Presentation Slides

Radio Frequency Identification

28th October 2004

Today’s Goals

• Real World View of RFID• Discuss RFID Applications• Business Perspective

AgendaA. Importance of supply Chain Management

B. Council of Supply Chain Management Professionals – Mentor Day

C. ModusLink Overview

D. History of RFID

E. Future ?

F. Benefits

G. Components

H. Technology

I. Challenges

J. Conclusion

CSCMP – Council of Supply Management Professionals

• Global Organization

• Formerly CSCMP – Council of Logistics Management

CSCMP Mission

To lead the evolving Supply Chain Management profession by developing, advancing, and dissemination Supply Chain knowledge and research.

CSCMP exists to:

• Provide opportunities for supply chain professionals to communicate in order to develop and improve their supply chain management skills.

• Identify and conduct research which adds to the knowledge base of supply chain theory and practice.

• Create awareness of the significance of supply chain to business and to the economy.

www.cscmp.org

http://www.cscmp.org/

CSCMP – Membership Benefits

• Professional Visibility

• CSCMP Resume

• Network

• Six issues of CSCMP - Logistics Comment

• Five issues of CSCMP-Explores

• Member Discounts

• Local Roundtable Meetings

• Access to CSCMPresearch

• Access to The Journal of Business Logistics

• Others

Background – Mel DavisCompany Position Duties Revenue

Exel Logistics - 8 years GM 1,000,000 Sq. Ft. OperationsSales, Ops, HR, Safety, Finance, etc

$35 Million

Ashland Chemical – 3 Years Operations

2 Years Sales

Reg. Ops Manager

Reg. Sales Manager

10 DCs US & Mexico

10 Sales Reps / Same Territory

$400

$75

Modus – 18 months GM / GAE Compaq / HP $150

Visar Logistics – 2 years President / Owner TransportationWarehousingSystemsConsulting

$5 +

Modus Global Services Director Reverse LogisticsRFID

$100

Industry Experience Electronics, Chemical, Industrial, Plastics, Consumer goods, Apparel, Foods, Automotive, and Beverage.

Education & Training BBA – FinanceMBA – Finance & Org. Behavior / HRCertified ISO-9000-2000 Auditor

Personal Married 12 years - Sam3 Children – Tucker 6, Carson 2, Peyton 3 monthsHobbies: Golf, Hunting & Fishing, Exercise, Reading

Typical Reverse Supply Chain

Customers

ODMOEM Retail Store

Scrap

Tech SupportGate KeepingWarranty ValidationReverse $ TransactionsUp SellCross Sell

Re Marketer

CRM

ARSRepairDepot

RMSField

Service

InventoryInventoryInventory Inventory Inventory InventoryInventory

Repair L2 , L3SortDe-KitDe-MfgTestRepair L1

ScreenSpare Parts MgtWarranty Validation

LiquidationSecondary Market

MODUSLINK

OVERVIEW

ModusLink Corporate Overview

• $1 Billion dollars*, the leader in global supply chain services• More than 20 years operational experience• Over 3,900 skilled employees• Strongest management strength in the

industry• Division of CMGI• The result of the merger of SalesLink and

Modus.

• Award winning solutions portfolio

• World-class global footprint• Americas: 19 Centers• EMEA: 10 Centers• Asia: 13 Centers

• Blue chip technology clients

• Best-in-Class systems strategy

Computing

Consumer Electronics

Software

Telecommunications/Wireless

DSL / Broadband

Networking

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*Note: CMGI Pro forma Revenue for year ended July 31, 2003

Size and Scope• ModusLink’s global footprint and scalability are part of our

unique value offering for our clients.

• Over US$25 Billion of Client Revenue passes through ModusLink.

• To put our business in perspective here are some operational statistics ModusLink managed:

• Hardware Units Shipped 150 million• Software Units Shipped 300 million• Part Number Transactions 2 billion• Active Part Numbers 400,000 • Currencies Transacted 36• E-Mails Responded 1.5 million• Inbound Calls 9 million• Outbound Calls 1 million• Web Transactions 2 million• Call Center Seats 0ver 1000• Languages Supported 16

Business Model

World-Class Global Footprint

Charlestown, MA

Memphis, TN

Guadalajara, Mexico (2)

Santa Clara, CANewark, CA

San Diego, CA

Fountain, CO

Indianapolis, IN

Miami, FL Penang, Malaysia (2)

Singapore (2)

Tilburg, The Netherlands

Lindon, UT

Raleigh, NC

Austin, TX

Nashville, TN

Monterrey, Mexico

Salt Lake City, UT

Chicago, IL

Waltham, MA HQ

Fukashima, Japan

Taipei, Taiwan (2)

Shenzhen, China

Shanghai, China

Futian, China

KunShan, China

SongJiang, China

Budapest, Hungary

Apeldoorn, The Netherlands

Orléans, FranceKildare, Ireland

Dublin, Ireland (2)

Limerick, IrelandAngers, France

Miskolc, Hungary

Cumbernauld, Scotland

Saitama, Japan

Kanagawa, Japan

Kyunggi-do, Korea

Beijing, China

Hong Kong, China

Hillsboro,OR

New York, NY

Houston, TX

Korea LLC

Tokyo, Japan

Shimane, JapanChiba, Japan

Blue Chip Client PortfolioISVComputing Hardware Telecom/ WirelessEMS / ODM

Consumer

http://www.handspring.com/index.jhtml;jsessionid=OJ4BB3GFLSRTXQFIAE1CFFGAVAATKIV0

http://www.corel.com/servlet/Satellite?pagename=Corel/Company/Satellite?pagename=Corel2/Home

http://www.emc.com/

http://www.gateway.com/sitemap.shtml

http://www.jabil.com/index.html

http://index.html/

http://www.compal.com/main_En.asp

http://www.efi.com/

http://www.sbc.com/

http://www.roxio.com/en/index.jhtml

http://www.cablevision.com/;jsessionid=YA5PJSYZJT5UOCQLARQCF3QKBMCGCI5G

http://www.microsoft.com/

http://www.nai.com/us/index.asp

http://www.filemaker.com/index.html

RFID Where Did it Come?

• RFID technology been around since WWII

• Business needed something that went beyond:• Direct line of site barcode scanning• No real time Supply Chain Visibility

• Retail supply chains need better inventory balancing

• MIT’s Auto ID lab hatched a plan and a consortium with retailers/suppliers/technology vendors

• EPC Global purchased rights to intellectual property

Auto-ID is Much More Than Track & Trace(e.g Product: Battery)

Source : RFID ROI Seminar organized by AutoScan Technology

“I’m a 8-pack of AA Dry Cell batteries and I will expire in 2007

“I was made on assembly line 5 of plant ABC in Shenzen on January 22, 2004”

“I am currently sitting in Warehouse B, Aisle 5”

“I am bound for XYZ” / “I have arrived at XYZ”

“I have just been removed from the Retail / Warehouse shelf”

“I have not been paid for by the customer”

“I was purchased from Store A in Town B”

“This is how you should use, handle and store me”

“This is what I’m made of” / “These are my design features”

“Here are complementary products”

“I am the real deal…not a counterfeit”

“I have not been tampered with”

RFID Where is it going? Evolution versus Revolution

• PC Example …PCs were only evolving during the 1980s – Excel and Quattro, WordPerfect and Word were driving business purchases.

• The Revolution in PCs Started By the Internet

• The Internet Causes Adoption to Go Up, Prices Then Go Down … Lower Prices Spur Even Greater Adoption, Higher Adoption Causes Prices to Lower, the Revolution Begins

Traditional Manufacturing

World of Demand-Driven Manufacturing

Fundamental shift of power to the customer

The Start• When Wal-Mart insists its top 100 consumer

packaged goods suppliers attached RFID tags cases and pallets by 2005.

• Such a move could benefit Wal-Mart by enhancing order accuracy, inventory control, operation efficiency, and material managements

• Wal-Mart currently conduct test on PEC labels and RFID tags in Dallas, Texas.

Major Initiatives

• Mandating RFID• Top 100 suppliers by Jan’05, all by end 2006• Case and pallet level

• Mandating RFID• All suppliers of selected items by Jan’05• Case, pallet and item level

• Mandating RFID• Top suppliers by Nov’04 •Case, pallet and selected item level

Source : RFID ROI Seminar organized by AutoScan Technology (Philips Semiconductors)

Who is next?

• BarcodeThermal Transfer

PrintingDirect Thermal PrintingOptical technology

• Biometric• GPS Tag• Card

Smart chipsMagnetic Stripe

• RFID

Auto ID Technologies - AI


Are You Currently Evaluating Auto-ID/RFID Solutions

You will need answers to two very fundamental questions:

• How can I use this technology to improve my business?

• Where Do I begin?

Raw Material Supplier

Component Supplier

Primary Manufacturer

Distribution Warehouse

Retailer


Where is RFID Adoption?

Innovators EarlyAdopters

Early Majority Late Majority Laggards

ConservativesHold on!

SkepticsNo way!

VisionariesGet ahead of the herd!

PragmatistsStick with the herd!

TechiesTry it!

Pragmatists create the dynamics of high-tech market developmentPragmatists create the dynamics of high-tech market development

We Are Here


RFID Value Proposition• Enables End to End Business Process Integration

• Recognition of real-time transactions and operations, via an Automatic Identification Data Capture system.

• Eliminate Work Duplication in terms of data collection and data documentation

• Automation of manual processes through technology

• Knowledge Retention for manual operations

• Streamlined warehouse operations processes and improved order turnaround

• Enable Warehouse operations automation to meet changes in customer demand, market opportunities and external events.

• Recognition of exceptional events in daily operations

• Provides Real-Time Inventory Diversion

• Improved supplier and customer relationshipsSource : RFID ROI Seminar organized by AutoScan Technology

Material Flow

Information Flow

Manufacturer Transport

RawMaterials

ConsolidatedDistribution

Center (CDC)

Brand owner

Marketing/ Sales

CustomersContainerShipping

3PLWarehouse


Automatic Data

Collection

Manufacturer Transport

RawMaterials

ConsolidatedDistribution

Center (CDC)

Brand owner

Marketing/Sales

CustomersContainerShipping

3PLWarehouse

RFID Business Application areas• Traditional RFID Applications

• Security/Traditional Access Control• Mass Transit• Library Access• Toll Collection• Animal Identification

• Emerging RFID Application• Warehouse Management• Supply Chain• Reverse Logistics• Asset Tracking • Retails Management• Document Tracking• Anti-counterfeit• Advance Access Control• Mass Transit – Monthly and Single Trip• Airline Baggage Handling• Regulatory Compliance


U.S. RFID for the Retail Supply Chain, 2002-2008

2002 2003 2004 2005 2006 2007 2008

$1.3B$1.27B

$91.5M

$M

1,400

1,200

1,000

800

600

400

200

0

Source: IDC, 2004 (#30490, U.S. RFID for the Retail Supply Chain Spending Forecast and Analysis, 2003-2008)

Hardware

Software

Services


U.S. RFID for the Retail Supply Chain, Long View

2002 2008 2020

Pallet & caseLevel Boom

Pallet & caseLevel Peak

Item-levelBegins

Item-levelTakes Off

Source: IDC, 2004


Benefits

The ROIThe MOST important return on investment your company hopes to realize from investing in RFID Technology.

Based on retailers using or planning to use RFID (n=71 retailers) - AMR Research

Product tempering / counterfeit reduction17%

Theft Reduction21%

OOS Reduction11%

Labor Savings38%

Inventory Reduction13%


Enhanced WMS Opportunity

• Warehouse Labour Hours 10-30%• Inventory Write-offs 5-10%• Total Inventory 5%• Shipping Errors 80-100%• Management Time 50%• Inventory Counting Hours 80-100%


RFID Benefits

•Speed distribution throughout the supply chain utilizing hands off reading technology

•Greater visibility and real-time inventory management capabilities

•Reduced product tampering, theft, and counterfeiting

• Introduction to Smart Shelf technology

•Easier product tracking and recalls

Real Benefits are Being Derived

• A UK Retailer• a 10% reduction in shrinkage will create a 1 year ROI• Reduced truck unload times from 18 minutes to 3 minutes

• A distributor cut energy charges by 25% by synchronizing the opening and closing of its refrigerated warehouse doors with arriving and departing trucks

• A 3PL cut the average time it took to unload trucks a truck at a DC from 3 hours to 1 hour

Real Benefits are Being Derived

• A global fashion clothes manufacturer and supplier increased inventory accuracy levels from 85% to over 99% and sales rose more than 5%

• Wal-Mart claims reducing stock-outs by 1% is an additional $1B USD in sales

• Wal-Mart estimates every bar code replaced will save 5 cents

“You can move forward with some things (projects) now while the (RFID) technology progresses and the details get worked out.” - AMR.

You Can Enjoy RFID Benefits Right Now …

… if your company has the following attributes or charters:

• Not dependent on technology and hardware standards

• High Dollar SKUs• Heavy asset based industry• Real time location of parts• Authentication to deter counterfeiting• Maintenance, repair and returns• RFID Enabled Enterprise Software

“… look for places inside the business where traditional

data collection technologies have failed … “ - Gartner

Benefits to Manufacturing

BUSINESS PROCESSInventory management and logistics

Production

Maintenance and Service

BENEFITS• Reduced order lead times and errors• Inbound and outbound order visibility• Better capacity utilization• Less shrinkage and loss• Gray-market tracking

• Better capacity utilization and sequencing of materials

• Improved product quality and fewer errors

• Tracking of work in progress for production components

• Better subassembly identification and tracking

• Automatic component matching and assembly

• Improved recipe management• Faster order cycles• Improved building to order and building

to demand• Reduced counterfeiting

• Better tracking of warranties, service and end-of-life processes, spare-parts and recalls

• Improved maintenance and repair through increased visibility and correct part ID’s

• Easier tracking for life and expiration dates for managing asset returns

POTENTIAL SAVINGS

• Save the 0.22% to 0.73% of annual revenues that is typically lost on theft

• Reduce transportation costs by up to 3%

• Increase revenues up to 1% by improving product quality and service

• Reduce fixed assets costs by 1% to 5% as a result of better equipment utilization

• Gain 7% in margin by tagging at the subassembly level

• Gain 12% in margin by tagging at the pallet level

• Gain 18% in margin by tagging at the unit level

• Avoid the erosion of nearly 30% of potential annual revenues that is caused by markdowns on old or unusable inventory.

Source : RFID ROI Seminar organized by AutoScan Technology (SAP)

Benefits to Warehousing

BUSINESS PROCESSReceiving and Shipping

Product storage and selection and order fulfillment

Task and resource management

BENEFITS• Automated processing of loading and

unloading • Reduced labor requirements• Faster processing• Automatic cross-docking• Automatic generation of 100% accurate

electronic manifests

• Correct product storage locations• Faster product retrieval• Fewer order errors• Reduced losses and shrinkage of assets• Improved order fill rates and times• Less safety stock required

• Automatic updating of tasks for each resource

• Improved automation and accuracy of flow control

• Improved real-time monitoring of operations

• Automatic conveyance and sorting• Automatic and accurate picking and

packaging

POTENTIAL SAVINGS

• Reduced receiving costs by 20% to 30%

• Reduced shipping costs by 15% to 25%%

• Reduce picking costs by 40% to 50%

• Reduce working capital by 8% to 12%

• Increase cross-docking by 45%


Benefits to TransportationBUSINESS PROCESSAsset management and routing

Yard Management

Contract compliance

BENEFITS• Increased asset utilization• Reduced loss and shrinkage• Pricing based on actual asset usage• Reduced labor costs• Optimized route planning and

backhauling• Automated advance shipping notices

• Visibility of drop shipments• Automatic identification and location• Increased throughput

• Decreased errors and exceptions• Improved customer service

POTENTIAL SAVINGS

• Achieve 25% to 40% higher profits due to improved logistics for returns

• Speed pickup and delivery by 10%

• Reduce labor costs by 30%• Reduce demurrage by 60%• Increase throughput by 20%

• Reduce bad-data costs by up to $100 million

• Reduce claims from lost packages by 98%


Benefits to Store OperationsBUSINESS PROCESSReceiving

Store Planning and Inventory management

Checkout

Returns and reverse logistics

After-sales support

BENEFITS• Faster load processing• Automated shipment confirmation and

payment• Improved order accuracy and less

shrinkage

• Improved on-shelf availability of products• Correct product compliance with the plan-• Mobile inventory tracking, velocity

measurement and monitoring• Improved product turns and shelf life

management• Out-of-stock notification and alerts• Multichannel retailing• Automatic compliance with expiration

dates and recalls• Automatic inventory counts• Less labour and time

• Faster and more accurate checkout using Auto-ID

• Instant sales data by SKU and EPC• Higher productivity and less labour• Instant cross-setting and up-selling and

promotions to member customers• Improved customer satisfaction

• Prevention of fraud in returns• More accurate return refunds• Faster disposal and backhauling

• Automatic warranty information associated with each item and personalized for each purchase

• Better warranty compliance and repairs processing

POTENTIAL SAVINGS• Reduce labour costs by up to 65%,

stocking costs by up to 25% and cycle counting by up to 25%

• Reduce losses due to theft by 40% to 50%

• Improve stock availability by 5% to 10%

• Increased sales by 3% to 7% due to improved stock availability

• Reduce spoilage and obsolescence write-offs by up to 20%

• Increase customer retention by 0.3% to 0.5%

• Increase revenue by 1% to 2% due to improved returns management

• N/ASource : RFID ROI Seminar organized by AutoScan Technology (SAP)

COMPONENTS

RFID ComponentsThree Basic Components• A transceiver (with decoder), commonly refer as RFID

Reader.• Antenna• A transponder, commonly refer as RFID labelA smart asset tracking solution consists of label and a reader connected to an information system

Reader Antenna Label

Source : Grand-flo Systems (s) Pte Ltd

What is a Smart Label?

A paper label with RFID inside

An antenna, printed, etched or stamped…

…on a substrate e.g. a plastic foil…

…and a chip attached to it.


RFID Components – Type of Labels

Note : Both Active and Passive labels can read/write

Source : Grand-flo Systems (s) Pte Ltd

• Active labels• With battery• Hyper frequency• Expensive• Greater in size• Limited operational

life (10years)

• Passive Labels• Without battery• Low or high

frequency• Low cost• Smaller in size• Virtually unlimited

operational life

• Read only• Data (ID) is fixed

by the manufacturer

• Can be sufficient• 64 bits memory

• Read / Write• Enter data, re-

enter, modify• An infinite number

of times• 2kbits EEPROM –

equivalent to 150 barcodes

Types of Tags


Characteristic

Active Passive

Power Source Battery Inductive

Memory Up to 288kb Up to 288kb

Read Range <=1,500 feet (500 meters)

<=15 to 30 feet (10 meters)

Class 0, 3, 4 0

Frequency Low (125, 134 KHz)High (13.56 MHz)Ultra High (868 to 930 MHz)Microware (2.4 GHz)

Not applicable303, 433 MHz

Data Transfer Rate

Variable Variable

Tags Class


Class Description

0 Passive, Read only

1 Passive, Write once, Read many

2 Passive, Multi Write / Read

3 Active, Multi Write / Read

4 Active, Networking Tags

Remarks: Currently most implementation is for Class 0 & 1 only

TECHNOLOGY

RFID Technology

Possible Frequency1. Low frequency : 10KHz to 200KHz2. High frequency: 13.56MHz3. Microwave: 2.45GHz to 2.5GHz4. UHF : Singapore (866~869MHz), Europe (860~869MHz), US

(902~928MHz). Singapore is proposing 923~925MHz.

< 150 kHz 13.56 MHz UHF 2.45 GHz Typical achievable reading range

1 m 1 m plus 3 m 2 m

Reading speed <5 kbit/s 80 kbit/s >100 kbit/s > 100 kbit/s Immunity to metal environment

Fair Medium Poor Poor

Immunity to electro-magnetic noise

Poor Medium Fair Fair

Immunity to water Fair Fair Poor Poor

Short Range Medium Range Long Read Long Read

Source : Grand-flow Systems (s) Pte Ltd

RFID Tags (Smart Tags) are the next step beyond barcodes, supporting the promise of an intelligent supply chain.


Barcode / UPC RFID / Auto-ID

Data Capacity

Limited data can be stored

Significantly higher data capacity and memory

Flexibility Static Information Potential for read/write capability (allows tags to be reusable)

Efficiency Ability to read one tag at one time

Ability to read multiple tags simultaneously (without line of sight)

Dependability

Labels susceptible to damage

Tags less susceptible to damage

RFID has not been widely adopted due to high implementation

costs and a lack of standards – EPC Global was created specially to address three issues.

CHALLENGES

Usability

• Crown Cork and Seal

• Ozarka

Tag Placement

Technical Challenges


• How to tag problem products• Consider tag and reader antenna placement• Choose the right tag and reader antennas

Gillette puts a tag where there’s an air gap in the case

Challenges


Standards• Drive to world-wide standards

Consumer / Shopper• Respond to consumer concerns (e.g. Privacy, Health &

Safety)

Costs• Tag and reader cost reduction

Technology Development to address• Tag and Reader interoperability• Cost / Performance balance• Country specific regulations• IT infrastructure requirements• RF properties with metals and liquids

• Crown Cork & Seal • Ozarka

CONCLUSION

Business thinking

RFID cannot transform your company

RFID is not a strategy

RFID is…Key Technology Enabler


10 RFID Myths to uncover1. RFID is a “talking” bar code2. You can read every RFID tag every time3. You can take inventory with a push of the

button4. RFID delivers perfect information5. You can buy tags for five cents6. The tag cost is critical to making any

deployment payoff7. RFID is primarily a supply chain technology8. Deploying RFID means the end of privacy9. RFID is easy to deploy10. We can afford to wait


Career Management

1. Never Stop Learning

2. Deliver Results / Money

3. Volunteer

4. Have Fun

5. Network

6. Find a Mentor

7. TEAM first ME Second

8. Be Patient

9. Diversify Skills

10.Values

11.Repeat Cycle

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