1 RFID and Telecommunication Services 25th May 2004 DATA BASE forum © Accenture 2004. All Rights Reserved. SESSION 1 State of the art and Market Trends.

1 RFID and Telecommunication Services

25th May 2004DATA BASE forum

© Accenture 2004. All Rights Reserved.

SESSION 1State of the art and Market Trends

Stefan Therond

Accenture Technology Labs

Silent Commerce Lab Director




Popular misconceptions about RFID…

RFID has been around for many years and is widely used in specialised/close loops applications.

RFID is not to be confused with RF (i.e. Wireless LANs) already used the Retail supply chain.

RFID is not a plug & play technology.

“One frequency fits all” is a myth.

Technology is evolving but physics has limitations.

RFID is tested now for open supply chain applications and deployments will be going on for multiple years.

Supermarket self-checkout is probably 10-20 years away from us, if it ever happens.

RFID does not solve data inconsistency within and across enterprises. The key is to identify which data are important for which application.

Management of this new physical infrastructure has been underestimated.

And remember: it is all about people




It is not only about the tags…

Tags

Read Points

Installation & Tuning

Middleware

Software Integration

Change Management

Product & Process Changes

…even at 5 cents each…




RFIDconcerns

Practical implications of RFID

Many clients are still in a “wait and see” mode

Concern about ROI (‘just another technology wave’)

IT budget restrictions & high infrastructure/solution costs

Not always a clear business case within the enterprise

Uncertainty around standards

Difficult to achieve competitive advantage through technology alone

What do I need to do to comply? What are the mandate requirements? What will this cost me? How much can I charge to the organization driving the mandate?

What do I do first? Second? And how can I take a phased approach?

What needs to change in my existing systems and business processes to integrate RFID?

How long will it take to make that happen? Will I be ready in time?

What else will be required in the future? What other retailers will soon require RFID?

And most importantly, how can I leverage the technology for my own benefit? What is the business case?

Concerns about the practical implications of this new technology have left many companies wondering what to do next




RFID can be used at various tagging levels

NonResaleable

Management

Consumer

SupplyChain

Management

Level of Tagging / Time

Cu

mu

lati

ve V

alu

e

Customer insight Shelf availability Self checkout Innovative payment mechanism Return management Maintenance

Track & Trace Inventory management Asset management

Quality Control Distribution Productivity Track & Trace Inventory management Asset management Shelf maintenance High value goods management

Truck/Asset Tote/PackagePallet/Case




Look for Burning Platforms…

ShrinkEnhanced check of products at receiving and exit bays

CounterfeitingFull tracking of goods from plant to client. Also applies to grey market

Regulatory RequirementsFull tracking of goods from raw materials to shipment. Genealogy.

QualityBatch tracking in manufacturing, inventory & fulfilment operations tracking

Stock-Outs

Excess Inventory

Enhanced inventory visibility, due to improved entry / exit checks, and “permanent” physical counting

Today’s most Common drivers of value are…




A roadmap for suppliers

Understand the Opportunity

What are the benefits of this new technology?

What is the opportunity for supply chain improvement?

What is the retailer’s contribution to revenue and profitability?

Can this be a competitive advantage?

What is the typical investment required?

What are the time constraints?

What are the budget constraints?

How does this fit in with other business and IT change initiatives?

Does this constitute a “burning platform?”

Is there consensus throughout the organization?

What technology components will be utilized?

What vendors will be utilized? Where will the pilot be

executed? How will the technology be

implemented?

What business capabilities offer the most value?

What business capabilities will be pursued?

What parts of the business will be affected?

In what sequence will the business capabilities be pursued

What is the business case for building the new capabilities?

How will the benefits be measured?

Create an Agenda Begin building Capabilities

Formulate a Strategy

A successful RFID program begins with a clear understanding of how to proceed…




Enhanced ROI using groundbreaking RFID industry solutions

EPC Pharma Jumpstart

EPC Electronics Jumpstart

• A consortium of manufacturers, distributors and retailers across the pharmaceutical industry

• Working together to prove the business value of Electronic Product Code (EPC) and radio frequency identification (RFID) within the supply chain

• Focus on the following areas:– Safe and secure supply chain– Returns management– Operational efficiencies– Establish standard industry operating models for

each of these areas and encourage EPC usage throughout the pharmaceutical industry

• Abbott Laboratories• Procter & Gamble• Johnson & Johnson• Cardinal Health• McKesson• Rite Aid• CVS Pharmacy

• Abbott Laboratories• Procter & Gamble• Johnson & Johnson• Cardinal Health• McKesson• Rite Aid• CVS Pharmacy

• Leverage approach successfully used in Pharmaceutical

• Prove out RFID business value in an end-to-end supply chain context

• Jumpstart RFID uptake and help establish the industry operating model

• Accelerate the technology learning curve for all participants

• Harness the momentum currently developing individually at companies

• Dell• Sony• HP• Flextronics• Haier• Best Buy• Circuit City• Wal-Mart• UPS• Nokia

• Dell• Sony• HP• Flextronics• Haier• Best Buy• Circuit City• Wal-Mart• UPS• Nokia

Participants

Potential Participants




Is RFID mature to fit the retailers mandate?

Standards Partial worldwide data standards Country-specific frequencies

allocation

Market HW & SW Vendor market is

fragmented Value chain collaboration

Technology Performance & robustness HW & SW costs Data synchronisation &

integration

People Afraid to change work habits and

re-focusing on mainstream tasks Privacy and Trust

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RFID and Telecommunication Services25th May 2004

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Putting it all together requires a wide range of expertise…

Solution Delivery Accelerator

Speeds up the delivery of RFID solutions

S&BC

Build

Test& Refine

Execute

Pilot

Scale and

Realize

BenefitsS&BC

Build

Test& Refine

Execute Pilot

Scale andRealizeBenefitsMethodology

Vendor Alliances Accenture

Technology Labs

Technology and Vendor Selection

Tool

Reference Architecture

Enterpriseintegration

Accelerator

Cost/Benefit Estimator

AssetsTools

Methods

Procurement Service

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…bringing a phased approach throughout the implementation cycle

RFID Strategy & Business Case

Build Pilot

Test &Refine Model

ExecutePilot

Scale andRealizeBenefits

Business Case & Value Management

Program & Change Management

RFID Strategy & Business Case

Build Pilot

Test &Refine Model

ExecutePilot

Build Pilot

Test &Refine Model

ExecutePilot

Scale andRealizeBenefits

Business Case & Value Management

Program & Change Management

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The Wal-Mart Mandate - A Retailer Plan for Action

Jan 2005 – All cases/pallets shipped to 3 DC (Texas) and the 150 associated Stores

Scanning at 5 Places… DC: receiving & shipping dock Store: receiving dock, backroom to store and trash compactor

# 1 Goal is store backroom inventory visibility Inventory Management Visibility to Suppliers Inventory shrink Asset tracking

The pace of domestic expansion dependent on progress and technology evolution and is expected to be announced in the summer.

Tagging individual items 10 to 15 years away.

This is only the beginning of the journey…

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Accenture provides a “One-stop shop” solution

Accenture

Third-Party

Consulting

IT

Software

Hardware

Infrastructure RFID

Middleware RFID

Selection

Installation & Adaptation

Installation

Deployment

Execute

Strategy, Processes, Organization, IT

Architecture Selection

DeploymentAdaptation & Integration

PMO

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Some take away

It works There is no simple recipe book. But it is not “black art” either.

Understand business benefits

Gain top management support

Manage expectations Technology is evolving / physics has limitations ‘Hype curve’ position is extremely high

Start now and use a phased approach

Focus on 4 KEY components Data collection / physics Data management / architecture Business process ROI capture

And remember: it is all about people

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Conclusion

Visit our web site at…

… http://www.accenture.com/SilentCommerce

1 RFID and Telecommunication Services 25th May 2004 DATA BASE forum © Accenture 2004. All Rights Reserved. SESSION 1 State of the art and Market Trends.

Documents

rfid n rfid

n technology

technology wave n

data base forum accenture

telecommunication services

practical implications

standards n difficult

enterprise n uncertainty