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Wal*Mart Case Study: RFID & Supply Chain Management

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Wal*Mart Case Study: RFID & Supply Chain Management TEAM MEMBERS Angrish, Sangita Chivukula, Venkata S. DeWitt, Brendon Patel, Raxesh Shamsi, Shazeb Yellapragada, Ramachandra Agenda Introduction to RFID Introduction to Supply Chain Management (SCM)

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wal mart case study rfid supply chain management
Wal*Mart Case Study: RFID & Supply Chain Management

TEAM MEMBERS

  • Angrish, Sangita
  • Chivukula, Venkata S.
  • DeWitt, Brendon
  • Patel, Raxesh
  • Shamsi, Shazeb
  • Yellapragada, Ramachandra

@Copyrights Reserved 2005 - RFID Team : INFS 640

agenda
Agenda
  • Introduction to RFID
  • Introduction to Supply Chain Management (SCM)
  • Introduction to Wal*Mart and its Business Processes
  • RFID in Wal*Mart
  • Current RFID Usage
  • Limitations and Challenges of RFID
  • Future of RFID

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introduction
Introduction
  • What is RFID ?
  • Why RFID over Bar-Code ?
  • RFID Working and Infrastructure

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what is rfid
What is RFID?

Electronic tagging technology that allows an object, place, or person to be automatically identified at a distance without a direct line-of-sight, using an electromagnetic challenge/response exchange.

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slide6
RFID
  • 40 years old technology
  • Why being Used NOW?
      • right time to use the technology
      • Benefits OUTWEIGH the Deployment Costs

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why rfid over barcode
Why RFID over Barcode ?
  • Ability to read without line-of-sight
  • Serialized numbering scheme enables more powerful
      • Understanding
      • Diagnosing
      • Controlling of Supply Chain
  • Serial numbers provides individual entity tracking and much more detailed behavior of SCM than UPC or EAN used in Bar codes
  • No duplicate reading of the same tag – a possibility in Bar codes
  • More powerful sensor-network and monitoring-system than bar-code systems.

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rfid components
RFID Components

RFID

Reader

TAG

Antenna

Silicon Chip

Substrate

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working of rfid
Working of RFID
  • Readergenerate signals that are dual purpose: provide power for a tag, and create an interrogation signal.
  • Tagcaptures the energy from Reader and executes commands sent by the Reader
  • Tag sends back a signal containing a unique digital ID (96-bit serial number) that can be looked up in a database available to the reader to determine its identity, perhaps expressed as a name, manufacturer, SKU (stock keeping unit) number, and cost.
  • Tags are generally passivebecause they require no batteries or maintenance.

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rfid infrastructure
RFID Infrastructure
  • Existing software systems

UNABLE to handle serial numbers

Solution– RFID Middleware

  • RFID Middleware : Layer between RFID readers and the application software

Consists of:

      • Lower level device and data management
      • Higher Interpretation level

Context generation and Interpretation

Device Management

Data Management

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rfid infrastructure contd
RFID Infrastructure (contd.)
  • Lower level devices such as motion sensors, programmable logic arrays and human interfaces fetch data and provides to Data management layer
  • Data management layer provides some functionality of filtering data due to intermittent appearances and disappearances
  • After the data management layer yields data, the Interpretation layer extracts inference from such data and forwards it to the applications that deploy RFID

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up next
Up Next……
  • Introduction to RFID
  • Introduction to Supply Chain Management (SCM)
  • Introduction to Wal*Mart and its Business Processes
  • RFID in Wal*Mart
  • Current RFID Usage
  • Limitations and Challenges of RFID
  • Future of RFID

@Copyrights Reserved 2005 - RFID Team : INFS 640

introduction to supply chain management
Introduction to Supply Chain Management
  • Supply Chain Management
    • Coordination of a network of facilities and distribution options
    • Includes procurement, processing and distribution
  • Five core processes
    • Planning
    • Sourcing
    • Making
    • Delivering
    • Returning
  • Integration of these processes to maximize benefits

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introduction to supply chain management contd
Introduction to Supply Chain Management (contd.)
  • Three levels of supply chain management
    • Strategic – linked to corporate strategy
    • Tactical
    • Operational – involve day to day activities

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introduction to supply chain management contd15
Introduction to Supply Chain Management (contd.)

Overall Goal

  • Optimize supply chains
  • Provide more accurate and time sensitive information
  • Maximize sales and profits

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introduction to supply chain management contd16
Introduction to Supply Chain Management (contd.)
  • RFID and Supply Chain
    • Provide real time information
    • Better readings of customers and markets
    • Ability to provide right products at the right times
  • Deloitte & Touché benchmark initiative
    • Only 7% of companies managing supply chain effectively
    • These 7% are 73% more profitable than other companies

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up next17
Up Next……
  • Introduction to RFID
  • Introduction to Supply Chain Management (SCM)
  • Introduction to Wal*Mart and its Business Processes
  • RFID in Wal*Mart
  • Current RFID Usage
  • Limitations and Challenges of RFID
  • Future of RFID

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wal mart introduction and business processes
Wal-Mart Introduction and Business Processes

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operations
Operations
  • Wal Mart Stores
    • Largest segment accounting to about 67.3% of 2005 fiscal sales
    • Super centers
    • Discount stores
    • Neighborhood Markets
  • SAM’s Club
    • Consists of membership warehouse clubs accounting to 13% of 2005 fiscal sales
  • Wal-Mart International
    • Accounted to 19.7% of 2005 sales

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business model of wal mart
Business Model of Wal*Mart
  • Market Strategy of Wal*Mart
    • Everyday Low prices (EDLP)
    • Employs both “Clicks & Bricks” and “Bricks & Mortar” strategy
  • Organizational Development
    • Specialty Division
    • Retail Division
  • Competitive Advantage
    • Price match guarantee
  • Market opportunity
    • B2B Single firm network
    • B2C E-Tailer Business Model

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supply chain management at wal mart
Supply Chain Management at Wal*Mart
  • Procurement and Distribution
  • Logistics Management
  • Inventory Management

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procurement and distribution
Procurement and Distribution

Procurement

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

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procurement and distribution23
Procurement and Distribution

Distribution

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

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logistics management
Logistics Management
  • Involves managing transportation & delivery of products
  • More than 7000 company owned trucks services Distribution centers
  • This enables shipping of goods from distribution centers to the stores within 2 days and replenish the store shelves twice a week
  • “Private Fleet Driver handbook” – tracking drivers activities
  • “Cross Docking” – from Manufacturer to Customer
  • Cross Docking enabled “demand chain”
  • “Demand chain” - Customers ‘pull’ the products instead of retailers having to “push” them

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inventory management
Inventory Management
  • Wal*Mart set up its own satellite system in 1983
  • Reducing unproductive inventory as far as possible
  • Use of Bar-code & RFID technologies for easy packing and counting of the inventories, efficient picking and receiving & proper inventory control of the products
  • “Massively Parallel Processor “ - enables easy tracking movement of goods & stock levels across all distribution centers and stores
  • Use of “Magic Wand” to keep track of inventory in stores
  • Use of sophisticated algorithm and technology infrastructure to forecast the quantities of each item to be delivered, based on inventories in the store and customer needs
  • Centralized inventory database

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up next26
Up Next……
  • Introduction to RFID
  • Introduction to Supply Chain Management (SCM)
  • Introduction to Wal*Mart and its Business Processes
  • RFID in Wal*Mart
  • Current RFID Usage
  • Limitations and Challenges of RFID
  • Future of RFID

@Copyrights Reserved 2005 - RFID Team : INFS 640

rfid in wal mart
RFID in Wal*Mart
  • Initiated the plan to implement RFID in its supply chain in June 2003
  • Subsequently, reinforced the RFID standards and specifications in November 2003

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rfid in wal mart28
RFID in Wal*Mart
  • Specification of RFID Components
  • TAGS
  • EPC
  • Why RFID?
  • EFFICIENCY
  • WAL*MART SUPPLIERS

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specification of rfid components
Specification of RFID Components
  • EPC
  • Type of Chip
  • TAG
  • Distribution Centers to accept RFID tagged products

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specification of rfid components30
Specification of RFID Components
  • EPC
    • 96 bit unique number to identify an item in the supply chain.
    • Global Trade Identification Number.
  • EPC data format on the chip is Class 1 Version 2 communication protocol.

Class 0: Factory programmable protocol

Class1: Provides the capability to write serial numbers on the chip

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specification of rfid components31
Specification of RFID Components
  • TAGS
    • Operates in the UHF spectrum
        • 868 MHz to 956 MHz
    • Carries the 96-bit serial number
    • Is field programmable
      • Allows suppliers to write serial numbers to the tags while being applied to the products

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why rfid
WHY RFID?
  • OBJECTIVE: To increasethe efficiency of its supply chain.
  • It will
    • Enhance Transparency of supply chain
    • Help in minimizing cost and labor
    • Strengthen inventory control

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efficiency
Efficiency
  • Wal*Mart aims to reduce the practice of manually placing the order
  • Has achieved 10% reduction in the case
  • Implementation of RFID tags in Wal*Mart’s inventory has helped boost sales by keeping shelves better stocked
  • Usage of RFID has reduced out-of-stock merchandise by 16% at the stores that have implemented RFID tags for more than a year.

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rfid cost
RFID COST

Cost Benefit Analysis

Initial Research indicatedcost of RFID tag was above $1.

At present, TAG costs about 30 cents

Cost will drop to less than 5 cents, if deployed on a large scale

Analysts suggest that the tag should be approx. 1 cent for small ticket items

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wal mart suppliers
Wal*Mart Suppliers
  • 130 major suppliers ship merchandise to Wal*Mart distribution centers with about 5.4 million tags
  • By 2006, Wal*Mart aims to mandate RFID implementation for all its suppliers

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wal mart suppliers36
Wal*Mart Suppliers
  • Major Suppliers:
    • Gillette
    • Hewlett-Packard
    • Johnson & Johnson
    • Kimberly Clark
    • Kraft Foods
    • Nestle
    • Proctor and Gamble

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wal mart suppliers37
Wal*Mart Suppliers
  • Kimberly-Clark
    • Manufacturer of paper goods products
      • Eg: Kleenex, Huggies
    • Tagged Scott paper Towels shipment with RFID tags
    • First supplier to use RFID – April 2004

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up next38
Up Next……
  • Introduction to RFID
  • Introduction to Supply Chain Management (SCM)
  • Introduction to Wal*Mart and its Business Processes
  • RFID in Wal*Mart
  • Current RFID Usage
  • Limitations and Challenges of RFID
  • Future of RFID

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successful implementation of rfid
Successful Implementation of RFID
  • Harvard Research suggests a seven step model for successful implementation of RFID.

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seven step model
Seven Step Model
  • Understand our visibility requirements
  • Query other end users about recommendations for trials
  • Move into the action phase in a real-world setting in a pilot/trial mode
  • Evaluate technical performance
  • Consider the economic benefits
  • Understand the impact
  • Decide whether or not to move forward with a larger scale implementation

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major companies implementing rfid technology
Major Companies implementing RFID technology
  • Volkswagen
  • Gillette
  • Tesco supermarket tries out smart tagging
  • Sun Microsystems sets up RFID test centre in Scotland
  • I.B.M. Expands Efforts to Promote Radio Tags to Track Goods
  • Texas Instruments

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up next42
Up Next……
  • Introduction to RFID
  • Introduction to Supply Chain Management (SCM)
  • Introduction to Wal*Mart and its Business Processes
  • RFID in Wal*Mart
  • Current RFID Usage
  • Limitations and Challenges of RFID
  • Future of RFID

@Copyrights Reserved 2005 - RFID Team : INFS 640

limitations of rfid
Limitations of RFID
  • Why the implementation of a 40 year old technology is taking so long?
  • As pointed out earlier, benefits are gradually outweighing the deployment costs
  • Limitations and challenges: Barriers to Quick Deployment

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

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limitations and challenges of rfid contd45
Limitations and Challenges of RFID (contd.)
  • Industry Standards
    • Privacy advocates are insisting the companies to state their intended use of the technologydue tolack of industry standards
  • Privacy and civil liberties
    • RFID tags can be embedded into/onto objects and documents without the knowledge of the individual
  • Complex programming
  • Potential job losses

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rfid practices that should be prohibited
RFID Practices that Should be Prohibited
  • Merchants must not force their customers into accepting RFID tags in the products they buy.
  • RFID must not be used to track individuals absent informed and written consent of the data subject – directly or indirectly.

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up next47
Up Next……
  • Introduction to RFID
  • Introduction to Supply Chain Management (SCM)
  • Introduction to Wal*Mart and its Business Processes
  • RFID in Wal*Mart
  • Current RFID Usage
  • Limitations and Challenges of RFID
  • Future of RFID

@Copyrights Reserved 2005 - RFID Team : INFS 640

future of rfid
Future of RFID

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future of rfid49
Future of RFID
  • For Retailers ??
    • The technology will bring a revolution.
    • It will be widely used in retail and consumer goods, automotive, healthcare, military, postal department and other scientific uses.
  • For Customers??
    • If the consumers think the technology is too complex, confusing or threat to their privacy…
  • Will the technology survive?

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key factors for rfid
Key Factors for RFID
  • Setting up more standards in the industry
  • Bringing down the cost of RFID
  • Level of understanding and experience

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demonstration of wal mart scm
Demonstration Of Wal*Mart SCM

Wal*Mart Store

Manufacturer

Wal*mart Warehouse

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movie time
Movie Time

http://www.future-store.org/servlet/PB/-s/1rop28q1ikm3s91d05t0h15w06yt14q0kbq/menu/1004023_l2/index.html

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thank you
THANK YOU

Questions & Suggestions?

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