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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 l.jpg
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


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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

  • What is RFID ?

  • Why RFID over Bar-Code ?

  • RFID Working and Infrastructure

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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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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 ?

  • 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.

  • @Copyrights Reserved 2005 - RFID Team : INFS 640


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    RFID Components

    RFID

    Reader

    TAG

    Antenna

    Silicon Chip

    Substrate

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    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.

    @Copyrights Reserved 2005 - RFID Team : INFS 640


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    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.)

    • 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

    @Copyrights Reserved 2005 - RFID Team : INFS 640


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    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


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    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.)

    • 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 (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 (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 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


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    Wal-Mart Introduction and Business Processes

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    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

    • 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

    • Procurement and Distribution

    • Logistics Management

    • Inventory Management

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    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 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

    • 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

    • 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 l.jpg
    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 l.jpg
    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*Mart

    • Specification of RFID Components

    • TAGS

    • EPC

    • Why RFID?

    • EFFICIENCY

    • WAL*MART SUPPLIERS

    @Copyrights Reserved 2005 - RFID Team : INFS 640


    Specification of rfid components l.jpg
    Specification of RFID Components

    • EPC

    • Type of Chip

    • TAG

    • Distribution Centers to accept RFID tagged products

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    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

    @Copyrights Reserved 2005 - RFID Team : INFS 640


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    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

    @Copyrights Reserved 2005 - RFID Team : INFS 640


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    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

    @Copyrights Reserved 2005 - RFID Team : INFS 640


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    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

    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

    @Copyrights Reserved 2005 - RFID Team : INFS 640


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    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 Suppliers

    • Major Suppliers:

      • Gillette

      • Hewlett-Packard

      • Johnson & Johnson

      • Kimberly Clark

      • Kraft Foods

      • Nestle

      • Proctor and Gamble

    @Copyrights Reserved 2005 - RFID Team : INFS 640


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    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

    @Copyrights Reserved 2005 - RFID Team : INFS 640


    Up next38 l.jpg
    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


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    Successful Implementation of RFID

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

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    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

    @Copyrights Reserved 2005 - RFID Team : INFS 640


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    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

    @Copyrights Reserved 2005 - RFID Team : INFS 640


    Up next42 l.jpg
    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


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    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

    @Copyrights Reserved 2005 - RFID Team : INFS 640


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    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

    @Copyrights Reserved 2005 - RFID Team : INFS 640


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    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

    @Copyrights Reserved 2005 - RFID Team : INFS 640


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    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.

    @Copyrights Reserved 2005 - RFID Team : INFS 640


    Up next47 l.jpg
    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


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    Future of RFID

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    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?

    @Copyrights Reserved 2005 - RFID Team : INFS 640


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    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

    Wal*Mart Store

    Manufacturer

    Wal*mart Warehouse

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    Movie Time

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

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    THANK YOU

    Questions & Suggestions?

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