Walmart & Rfid

3rd December 2005
@Copyrights Reserved 2005 - RFID Team : INFS 640
Wal*Mart Case Study: RFID & Supply Chain Management

TEAM MEMBERS Angrish, Sangita Chivukula, Venkata S. DeWitt, Brendon Patel, Raxesh Shamsi, Shazeb Yellapragada, Ramachandra
3rd December 2005 @Copyrights Reserved 2005 - RFID Team : INFS 640
Agenda
Introduction to RFID Introduction to Supply Chain Management (SCM) Introduction to Wal*Mart and its Business Processes RFID in Wal*Mart Current RFID Usage Limitations and Challenges of RFID Future of RFID
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Introduction
What is RFID ? Why RFID over Bar-Code ? RFID Working and Infrastructure
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What is RFID?
Electronic tagging technology that allows an object, place, or person to be automatically identified at a distance without a direct line-ofsight, using an electromagnetic challenge/response exchange.
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RFID

40 years old technology Why being Used NOW?

right time to use the technology Benefits OUTWEIGH the Deployment Costs
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Why RFID over Barcode ?

Ability to read without line-of-sight Serialized numbering scheme enables more powerful

Understanding Diagnosing Controlling of Supply Chain
Serial numbers provides individual entity tracking and much more detailed behavior of SCM than UPC or EAN used in Bar codes No duplicate reading of the same tag a possibility in Bar codes More powerful sensor-network and monitoring-system than bar-code systems.
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RFID Components
RFID
Reader Antenna
TAG Silicon Chip
Substrate
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Working of RFID
Reader generate signals that are dual purpose: provide power for a tag, and create an interrogation signal. Tag captures the energy from Reader and executes commands sent by the Reader Tag sends back a signal containing a unique digital ID (96-bit serial number) that can be looked up in a database available to the reader to determine its identity, perhaps expressed as a name, manufacturer, SKU (stock keeping unit) number, and cost. Tags are generally passive because they require no batteries or maintenance.
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RFID Infrastructure
Existing software systems UNABLE to handle serial numbers
Solution RFID Middleware
RFID Middleware : Layer between RFID readers and the application software
Consists of :
1. 2.
Lower level device and data management Higher Interpretation level

Context generation and Interpretation
Device Management Data Management
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RFID Infrastructure (contd.)
Lower level devices such as motion sensors, programmable logic arrays and human interfaces fetch data and provides to Data management layer Data management layer provides some functionality of filtering data due to intermittent appearances and disappearances After the data management layer yields data, the Interpretation layer extracts inference from such data and forwards it to the applications that deploy RFID
3rd December 2005
Up Next
Introduction to Supply Chain Management
Supply Chain Management

1.
2.
Coordination of a network of facilities and distribution options Includes procurement, processing and distribution
Planning Sourcing Making Delivering Returning
Five core processes

1.
2.
3. 4. 5.
Integration of these processes to maximize benefits

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Introduction to Supply Chain Management (contd.)
Three levels of supply chain management

1.
2. 3.
Strategic linked to corporate strategy Tactical Operational involve day to day activities
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Introduction to Supply Chain Management (contd.) Overall Goal

1. Optimize
supply chains 2. Provide more accurate and time sensitive information 3. Maximize sales and profits
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Introduction to Supply Chain Management (contd.)
RFID and Supply Chain

1.
2. 3.
Provide real time information Better readings of customers and markets Ability to provide right products at the right times
Deloitte & Touch benchmark initiative

1.
2.
Only 7% of companies managing supply chain effectively These 7% are 73% more profitable than other companies
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Up Next
Wal-Mart Introduction and Business Processes
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Operations
Wal Mart Stores

1. 2. 3. 4.
Largest segment accounting to about 67.3% of 2005 fiscal sales Super centers Discount stores Neighborhood Markets
SAMs Club
1.
Consists of membership warehouse clubs accounting to 13% of 2005 fiscal sales
Wal-Mart International
1.
Accounted to 19.7% of 2005 sales

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Business Model of Wal*Mart
Market Strategy of Wal*Mart

1.
2.
Everyday Low prices (EDLP) Employs both Clicks & Bricks and Bricks & Mortar strategy
Organizational Development
1. 2.
Specialty Division Retail Division
Competitive Advantage
1.
Price match guarantee
Market opportunity
1. 2.
B2B Single firm network B2C E-Tailer Business Model

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Supply Chain Management at Wal*Mart

Procurement and Distribution Logistics Management Inventory Management
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Procurement and Distribution

Procurement
Procurement involves getting goods from different manufacturers Involves reducing the purchasing costs as far as possible Goods procured directly from the manufacturers, bypassing all intermediaries
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Procurement and Distribution

Distribution
Distribution centre is divided in different groups depending on the quantity of goods received Goods to be used internally in US arrive in pallets & imported goods arrive in re-usable boxes. Employees have access to the inventory levels of all the products Employee makes two scans1. For identifying the pallet 2. For identifying the location from where the stock had to be picked up Bar codes & RFID used to label different products, shelves & bins The hand held computers guide employee to the location of the specific product. The quantity of the product required from the center is entered in the hand held computer, which updates the information on the main central server. computers enable packaging department to get accurate information such as storage, packaging & shipping,

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Saves time in unnecessary paperwork. Enables supervisors to monitor their employees closely
Logistics Management
Involves managing transportation & delivery of products More than 7000 company owned trucks services Distribution centers This enables shipping of goods from distribution centers to the stores within 2 days and replenish the store shelves twice a week Private Fleet Driver handbook tracking drivers activities Cross Docking from Manufacturer to Customer Cross Docking enabled demand chain Demand chain - Customers pull the products instead of retailers having to push them
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Inventory Management

Wal*Mart set up its own satellite system in 1983 Reducing unproductive inventory as far as possible Use of Bar-code & RFID technologies for easy packing and counting of the inventories, efficient picking and receiving & proper inventory control of the products Massively Parallel Processor - enables easy tracking movement of goods & stock levels across all distribution centers and stores Use of Magic Wand to keep track of inventory in stores Use of sophisticated algorithm and technology infrastructure to forecast the quantities of each item to be delivered, based on inventories in the store and customer needs Centralized inventory database
3rd December 2005
Up Next
RFID in Wal*Mart
Initiated the plan to implement RFID in its supply chain in June 2003 Subsequently, reinforced the RFID standards and specifications in November 2003
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RFID in Wal*Mart
Specification of RFID Components TAGS EPC Why RFID? EFFICIENCY WAL*MART SUPPLIERS
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Specification of RFID Components

EPC Type of Chip TAG Distribution Centers to accept RFID tagged products
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EPC
96 bit unique number to identify an item in the supply chain. Global Trade Identification Number.
EPC data format on the chip is Class 1 Version 2 communication protocol.

Class 0: Factory programmable protocol Class1: Provides the capability to write serial numbers on the chip
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TAGS
Operates in the UHF spectrum
868 MHz to 956 MHz
Carries the 96-bit serial number Is field programmable

Allows
suppliers to write serial numbers to the tags while being applied to the products
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WHY RFID?

OBJECTIVE: To increase the efficiency of its supply chain. It will

1. 2. 3.
Enhance Transparency of supply chain Help in minimizing cost and labor Strengthen inventory control
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Efficiency

Wal*Mart aims to reduce the practice of manually placing the order Has achieved 10% reduction in the case Implementation of RFID tags in Wal*Marts inventory has helped boost sales by keeping shelves better stocked Usage of RFID has reduced out-of-stock merchandise by 16% at the stores that have implemented RFID tags for more than a year.
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RFID COST
Cost Benefit Analysis
Initial Research indicated cost of RFID tag was above $1. At present, TAG costs about 30 cents Cost will drop to less than 5 cents, if deployed on a large scale Analysts suggest that the tag should be approx. 1 cent for small ticket items
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Wal*Mart Suppliers
130 major suppliers ship merchandise to Wal*Mart distribution centers with about 5.4 million tags By 2006, Wal*Mart aims to mandate RFID implementation for all its suppliers
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Wal*Mart Suppliers
Major
Suppliers:
Gillette Hewlett-Packard Johnson & Johnson Kimberly Clark Kraft Foods Nestle Proctor and Gamble
Wal*Mart Suppliers
Kimberly-Clark

Manufacturer of paper goods products

Eg:
Kleenex, Huggies
Tagged Scott paper Towels shipment with RFID tags First supplier to use RFID April 2004
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Up Next
Successful Implementation of RFID
Harvard Research suggests a seven step model for successful implementation of RFID.
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Seven Step Model

1.
2.
3. 4. 5. 6. 7.
Understand our visibility requirements Query other end users about recommendations for trials Move into the action phase in a real-world setting in a pilot/trial mode Evaluate technical performance Consider the economic benefits Understand the impact Decide whether or not to move forward with a larger scale implementation
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Major Companies implementing RFID technology
Volkswagen Gillette Tesco supermarket tries out smart tagging Sun Microsystems sets up RFID test centre in Scotland I.B.M. Expands Efforts to Promote Radio Tags to Track Goods Texas Instruments
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Up Next
Limitations of RFID
Why the implementation of a 40 year old technology is taking so long?

As pointed out earlier, benefits are gradually outweighing the deployment costs Limitations and challenges: Barriers to Quick Deployment
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Limitations and Challenges of RFID (contd.)

1.
Global standards
Variety of RFID standards and technologies
2.
Technology problems
Read-range distances not sufficient to allow for consumer surveillance Defective and poorly performing RFID tags Damaged RFID tags Lack of development of right information management tools Tags, Tag Readers, Databases
3.
Data management
4.
Cost
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Limitations and Challenges of RFID (contd.)

5.
Industry Standards
Privacy advocates are insisting the companies to state their intended use of the technology due to lack of industry standards
6.
Privacy and civil liberties

RFID tags can be embedded into/onto objects and documents without the knowledge of the individual
7. 8.
Complex programming Potential job losses
3rd December 2005
RFID Practices that Should be Prohibited Merchants must not force their customers into accepting RFID tags in the products they buy. RFID must not be used to track individuals absent informed and written consent of the data subject directly or indirectly.
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Up Next
Future of RFID
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Future of RFID
For Retailers ??

The technology will bring a revolution. It will be widely used in retail and consumer goods, automotive, healthcare, military, postal department and other scientific uses.
If the consumers think the technology is too complex, confusing or threat to their privacy
For Customers??
Will the technology survive?

3rd December 2005
Key Factors for RFID

Setting up more standards in the industry Bringing down the cost of RFID Level of understanding and experience
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Demonstration Of Wal*Mart SCM

Wal*Mart Store
Manufacturer Wal*mart Warehouse
3rd December 2005
Movie Time
http://www.future-store.org/servlet/PB/- s/1rop28q1ikm3s91d05t0h15w06yt14q0kbq/menu/1004023_l2/index.html
3rd December 2005
THANK YOU
Questions & Suggestions?
3rd December 2005

Walmart & Rfid

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3rd December 2005

@Copyrights Reserved 2005 - RFID Team : INFS 640

Wal*Mart Case Study: RFID & Supply Chain Management

3rd December 2005

3rd December 2005

@Copyrights Reserved 2005 - RFID Team : INFS 640

3rd December 2005

@Copyrights Reserved 2005 - RFID Team : INFS 640

40 years old technology Why being Used NOW?

3rd December 2005

@Copyrights Reserved 2005 - RFID Team : INFS 640

Why RFID over Barcode ?

Understanding Diagnosing Controlling of Supply Chain

3rd December 2005

@Copyrights Reserved 2005 - RFID Team : INFS 640

TAG Silicon Chip

3rd December 2005

@Copyrights Reserved 2005 - RFID Team : INFS 640

3rd December 2005

@Copyrights Reserved 2005 - RFID Team : INFS 640

Existing software systems UNABLE to handle serial numbers

Solution RFID Middleware

Lower level device and data management Higher Interpretation level

3rd December 2005

@Copyrights Reserved 2005 - RFID Team : INFS 640

RFID Infrastructure (contd.)

3rd December 2005

Introduction to Supply Chain Management

Supply Chain Management

Five core processes

Integration of these processes to maximize benefits

3rd December 2005

Introduction to Supply Chain Management (contd.)

Three levels of supply chain management

3rd December 2005

@Copyrights Reserved 2005 - RFID Team : INFS 640

Introduction to Supply Chain Management (contd.) Overall Goal

3rd December 2005

@Copyrights Reserved 2005 - RFID Team : INFS 640

Introduction to Supply Chain Management (contd.)

RFID and Supply Chain

Deloitte & Touch benchmark initiative

3rd December 2005

Wal-Mart Introduction and Business Processes

3rd December 2005

@Copyrights Reserved 2005 - RFID Team : INFS 640

Wal Mart Stores

Consists of membership warehouse clubs accounting to 13% of 2005 fiscal sales

Accounted to 19.7% of 2005 sales

3rd December 2005

Business Model of Wal*Mart

Market Strategy of Wal*Mart

Specialty Division Retail Division

Price match guarantee

B2B Single firm network B2C E-Tailer Business Model

3rd December 2005

Supply Chain Management at Wal*Mart

3rd December 2005

@Copyrights Reserved 2005 - RFID Team : INFS 640

Procurement and Distribution

3rd December 2005

@Copyrights Reserved 2005 - RFID Team : INFS 640

Procurement and Distribution