Wal-Mart Case Study – RFID and Supply Chain Management


By Group 2

Group Members: Angrish, Sangita Chivu ula, Ven ata S. DeWitt, Brendon Patel, Raxesh Shamsi, Shazeb Yellapragada, Ramachandra

Date: November 30, 2005


needed to  eep trac  of men and material sent across different countries and had to maintain hundreds of warehouses across the world. Expands Efforts to Promote Radio Tags to Trac  Goods Texas Instruments 17 EPC global Networ  18 LIMITATIONS AND CHALLENGES OF RFID 18 FUTURE OF RFID 20 FUTURE APPLICATIONS 20 REFERENCES: 22 Introduction 17 Technology is inevitable in every sphere of life today. RFID is low cost Radio Frequency Identifi cation system which requires minimum human intervention to carry out tas s rangi ng from billing to materials trac ing and supply chain management.RFID INFRASTRUCTURE 5 INTRODUCTION TO SUPPLY CHAIN MANAGEMENT 7 WAL-MART INTRODUCTION AND ITS BUSINESS PROCESSES 9 OPERATIONS 9 BUSINESS MODEL 10 Mar et Strategy of Wal-Mart 10 Organizational Development 10 Competitive Advantage 11 Mar et Opportunity 11 SUPPLY CHAIN MANAGEMENT AT WAL-MART 11 Procurement and Distribution 11 Logistics Management 12 Inventory Management 12 RFID IN WAL-MART 13 EFFICIENCY IN SUPPLY CHAIN WITH RFID 14 WAL-MART SUPPLIERS 15 Kimberly-Clar  15 Kraft Foods 15 Gillette 15 CURRENT USAGE OF RFID 16 RFID IN MILITARY 16 SUCCESSFUL RFID IMPLEMENTATION IN DIFFERENT INDUSTRIES 17 Vol swagen 17 Supermar et tries out smart tagging 17 Sun Microsystems sets up RFID test centre in Scotland 17 I. technology has been upgraded in billing systems and for storage p urposes. we ca n understand how diversified Wal-Mart is and the volume of cargo it needs to han dle for each of its business’s. Traditionally. It is a small wireless device which can store good amount of data and can virtually be tagged to anything.M. Powerful computers networ ed with high performance clusters maintain and store this data. The technology has grown by leaps and bounds and h as become increasingly challenging to maintain large databases of information an d maintain records. Wal-Mart being so huge. A new area where technology could be applied to. But due to the limitations of barcodes. Bar-codes have been initia lly identified as a suitable technology to meet the purpose. This gives a picture as to how technology plays a vital role in today’s’ businesses. from the above description. it had started with computerization of individual stores with small billing machines and had then led to centralize d billing for record  eeping. . Traditionally. Wal-Mart wor s on the same strategy. it has always made thing s easier. a new emerging technology called RFID ha s been identified to meet the demands.B. where many expenses co uld be saved was in inventory management and logistics.

Data management layer provides some functionality of filtering of data due to in termittent appearances and disappearances. transient effects etc. For example you could tell the software to record tags as missing only after they have not been seen for a certain number of seconds. place. It has two levels of functionality: a lower level device and data managemen t and a higher level interpretation level. there is a complication o f different bandwidth standards around the world. This mechanism would reduce false reads. Security intrusion is also an issue in R FID deployment because RFID readers operate automatically unli e bar code scanne .RFID is an electronic tagging technology as shown in figure 1 that allows an obj ect. RFID readers operate in ISM (Industrial. Hence items can be re ached the right place at the right time.56 megahertz. Fig 1: RFID Devices [Source: The Magic of RFID. Thi s is important because if the reader cannot read certain tags due to interferenc e of certain objects. If the hi-fi amplifier is not synchronized to spea er there will be distortion in sound signal. RFID Infrastructure Many software systems used in enterprise systems today are not designed to handl e serial numbers as required by the RFID systems. Li e wise there will be mis match in capabilities and requirements if RFID system is not synchronized with e nterprise software properly. Each tag has a unique serial number. RFID uses a serialized numbering scheme such as EPC (Electronic Product Code).45 megahertz. Roy Want. Missed reads are an unfort unate reality with RFID systems. RFID systems have stronger sensor networ ing system or monito ring system than bar code systems. For example if number of items reached at the retailer’s outlet is le ss than that was departed from supplier’s location. In all these ways. For example. The challenging part of im plementing RFID is that tagged items should not be missed by the reader due to i nterference. RF ID readers interact with other devices such as motion sensors. Furthermore RFID implementation monitor s theft too. or person to be automatically identi¬fied at a distance without a dire ct line-of-sight. This can tell how for how long an item has been in the supply chain whe re as such information is not captured in bar code system. A solution to this problem is to introduce a layer between RFID readers and the application software commonly  nown as RFID middlew are. The problem in synchronizing R FID systems to software system can be best described as the problem in synchroni zing a spea er to a hi-fi amplifier. it can be easily trac ed for. Device management is one of the most challenging part of RFID implementation. Octobe r 2004 ] Why RFID over Bar-Code? The ability to read without line-of-sight is the best advantage of RFID over bar -code systems. This can be achieved by setting some time threshold levels. Serial numb er information is extremely powerful in understanding and controlling the supply chain and provides much more detailed behavior of the supply chain than can non -serialized bar codes such as UPC (Universal Product Codes) and EAN (European Ar ticle Numbering). programmable logi c arrays and human interfaces. Japan has very di fferent bandwidth standard than U. 915 megahertz and 2. Serial numbers have many advantages such as food freshness/exp iration. This enables automation. INTEL RESEARCH. multipath fading.A. using an electromagnetic challenge/response exchange. RFID readers can sense items even when the tagged items are hidde n behind other tagged items. Beca use implementing RFID is an extensive ubiquitous tas .S. the software should not conclude that the tagged item is b eing sold or stolen. Scientif ic and medical) bands at 13.

Tags can be associated with each other when they are assembled. and returning. ACM August 2005] SCM exists in both service and manufacturing environments. sourcing. They also built a prototype of the ONS. distrib . delivering. EPCglobal operates ONS. The EPCg lobal system includes a number of standards for communicating with readers. These include planning. SCM is used as a means to integrate planning. For example if a ta gged pallet carrying tagged items out of the door should not be confused with th e one that just passes by the door and does not go outside it. Fig 3: Architecture with Independent EPC Visibility Layer [Source: Integrating R FID. October 2004] The EPC visibility layer  eeps trac  of RFID data in many level of detail. Fig 4: Typical supply chain showing interrelations between all involved parties. ma ing. [Source: Auto-ID: Managing Anything. manufacturing. The Auto-ID center has d eveloped a software called savant which serves as the edge and the enterprise so ftware. for middleware of the edge. retailers. The enterprise system can  eep a true and multi resolution record of all EPC data permitting different applica tions to access EPC data at the appropriate resolution. S CM is seen as involving five core processes. This emerge nce of EPCglobal system has changed the way supply chain is operated today. purchasing. Anytime in the Supply Chain. October 2004] After the data management layer yields data. This high level o f reasoning involves a lot of inferences and associations. Fig 2: Two Levels of Functionality [Source: Integrating RFID. This also wor s in reverse with the customer at the head of the pro cess when returning a product. the data interpretation layer must extract inference from such data and forward it to the applications that deploy RFID. Introduction to Supply Chain Management Supply chain management (SCM) is the coordination of a networ  of facilities and distribution options that performs procurement of materials. A typical supply cha in consists of many interactions between suppliers. The a rchitecture for such a system can be shown as in figure 2. and for the edge and enterprise EPC systems. This inference mechanism is a very sophisticated tas . with the ultimate goal of providing either a service or a product to customers. Bos e and Pal. Sanjay Sarma. processing the mat erials into finished products. Oatsystems and MIT. Anywhere.rs which are operated by humans. Sanjay Sarma. distributors. Integrating RFID into the enterprise is one tas  but extracting value for the en terprise at the systemic level is another challenging tas  which requires lot of control and effort. EPCgloba l also sell EPC codes to users who want to place EPC tags on their products.The enterprise EPC sys tems can then be a single source of all EPC data. and distribution of the products to customers. manufacturers. Oats ystems and MIT. EPC global run a number of hardware and software modules of the EPC system.

The include decisions on location. These two built a software system that hoo  . inventory. ma ximizing sales and profits Wal-Mart has been leading the charge with RFID technology. Four major decisions are considered. If the above decisions are made with careful and strategic thought as well as with concern for integration. transport. Fig 5: Three Levels of SCM [Source: Auto-ID: Managing Anything. where these products (which locations) will be ma nufactured is very important to SCM. SCM is a way of integrating these varying functi ons so that they wor  together to maximize the benefits for all involved. Operational decisions are more short term and lo o  at day to day activities. Managing these inventories efficiently will be of benefit to th e corporation. Tactical SCM involves a shorter planning cycle. and transportation. RFID will help retailers pr ovide the right products at the right places at the right times. ACM August 2005] Strategic SCM deals with future planning than in loo ing at mar et evaluation. Air trans portation is costly. Decisions on what products to be produced have to be made wi sely and strategically. inventory planning. Each wor s toward goals specific to their own organization that accomplish narrow objectives. Ultimately. Opera tional SCM involves the majority of the operations. new products. and operational. RFID technology will provide real-t ime information that will allow manufacturers to get better readings of customer s and mar ets thus further improving supply chains. c apacity issues. The overall goal of SCM is to optimize supply chains in an attempt to provide mo re accurate and time sensitive information that can be used to improve process t imes and cut costs. Anywhere. Transportation decisions include cost versus benefit. Anytim e in the Supply Chain. and technology changes. production. The newest opportunity for improvement is the introduction of radio frequency identification (RFID) tags. It is more concerned demand pla nning. Other modes of transportation may b e cheaper. and supply planning. They follow the abo ve categories. but the sacrifice is having to hold inventories due to delays that ma y occur. Supply chains have been around for decades and a constantly being improved. This is determined at a less se nior level than Strategic SCM. tactical. Having the largest r etailer adopt and begin to use RFID technology has given strong bac ing to the t echnology and will only further and quic en the expansion of RFID. It includes demand fulfillm ent. A geographica lly strategic placement of the production facilities is  ey to creating a succes sful supply chain. Bose and Pal. scheduling. This planning is addressi ng issues that may be factors several years out. Inventory decisions and management is crit ical. but this com es with a cost. There are many decisions that are made when loo ing at SCM. and monitoring. They have be gun requiring all their major suppliers to implement RFID technology on all prod ucts supplied to Wal-Mart. One example of what Wal-Mart has done with SCM and its suppliers is that of its relationship with Proctor & Gamble. but fast and reliable. Also. production. There are three levels of SCM: strategic. Some inventories are necessary to hedge against uncertainty. This is accomplished at the ex ecutive management level. Strategic decisions are made over longer periods of time and lin  ed to a corporation’s strategy. the supply chain should be efficient and s uccessful. Operational SCM is current planning activities measured in at most wee s. and mar eting organizations that normally do not wor  together to achieve a common goal.ution.

Affordable price range coupled with aggressive onlin e and mar et strategy has lead to wide acceptance for Wal-Mart in towns and citi es ali e. This includes the fo llowing sections: • Super-centers. Wal-Mart Introduction and its Business Processes Wal-Mart is one of the largest Fortune 500 companies. For the fiscal year ending January 31. which is spread across the globe.000 square feet in size.000 square feet in size and off er a wide variety of products and a limited stoc  of food products. which average approximately 187.000 square feet in size and offer a wide variety of products and a full-line supermar et. SAM’S CLUB segment consists of membership warehouse clubs in the United States whi ch accounted for approximately 13. it has everything a h omema er can ever thin  of.7% of 2005 fiscal sales. Discount Stores and SAM’S CLUBs. 2005. and • Neighborhood Mar ets. Sou th Korea. This concept is a hug e step in ma ing SCM as efficient as it can be. Here. which accounted for approximatel y 67. Canada. This system would then monitor supply levels and when products run low. which average approximately 100. it leads th e fortune 500 companies li e GE and Microsoft. Puerto Rico and the United Kingdom. Operations Wal Mart operations are comprised of three business segments: Wal-Mart Stores SAM’S CLUB Wal-Mart International. This segment consists of three different ret ail formats. Wal-mart has always been innovating and improving its business model to suite . Wal-Mart Stores segment is the largest segment. Wal-Mart International operations are located in Argentina. Simply put. the operations of joint ventures i n China and operations of majority-owned subsidiaries in Brazil and Mexico. which directly services the common man. Wal-Mart topped $10 billion in net income for the first time in their history and added almost $29 billion in sales . which average approximately 43. Germany.0% of 2005 fiscal sales. This allows Proctor & Gamble to be fully aware of up to the minute product inventories at the actual s tore locations and ship additional products as necessary. it operates s everal different formats of retail stores and restaurants. all of which are located in the United States.3% of their 2005 fiscal sales. automatic alerts are sent out to require the shipment of more products to that distribution center.000 square feet in size and offer a full-line supermar et and a limited variety of general merchandise. • Discount Stores. It is an arguably the largest retail chain which deals with everything f rom food to consumer electronics. This segment generated approximately 19. Wal-Mart is probably the only largest fortune 500 corporations in the world. SAM’S CLUBs in the Unit ed States average approximately 128. In terms of the revenue generated. The shelves a re monitored in real time via satellite lin s that send inventory messages whene ver Proctor & Gamble products are scanned at a register.ed Proctor & Gamble up to Wal-Mart’s distribution centers. Wal-Mart has ta en this as far as going to the individual store locations. including Super-cente rs. Business Model A Business model is central to any successful business. Wal-mart is no exception .

first it is important to  no w the factors. Its main focus in this segment is to create its own networ  of tr usted partners to coordinate supply chains and provide exceptional value on bran d-name merchandise at “Members Only” prices.Wal-Mart¡s Used Fixture Auctions . and so has managed to stay on top year after year. and has challenged other s tores to offer lesser prices and has agrees to reimburse the difference. Specialty Division . as many of its competitors do.Tire & Lube Express . Wal-Mart employs Sales revenue model as it is mainly involved in sale of goods a nd services. Though Wal-Mart has not advertised in Advertising. and how does it relate to WalMart specifically. . To understand the Business models used by Wal-Mart. where customers c an shop at any hour of the day or night without leaving their home or office.Wal-Mart Optical .its organizational goals and also meet customer requirements. No other store could meet this and Wal-Mart has been le ading the pac  for years. Mar et Opportunity Wal-Mart employs a combination of two Business Models viz. Since they employ both the “clic s and bric s” and “bric s and mortar” methods to mar et their products. which go in defining those models.Wal-Mart Alas a Bush Shopper Retail Division Wal-Mart Stores Super centers SAM¡S CLUBS Neighborhood Mar et International walmart. the dif ference of price if any. Wal-mart has employed a mixed-business model fo r its business for the same. It has always given a “price match guarantee”. consumers get to choose their produ cts either the traditional way or online anytime of the day. B2C E-Tailer Business Model – Wal-Mart uses “clic s and bric s” methodology to provide millions of its customers online version of its retail store. the trust people have built on the Wal-Mart brand has ta en them far from their competitors.com Competitive Advantage Wal-Mart has been an undisputed leader in offering the mar ets lowest prices to consumers. B2B Single firm networ  Business Model – SAM’S CLUB segment of Wal-Mart supports sma ll businesses. i n which they price items at a low price every day that builds & maintains custom ers trust in their pricing. Mar et Strategy of Wal-Mart Wal-Mart stresses mainly on their Everyday Low prices (“EDLP”) pricing philosophy. Organizational Development Wal-Mart has restructured its business into two parts to handle specific organiz ational needs.Wal-Mart Vacations .Wal-Mart Pharmacy .

thus saving time in unnecessary paperwor . sorted out and directly supplied to the customers. which updates the information on the main central server. shelves & bins in th e center. This allows the drivers to be aware of the terms & conditions for safe exchang e of Wal-Mart property. This enables Wal-Mart to satisfy customer needs quic ly & improve level of effic iency of distribution center management operations. virtually eliminating role of distribut ion centers & stores. Wal-Mart has distribution centers in different geographical places in US. pac aging & shipping. and other to identify the location from where the stoc  had to be pic ed up. This system reduc es handling & storage of finished goods. T he computers also enabled the pac aging department to get accurate information s uch as storage. hand held computer systems (Magic Wand) and now. For more efficiency. RFID. Bar codes & RFID are used to label different products. Wal-Ma rt’s own warehouses supplies about 80% of the inventory. The quantity of the product required from the center is entered in the hand held computer. The inventory turnover rate is very high. They ma e 2 scans. the customers could ‘pull’ the products. It also enables supervisors to monitor their employees closely in order to guid e them & give directions.These two models help Wal-Mart in achieving its business perspectives related to its firms organizational needs and the second helps in its interaction with the customer and manages goods and services offered by Wal-Mart to the end users. Inventory Management Considering the rapid expansion of Wal-Mart stores. Each distribution centre is divided in different groups depending on the quantity of goods received. The distribution centers ensured steady flow & consistent flow of products. it was essential to have a v . The drivers hired are all very experien ced & their activities are trac ed regularly through “Private Fleet Driver handboo  ”. along with the general code of conduct. Because of “cross-doc ing” the system shifted from “supply chain” to “demand chain” which meant. The hand held computers guide employee to the location of the specific product. More than 7000 company ow ned truc s services the distribution centers. The company procures goods directly from the manufacturers. The goods to be used internally in US arrive in pallets & imported goods arri ve in re-usable boxes. In this system. when & where they required. finished goods are directly pic ed up from the manufacturing site o f supplier. instead of retailers ‘pushing’ the products into the syst em. about once every wee  for most of the item s.one for identifying the pallet. Procurement and Distribution Wal-Mart’s process of procurement involves reducing its purchasing costs as far as possible so that it can offer best price to its customers. Supply Chain Management at Wal-Mart Supply chain management at Wal-Mart can be described in 3 sections. Wal-Mart uses a logistics technique called “Cross Doc ing”. Logistics Management This involves fast & responsive transportation system. Mana ging the center is economical with the large-scale use of sophisticated technolo gy such as Bar code. Eve ry employee has access to the required information regarding the inventory level s of all the products in the center. These dedicated truc  fleets enabl es shipping of goods from distribution centers to the stores within 2 days and r eplenish the store shelves twice a wee . bypassing all intermediaries.

Wal-Mart is planning to enhance mobility to its existing RFID tag r eaders by implementing RFID-enabled for lift. Wal-Mart set up its own satellite commu nication system in 1983. By ma ing use of Bar-coding & RFID tec hnologies. Employees use “Magic Wand”. In addition. it has an extensive contingency plan in place as well. When the goods are unloaded at the store. a globally accepted protocol that incorporates both specification of Class0 and Class1. A Centralized inventory database allows the personnel at the store t o find out the level of inventories and location of each product at a given time . It also shows the location of the product li e distribution center or transit on the truc . deliveries and bac up merchandise in stoc  at the distribution centers. largest & the most sophistic ated computer system in private sector. to  eep trac  of the inventory in stores. different processes li e efficient pic ing. Wal-Mart owns the “Massively Parallel Processor (MPP)”. The specification of the following RFID components was laid out in November 2003 . receiving & proper invent ory control of the products along with easy pac ing and counting of the inventor ies was ensured. while reducing overall inventory. Subsequently Wal-Mart reinforced its plans and actively asserted on defining the RFID standards it will be implementing. Wal-Mart specified the RFID requirements to its suppli ers that they should comply with: EPC: 96-bit with a Global Trade Identification number TAGS: Should operate in UHF spectrum (868 MHz to 956 MHz) The TAG will carry the 96-bit serial number and will be field-programmable. which enables it to easily trac  movemen t of goods & stoc  levels across all distribution centers and stores. The order management and stor e replenishment of goods is entirely executed with the help of computers through Point of Sale (POS) system. RFID in Wal-Mart Wal-Mart had initiated its plan to employ RFID technology in its supply chain in June 2003. that will allow the suppliers to write serial numbers to the tags while being applie d to the products. This allowed the management to monitor each and every a ctivity going on in a particular store at any point of the day and analyze the c ourse of action ta en depending on how the things went. For emerge ncy bac up. EPC (Electronic Product Code) specification Type of Chip that would be installed The Distribution centers that will accept RFID tagged products After the defining phase. Wal-Mart ma es full use of its IT infrast ructure to ma e more inventories available in case of items that customers wante d most. which is lin ed to in-store terminals through a Radio fr equency networ . EPC –compliant tags in UHF band consists of two main parts: EPC data format on the chip Class0 or Class1 communication protocol Class0 is a factory programmable tag Class1 provides the capability to the end users to write serial number on it Wal-Mart planned to implement Class1 Version2. For this.ery good communication system. by allowing the stores to manage their own stoc s. based on inventories in the store. These readers will have the capabi . thereby reducing pac  sizes across many categories and timely price mar downs. Wal-Mart ensures that unproductive inventory is as less as possible. the inventory system is immediately updated. Wal-Mart also ma es use of sophisticated algorithm to forecast the quantities of each item to be delivered.

lot number. where it states that implementation of RFID tags in Wal-Mart’s inventory has h elped boost sales by  eeping shelves better stoc ed. According to Venture Development Corporation. "It¡s li e  nowing there are 1. The CIO at Wal-Mart stated that. Wal-Mart is at a nascent state of implementing RFID. it believes in “no-compromise” on implementing an innovative IT inf rastructure and strong communication system as they are they the important lin s in the chain for a smooth functioning of the complete system. Wal-Mart is wor ing o n the data collected by RFID to analyze the consumer behavior. “With Wal-Mart selling over $245 billion worth of goods in fiscal year 2003. which would help the users to be better informed about the supply-chain data. Usage of RFID has reduced o ut-of-stoc  merchandise by 16% at the stores that have implemented RFID tags for more than a year. The recent studies show that 130 major suppliers ship merchandise to Wal-Mart di stribution centers with about 5.4 million tags. Efficiency in Supply Chain with RFID The various components of Supply Chain are: Procurement. a study by Cohen at Wharton chal s out the difference between the e xisting inventory management and the RFID enabled supply chain.lity to read the tags on the pallets and transmit data through the RFID networ . and that inform ation is compiled in an enterprise planning software system.” In addition to improving the availability of in-stoc  merchandise.” In addition.5 billion in very profitable sales. the major implementation milestone . The increase in their efficiency is evident from the news article at Breitbart. According to Venture Development Corporation. At present. you may  now there are 10 items on the shelf. you  now there are 10 items. “Wal-Mart has been able to restoc  RFID-tagged items three times as fast as non-ta gged items. Wal-Mart expects to increase RFI D implementation by adding another 200 suppliers that are projected to supply to another 1000 stores. With RFID.000 people in a city. Since the core of Wal-Mart business is perpetual improvement in its Supply Chain implementation. In addition to strengthening the Supply Chain. the largest retailer is also loo ing into differ ent dimensions where RFID can be helpful." From the above studies it indicates that employing RFID technology will help in implementing a seamless supply chain and hence yield profits. “In current systems." says Cohen. Wal-Mart tapped RFID technology with an aim to increase the efficiency of its su pply chain.c om. Distribution. "With RF ID. Wal-Mart aims to reduce the practice of manually placing the order and has achieved 10% reduc tion in the case. This is because RFID implementation will enhance transparency of the ir supply chain and hence will help them minimize cost and labor and will streng then inventory control. you  now their names. Logistics and Inventory Management. As a pilot test. and expiration date and warehouse or igin. a 1% improvement in the out-of-stoc  issue could generate nearly $2. their age.

Wal-Mart Suppliers Some of the major suppliers of Wal-Mart are: Gillette.s of RFID at Wal-Mart are to expand Regional and domestic implementation of RFID throughout 2005.S. In a memo issued bac  in 2003 by the Acting Under Secretary of Defense that said . “The Department of Defense will be an early adopter of innovative RFID technolog ies that leverages the Electronic Product Code (EPC) and compatible tags. Grocery Distribut ion Centers and Sam’s Club Distribution Centers in Texas. Gillette has ordere d half a billion tags to trac  razors. Current Usage of RFID RFID technology is rapidly evolving and growing. it is clear that its deployment is an atta inable future goal. Kimberly-Clar  Kimberly Clar  is a manufacturer of paper goods products that include Kleenex. Though RFID deployment is still not full fledged. The military’s main focu s is on getting equipment and necessities to the servicemen and servicewomen who are on the battlefield. Kimberly Clar  tagged its Scott paper towels s hipment with RFID tags to be shipped to Sanger. the largest food company employs RFID system to improve handling of its bul  containers. range and reliability needed to trac  the target product ROI (Return On Investment) in the context of scope for improvements RFID in Military The U. Hewlett-Pac ard. as with any new technology.” The goal of the military is to improve data quality. Kimberly-Clar . Kraft has outsourced its RFID system to TrenStar to handle the complete supply chain. And. providing solutions to a wide a rray of problems. This is quite different from most businesses that ofte n lose sight of the end customer in the process. the pac aging of Gillette Mach3 razor blades has been fitt ed with tiny chips. which is the most important metric for a RFID app lication. military has also been heavily involved in SCM. Procter & Gamble and Unilever. We also plan to require RFID tags on  ey high-value items. Nestl e. H uggies and Depend. Wal-Mart a ims to mandate RFID implementation for all its suppliers. by 2006. Our p olicy will require suppliers to put passive RFID tags on lowest possible piece p art/case/pallet pac aging by January 2005. Texas. Kraft Foods Kraft Foods. Johnson & Johnson. Kraft Foods. Many companies are finding value in implementing RFID systems today especially when it is applied to solve more realistic supply chain problem s. is to understand the capabilities of RFID and evaluate how it can be useful to our operations today. is determined by considering the following  ey factors: Basic asset and inventory visibility needs. The value. All the cases in a pallet are scanned with RFID rea ders as they move along the conveyor belt. Purina PetCare Company. The  ey factor. In a trial at Tesco¡s new mar et Road branch in Cambridge. item . Speed. In April 2004. Gillette Smart razor blades have been introduced to the supermar ets. These include Regional Distribution Centers. The Gillette Company uses RFID for both p allet and case applications.

the status is written to the active tag. every vehicle is equipped with an i-Q8 tag. electronic wor -in-process trac ing. They will also help prevent shoplifting. transportation. The milita ry approach to SCM is only slightly different than that of the commercial indust ry. orde r management. trac ing the items fr om the shelf to the till and out of the door. The solution also provides additional b enefits such as improving quality control. They continue to be on the cutting edge in advances in milit ary logistics using RFID and SCM. The ve hicle is then delivered to the holding lot. . After deploying active RFID solution. an active tag that contains a unique identification number and pre-delivery tas s. which has over 10. The military focuses on mission requirements as opposed to profit and loss statements. Europe¡s largest automa er and the fourth largest auto manufacturer in the world are deploying RFID technology to speed up vehicle pic up and improv e customer service. Efficient SCM is difficult to implement and is being widely studied. Sun Microsystems sets up RFID test centre in Scotland Sun maintains that RFID tags have the potential to cut huge costs from the suppl y chain of retailers and manufacturers and said the European centre will help fi rms with the tagging of products. and customers. and maintenance. Anticipatory logistic s is in an attempt to use technologies. information systems. and automatic status update. Supermar et tries out smart tagging The electronic radio tags will allow staff and customers to  eep trac  of the go ods in the store.000 automobiles. procurement. only seven percent of companies are effectively managing their supply chains. manufacturing. The interesting fact is these companies are seventy three percent more profitable than other manufactur ers. If this is done properly. The Army has experimented with a concept called anticipatory logistics. transportation and manufac turing costs. If the product goes through the door without being paid for an alarm is set off. After the production line. The DOD has done a good job at meeting this goal. British supermar et chain Tesco ha s started to install ‘smart shelves’ that can trac  items as they are placed or remo ved. These are suppliers. According to a benchmar  initiative by Deloitte & Touche. SCM will be successful and the company will li ely receive the rewards by way of increased profitability. They both consist of seven main components. integrating the information into bac -end syst ems and sharing it with their supply chain partners. This lends to the belief that proper SCM is beneficial to a company’s bottom line. Anticip atory logistics is quite similar to the corporate world’s SCM. An Intelligent Long Range (ILR) -ena bled van with an RFID reader identifies the targeted vehicle when approaching th e car. which are what drives a corporation. The system is used to quic ly locate a car in the holding lo t. and to trac  the vehicles¡ progress throug h a pre-delivery system. asset visibility. warehousing. Successful RFID Implementation in different Industries Vol swagen Vol swagen. and procedures to p redict and prioritize needs and provide supplies in a timely manner. Com panies must find the right balance between inventory.management. After the pre-delivery tas s are completed. Vol swagen claims to have witnessed the be nefit of significant reduction of the vehicle delivery time and productivity has been improved by as much as four times.

Savant is the middleware technology that coordinates the movement of information over the computer systems. each tag communicates to an RFID reader its EPC. Limited information contained on tags: Although some researchers on RFID support this aspect of the technology by pointing out that the tags associated with most consumer products will contain only a serial number. RFID creates real time information lin s that speed production. ma  ing it readily available on a worldwide level. transmission freq uency. Unfortunately. which is generally used as a reference numb er that corresponds to information contained on one or more Internet-connected d atabases. standards for RFID will probably vary between many regions of the w orld. Each silicon chip of each RFID tag is encoded with a unique EPC that identifies the product. The networ  has five fundamental elements: The Electronic Product Code (EPC) is a unique number that identifies an item in the supply chain. TI-RFID technology connects all phases of the supply chain. and whether they are passive or active. using radio frequency identification technology.B. this num ber can reveal a lot of information. Also I. Texas Instruments Texas Instruments deploy RFID in the field of logistics/supply chain management. 2. improve quality and streamline delivery. 3. and can be augmented as new information is collected. The read range of the RFID tags depends on the antenna size. EPC global Networ  The EPC global Networ  uses RFID to enable true visibility of objects in the sup ply chain. reader accuracy and spe ed. This means that the data associated with that number is theoretically unlimited. Failure rates in early RFID pilots have been as high as 30%.I. Read-range distances are not sufficient to allow for consumer surveillan ce: Most of the RFID tags currently in use have read ranges of fewer than 5 feet . Defective and poorly performing RFID tags: RFID tag manufacturers contin ue to produce faulty tags. "relatively high reliability" is unacceptable if an RFID mandate calls for a 100% read rate. Expands Efforts to Promote Radio Tags to Trac  Goods IBM’s move into the RFID tag printer business with an RFID-capable printer designe d to help customer reduce costs and improve operational efficiencies. However. This information will typically reside on the Internet. Current challenges in RFID implementation are: • Global standards: A single global RFID standard is highly unli ely to evolve. The silicon chip is wired to an antenna. • Technology problems: Problems such as signal distortion. or pallet. and. Some of the major technical limitations are: 1. consultants began selling advice on consumer privacy issues related to the use of radio identification tagging of consumer goods. The ONS resides on a computer or local application system. from resourcing and manufacturing to inventory and distribution. . Li  e barcodes.M . The Object Name Service (ONS) collects the EPC that is passed on from the reader . of many products being shipped. Multinationals li e Wal-Mart may need to implement a variety of RFID stand ards and technologies across their global organizations.M. It tells the comput er systems where to locate information on the networ  about the item who’s EPC it has just encountered. Physical Mar up Language (PML) is an XML-based language that is used to define d ata on objects. and tag transmission capabilities persist ma ing RFID still not practical fo r widespread use. Limitations and Challenges of RFID Many issues still exist about the implementation of RFID that even Wal-Mart may have trouble addressing despite their decision to move forward with the new tech nology. whether that is an individual product or a case.B.

apparel. through clothing. and DVDs etc. their integration with a company’s c urrent systems and the effective transmission of information. RFID tags ca n be embedded into/onto objects and documents without the  nowledge of the indiv idual who obtains those items. Damaged RFID tags: Since tag reading happens automatically without line of sight and no human interaction. it can be difficult to  now when certain tags are not read. reside in the required size of the databases. and data synchronization is usually required. • A final barrier to implementation that may need managing is employee acceptance. This becomes a serious issue for business applications built arou nd RFID if 100% read rates are implicit as part of the core business application design. • RFID should never be employed in a fashion to eliminate or reduce anonymity. is ma ing it difficult to realize the full potential of RFID in generating a wealth of information. tag readers can cost anywhere from several hundred to several hundred thousand dollars. Human trac ing is inappropriate. • RFID must not be used to trac  individuals absent informed and written consent o f the data subject.4. and to da ta volume (in database management and transmission)”. however. Suppliers would not be affected with a narrower focus on high-priced products li e prescription dru gs. And depending on functionality. Associated costs c an approach the millions of dollars. “Companies planning to adopt RFID f ace technical concerns related to effective data capture (or reading). What Should Wal-Mart Do? Wal-Mart should redefine the scope of its RFID mandate by narrowing the scope of products to those with limited amounts of metal and liquid. particularly in light of potential job losses. wh ich is highly expensive to implement. RFID tags on drug bottles are being used . “In addition to addressing the challenges they are facing in imple menting RFID with Wal-Mart. Future of RFID Fig 6: State of RFID technology deployment [Source: AMR Research. • Data management: Lac  of development of right information management tools to ma nage the data effectively. either directly or indirect ly. • Cost: Any developing technology is associated with high costs and so is RFID. RFID Practices that should be prohibited: • Merchants must not force their customers into accepting RFID tags in the product s they buy. 2005] Future Applications In the pharmaceutical industry. or other items. It gives additional time for vendors and suppliers to perfect tag reliability for all products. applied and verified individually. For instance. but they are unavoidable if the full benefi ts of RFID are to be realized. The largest cost issues. “Forrester recommends that Wal-Mart use its influence to help create a buying consortium. • Must be programmed. RFID should not be incorporated into currency. • Privacy and civil liberties: One major confrontation for RFID technology would b e to deal with the threats to consumer privacy and civil liberties. giving suppliers the collecti ve power to cut tag costs” . “Individual tags cost about 30 cents each. t his will drop to between one and five cents per tag once billions are being prod uced” . suppliers should create an internal RFID lead positi on with direct access to the CEO”. consumer goods. • Industry Standards: Many privacy advocates are insisting the companies to state their intended use of the technology due to lac  of industry standards regardin g the use of personal information that could be encoded on the chips. What Should Suppliers Do? Suppliers should use their initial  nowledge to shape mandates by Wal-Mart and o ther retailers.

What is most frig htening. RFID learning curve is a long process and starti ng with small projects and then establishing standards for efficient future prod uct movement can effectively implement it. It will be widely used in retail and consumer goods. In libraries. however. Before any organization can seriously contemplate using RFID to support its operations. First off. A CM Digital Library: Communications of the ACM. Secondly. automotive. bac  to the originating farm. Pages 100-10 6. It has been ac nowledged that RFID technology can be used for mar eting purposes or even. too much technology o r their privacy concerns are too strong – will the technology survive is the quest ion to be answered. The typical approach has been one of trial and error. it should have a firm understanding of the bene fits that the technology can provide. There has been a mixed reaction from the variou s suppliers and customers who already deployed RFID into their industry. there has been no clear r oadmap that a company can employ while evaluating RFID opportunities or mandates . Anytime in the Supply Chain. Wal-Mart of the US are pushing ahead with the technolog y that will end up affecting thousands of suppliers." Even if the true benef its will not be realized for several years. Auto-ID: Managing Anything. or acting as bar-code replacements” 9.as anti-counterfeiting devices. August 2005. Industr y analysts are unanimous on the view that RFID is going to dominate the industry soon. in a Brave New World scenario. RFID technology will reach the zenith by the end of 2006 and from a retai lers perspective the technology will bring a revolution. such as mad cow dis ease. So too is the US Department of Defense. Pet owners have begun implanting their cats and dogs with RFID chips to locate them should they become lost. for instance a pair of jeans or a set of automobile tires. freein g up librarians to perform other tas s. The USDA is pushing to give every cow in the United States its own uniqu e identification number.  ey retailers such as T esco and. Number 8. ma ing it easier to trac  diseases. The future of RFID is uncertain. the future of RFID is going to be determined more by the dominant applications rather than by the technology. Researchers have concluded that organizations should  eep initial RFID projects at a simpler scale. Many see RFID as a technology in its infancy with an untapped po tential. This also allows a librarian to easily l ocate a boo  misplaced on the wrong shelf. is the ability to implant an RFID chip under the human s in. While we may tal  of its existence and the amazing ways in which this t echnology can be put to use. "the early bird catches the worm. postal department and other scientific use but if consumers really don¡t li e the idea – if it¡s too confusing for them. such as trac  ing cases or pallets within warehouses. Anywhere. This level of understanding and experience will be necessary before moving to more complicated supply chain implementation s in ma ing RFID a big success. boo s are being tagged for self-automated chec out. until there are more standards set within the indus try and the cost of RFID technology comes down we won¡t see RFID systems reachin g near their full potential anytime soon. Volume 48. Two things are clear when it comes to RFID. in particular. REFERENCES: Bose & Pal. or from warehouse to store. “As the old saying goes. government trac ing of its citi zens. . military. establishing the base RFID infrastru cture today is the  ey driver for total supply chain adoption and benefit realiz ation tomorrow”10. it is possible to ubiquitously embed the chip within a produ ct. he althcare. “This might include single stage implementation. For instance.

edu http://www.news.php http://www.com/article2/0. RFID Journal.html http://www.tutorial-reports.39118283.1540. http://www.com/news4530.searchemall.shtml/searchemall_TI_RFid_(Texas_Instruments_Radi o_Frequency_Identification_Solutions)_offers_the_most_extensive_range_of_transpo nder_reader_and_antenna_products_for_a_widewww_ti_com_tiris_docs_solutions_suppl y_logsup.com/article/articleview/435/1/26/ http://www. June 2004 http://www.rfid-101.morerfid.html http://icmr.sapinfo.almc.csa.co.html http://www.784/www/BD%20Supplementals/Materials/Unit%20Two/Security% 20Privacy%20Identity/IBM%20promotes%20radio%20tags%20NYT.org/2004/06/rfid_101.html http:// nowledge.rfidgazette.icfai.com/details.mil/alog/issues/SepOct02/MS774.upenn.html http://www.com/news/2005/09/26/143922.com/wireless/rfid/walmart/rfid-future.edu/21w. Cheaper.html http://www.com/66090.physorg.com/article/articleview/604/1/1/.rfidgazette.theautochannel.asp http://www.1612149.com/GlobalWMStoresWeb/navigate.php?subdetail=Report&action=details&report_id=55 2 http://www.do?catg=453&contId=5700 http://www.zdnet.ti. Retrieved from http://www.Military Edict: Use RFID by 2005.org/2004/06/rfid_101.html http://www.iisc.walmartstores.amrresearch.net/ http://www.bbc.stm http://news.baselinemag.com/ASP/viewarticle.army.logisticstoday.org/2005/09/rfid_and_walmar.com/27092005/221/rsi-aggressively-prices-rfid-labels.html http://u .asp?strarticleID=106246&page=1 Smaller.com/ http://www.ameinfo.htm http://lcm.html http://news.rfidjournal.htm http://web.html .pdf http://www.rfidjournal.itrportal.com/ http://www.co.com/rd/results/rdq_logistics_supply_chain/www.00.com/article/05/08/09/33OPreality_1.com/tiri s/docs/solutions/supply/logsup.ernet.rfidgazette. Quieter.org/pdf/Operations%20Case%20Study%20-%20Wal-Marts%20Supply%20C hain%20Management%20Pr.39020357.u /1/hi/technology/2661825.html http://www.in/supply_chain_intro.00. Faster. So What Else Is New?NetNews.yahoo.infoworld.mit.com/ http://www.wharton.u /hardware/emergingtech/0.

shtml .39024649.00.html http://64.39120064.tomp insinc.39121091.com/DidYouKnow/Computer_Science/2005/rfid.webopedia.104/search?q=cache:AcAEmm5wU24J:networ s.rfidlowdown.00.com/200504/vendorvoice02.00.233.233.sid%253D24348%2526cid%253D36852.161.silicon.com/storage/0.infopeople.forrester.asp http://www.10801.silicon.00.104/search?q=cache:hajF6 p0mQIJ:www.networ magazineindia.com/publications/competitive_edge/articles/02-04-RFID_Pha rma.167.1769.html+which+companies+are+implementing+RFID+technology&hl=en http://rfidanalysis.internetnews.asp http://www.com/dtt/article/0.php/3425801 http://www.39 024663.com/ent-news/article.com/mobiletopics/mobile/technology/story/0.911.deloitte.85199.org/resources/rfid_survey/ http://www.com/2005/11/future_of_rfid.com/lans/0.htm http://www.org/ http://informationwee .com/ER/Press/Rel ease/0.1002.ht ml http://www.htm+future+of+RFID&hl=en http://hardware.jhtml?articleID=53200075&pgno=2 http://64.computerworld.html http://www.http://www. 00.com/story/showArticle.

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