Leveraging RFID-Enhanced Networks for Ocean Cargo Visibility and Security:

Vic VermaChairman, President and CEO

Savi Technology

AIDC 100 "Truth in Technologies  2005: Supply Chain RFID" 

Challenges to Supply Chain Efficiency

• Supply Chains Have Become Increasingly Complex • Increasing Outsourced Off Shore Manufacturing• 20+ Entities Participate In The End-to-end Movement Of An Ocean Container• Shippers Vary Manufacturers & Service Providers For Best Price & Service• Carriers Vary Schedules And Routes For Maximum Efficiency

• Security Issues Threaten Supply Chain Disruption • Potential For Weapon Of Mass Destruction Smuggled In Ocean Containers• Subsequent Impact To Global Commerce Would Be Significant

• Anti-terrorism Regulations Increase Complexity And Costs• U.S. Initiatives

• 24 Hour Manifest Rule, Seal Checks• International Initiatives

• ISPS codes for ship and facility security • World Customs Organization

Recent Drivers Accelerating Change

• US CBP expected to pass verification rule rollout to industry early next year– Driving collaboration among carriers, shippers, terminal operators

and tech companies to finalize e-seal standards

• Wal-Mart and DoD compliance continuing to next wave of suppliers– Driving companies to look for ways to gain value in international

logistics operations– Source tagging growing as mechanism to comply

• Bonner recent comments on Greenlane– December 31st goal to define benefits of use of “smart containers”

• Standardization among allied militaries for global container tracking

• IBM/Maersk joint initiative

Ocean Cargo Supply Chain Executive Priorities

Reducing Inventory and Assuring Container Security are the most important issues supply chain executives are managing (n = 24)

Source: A.T. Kearney interviews

5Most

Important

1Not

Important

3Moderately Important

2.1

2.2

2.4

2.7

2.8

3.0

3.1

3.3

3.5

3.7

3.7

3.9

4.0

Complying with RFID MandatesReducing Insurance Costs

Reducing Shrink

Increasing Mfg Uptime

Assigning Liability

Locating Lost Containers

Reducing Labor/Fees

Managing POFR

Preventing Lost Containers

Reducing Stock Outs

Reducing Lead Time Var.

Reducing Inventory

Assuring Container Security

Savi Networks Commercial Launch

• HPH and Savi Launched Savi Networks in April – service for container tracking and security

• In August, 0 false tamper field trial of 3rd generation RFID sensor tag on Mitsui containers

• Officially launched SaviTrak service last week– Consumer goods manufacturer operational program– Full source tagging and nested visibility solution

Business Model

• Savi Networks is a utility service– Installs and operates a shared network infrastructure

– Operates the service to collect data, monitor the network and provide information to customers

• Savi Networks provides integrated hardware, software, services, and tags necessary for users to connect– Manufacturing and consolidation facilities that originate cargo

– Distribution centers receiving cargo

– Enabling nested visibility and source tagging

• Savi Networks provides data to carriers, shippers and/or other customers– Hosted view of the information

– Integration to backend systems

– Per transaction or subscription basis

Features

• Solution Enables:– Continuous supply chain performance improvement

– Exception management and Supply chain analytics

– Tamper alerts and audit trails for loss prevention and risk management

– Data availability and accuracy improvements

– Passive tag reads for manifest creation and “nested visibility”

– Enables retail RFID mandate compliance as source

– Automated ASN creation and other documentation

– Automated monitoring and alerting during import transport segments

– Electronic securing by authenticated users and chain of custody controls

– Chain of custody control at key hand offs in the supply chain

• Anticipated future capability:– Satisfy government requirements for “Greenlane” treatment of imports

– E-Seal verification once standard is completed

Device-Level Solution

Connectivity to users on the ground, verifying people, automating processes, validating security, capturing origin and

destination physical location and status

Chain of custody control through confirmation of physical movement and container status at process points like the port

crane operations

Reader Solution

Nested Visibility: Supports Source Tagging

GPS

Integrated, global, multi-modal

Hardware

Software

Container Movementvehicle

Unit LoadTransport unit

PackagingItem

Savi Software Supports Multiple AIDC Technologies

• Zebra• Symbol• Intermec

• Phillips• Intermec• Matrics• Alien

• TI• SAMSys• Thing Magic

• Qualcomm• @Road • PAR• Wherify

Barcode

GPS

Passive RFID

Gen 2 ISO 18000-6

SmartChain Software

ISO 18000-7

Active RFID

Networked Software

Networked software application provides users specific data security, alert and reporting capability for exception

management, audit and analytics information, and operating system integration (ERP, TOS, TMS)

Savi Networks Hosted Software

Savi Networks is Implementing an ISO Standard RFID NetworkIncluding a Hosted Application to Provide Global Visibility To

and Manage The Security of Ocean Cargo Containers

Managed Services

Savi Networks Hosted Software

Shippers Implement Compatible RFID Infrastructure At Supply Chain End Points, Connecting To Savi Networks Hosted Software Extending The Network Across The Global Supply Chain

Managed Services

Savi Networks Hosted Software

6

Web Based Services Data ServicesAlert Services

Savi Networks Will Provide Visibility and Security Transaction Priced Services To Shippers Through

Web PortalAlert Services

Direct Enterprise Data Integration

Managed Services

Key Findings

• Approximately 95% of the total benefit derived from the offering savings are driven by four factors — Reduced inventory carrying costs— Reduced out-of-stocks— Reduced lead time variance— Increased manufacturing uptime

• Reducing labor and fees (3%), increasing security (2%), preventing lost containers (1%), and reducing insurance costs (0%) combined for 6% of the total benefit

Note: (1) Reducing insurance costs showed zero benefits or the benefits could not be provided, according to the interviewees Source: A.T. Kearney Interviews; A.T. Kearney analysis

Reduce Out-of-Stocks

30%

Increase Mfg. Uptime

16%

Reduce Inventory

31%

Other6%

Reduce Lead Time Variance

17%

Supply chain executives estimated the total average benefit per container from Savi Networks Solution is approximately $1,150(1)

Value to Shippers

Leveraging RFID-Enhanced Networks for Ocean Cargo Visibility and Security:

Vic VermaChairman, President and CEO

Savi Technology

AIDC 100 "Truth in Technologies  2005: Supply Chain RFID"