Lexar Media Streamlines Manufacturing and Warehouse Operations with RFID

March 25, 2008

Agenda

Lee MarSenior Logistics Analyst & RFID Project Lead

Edwin C. WinderExecutive VP

Laurie SullivanRFID World Site Editor

Joe WhiteVP of RFID Business Development & Marketing

RFID World

Laurie SullivanRFID World Site Editor

Lexar

Lee MarSenior Logistics Analyst & RFID Project Lead

Lexar Media Overview

• Subsidiary of Micron Corporation

• > $700 M in revenues

• Maker of USB jump drives, memory cards for cameras, video recorders, PDA, digital picture frames

• Supplier to Wal-mart, BestBuy, Target, Kodak, Officemax

• Headquartered in Fremont, CA with operations worldwide

Lexar’s Supply Chain• Number of Active SKUs – 200+• Avg. Monthly Shipments – 30,000+ (4000+ Wal-Mart)• Orders are typically shipped in cartons and pallets• Shipped via Fedex, UPS and other LTL Carriers• Outsourced Transportation & Logistics to 3PL providers• Typical Order To Shipment Time – 5 days• Peak Period – Black Friday, Christmas holidays

IT Infrastructure• ERP: SAP• WMS: Leverage 3PL’s application• Shipping Software: Leverage 3PL’s software• EDI support: ASN, PO, Invoice

Lexar Operation Overview

Vendor 1

Vendor 2

Vendor n

Port ofOrigin

Port ofDestination

Warehouse 1

Warehouse 2

Warehouse n

Carrier

Asia USA

Customers

Inside the Warehouse

Orders

Purchases

ProductionProcess

Barcode Support

Planning Manufacturing FulfillmentPurchasing

InspectInspectReceiveReceive

ShipShip PackPack DirectedDirected Pick Pick

Cost

Kitting

WIP

TransferCount

Move

Replen-ish

Label

Putaway

Inbound Distribution Visibility Challenges

Warehouses & Distribution Centers

Inventory Mgmt Challenges

• Inaccurate inventory stock

• Inventory shrinkage• Limited work-in-process

visibility

Order Mgmt Challenges

• Inaccurate order receipts & fulfillment

• Delayed proof of receipts & delivery

• Short-receipts and mis-shipment of merchandise

DC Performance Challenges

• Inefficient utilization of warehouse resources

• Higher labor costs resulting in higher costs of processing an order

• Loss of productivity

• What is my production status?

• What is my order status?

• How much inventory do I have?

• How much do I have to make to fulfill my orders for the day?

• Where are all my assets that need to be serviced?

• Improve shipment accuracy by eliminating count errors,

reduce shrinkage

• Improve order fulfillment by reducing shipment errors,

decrease costs and increase quality

• Improve financial reconciliation by providing accurate, on-

demand shipment and delivery information

Key Business Drivers

Improved visibility, security and quality are key drivers

Lexar’s Business Requirements

• Manage orders in real time

• Optimize 3PL operations for sustained competence

• Strengthen cross-functional collaboration to improve efficiency

• Get visibility into the complete shipment lifecycle at 3PL and at customer’s DC

RFID Implementation Roadmap

2004 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 2009

Phase I:Pilot

Phase II:Beyond

Compliance

Phase III:Operational

Biz Intelligence

-Number of RFID Tags –Per year

WalMart Compliantvisibility in the shipping process(Select SKUs & DCs)

Extended Solution• Visibility into kitting,

packing, staging, shipping and ship confirm processes

Control of the entire shipment lifecycle

• Central monitoring dashboard

• integrating operational data with goods receipt acknowledgements

SmartDC – Distribution Visibility Platform

2M

1M

500k

RFID Infrastructure

RFID LabelPrint Stations

RFID EnabledForklifts

RFID EnabledLines

RFID EnabledDock Door

KeyTone SmartDC

ERP

WMS

Supplier ID 43979Supplier Name J ack & TobbsReport Date

Checked Out Date Container ID1/3/2007 J -90440403 814/5/2007 J -90440413 107/5/2007 J -91034402 18/5/2007 J -09791888 23

13/5/2007 J -90891066 220/6/2007 J -09906597 45

3/7/2007 J -90770555 5610/7/2007 J -77975041 5

23/7/07 J -77953292 715/8/07 J -95584221 9

1/ 6/ 2007 to 31/ 6/ 2007

Days Outstanding

Visibility Dashboards

KPI Reports

Supplier I D 43979Supplier Name J ack & TobbsReport Date

Checked Out Date Container I D1/3/2007 J -90440403 814/5/2007 J -90440413 107/5/2007 J -91034402 18/5/2007 J -09791888 23

13/5/2007 J -90891066 220/6/2007 J -09906597 453/7/2007 J -90770555 56

10/7/2007 J -77975041 523/7/07 J -77953292 715/8/07 J -95584221 9

1/ 6/ 2007 to 31/ 6/ 2007

Days Outstanding

Supplier I D 43979Supplier Name J ack & TobbsReport Date

Checked Out Date Container I D1/3/2007 J -90440403 814/5/2007 J -90440413 107/5/2007 J -91034402 18/5/2007 J -09791888 23

13/5/2007 J -90891066 220/6/2007 J -09906597 453/7/2007 J -90770555 56

10/7/2007 J -77975041 523/7/07 J -77953292 715/8/07 J -95584221 9

1/ 6/ 2007 to 31/ 6/ 2007

Days Outstanding

RFID enabled warehouse

Orders

Purchases

ProductionProcess

InspectInspectReceiveReceive

ShipShip PackPack DirectedDirected Pick Pick

Cost

Kitting

WIP

TransferCount

Move

Replen-ish

Label

Cross DockPutaway

Tags are applied at manufacturing with unique UPC ID for each case

These cases are picked against an order

Cases shipped as-is or in pallet. Shipment label created with unique UPC ID for every shippable container

Contents of each container verified with the customer PO

Forklift operator directed to specific dock door to load when pallet is picked

Benefits from RFID

• Improved inventory accuracy by eliminating count errors

• Improved accuracy in shipments• Improved customer service and satisfaction levels• Reduced overall operating costs• Cost-effective Sarbanes-Oxley compliance• Real-time business information for better decision-

making• Ability to scale up and down to meet seasonal

demands — without requiring additional investment

KeyTone Technologies

Edwin C. WinderExecutive VP

KeyTone Overview

• End-To-End Visibility for Operational Excellence – That’s What We Do !

• Our goal is to simplify RFID adoption and help enterprises improve visibility, efficiency and agility

• 50+ Global 1000 customers• Strong partnerships with leading RFID technology

companies• Provide end-to-end solution by leveraging our software

platforms• SmartDC – Distribution Visibility• SmartWIP – Work-In-Process Tracking • AssetTrace – Asset Lifecycle Management

SmartDC – Distribution Visibility Platform

• Automate Receipt Reconciliation

• Eliminate Material Movement & Put-Away Errors

• Conduct Accurate Cycle Count Faster

• Real time work in process tracking

• Improve line utilization

• Automate order verification

• Eliminate mis-shipments

Solution For Every Supply Chain Challenge

Supplier Warehouse Store

Inventory Mgmt Challenges

• Inaccurate inventory stock

• Inventory shrinkage• Limited work-in-process

visibility

Order Mgmt Challenges

• Inaccurate order receipts & fulfillment

• Delayed proof of receipts & delivery

• Short-receipts and mis-shipment of merchandise

DC Performance Challenges

• Inefficient utilization of warehouse resources

• Higher labor costs resulting in higher costs of processing an order

• Loss of productivity

In-Transit Visibility Solution• Real Time truck & load tracking• Reduce loading & shipment errors

Inventory Mgmt Solution

• Improved inventory accuracy

• Up-to-date inventory location

• Assembly/Kitting WIP accuracy

Order Mgmt Solution• Accurate receipt/shipment

verification with order info• Auto receipt

acknowledgement, ship confirm

• Faster and accurate order fulfillment

DC Performance Solution

• Improved dock-to-stock time

• Improved line utilization• Increased throughout

Approach to Lexar Implementation• Phase I

• Translated Lexar’s vision into measurable objectives• Enabled existing shipping process with RFID• Deployed SmartDC Express – Small footprint solution to get Lexar

compliant with Wal-Mart’s mandate• Leveraged RFID information to deliver custom reports to benchmark the

processes• Phase II

• Enabled tagging at manufacturing to gain increased visibility• Enabled dock doors with RFID to ensure right orders where loaded in the

right truck• Leveraged RFID information to handle customer related receiving exception• Enabled a web based portal to deliver reports on demand

• Phase III• Upgraded SmartDC Express to SmartDC Enterprise to provide the ability to

gain visibility into other distribution processes• Increased “read” opportunities by enabling forklifts with RFID readers and

software for load verification• Developed custom reports for order lifecycle management

Best Practice

• Choose a platform that is flexible

• Choose a solution that adapts to your processes

• Deploy a solution that compliments your existing

enterprise applications (ERP, WMS, MES etc.)

• Solution should be low maintenance

• Ensure that the physics, process and systems work

in concert

• User Experience is key

• Start using RFID information

RFID Enabled Enterprise Ecosystem

Order Management

System (ERP)

Warehouse Management

System (WMS)

Customer Relationship Managemen

t System (CRM)

Manufacturing Execution

System (MES)

Asset Management

System (AMS)

DataWarehouse

Business Intelligence Portal

Enterprise Applications Layer

Customer Analytics

Financial Analytics

Supply Chain Analytics

Merchandise planning & allocation

Forecasting, buying, replenishment

Inventory Management

Warehouse management, logistics & distribution, out-of-

stock, reverse distribution

ManufacturingWork-in-process

inventory, production management, recipe &

tool management

Sales and Marketing

Brand management, promotions,

advertising, signage

FinanceRegulatory

compliance, claims & deduction

management, asset audits, cash flow

management

Business Process Layer

Enterprise Infrastructure Backbone

Messaging Data Transformation

Monitoring & Management Barcode

W.I.PDistribution Visibility Platform

Order management, inventory

management, DC performance management

Work-In-Process Platform

Material tracking, Overall Equipment

Effectiveness, Product Genealogy

Asset Tracking Platform

Asset inventory, discovery and security

Real Time Supply Chain Execution Layer

DC ops

Asset tracking

Operational Intelligence Dashboards

Order Fulfillment Dashboard

Assembly Tracking Dashboard

Inbound Receiving Dashboard

Outbound Shipment Dashboard

Asset Monitoring Dashboard

Asset Violation Dashboard

Asset Check-in/Out Dashboard

W.I.P Dashboard

Equipment Effectiveness Dashboard

Equipment Status Dashboard

Inventory Tracking Dashboard

Operational KPI Reports

Order Management

System (ERP)

Warehouse Management

System (WMS)

Customer Relationship Managemen

t System (CRM)

Manufacturing Execution

System (MES)

Asset Management

System (AMS)

DataWarehouse

Business Intelligence Portal

Enterprise Applications Layer

Customer Analytics

Financial Analytics

Supply Chain Analytics

Merchandise planning & allocation

Forecasting, buying, replenishment

Inventory Management

Warehouse management, logistics & distribution, out-of-

stock, reverse distribution

ManufacturingWork-in-process

inventory, production management, recipe &

tool management

Sales and Marketing

Brand management, promotions,

advertising, signage

FinanceRegulatory

compliance, claims & deduction

management, asset audits, cash flow

management

Business Process Layer

Enterprise Infrastructure Backbone

Messaging Data Transformation

Monitoring & Management Barcode RFID

KeyTone Operational Business Intelligence Applications enables enterprises to improve efficiency, visibility and agility by leveraging RFID business

information for real time decision making

End-To-End Solutions Approach

KeyToneTechnologies

Motorola

StrategicPartnership

RFID Hardware Out-of-Box Solutions

Motorola

Joe WhiteVP of RFID Business Development & Marketing

Motorola RFID At A Glance

High Performance Asset Tags

“Best Performer - Significant Margin”

Visibility Within the 4 Walls

RD5000 Mobile Reader

Dense-Reader Certified

XR Series Fixed Readers

MC9000 Handhelds

No Comparable Reader On The Market

• 20% Market Share*• Established Leadership

• RF, Wireless, Mobility

Broad Product Portfolio

300 Combined RFID-Centric Patents Leader in Deployed RFID

– Deep Vertical & Application Experience

Industry Leader

Wi-NG

Wireless & RF Innovation

* Handheld & Fixed Readers• Source: EMb Market Intelligence, VDC 2007

RFID Trends• Supply Chain Slow to Build Out….

…….But Growing!• Modest Velocity of UHF RFID Adoption with “Inflection

Point” in 2010• Active Pilot Activity with Shift From. . .

Motorola Vision• Bullish on RFID – Too Much Value/Benefit across Too Many, Already-

Entrenched Industries• Increased Mobility with New Form Factors for Application• Increased Manageability with Enterprise Offering• Comprehensive/Integrated Wireless Solution Offering

Mandated “open loop” applications (multiple trading partner eco-systems) to. . .

…“closed loop”,ROI-driven Applications

Ret

ail

Man

uf.

Tran

sp.

& L

ogis

tics

Ener

gyU

tiliti

es

Focus: Small Number of Target Markets with Clear ROI

Product Traceability

Item Level Visibility

Supply Chain Management

Asset Management

• FOCUS: Retail item level, Aviation• BUILD: Horizontal applications - Asset Tracking / Supply Chain Management• INNOVATE: Food Chain, Cold Chain

RFID Deployment Lessons Learned• Current deployment practice focused on choke points (E.g. dock doors)

• Products transition choke points rapidly• Limited read opportunities with stationary readers - reduced read accuracy

• Visibility beyond choke points• It’s in the warehouse – But Where?

• ROI per choke point• Dependent on the product traffic through that point• E.g. DCs typically have only 20-30 % of their dock doors active at any one

time

RFID & Mobility - Enhancing visibility and ROI

• Material Handling Equipment - MHE has the most interaction with assets

– Thus, most read opportunities

• Fixed readers not designed for vehicle mounting

– Obtrusive cabling/antennas

• Increased, granular product visibility

• Increased utilization per reader– Investment protection

• Increased automation– Real-Time Inventory Cycle Counts– Vehicle Drivers not manually recording

Application Spectrum

Fixed Readers Mobile ReadersMobile Readers

RFID On MHE Increased Efficiency

• Handheld readers for Exception Processing

– For mobile, operator interaction tasks

Mobile Product Set

Pallet Jacks Skate Wheel Conveyors Forklifts

Mobile CartsPallet JacksShrink Wrappers

Clamp TrucksPortals

RD5000 with Interactive Sensing Technologies

• Rugged small form-factor with Integrated antenna• 802.11 a/b/g, Bluetooth • Battery-power*

• Cutting edge technologies to optimize and automate RFID operations

• Proximity sensor• Ultrasonic sensor to detect proximity to pallets,

cartons, etc.• Indicates distance to obstructions in the 3-7 foot range

• Acceleration sensor• Can detect acceleration (between -2 and +2 g’s) along

all 3 axes• Uses include detecting vehicle and fork motion to

trigger decision points

ProximitySensor

Motorola & RFIDExperience

• Long history in RFID: since 2001• ISO 2000certified/ mature operations• Global industry experience

Innovation• Over 75 years of technology innovation• Broad RF leadership • Over 300 RFID Patents

Products• Most complete suite of RFID products in the industry• Wireless, Mobile, Scanning & RFID• RFID Performance Leader

Lexar RFID Case Study

Thank You!

For More Information

– www.motorola.com/rfid

– rfidinfo@motorola.com

– Ph: 732 233 3883

– www.keytonetech.com

– sales@keytonetech.com

– Ph: 888 816 0727 x100