1

Table Of Contents

 Introduction

 The momentum created by global trends

 The Australian environment

 Opportunities to exploit RFID as an enabling technology

2

Table Of Contents

 Introduction

 The momentum created by global trends

 The Australian environment

 Opportunities to exploit RFID as an enabling technology

3

Visibility is today’s value chain problem … seeing a problem is 90% of fixing it!

 Poor visibility across the supply chain

 Lack of transaction velocity

 Inefficient capacity to optimise and synchronise supply chain activity

 Poor supply chain control and accountability

 Black holes and high costs

4

Likely move

The pace of change in the Auto ID business environment is breathtaking .….. the tsunami effect!

5

Table Of Contents

 Introduction

 The momentum created by global trends

 The Australian environment

 Opportunities to exploit RFID as an enabling technology

6

Global business trends

 Search for greater enterprise visibility - realisation that timely information is necessary for better decision making

 Move toward collaboration and connectivity by extending the supply chain  Increased outsourcing of supply chain functions  Focus on global supply chain security increasing – Secure Tradelanes Initiative*  Increased use of RFID in end-use markets - last mile analytics  Increasing awareness of benefits of RFID  Current ERP, SCM and internal technologies generating diminishing benefits  Competition for higher margins and lower prices in increasingly global market  Vertical industry adoption to demonstrate ROI*  Significant growth in healthcare, pharmaceutical industries and aerospace*

7

 RFID technology is maturing and dynamic - Smart tagging*  Significant increase in testing and piloting  Advances in microelectromechanical (MEMS) and sensor systems  Cooperative standard setting – ISO approval of EPC Gen 2 Class 1 UHF*  Mandates creating momentum. Opportunity for competitive advantage*  Momentum on item level tagging  Falling prices  Growing and broadening applications with pilots emerging on a daily basis*  Technology integration*  Partner eco-systems to deliver end-to-end RFID solutions  Market improvement in RFID security and encryption  Realisation that architecture is important and that one size does not fit all*

Global Auto-ID technology trends

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Whilst there is geographical imbalance in RFID, international growth has been significant with positive moves in both Asia and Europe

No Case Studies

Adapted from IDTechEx

Case Studies per Country

9

By far the most common use of RFID is tracking across the supply chain. Item level identification and tracking is the fastest growing application

No Case Studies

Adapted from IDTechEx

RFID Sectors

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Surveys seeking to capture the reasons for adopting RFID indicate that increased supply chain transparency is acknowledged as a major benefit

Percentage of responses

Adapted from ABI Research

Primary Reason RFID Adoption

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Table Of Contents

 Introduction

 The momentum created by global trends

 The Australian environment

 Opportunities to exploit RFID as an enabling technology

12

The pace of Australian industry and Government involvement in RFID is significant

 DCITA’s Starting Guide to RFID for SMEs

 Over 44 case studies across multiple industries

 World class suppliers such as G2 Microsystems and Magellan

 World’s largest supplier of livestock tagging – Allflex

 Setting standards for tracking livestock

 Preponderance of consultancies, hardware suppliers, system integrators

 Standards setting bodies - GS1 Australia

 Peak body creation - RFIDAA

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Of the 44 case studies identified in Australia, 14 were in the livestock and farming sector

Number of case studies Adapted from ISTechEx

IDTechEX identified case studies in Australia

14

Example Australian case studies

 National Demonstrator Project –  Designed by CSIRO, overseen by GS1 Australia

and partly funded by DCITA –  Two supply chains operating an EPC Network

  National Livestock Identification System (NLIS) –  License plating of over 10 million cattle –  World’s best livestock tracking program

 Mining –  Coal –  Nickel –  Copper

 Government –  Department of Corrections –  Defence –  AFP –  Libraries

 Retail Consumer Goods –  Coles Myer –  Moraitis tomato

 Logistics –  Australia Post

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Very High High Neutral Low Very Low

48%

14%

29%

10%

48% 14%

29%

10%

RFID Educational Materials

23% 23%

23%

RFID General Knowledge

23% 23%

23% 27%

5%

27%

5%

41%

36% 14%

9%

41%

36% 14%

9%

Understanding RFID Standards

Booz Allen and RFIDAA’s 2006 Survey – Measuring Government’s Understanding - also provides interesting insights into RFID adoption in Australia.

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Trailing Following Leading

Government

Finance

Health

Mining

Defence

Manufacturing

Transport

Retail

Supply Chain 90%

85%

80%

60%

47%

35%

20%

11%

10%

Most recognised the supply chain, retail and transport activity, but failed to identify the RFID investment in health

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RFID investment and adoption would be driven by demonstrated efficiencies and security enhancements

10% 70%

30% 40%

85% 10%

35% 25%

15% 65%

0 100 -100

Demonstrated efficiencies

Interoperability

Mandates

Regulations

Security

Low / very low High / very high

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70%

45%

95%

55%

50%

0 100

Efficient processes

Improved customer service

Information accuracy

Labour saving

Reduced costs

Perceived Benefit (High / very high)

70% Security

In relation to the perceived benefits, respondents believed that RFID would improve the accuracy of information, deliver more efficient processes and enhance security

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They also identified competing program priorities and demonstrating in-year cost benefit as the major challenges to RFID adoption in the Government sector

5% 80%

10% 70%

65% 10%

50% 35%

45% 15%

0 100 -100

Competing priorities

Cost benefit

Data volume

Lack of executive sponsorship

Lack of standards

Easy Implementation (Low / very low)

Implementation Challenges (High / very high)

Privacy

System integration

35% 20%

20% 55%

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We concluded that the implications for Government, and probably for Australian industry, were as follows

 RFID is a significant business investment and demands a strong business case

 RFID can provide a breakthrough solution to improve the accuracy and timeliness of information

 Australian Government needs greater awareness to understand the implications of RFID on the broader Australian economy

 Getting involved early on can provide competitive advantage and shape the technology

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Table Of Contents

 Introduction

 The momentum created by global trends

 The Australian environment

 Opportunities to exploit RFID as an enabling technology

22

2006 Larstan Business Report ‘Meeting of the Minds’ and BAH European Study

 RFID is an enabling technology

 RFID is becoming a mainstream technology

 Focus on improving process efficiency

 ROI demonstrated in targeted applications

 Real benefit in providing visibility across extended supply chain

 Need middleware applications to provide an analytical overlay for data

 Key is not in obtaining data but in how organisations will use the data

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Global pilots  Automotive

–  Sensor equipped processes –  Parts tracking

 Consumer Packaged Goods –  Gillette –  International Paper

 Financial services –  Tracking physical goods –  Document tracking

 Manufacturing –  Product life-cycle

management –  Safety –  Tracking hazardous materials

 Aerospace and Defence –  Boeing and Airbus - safety,

security, and MRO –  Baggage tracking at Hong

Kong, Narita, QATAR and Paris

–  US DoD

 Transport –  Postal and Courier –  Airlines and airports –  Containers, pallets and totes

 Health –  Drug authentication –  Patient safety –  Environmental sensing (1) 1 billion cars each with 100 sensors

generating data a 6.7 tbps (2) Each new A380 jetliner will contain 10,000 RFID tags

 Retail –  Improved on-shelf availability –  Reduced out-of-stocks

 Mining –  Asset management –  Warehouse management –  Product tracking

 Government –  Tracking in cultural institutes –  Document tracking –  Access control –  Libraries –  US DoD and UK MOD

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Contact information;

Dr Clive Macmillan-Davies Booz Allen Hamilton (Australia) Ltd Level 7, 12 Moore Street Canberra City ACT 2601 Tel +61 (0)2 6279 1951 Fax +61 (0)2 6279 1990 Mob +61 (0)438 670 859