Beyond Compliance: Turning RFID Data into a Strategic Asset ...

Beyond Compliance: Turning RFID Data into a Strategic Asset ...

Beyond ComplianceTurning RFID intoA Strategic AssetPhilip CalderbankBeyond Compliance: VP RFID TurningRFID Data into a Strategic Asset-1- SEEBURGER Inc. 2006

Introduction Driven by the Retail and DOD Mandates Thousands of suppliers will need to provide RFID tagsto product shipments over the next few years Should this be viewed as a strict cost? Is there an ROI to be found for the supplier? To date, all the focus has been on RFID tags andreaders This session will demonstrate how intelligent use ofRFID data can be used to generate substantial ROI forall trading partners …-2- SEEBURGER Inc. 2006

What We’ll Cover … Wal-Mart and DoD RFID Mandates Supply Chain Integration RFID Business Case ROI Sharing Data through Trading Partners Automating Predictive Applications in the SupplyChain Implementation and Deployment Wrap-up-3- SEEBURGER Inc. 2006

SEEBURGER: Company Profile Recognized for B2B software gateways —software integration Founded 1986 HQ Bretten/Karlsruhe, SouthwestGermany Operates in 35 countries America’s HQ — Atlanta, GA Over 6,500 customers Strong technical partnerships (SAPOracle)-4- SEEBURGER Inc. 2006

SEEBURGER Overview: SAP Relationship First SAP partner in the world to achievecertification for: EDI (1995) ALE (1997) SAP/XML (2000) SEEBURGER provides the world’s largest SAP EDI/B2B customerbase — over 1,000 SAP customers worldwide rely on our SAP-relatedsolutions and services today Selected (2002) as only EDI/B2B provider for SAPNetWeaver®/mySAP Business Suite-5- SEEBURGER Inc. 2006

SEEBURGER Overview: SAP Relationship (cont.) “SAP is pleased to expand our relationship with SEEBURGER toultimately extend the functionality of the SAP Exchange Infrastructure” “Our customers will benefit by more easily building integratedprocesses with their business partners in an efficient, reliable and,secure manner, whether the integration is based on existing EDItechnology or emerging Internet standards”Klaus Kreplin, Senior Vice PresidentGBU Integration Platform, SAP AG-6- SEEBURGER Inc. 2006

In This Session ... We will:Understand why the data from RFID impactssupply chain processes in a way that is notpossible with just bar codesMove beyond simple tagging to discover how togenerate a strong ROI through IntegratingRFID Data to Supply Chain Applications-7- SEEBURGER Inc. 2006

Wal-Mart’s Mandate Wal-Mart has been the major industry driver to date,although others are following their lead closely The mandate• Suppliers tag at the pallet/case level• 150 suppliers joined in 2005; 200 in 2006 Complimentary requirements• Data Synchronization and subscription to aGlobal Data Registry (e.g., UCCnet)• Internet-based EDI (EDIINT AS2) transmission of data-8- SEEBURGER Inc. 2006

Wal-Mart’s Mandate (cont.) Wal-Mart has been the major industry driver todate, although others are following their leadclosely (cont.) Others• U.S. Federal Drug Administration (FDA) “unit-of-use codingstandard” is forthcoming• European Union and U.S. will mandate Food Safety andSecurity requirements• Major CPG retailers (Best Buy, Albertsons, Target, CVS, etc.)will deploy/mandate RFID• Logistics providers (e.g., UPS, FedEx, DHL, etc.) will deployRFID-9- SEEBURGER Inc. 2006

DoD RFIDDepartment of Defense-10- SEEBURGER Inc. 2006

The ProblemUncertainty in the supply chain• Lack of customer confidence• Lack of timely consistent information• Unsynchronized materiel flow andhand-offs … disparate systems• Lack of collaboration in planningand execution• Diverse or misaligned businessprocesses … no textbook solutions“My logisticians are a humorless lot … they know if my campaign fails, they are thefirst ones I will slay” – Alexander the Great-11- SEEBURGER Inc. 2006

DoD and Active RFIDDOD operates the largest end-to-endactive RFID system in the world30+ Countries and over 850 sitesworld-wide-12- SEEBURGER Inc. 2006

Finding Products in the Supply Chain-13- SEEBURGER Inc. 2006

RFID — Optimize the Supply Chain DoD will be an early adopter of passive RFID technology Partnered with industry — EPCglobal, Wal-Mart, etc. Conducted initial operational RFID projects at case/pallet level and onselected high value items Implemented passive RFID technology at selected sites and with selectedsuppliers by January 2005 Gave suppliers a reason to partner … call to Congress Programmed and budget for total implementation in order to takemaximum advantage of technology• Hands-Off Data Capture• Improve Data Accuracy• Improve Logistics Processing Time• Improve Manpower Utilization• Enhance Interoperability with IndustryReduce TotalOwnership Costs-14- SEEBURGER Inc. 2006

RFID: Implementation Programs• Combat Feeding GlobalAsset Visibility• Individual Protective Equipment• Passive RFID Tag MilitaryShipping Label• Passive/Active RFID for Total AssetVisibility/Material Visibility-15- SEEBURGER Inc. 2006

DoD Defense Federal Acquisition RegulationSupplement (DFARS) Case 2004-D011 Passive RFID. Commencing November14, 2005 Case 2004-D011 Passive RFID. September 13, 2005: DoD issued a “‘Final Rule” amending theDefense Federal Acquisition Regulation Supplement (DFARS) toadd policy pertaining to package marking with passive RFID tags The rule applies to all “new contracts” Requires contractors to affix passive RFID tags at the case andpalletized unit load levels. Contractors are also required to sendan advanced shipping notice with all shipments. When shipping to Defense Distribution Depots in:• Susquehanna, PA• San Joaquin, CA-16- SEEBURGER Inc. 2006

Where is the Business Case?For Suppliers?For Retailers?-17- SEEBURGER Inc. 2006

Benefits of RFIDComplexComplexity/typical RFIDapplicationSimpleRawMaterialsReceiptEqpt.Locationand AssetMgmt.EnhancedKanbanReplen.ImprovedRe-workEfficiencyFewStakeholdersImprovedForecastAccuracyImprovedERPIntegrationImprovedWarehouseEfficiencyImprovedDispatchEfficiencyFewerPaperSystemsImprovedQualityMgmt.Stakeholders realizingdirect benefit from theapplicationImprovedMaterialsVisibilityReducingFormulationErrorsImprovedStakeholderInfo AccessAccurateProductTraceability.UniformMaterials IDDataManyStakeholdersAchievable internally ifdesiredEnhanced by externalstakeholder cooperation,e.g., application of tags topackaging materials atsource-18- SEEBURGER Inc. 2006

Wal-Mart's Initial Business CaseWal-Mart will be a key driver of adoption globally; their business case forRFID adoption is truly compelling (analyst estimates)$6.7 billion$600 millionEliminating the need to have people scan barcodes on pallets and cases in the supply chainand (eventually) on items in the store could reduce by 15% the costs of the labor involvedOn-Shelf availability (OSA) is expected to be substantially improved through better inventoryinformation and more effective shelf replenishment$575 millionScanning products throughout the supply chain reduces fraud and administrative errors$300 millionImproved tracking of more than 1 billion items of reusable transit packaging (pallets, traysetc.) reduces losses and capital employed$180 millionImproved inventory visibility allows inventories to fall while maintaining or improving levels ofcustomer service-19- SEEBURGER Inc. 2006

ROI — The ‘real’ Endgame Reduce excess inventory in the supply chain On-Shelf Availability (OSA) is key to retail and CPGsuccess Cost of maintaining OSA is very high 30% of inventory is placed in reserves to achieve OSA Additional warehousing required for reserves Cutting excess inventory amounts to multi-billions ofU.S. dollars in potential logistics cost saving-20- SEEBURGER Inc. 2006

Real Business Case: RFID-Enabled Supply ChainReduce ExcessInventory Through:Automated VMILinked to PredictiveRFID Applications-21- SEEBURGER Inc. 2006

RFID-Enabled Supply Chain Market Opportunity Since the advent of bar coding, both retailers andmanufacturers are looking for ways to run VendorManaged Inventory (VMI) through the supply chain Advantage to Retail• Pay for product at later stage in the supply chain. Retailerswould prefer the ultimate: Not to have to pay until POS.Today’s target: Pay when product hits the sales floor. Advantage Manufacturer• Manage the inventory all the way to the retail shelf –aids on-shelf availability and creates advantageover competition-22- SEEBURGER Inc. 2006

RFID-Enabled Supply Chain (cont.)Problem = Product Visibility Bar codes can only show when item enters and leaves a building, dueto the cost and time taken to read barcodes Blind spots between trading partners: “I know it’s en route, but I can’tsay where it is.” VMI needs true product visibility for partners to be able to exertcontrol and monitoring Questions to be answered:• What — product is in the supply chain• Where — not only which warehouse or DC, but which zone• Why — is product at location matching forecast and order?• When — is product on correct route and time?• How — is product being handled? Are there any bottlenecks?-23- SEEBURGER Inc. 2006

RFID-Enabled Supply Chain (cont.) Market Solution RFID readers throughout the supply chain to trackproduct flows Use RFID tools to highlight performance and controlissues Integrate RFID tools with:• Demand forecasting• Warehouse management• Supply chain applications• ERP to monitor and control product issues-24- SEEBURGER Inc. 2006

RFID Generates Product Visibility through automated dataCaptureShipment Gate 1 (PG02)Location:Node Type:…Storage AreaRFID-Reader…? ?Track Event 20031502-3003Date: 2003-15-0217:03:21Quantity: 129 (IP392)100 (IP349)……-25- SEEBURGER Inc. 2006

RFID-Enabling SCM Automated Processes RFID physical — tag readers increase product visibility by gatheringthe data RFID software triggers rules-based events Software integration enables:PredictiveApplicationsAlert when Product is Out of StockAutomatedApplicationsAutomatically Activate Order Replenishment-26- SEEBURGER Inc. 2006

RFID Eliminates Integrated the need with for VMI manual — ID query Critical SituationRFIDInspectionCriticalSituation-27- SEEBURGER Inc. 2006

RFID Integated with VMI — Automated OrderReplenishmentAutomaticproposal ofshipments-28- SEEBURGER Inc. 2006

RFID Integrated to VMI — Automated Supply and DemandAutomaticproposal ofshipments.Critical situationhas beenresolved-29- SEEBURGER Inc. 2006

Workbench Gateway Hosted Supply Chain IntegrationIntegrate Enterprise ApplicationsERPWMSID product positionIntegrateFORECASTINGIntegrateWorkbench GatewayCommunicate – Integrate – Device Mgmt.RETAILMANFCTCreate product flowmapsControl routingMatch productto forecastID bottlenecksGenerates productorderRETAILDCTRNSP3PLWHOUSEIntegrate Trading PartnersDC-30- SEEBURGER Inc. 2006

Implementing RFID SoftwareThe Data Issues-31- SEEBURGER Inc. 2006

The Impact of Data VolumesNumber ofItemsNumber of EPC codesItem11 EPC codeTracking BenefitAdoptionInner case(holds 10 items)Case(holds 6 inners)106010 items + 1 inner =11 EPC codes60 items + 6 inner + 1 outer = 67EPC codesPallet(holds 16 cases)960960 items + 96 inner + 16 case + 1pallet =1074 EPC codesPallet load(example 4 pallets)38403840 items + 384 inner + 64 case +4 pallets =4292 EPC codesComplex Issues:• What happens when the item contains manyRFID-enabled components?• How will one manage mixed pallets?-32- SEEBURGER Inc. 2006Key Challenges:• This data will challenge system infrastructure, applicationperformance, and processes• Batch systems will limit benefit realization

When the Readers are Considered, the DataVolumes Increase Significantly Readers can be on shelves, trolleys, doorways, handhelds, and onalmost any other location As an item moves through the zone of a reader it will send a signalwhich then needs to be stored and processedEntry Portal1,072 EPC codesRoof Reader1,072 EPC codesShelf Reader1,072 EPC codesExit loading dock 5READERREADERREADER-33- SEEBURGER Inc. 2006As the pallet moves through yourenvironment, your readers willlog the movement. Is this ofinterest and needs to be loggedor should you ignoreirrelevant reads?If you are using active tags onintelligent trolleys then youneed to be able to read thedata in real time all the time

RFIDware (Process Integration Perspective)ReaderReader Controller (∆ Application)ReaderApplicationsRFID middlewareRFIDApplicationsBusiness Applications(ERP, CRM, SCM, WMS, etc.)Collaborative Applications(EDI, Marketplaces, etc.)-34- SEEBURGER Inc. 2006

RFID Data ProcessReader Eventreadextendaggregate/synchronizedeployreact/writeReaderDBApplications(WMS, ERP, CRM, …)HardwareCareful Data ManagementB-to-BReader-35- SEEBURGER Inc. 2006

-36- SEEBURGER Inc. 2006Integrating RFID

SEEBURGER RFIDRFID is integrated with business systems across several technicallayersSEEBURGER SEEBURGEREDIFCASTERPWMSEAI MiddlewareSCMORDERFiles ReportsASN TransmissionEventsAlarmsRealTimeIntegration LayerApplication LayerAggregation &Filtering LayerRFID VARRFIDreadersProductPhysical Layer-37- SEEBURGER Inc. 2006

Integration — Across ApplicationsThird partiesManufacturerRFID data will impact typical manufacturers architecture in many layersTrading PartnerAS2 EDI -INT(EDI/HTTP)AS2handlerEDItranslatorERP/WMSNew supplychainvisibilityapplicationsApplicationLayerData synchqueries(XML/HTTP)EAI/B2B middlewareWorkflow engineApplication and B2B- collaboration adaptersIntegrationLayerData broker (adaptation and transformation)UCCNetGLOBALRegistryData synchtransactions(XML/HTTP)Messaging infrastructureData smoothingAggregation/filtering layerData aggregationEvent schedulingAggregationandFiltering LayerEvent filteringEvent queuingReader adaptersReader Management-38- SEEBURGER Inc. 2006RFID physical layer(readers/antennas/tags)PhysicalLayer

Example: SAP NetWeaver Adapter and RFIDVendorCheck andReceive GoodsBuyerSEEBURGERBISBusiness content plusRFID informationSEEBURGERRFIDWorkbenchRFIDintegrationSAP NetWeaverPeople IntegrationInformation IntegrationAIISAPSAP SCEMAdv. ShipNotificationProcess IntegrationSAP NetWeaverEDI Industry Adapter• Business content• EDI TechnologySAP ERPApplication platform-39- SEEBURGER Inc. 2006

Kraft Foods Architecture of InfrastructureWANAdmin UserSTAR ERPForklift/ScannerALEWANWeb-ConsoleSTAR LES/WMCrane/ConveyorSPS/MESWANRFCORIONConsole MESlocalcentral-40- SEEBURGER Inc. 2006

ERPWMSERPInbound Process — Receive Electronic ASNPurchaseOrder/SA1 Pallet = 1 HUB7 B8 B9B4 B5 B6B1 B2 B3DESADVIDOCTOInboundDeliveryInboundDeliveryPurchaseOrder/SATOProcesses1. Receive DispatchAdvice2. Automaticallycreated InboundDeliverywith HUs3. Replicate InboundDelivery4. Transfer Orderswhere createdautomatically ormanually5. Physical Putawayof Pallets6. Verify DestinationBin and HU7. Confirm TransferOrder8. Post GoodsReceipt automaticInvoiceVerification 9. LIV Log. InvoiceVerification-41- SEEBURGER Inc. 2006

SEEBURGER Trading Partner Integration on Workbench/GatewayERPWMSTrading PartnersSEEBURGERRFID WorkBench GatewayAutomatic Rules BasedPredictive EventsEPC CodesDatabaseERPWMSOrderASN= Adapter-42- SEEBURGER Inc. 2006

Achieving the RFID Integrated Supply ChainCurrent IssuesLimited planning on how to use RFID dataLimited ability of RFID vendors to integrateacross trading partners and control systemsCost-prohibitive to all but the largest retailersand manufacturersCost-prohibitive to integrate all parts of thesupply chain-43- SEEBURGER Inc. 2006

Solution – Step by Step ProjectStep 12006Step 22007Step 32008Step 42009Pilot SystemAdditional Items& PartnersIntegrate FullSystemActivateFull RFID GatewayLimited ProductIntegrate 1 PartnerMore Locations,More IntegrationAcrossSupply ChainApps.Across ALL PartnersMajor productsID a ROIImprove ROIAll PartnersTest & Measure-44- SEEBURGER Inc. 2006

Summary - 1 Example ROI StrategyUse RFID to generate Predictive EventsPredictive Events Integrate to Automated Applications Automates VMI Program Automates Stock Replenishment Enhances Inventory & Logistics ControlsAutomated Applications lead to ‘ Improved Controls and ProductFlows’ Lowers the need for high Inventory Reserves Saves billions of $ dollars-45- SEEBURGER Inc. 2006

Resources Gives full information on DoD RFID program The EPCglobal Web site; gives information on standards and latestthinking on RFID strategies for the CPG supply chain-46- SEEBURGER Inc. 2006

7 Key Points to Take Home Have a clear vision for ROI in place before you start Involve your trading partners in planning the project Focus on the solution and not the tags and readers Decide how to manage and filter the data Integrate RFID with ERP/WMS/Other Applications Identify which applications can be predictive and look to automatethat process through integration Develop a step-by-step implementation plan. Don’t expect immediatepayback, but work towards a large, long-term gain.-47- SEEBURGER Inc. 2006

Take the 1 st step to Your RFID-EnabledSupply ChainStep 12006IDnet Pilot SystemComply to MandatesTest RFID Limited on Limited Product LinesTest Integration with 1 Partner 1 ApplicationProve the ROI-48- SEEBURGER Inc. 2006

Questions ?SEEBURGER RFIDIDnet & Workbenchwww.seeburger.comp.calderbank@seeburger.comPhilip CalderbankVice President RFIDPhone: 678 904 3332-49- SEEBURGER Inc. 2006

More magazines by this user
Similar magazines