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3rd December 20053rd December 2005 @Copyrights Reserved 2005 - RFID Team : INF@Copyrights Reserved 2005 - RFID Team : INFS 640 S 640


Wal*Mart Case Study: Wal*Mart Case Study: RFID & Supply Chain ManagementRFID & Supply Chain Management

•Angrish, Sangita•Chivukula, Venkata S.•DeWitt, Brendon•Patel, Raxesh•Shamsi, Shazeb•Yellapragada, Ramachandra

TEAM MEMBERS


AgendaAgenda

Introduction to RFIDIntroduction to RFID Introduction to Supply Chain Management Introduction to Supply Chain Management

(SCM)(SCM) Introduction to Wal*Mart and its Business Introduction to Wal*Mart and its Business

ProcessesProcesses RFID in Wal*MartRFID in Wal*Mart Current RFID UsageCurrent RFID Usage Limitations and Challenges of RFIDLimitations and Challenges of RFID Future of RFIDFuture of RFID


IntroductionIntroduction

What is RFID ?What is RFID ?Why RFID over Bar-Code ?Why RFID over Bar-Code ?RFID Working and InfrastructureRFID Working and Infrastructure


What is RFID?What is RFID?Electronic tagging technology that allows an Electronic tagging technology that allows an object, place, or person to be automatically object, place, or person to be automatically identified at a distance without a direct line-of-identified at a distance without a direct line-of-sight, using an electromagnetic sight, using an electromagnetic challenge/response exchange.challenge/response exchange.


RFID RFID 4040 years old technology years old technology Why being Used NOW?Why being Used NOW?

right time to use the technologyright time to use the technology Benefits Benefits OUTWEIGH OUTWEIGH the Deployment Coststhe Deployment Costs


Why RFID over Barcode ?Why RFID over Barcode ? Ability to read Ability to read without line-of-sightwithout line-of-sight Serialized numberingSerialized numbering scheme enables more powerful scheme enables more powerful

UnderstandingUnderstanding DiagnosingDiagnosing Controlling of Supply ChainControlling of Supply Chain

Serial numbers provides Serial numbers provides individual entity trackingindividual entity tracking and and much more much more detailed behaviordetailed behavior of SCM than UPC or EAN of SCM than UPC or EAN used in Bar codesused in Bar codes

No duplicateNo duplicate reading of the same tag – reading of the same tag – a possibility in a possibility in Bar codesBar codes

More More powerful sensor-networkpowerful sensor-network and monitoring-system and monitoring-system than bar-code systems.than bar-code systems.


RFID ComponentsRFID Components

RFID

Reader TAG

Antenna Silicon Chip Substrate


Working of RFIDWorking of RFID

ReaderReader generate signals that are dual purpose: provide generate signals that are dual purpose: provide power for a tag, and create an interrogation signal.power for a tag, and create an interrogation signal.

TagTag captures the energy from captures the energy from ReaderReader and executes and executes commands sent by the commands sent by the ReaderReader

Tag Tag sends back a signal containing a sends back a signal containing a unique digital IDunique digital ID ((96-bit serial number)96-bit serial number) that can be looked up in a that can be looked up in a database available to the reader to determine its identity, database available to the reader to determine its identity, perhaps expressed as a name, manufacturer, SKU perhaps expressed as a name, manufacturer, SKU (stock keeping unit) number, and cost.(stock keeping unit) number, and cost.

TagsTags are generally are generally passivepassive because they require no because they require no batteries or maintenance.batteries or maintenance.


RFID InfrastructureRFID Infrastructure Existing software systems Existing software systems

UNABLE to handle serial numbersUNABLE to handle serial numbers

SolutionSolution – – RFID MiddlewareRFID Middleware RFID Middleware RFID Middleware : : Layer between RFID readers and Layer between RFID readers and

the application softwarethe application software

Consists ofConsists of ::1.1. Lower level device and data management Lower level device and data management

2.2. Higher Interpretation levelHigher Interpretation level

Device Management

Data Management

Context generation and Interpretation


RFID Infrastructure (contd.)RFID Infrastructure (contd.) Lower level devicesLower level devices such as such as motion sensors, motion sensors,

programmable logic arrays and human programmable logic arrays and human interfaces fetch data and provides to Data interfaces fetch data and provides to Data management layermanagement layer

Data management layerData management layer provides some provides some functionality of filtering data due to intermittent functionality of filtering data due to intermittent appearances and disappearancesappearances and disappearances

After the data management layer yields data, the After the data management layer yields data, the Interpretation layerInterpretation layer extracts inference from such extracts inference from such data and forwards it to the applications that data and forwards it to the applications that deploy RFIDdeploy RFID


Up Next……Up Next……





Introduction to Supply Chain Introduction to Supply Chain ManagementManagement

Supply Chain Management1. Coordination of a network of facilities and distribution options2. Includes procurement, processing and distribution

Five core processes1. Planning2. Sourcing3. Making4. Delivering5. Returning

Integration of these processes to maximize benefits


Introduction to Supply Chain Introduction to Supply Chain Management (contd.)Management (contd.)

Three levels of supply chain management1. Strategic – linked to corporate strategy

2. Tactical

3. Operational – involve day to day activities



Overall Goal1. Optimize supply chains

2. Provide more accurate and time sensitive information

3. Maximize sales and profits



RFID and Supply Chain1. Provide real time information

2. Better readings of customers and markets

3. Ability to provide right products at the right times

Deloitte & Touché benchmark initiative1. Only 7% of companies managing supply chain

effectively

2. These 7% are 73% more profitable than other companies


Wal-Mart Introduction and Wal-Mart Introduction and Business ProcessesBusiness Processes


OperationsOperations Wal Mart StoresWal Mart Stores

1.1. Largest segment accounting to about 67.3% of 2005 fiscal Largest segment accounting to about 67.3% of 2005 fiscal salessales

2.2. Super centersSuper centers

3.3. Discount storesDiscount stores

4.4. Neighborhood MarketsNeighborhood Markets

SAM’s ClubSAM’s Club1.1. Consists of membership warehouse clubs accounting to 13% Consists of membership warehouse clubs accounting to 13%

of 2005 fiscal salesof 2005 fiscal sales

Wal-Mart InternationalWal-Mart International1.1. Accounted to 19.7% of 2005 salesAccounted to 19.7% of 2005 sales


Business Model of Wal*MartBusiness Model of Wal*Mart

Market Strategy of Wal*MartMarket Strategy of Wal*Mart1.1. Everyday Low prices (EDLP)Everyday Low prices (EDLP)2.2. Employs both “Clicks & Bricks” and “Bricks & Mortar” strategyEmploys both “Clicks & Bricks” and “Bricks & Mortar” strategy

Organizational Development Organizational Development 1.1. Specialty DivisionSpecialty Division2.2. Retail DivisionRetail Division

Competitive Advantage Competitive Advantage 1.1. Price match guaranteePrice match guarantee

Market opportunityMarket opportunity1.1. B2B Single firm network B2B Single firm network 2.2. B2C E-Tailer Business ModelB2C E-Tailer Business Model


Supply Chain Management at Supply Chain Management at Wal*MartWal*Mart

Procurement and DistributionProcurement and DistributionLogistics ManagementLogistics Management Inventory ManagementInventory Management


Procurement and DistributionProcurement and Distribution

ProcurementProcurementProcurement involves getting goods from Procurement involves getting goods from

different manufacturersdifferent manufacturers IInvolves reducing the purchasing costs as far nvolves reducing the purchasing costs as far

as possible as possible Goods procured directly from the Goods procured directly from the

manufacturers, bypassing all intermediariesmanufacturers, bypassing all intermediaries


Procurement and DistributionProcurement and Distribution

DistributionDistribution Distribution centre is Distribution centre is divided in different groupsdivided in different groups depending on the depending on the

quantity of goods received quantity of goods received Goods to be used internally in US arrive inGoods to be used internally in US arrive in pallets pallets & imported goods & imported goods

arrive in arrive in re-usable boxesre-usable boxes.. Employees have Employees have access to the inventoryaccess to the inventory levels of all the products levels of all the products Employee makes Employee makes two scans-two scans-

1.1. For identifying the palletFor identifying the pallet2.2. For identifying the location from where the stock had to be picked For identifying the location from where the stock had to be picked

upup Bar codes & RFIDBar codes & RFID used to used to labellabel different products, shelves & bins different products, shelves & bins The The hand held computershand held computers guideguide employee to the location of the specific employee to the location of the specific

product.product. The quantity of the product required from the center is entered in The quantity of the product required from the center is entered in

the hand held computer, which updates the information on the main the hand held computer, which updates the information on the main central server. central server.

computers enable packaging department to get accurate computers enable packaging department to get accurate information such as storage, packaging & shipping,information such as storage, packaging & shipping,

Saves time in unnecessary paperwork. Saves time in unnecessary paperwork. Enables supervisors to monitor their employees closelyEnables supervisors to monitor their employees closely


Logistics ManagementLogistics Management Involves managing transportation & delivery of productsInvolves managing transportation & delivery of products More than 7000 company owned trucks services More than 7000 company owned trucks services

Distribution centersDistribution centers This enables shipping of goods from distribution centers This enables shipping of goods from distribution centers

to the stores within 2 days and replenish the store to the stores within 2 days and replenish the store shelves twice a week shelves twice a week

““Private Fleet Driver handbook” – tracking drivers Private Fleet Driver handbook” – tracking drivers activitiesactivities

““Cross Docking” – from Manufacturer to CustomerCross Docking” – from Manufacturer to Customer Cross Docking enabled “demand chain” Cross Docking enabled “demand chain” ““Demand chain” - CDemand chain” - Customers ‘pull’ the products instead ustomers ‘pull’ the products instead

of retailers having to “push” themof retailers having to “push” them


Inventory ManagementInventory Management Wal*Mart set up its own satellite system in 1983Wal*Mart set up its own satellite system in 1983 Reducing Reducing unproductive unproductive inventory as far as possibleinventory as far as possible Use of Bar-code & RFID technologies for easy packing Use of Bar-code & RFID technologies for easy packing

and counting of the inventories, efficient picking and and counting of the inventories, efficient picking and receiving & proper inventory control of the productsreceiving & proper inventory control of the products

““Massively Parallel Processor “ - enables easy tracking Massively Parallel Processor “ - enables easy tracking movement of goods & stock levels across all distribution movement of goods & stock levels across all distribution centers and stores centers and stores

Use of “Magic Wand” to keep track of inventory in storesUse of “Magic Wand” to keep track of inventory in stores Use of sophisticated algorithm and technology Use of sophisticated algorithm and technology

infrastructure to forecast the quantities of each item to be infrastructure to forecast the quantities of each item to be delivered, based on inventories in the store and delivered, based on inventories in the store and customer needscustomer needs

Centralized inventory database Centralized inventory database


RFID in Wal*MartRFID in Wal*Mart

Initiated the plan to implement RFID in its Initiated the plan to implement RFID in its supply chain in June 2003supply chain in June 2003

Subsequently, reinforced the RFID Subsequently, reinforced the RFID standards and specifications in November standards and specifications in November 20032003


RFID in Wal*MartRFID in Wal*Mart

Specification of RFID ComponentsSpecification of RFID ComponentsTAGSTAGSEPCEPCWhy RFID?Why RFID?EFFICIENCY EFFICIENCY WAL*MART SUPPLIERSWAL*MART SUPPLIERS


Specification of RFID ComponentsSpecification of RFID Components

EPC EPC Type of ChipType of ChipTAGTAGDistribution Centers to accept RFID Distribution Centers to accept RFID

tagged productstagged products


Specification of RFID Components Specification of RFID Components

EPCEPC96 bit unique number to identify an item in the 96 bit unique number to identify an item in the

supply chain.supply chain.Global Trade Identification Number.Global Trade Identification Number.

EPC data format on the chip is EPC data format on the chip is Class 1 Class 1 Version 2 communication protocol.Version 2 communication protocol.

Class 0: Factory programmable protocolClass 0: Factory programmable protocol

Class1: Provides the Class1: Provides the capability to write serial numberscapability to write serial numbers on the chip on the chip


Specification of RFID ComponentsSpecification of RFID Components

TAGSTAGSOperates in the Operates in the UHF spectrumUHF spectrum

868 MHz to 956 MHz 868 MHz to 956 MHz

Carries the Carries the 96-bit serial number96-bit serial number Is Is field programmable field programmable

Allows suppliers to write serial numbers to the tags Allows suppliers to write serial numbers to the tags while being applied to the productswhile being applied to the products


WHY RFID?WHY RFID?

OBJECTIVE: To OBJECTIVE: To increaseincrease the efficiencythe efficiency of its supply chain.of its supply chain.

It willIt will1.1. Enhance TransparencyEnhance Transparency of supply chain of supply chain

2.2. Help in Help in minimizing costminimizing cost and labor and labor

3.3. StrengthenStrengthen inventory control inventory control


EfficiencyEfficiency Wal*Mart aims to Wal*Mart aims to reducereduce the practice of the practice of

manually placingmanually placing the order the order Has Has achieved 10% reductionachieved 10% reduction in the case in the case Implementation of RFID tags in Wal*Mart’s Implementation of RFID tags in Wal*Mart’s

inventory has inventory has helped boost saleshelped boost sales by keeping by keeping shelves better stockedshelves better stocked

Usage of RFID has Usage of RFID has reduced out-of-stockreduced out-of-stock merchandise by merchandise by 16%16% at the stores that have at the stores that have implemented RFID tags for more than a year. implemented RFID tags for more than a year.


RFID COSTRFID COST

Cost Benefit AnalysisCost Benefit Analysis

Initial Research indicatedInitial Research indicated cost of RFID tag was cost of RFID tag was above $1above $1..

At present, TAG costs about At present, TAG costs about 30 cents30 cents

Cost will drop to Cost will drop to less than 5 cents, less than 5 cents, if deployed on a large if deployed on a large scale scale

Analysts suggest that the tag should be approx. Analysts suggest that the tag should be approx. 1 cent for 1 cent for

small ticket itemssmall ticket items


Wal*Mart SuppliersWal*Mart Suppliers

130 major130 major suppliers ship merchandise to suppliers ship merchandise to Wal*Mart distribution centers with about Wal*Mart distribution centers with about 5.4 million tags5.4 million tags

By 2006,By 2006, Wal*Mart aims to mandate RFID Wal*Mart aims to mandate RFID implementation forimplementation for all all its suppliers its suppliers


Wal*Mart SuppliersWal*Mart SuppliersMajor Suppliers:Major Suppliers:

GilletteGilletteHewlett-PackardHewlett-PackardJohnson & JohnsonJohnson & JohnsonKimberly ClarkKimberly ClarkKraft FoodsKraft FoodsNestleNestleProctor and GambleProctor and Gamble


Wal*Mart SuppliersWal*Mart Suppliers

Kimberly-ClarkKimberly-ClarkManufacturer of paper goods products Manufacturer of paper goods products

Eg: Kleenex, HuggiesEg: Kleenex, Huggies

Tagged Scott paper Towels shipment with Tagged Scott paper Towels shipment with RFID tags RFID tags

First supplier to use RFID – April 2004First supplier to use RFID – April 2004


Successful Implementation of RFIDSuccessful Implementation of RFID

Harvard Research suggests a seven step Harvard Research suggests a seven step model for successful implementation of model for successful implementation of RFID.RFID.


Seven Step ModelSeven Step Model

1.1. Understand our visibility requirements Understand our visibility requirements 2.2. Query other end users about Query other end users about

recommendations for trials recommendations for trials 3.3. Move into the action phase in a real-world Move into the action phase in a real-world

setting in a pilot/trial mode setting in a pilot/trial mode 4.4. Evaluate technical performanceEvaluate technical performance5.5. Consider the economic benefits Consider the economic benefits 6.6. Understand the impact Understand the impact 7.7. Decide whether or not to move forward with a Decide whether or not to move forward with a

larger scale implementation larger scale implementation


Major Companies implementing RFID Major Companies implementing RFID technology technology

VolkswagenVolkswagen GilletteGillette Tesco supermarket tries out smart taggingTesco supermarket tries out smart tagging Sun Microsystems sets up RFID test centre in Sun Microsystems sets up RFID test centre in

ScotlandScotland I.B.M. Expands Efforts to Promote Radio Tags to I.B.M. Expands Efforts to Promote Radio Tags to

Track GoodsTrack Goods Texas InstrumentsTexas Instruments


Limitations of RFIDLimitations of RFID

Why the implementation of a 40 year old Why the implementation of a 40 year old technology is taking so long?technology is taking so long?

As pointed out earlier, benefits are As pointed out earlier, benefits are gradually gradually outweighing the deployment costsoutweighing the deployment costs

Limitations and challenges: Limitations and challenges: Barriers to Quick Barriers to Quick DeploymentDeployment


Limitations and Challenges of RFID Limitations and Challenges of RFID (contd.)(contd.)

1.1. Global standardsGlobal standards Variety of RFID standards and technologies Variety of RFID standards and technologies

2.2. Technology problems Technology problems Read-range distances not sufficient to allow for Read-range distances not sufficient to allow for

consumer surveillanceconsumer surveillance Defective and poorly performing RFID tagsDefective and poorly performing RFID tags Damaged RFID tagsDamaged RFID tags

3.3. Data management Data management Lack of development of right information Lack of development of right information

management toolsmanagement tools

4.4. CostCost Tags, Tag Readers, DatabasesTags, Tag Readers, Databases


Limitations and Challenges of RFID Limitations and Challenges of RFID (contd.)(contd.)

5.5. Industry StandardsIndustry Standards Privacy advocates are insisting the companies to state their intended Privacy advocates are insisting the companies to state their intended

use of the technologyuse of the technology due todue to lack of industry standardslack of industry standards

6.6. Privacy and civil libertiesPrivacy and civil liberties RFID tags can be embedded into/onto objects and documents without RFID tags can be embedded into/onto objects and documents without

the knowledge of the individual the knowledge of the individual

7.7. Complex programmingComplex programming

8.8. Potential job lossesPotential job losses


RFID Practices that Should be ProhibitedRFID Practices that Should be Prohibited

Merchants Merchants must not forcemust not force their customers their customers into accepting RFID tags in the products into accepting RFID tags in the products they buy. they buy.

RFID must RFID must not be used to track individualsnot be used to track individuals absent informed and written consent of the absent informed and written consent of the data subject – directly or indirectly.data subject – directly or indirectly.


Future of RFIDFuture of RFID


Future of RFIDFuture of RFIDFor Retailers ??For Retailers ??

The technology will bring a revolution. The technology will bring a revolution. It will be widely used in retail and consumer goods, It will be widely used in retail and consumer goods,

automotive, healthcare, military, postal department automotive, healthcare, military, postal department and other scientific uses.and other scientific uses.

For Customers??For Customers?? If the consumers think the technology is too complex, confusing If the consumers think the technology is too complex, confusing

or threat to their privacy…or threat to their privacy…

Will the technology survive?Will the technology survive?


Key Factors for RFIDKey Factors for RFID

Setting up more Setting up more standardsstandards in the industry in the industryBringing down the Bringing down the cost cost of RFIDof RFIDLevel of Level of understandingunderstanding and and experience experience


Demonstration Of Wal*Mart SCMDemonstration Of Wal*Mart SCM

Manufacturer

Wal*mart Warehouse

Wal*Mart Store


Movie Time Movie Time

http://www.future-store.org/servlet/PB/- s/1rop28q1ikm3s91d05t0h15w06yt14q0kbq/menu/1004023_l2/index.html


THANK YOUTHANK YOU

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