EPC Advanced Business Aspects Training. Chapter 1 Introduction.

EPC Advanced Business Aspects

Training

Chapter 1Introduction

Chapter 1: Introduction

Chapter 2: The Global Vision

Chapter 3: Benefits of EPC/RFID

Chapter 4: EPC/RFID Deployment

Chapter 5: Examples of Applications

Chapter 6: The Consumer

Introduction

Chapter 2The Global Vision

The Internet of Things

The Internet (of information) expands to the real world: an Internet of Things emerges

The Internet of Things

Internet is an island

Today’s Internet is an island in the gulf of physical objects: only connected through human (manual) inputs

Benefits of the Internet of Things

• Status (capture & report)

• Diagnostics (troubleshoot)

• Upgrades (augment performance)

• Control/Automation (device cooperation)

• Profiling/Behaviour Tracking (performance)

• Replenishment/commerce (consumption)

• Location Mapping and Logistics (sales)

Over 100 trillion items per year

6.5 bio

10000 bio

The size of the future market

Total number of tags purchased annually (in Millions)

86,700

22,400

3,220144

20,000

40,000

60,000

80,000

100,000

2007 2012 2017 2022

The size of the future market

Total number of locations with RFID readers

453,000

144,000

30,7102,750

100,000

200,000

300,000

400,000

500,000

2007 2012 2017 2022

Total number of RFID readers deployed

6,268,500

1,161,800176,2807,630

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

2007 2012 2017 2022

Available at www.bridge-project.eu

We only can manage what we can measure.

Physical world

UbiComp-Technologies

Machine sensing

Punch card Keyboard Barcode

Manual measuring

Information systems & the Internet

No measures means potential business problems

•Average OOS level in retail industry: 8.3%

•Average shrinkage rate for supermarkets/grocery in US: 1.5% of sales

•Average deduction level for inaccurate invoices: 9.9% of annual invoiced sales in US

•Cost of unsellable food and grocery products in US: 1% of sales

•Product counterfeiting is estimated to account for between 5 and 7% of world trade

Source: C. Tellkamp, E. Fleisch, Auto-ID Lab St. Gallen

Recent advances in miniaturization, sensor & communication technology, and new materials drive for a new computing paradigm

(2) PCs

(1) Mainframe

(4) Smart Things

(3) Mobiles / Smart Cards

The most widely deployed Technology: RFID

Leveraging RFID in retail

Source: C. Tellkamp, HSG; Gartner

The opportunities are multi-fold:

Search & Find Trust Linking Information

The correct medication to the right patient

Smart T-Shirts

Anti-counterfeiting solutions are under study

STOLPAN Project

Retail Back-Office

Solution

Credit Card

Middlew

Middleware

ProductInfo

Loyalty program

Project Goals: EPC and NFC compatible mobile phones EPC based product information EPC based product authentication NFC based loyalty programs EPC triggered mobile advertisement NFC based self check out and mobile payment

New items are tagged everyday…

… for various purposes

RFID enables new business models

Sensors

Source: Courtesy of F. Mattern, ETH Zürich

Risk-based-pricing

Technology that reaches the consumer

Summary

Chapter 3Benefits of EPC / RFID

What are standards?

Why do we have Standards?

Benefits of using standards

Benefits of Global Standards

Reduce costsSpeeds customer acceptanceEncourage innovationReduce complexity

Global Standards & Competitive Advantage

PCSGSM

Standards allow technology providers to focus on innovation, not translation and intermediation

The role of EPCglobal standards

Role of Global Standards

Encourage Technology Innovation

Foster competition Guaranteeing Interoperability

Common Protocols for exchanging information

The benefits of EPCglobal standards

Benefits of Global

Standards

Encourage Technology Innovation

Lower Costs of products and implementation

Foster competition Guaranteeing Interoperability

Smooth integration with existing infrastructureLower Cost of Changes

Common Protocols for exchanging information

Overview of RFID benefits

Fully automated data capture

Analysisapplication

Best business decisions

RFID is a tool allowing Increased Visibility

RFID vs Barcodes

Benefits of EPC / RFID over Bar Codes:

Attributes EPC / RFID Bar Code

Data transmission Electromagnetic / Wireless

Optical

Reading capability

Non-line of sight Line of sight

Tag reading Multiple One by one

Reading speed 500 / minutes 80 / minutes

Moving object reading

Yes No

Data modification Read & write Write once, read many

Data volume 1 bit ~ 16 Mbytes < 100 bytes

Access security High Little but possible

Anti-collision Possible Not possible

Complying with mandates

ALE and EPCIS provide increased visibility

ReaderReader

EnterpriseApp

ReaderReader

EdgeEnvironment

Data CenterEnvironment

palletelectric eye

conveyor

Filtering & CollectionFiltering & Collection

PalletizerCapture App

Reader Protocol (LLRP)

“between the time the case crossed the two beams at location L, the tag X was read with temperature T”

“at time T, the association of the following case tags to the following pallet tag was created at palletizer #3, to fulfill order #1234”

Supply Chain Visibility

Inventory Visibility

Chain of Custody visibility

Visibility of maintenance

Visibility of counterfeit products

Visibility is only the starting point

EPC Readings

ALE EPCIS

Trend Analysis

Problem Identification

Operational Performance

Management of Solutions Providers

Benefits for the producer

Visibility of Production Processes

Quick reconciliation of shipments

Just-in-time production and delivery

Benefits for the seller

Reduced safety stocks

Availability of products

Reduced theft

Speedy check outs

Improved after sales

Customer satisfaction

Where is my product?

Your product was last seen in Store #23, at

10am Tuesday, during receiving

Data flow

Summary

Back-up Slides

• Calculating ROI for implementing EPC / RFID

• The checklist below summarizes some of the key financial items

• incurred in EPC / RFID implementations

Understanding the Financial Aspects

One time set up cost:

RFID reader

Middleware

RFID printers

Networking & cabling

Enterprise system integration

Consulting

Training

Recurring cost:

RFID tags

Maintenance cost for

hardware & software

Training

BACKUP SLIDE

• ROI Calculation Tools Available in the Market

• EPC Value Models• Developed by Stanford University, Massachusetts Institute of

Technology• (MIT) and EPCglobal US, aimed to identify business issues and

drivers• where EPC / RFID is expected to have the greatest impact &

quantify• expected value of EPC / RFID implementation.

• URL: • http://www.epcglobalna.org/dnn_epcus/SubscriberTools/

FinancialPlanning/EPCValueModels/tabid/225/Default.aspx

BACKUP SLIDE

• ROI Calculation Tools Available in the Market (Con’t)

• RFID Cost Tutorial

• Developed by EPCglobal Inc. is a reference tool for companies planning to

• make an investment in RFID technology. EPCglobal recommends that the cost

• items, phase structure and timeline presented herein be modified to suit the

• specific needs of the organization.

• URL:

• http://www.epcglobalinc.org/what/cookbook/chapter2/

BACKUP SLIDE

Benefits from Future EPC / RFID Trends

When RFID technology is commonly used in the future with sensing technologies, some potential use and benefits can be obtained:

• Temperature tracking

• Humidity monitoring

• Tilt indicator

• Accelerometer monitoring

• Pressure monitoring

BACKUP SLIDE

Chapter 4EPC / RFID DEPLOYMENT

Introduction

Think of a major change

Think of any major change that you have seen undertaken in a business……

A grand new machine

installed……..

Launching a new product

A new computer

system

Can you think of a major change that has taken

place where you work ?

Preparing the change

Changes need:• Planning

• Organisation• Collaboration

• Purpose• Objectives

• Review

Use the same common sense approach

Don’t leave your brain in the car park just because it’s radio !

Business Context

Getting The Business Context

EPC and RFID implementation is not only about technical aspects

EPC and RFID are tools for a

business change in your operations.

Business processes Are Key

EPC / RFID can now impact your business processes

PROCESSES ARE KEY

Who Will Be Involved…

Many departments will be involved so

involve them early.

The Business Case

Financial

Efficiencies

Customer Service

Customer Satisfaction

Environment

The Business Case – Common Benefits

Financial

Customer Service

Efficiencies

Customer

Satisfaction Environment

The Business Case – Financial Benefits

Lower costs

Less inventory

Less work

Supply chain velocity

The Business Case – Efficiency Benefits

Better visibility

Standard terms

Common understanding between trading partners

Lower shipping errors

The Business Case – Customer Service

Time to market

Customer Response Time

Returns processing

Business Case – Customer Satisfaction

Information

Warranty provision

Better service

Anti-Counterfeiting

The Business Case – The Environment

Better Disposal

Lower recycling costs

Tracking of hazardous material

The Business Case – Time

Time is Money

The Business Case - Summary

Deployment Objectives

Set clear and specific

objectives

Sample Deployment Objectives - Processes

Situation Analysis

A key factor to successful RFID deployment is understanding what exists before the change

Situation Analysis – Key Factors

What are the current processes ?

Where and how are they carried out ?

Who executes them ?

Where are items identified in the processes ?

Why is identification necessary for those processes ?

What materials move into and out of the processes ?

What information is key about each item ?

Situation Analysis – Common Tools

Process Maps

System Maps

RACI Chart

Situation Analysis – Radio Assessment

Radio energy can be impacted by many things,

so, assess your environment in this respect

Readermodule

Antenna TagHost

Building the Team

Building The Team - Principles

• Team-leader• Key stakeholders• Business knowledge

within team• Open attitude

towards change

Building The Team – Executive Sponsor

Executive Sponsor:

• Sets the goals and direction for the program

• Enables you to get the resources and commitment

• Senior executive within the company• Leads a function or division if possible

Building The Team – The Core Team

The Core Team:

• Stakeholders (right from start of program)

• Guides program according to agreed goals and objectives

• Acts as a link into the rest of the company

Building The Team – Motivation

Motivate beyond the initial enthusiasm

Hold regular training sessions, team feedback reviews,

team outings etc.

Be frank about what is working and what isn’t

Seek the team’s ideas on how to make progress.

Reward exceptional individual contributions

Reward achievement of major milestones by the whole team

THANK YOU!

Requirements Gathering

Requirements Gathering - KPI’s

Measurable Objective = Increase Average

Revenue per Customer from 10 to 15 US Dollar

by End Of Year 2008

KPI = Average Revenue per Customer

Planning

“No battle plan survives contact with the enemy”

Count Helmut von Moltke the Elder

1800 – 1891

Planning – Why Do It At All ?

purpose and direction…

what is expected and when….

checklist…

communicate progress or issues…

dependencies...

what to do if things go wrong…

Planning – Level Of Detail

• Not too much detail…• For simple projects written list of

activities is ok• Larger projects require activities list,

usually spreadsheet• Large complex projects involving

multiple teams, skills and functions over a longer period of time best planned using integrated project planning tool

Not planning at all is planning to fail !

Process Integration

Process Integration - The Basics

Integrate new

processes carefully in

order to minimize

disruption and risks

Process Integration - How

Document and understand the existing and new processes so as to

minimize risks and misunderstandings

The Pilot

The Pilot - Why Do It At All ?

The Pilot - How - Start Small

Small is beautiful – until you know it works !

The Pilot - How - Start Small

… and / or a few locations then expand if these trials are successful

Select initially a few products …

The Pilot - How - Predict & Compare

For each part of the pilot:

Describe the new processes and what to expect

During the pilot:

Monitor and record what actually happens

The Pilot - How - RFID

RFID equipment usually requires adjustment – this is normal !

You can ensure interoperability of tags and equipment by

ensuring that they are certified

The Pilot - Completion

Show the Executive Sponsor and the Core Team the pilot’s results and get agreement to deploy.

Deployment

Deployment - Providing Support

Full deployment = full risk !

Deployment - Providing Support

You should ensure adequate level of support, either remotely or locally

Measuring Success

Project success comes in many forms

Rewarding Success

Don’t forget to reward success

Regulatory Considerations

Ask your solution provider to ensure that your equipment is operating within the regulations for your

country

Chapter 5

Examples of applications

Introduction

Some applications of EPC/RFID

• Asset Management (Nortura)• Track and Trace in the Book industry (Byblos)• Outbound / Inbound in the textile industry (Lemmi)• RFID in healthcare (Hospital Speising)• Cold Chain (Nestlé)• Baggage tracking (Hong Kong Airport)• Visibility in complex retail chain – (Wal*Mart)• Optimising manufacturing processes (Griva S.p.A)

Recommended exercise

Asset Management: Nortura

• Norwegian company

• Meat manufacturer

• Employs 6.800 people

• Annual sales €2 billion

• Organized as a cooperative owned by

approximately 30,300 farmers

• 41 municipalities in 18 counties

Problem: Today nobody knows where, which and how many

Returnable Transport Items (RTI) are spead along the

supply chain

Source: Nortura

• Benefits

• Automatical RTI lifecycle control

• Documentation of RTI lifecycle (cold, freezing cold, washing, etc)

• Real time inventory

• Prediction of RTI need

• Process management project

• RFID tag inside 80000 crates with GRAI

• 73 RFID readers

• Employee ID coupled with GS1 GRAI

• Each person gets performance feedback

• ROI: 3 months

Source: Nortura

Asset Management: Nortura

Track & Trace in the book industry - Byblos

• Portuguese company

• Bookstore

• 50,000-square-foot store

• Receiving more than

200,000 products per

Source: Byblos

Problem: Problems for localising

products resulting in high costs

of inventory and poor customer

service

• Solution

• 250,000 books, games and

videos tagged

• 40 RFID-enabled kiosks

• 13 incorporates RFID

security gates

• 14 RFID point-of-sale

(POS) reading stations

• 10 RFID Handhelds

Source: Byblos

• Benefit

• 30% less stock

• Possibility to handle more

customer at POS

• Faster localisation of items

• Faster reposition and re-

ordering of sold items

• Possibility of daily and full

inventory

Source: Byblos

Outbound / Inbound in the textile industry - Lemmi

• German SME company

• A leading children’s

wear manufacturer

• Founded in 1959

• Employs around 50 people

• Produces over 1 million

garments per year

Problem: Poor stock turn over

Source: Lemmi

• Solution

• 100 % of merchandise is tagged

• Integrated Solution: RFID fully integrated into ERP

• Benefits

• Increase efficiency on all steps of SC

• Increase quality of deliveries from production to customers

• Precise information on goods in transit

• Strengthen relationships with customers

• Easy to use for all employees

Source: Lemmi

• Payback

• Stock turnover before tagging: 5,000 to 10,000 items per day

• Stock turnover after tagging: 20,000 items per day

• Increase of 250%-300% in receipt and shipment of goods

Source: Lemmi

RFID in healthcare - Hospital Speising

• Austrian company

• Orthopädisches Spital Speising

is part of Vinzenz groupe

• Total number of beds: 2221

• Hospital patients per year:

112359

• Workers in the hospitals: 4535

Introduction of RFID in instrument

cycle of a hospital

Benefits • Detection of specific medical equipment

and inventory within the hospital • Better process transparency • Automated documentation• Simplification of logistics operations • Automation of ordering • Quality improvement in the process

chain • Risk reduction in the area of application • Reduce storage costs • Increase the cost-efficiency • Patient safety

RFID in healthcare - Hospital Speising

Cold Chain - Nestlé

• World's largest food company:

• 2007 sales – $98 billion

• 130 operating Markets

• 450+ factories in 87 countries

• 250,000 employees

• 130+ main brands

Ice Cream does not like heat shocks

Objectives of the trail 2007

Evaluate technical feasibility of a temperature monitoring solution along the entire cold chain

Evaluate the real advantages compared to actual situation, for all organization areas involved.

During kick-off meeting in June discovered other interesting issues....

Assess solution for several business needs: - Freezer traceability - Better support on freezer maintenance issues - Service to big customers (e.g. theme parks):

efficient & automatic HACCP freezer performance warranty for a better support

on sales activities - Systems integration requirements

Installed Sensors - Distribution

DeliveryTruck

In Freezer View

Simple to install – 5 minutes

No maintenance

30° External-18°C in Cold Store-10°C deliveryFirst delivery at -23°CLast delivery at -10°C !!!

Problem with temp probe and compressor on the truck

Secondary Distribution

External temperature

Cold store temperature Truck temperature

Example: Store Freezer Activity

-12°C constantToo warm

Continuous defrosting.......Ice cream quality will be a problem

Freezer well regulated at- 22°C

Too cold Different from day & night?

Key Benefits

Improved visibility of the cold-chain: Better understanding of:

Freezer performance & management Temperature cycles – warning signs

Improved quality control of products Quality & Safety Improved product taste / experience Lower 'bad goods' & insurance write offs

Potential energy savings Added value services to Distributor

Production(cold store)

Primary DC

Depot / Distributors

Restaurant, Bar, POS

Primary transport

DeliveriesConsumer

Some results and conclusions

At the beginning we talked about benefits in terms of: Legal duty ensure quality in the food chain Quality of product and brand image on market Cost of bad goods Insurance costs

Today we also talk about: Better management of installed freezeer : traceability, sobstitution, maintenance,

allocation, energy consumption

Marketing & sales support: service to customers (HACCP due activity, freezer performance, maintenance guide) allocation and match model/version freezer-location-invoicing

Support for research & development: thermal history of singles batches, development of product

Better efficiency on quality control: coverage, efficiency & “best practice”

Significant opportunities for added value

Baggage tracking – Hong Kong Airport

• One of the busiest airport in the world

• Passenger: 350 million per annum

• Air cargo: 3 million tons per annum

• Named the world’s best airport by

Sky Trax (UK) in Apr 2004 & received

special recognition award from IATA

• ~ 40% of luggage handled comes

from transfer flights

• Major hub to/ from mainland &

volume is expected to be increasing

Issues• Currency bar code system is 85-95%

read rate (Manually handling failures) • Remove & check all Unit Loading Device

on the plane to identify baggage• Security measurement• Velocity and Baggage handling accuracy

Solutions• Deploy RFID technology on extensive

baggage-handling facilities alongside the bar code system to bring up visibility, improve accuracy and efficiency, step up security measurement

Benefits• Improve customer satisfaction• Improve security• Cut operating costs

Visibility in complex retail chain - Wal*Mart

• Walmart operates retail stores

worldwide in various format

• Products allocated through 90 DCs

and/or direct from manufacturer

• Total sales 2004 – US$ 256.3B

• Requested EPC RFID tagging by Jan

2005 to increase supply chain visibility

and eliminate many manual process.

• Estimated annual saving is ~ 3.3% of

sales (i.e. ~ US$ 8B)

Issues

• Without merchandise visibility along this huge supply

chain may lead to Out Of Stocks, shrinkage, and

operation inefficiency that could ultimately reduce

competitive advantages

Solutions

• Mandated suppliers to affix EPC compliance RFID

tags to cases and pallets before shipping to Wal-mart’s

DCs. The tags allow Wal-mart utilize automatic

tracking on product movement that will provide product

visibility without additional human intervention.

Benefits

• Eliminated many manual

processes in the area of I)

receiving, ii) product movement

in warehouse and DC, iii)

shipping to stores, and iv)

paying suppliers.

• Reduce inventory shrinkage

and out-of-stock situations.

Benefits

Optimising manufacturing processes – Griva S.p.A

• Italian company

• Founded 1955

• A leading high-volume textile manufacturer

• Employs 70 people

• Annual sales €14 million

• Markets – 60% domestic, 40% foreign

• 300,000 rolls of fabric per year

• Reliance on automated manufacturing systems with integrated

logistics

• “An improvement in productivity was critical to our ongoing

competitiveness. Until recently, we could not accurately control

the contents of the roll” Gualtiero Casalegno – President, CEO and owner

• Fabric is woven and then rolled onto cardboard tubes

• Alien Gen 2 EPC compliant readers and tags• EPCglobal numbering system• Compliant with European (ETSI) regulations• Strategic read points from production to

warehouse• Harsh manufacturing environment

• High temperatures

• Water and high humidity

• Harsh chemical agents for dying• Griva needed a robust system with complete

fabric roll traceability without being intrusive to the production process” Claudio Bertolo – Marketing Manager, Simet

• Visibility

• Tracking of textile rolls through production

• 15 separate dying and coating stations

• Improved accuracy in production treatments

• Accurate information to customers

• Fabric can be sorted automatically

• Readers at checkpoints supports decision making by systems and operators

• Cost effectiveness

• Reduced manual effort in:

• determining most cost effective transportation options

• Building customized shipping boxes

• Identification of products

• Production velocity

• Before – 400 rolls per day (2 x 10hour shifts)

• After – 600 rolls per day (2 x 8 hour shifts)

• From 20 rolls/hour to 37.5 rolls/hour…….+87.5%• ROI

• 30% after 9 months

Recommended exercise

GROUPS (4 to 8 persons)

20-30 Minutes

Benefits of EPC / RFIDMajor Challenges of EPC / RFID implementation

Proposed applications:• Inventory control• Outbound / Inbound• Smart Shelf• Track and Trace• Anti-counterfeiting• Supply Chain Visibility

Summary

Chapter 6The Consumer

Consumer Acceptance

Awareness

Consumer Awareness Guidance available at www.discoverrfid.org

Responsible use

Basic principles on Consumer confidence can be found at:

http://www.discoverrfid.org/how-it-works/your-rights/data-protection-guidance.html; Consumer Guidelines for EPC on Consumer Confidence ICC Privacy Guidelines on RFID Centre for Democracy and Technology

Addressing Consumer Benefits

http://www.discoverRFID.org

http://rfidabc.de/

http://www.fashiongrouprfid.com

Consumer Benefits – Patient Safety

Patient Safety - Stay Healthy

New born identified with RFID bracelets preventing mix up

Blood products are tracked and match with the patient Id

Consumer Benefits – Food Safety

Food Safety – Eat wellRFID helps monitoring of freshness and quality of products

RFID enables controls of authenticity and origin

Consumer Benefits – Quality of Life

Quality of Life – Get what you want

RFID enhances the shopping experience

RFID improves the postal service and speeds up the delivery

Quality of Life – Feel safe

RFID helps ensure your airplane is properly maintained and does not contain counterfeit spare parts.

RFID helps you protecting your valuables from theft

Quality of Life – Work better

RFID saves us time at toll booths

RFID protects workers in, contact with Dangerous Environments

Consumer Benefits – Environment protection

Environment protection – Protecting Nature

RFID allows for better and easier recycling

RFID protects endangered species

Practical Recommendations

Data Protection Overview

Why is data protection law important?

General Data Protection Directive

Some important obligations

Data Controller MUST:

• Ensure accurate data is collected and only what is strictly necessary

• Ensure the data is processed for legitimate purposes

• Protect the integrity of the data from unauthorised access

• Notify to the data protection authority

Some important obligations

Data Controller MUST:

• Obtain the consent from the person

• Or show the processing of the personal data is needed to perform the contract

• Or show the data is needed to protect the vital interests of the person

E-Privacy Directive

http://ec.europa.eu/justice_home/fsj/privacy/law/index_en.htm

Data Protection questions on RFID

Summary

EPC Advanced Business Aspects Training. Chapter 1 Introduction.

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