Title: RFID%20Migration%20Strategies:%20The%20Key%20to%20Electronic%20Product%20Code
1RFID Migration Strategies The Key to Electronic
Product Code
- Michael Dominy
- Director, Enterprise Services
- The Yankee Group
- October 21, 2004
2Agenda
- RFID Basics
- Implementation Strategies
- Costs and Risks
- Benefits
- Best Practices
3Agenda
- RFID Basics
- Implementation Strategies
- Costs and Risks
- Benefits
- Best Practices
4RFID Basics Data and Processes
Retailer
Supplier
ERP/SCM Apps
3
4
2
Server and Database
B2Bi
Tags, Readers, LAN, WLAN, Software
1
1
Manufacturer
Source The Yankee Group, 2004
5RFID Basics Technologies
- Tags (chips)
- Readers
- Network (LAN or WLAN)
- Reader and network Software
- Integration software to database
- Database
- Integration software to applications
- Data communication software/services
Source EPC Global
PML Server
ERP Applications (Inv., SCM, Planning)
ONS Server
EPC
Savant
Reader Network
SCE Applications (WMS and TMS)
RFID Tagged Pallet and Cases
6EPC RFID Spending on Technology and Services
Cost per Tag
0.30
0.18
0.09
0.05
4,500,000
Tags
4,000,000
Services
3,500,000
Middleware
3,000,000
Cost(in Thousandsof U.S. Dollars)
Database
2,500,000
WLAN
2,000,000
Scanners
1,500,000
Applicators
1,000,000
500,000
0
2004
2005
2006
2007
2008
As tag costs decline and adoption increases, the
RFID market will reach 4.2 billion by 2008
Source The Yankee Group, 2004
7RFID Basics The Opportunity
- Reduce inventories 117-293 billion
- Increase sales 83-166 billion
- How?
- Connecting, collaborating and synchronizing with
the extended supply chain - RFID as a key enabler for improved SCM
Source The Yankee Group, 2004
8RFID Basics Key Decision Points
Source The Yankee Group, 2004
9Agenda
- RFID Basics
- Implementation Strategies
- Costs and Risks
- Benefits
- Best Practices
10Implementation Strategies
Compliance Conservative Committed
Minimal RFID at limited locations (typically 1-3) distribution centers Basic RFID capabilities at all (typically 4-7) distribution centers RFID at all distribution centers with selective tagging in manufacturing
Source The Yankee Group, 2004
11Implementation Strategies Across Verticals
Survey of 309 enterprises.
Source The Yankee Group, 2004
12Industry Implementation Strategies Survey Says
Committed
Conservative
Survey of 309 enterprises.
Source The Yankee Group, 2004
13Hosted by
What best describes your RFID implementation or
migration strategy?
- Compliance (1-3 distribution centers)
- Conservative (4 distribution centers)
- Committed (ALL distribution centers and
some implementation in manufacturing) - No plans to implement RFID
14SAP Users Implementation Strategies Survey Says
Survey of 76 SAP Users.
Source The Yankee Group, 2004
15Industry Implementation Strategies Survey Says
Committed
Conservative
Compliance
Survey of 309 enterprises.
Source The Yankee Group, 2004
16Agenda
- RFID Basics
- Implementation Strategies
- Costs and Risks
- Benefits
- Best Practices
17Costs and Risks
Compliance Conservative Committed
Costs and Risks Costs and Risks Costs and Risks
Unable to meet increasing volume requirements (capacity) Longer lead times Increased logistics costs (intranetwork transfers) Typical cost 1-2 million Invest too broadly and quicklypioneer Multiple expansion projects as volume rises unevenly Typical cost 7-10 million Slow adoption Changing requirements Technology changes Typical cost gt30 million
Source The Yankee Group, 2004
18Planned RFID Spending
Survey of 309 enterprises.
Source The Yankee Group, 2004
19Hosted by
How much do you plan to spend on RFID in 2005?
- 0
- gt1 million
- 13 million
- 3 million
20Agenda
- RFID Basics
- Implementation Strategies
- Costs and Risks
- Benefits
- Best Practices
21RFID Benefits Continuum
High
- Improve promotion effectiveness
- Improve freshness/reduce obsolescence
- Improve extended SCM
- Improve on-shelf availability
RFID Driving Collaborative Planning and Execution
- Invoice matching
- Processing efficiencies
- In-transit visibility
- Reduce shrink
- Improve deduction management
BenefitOpportunity
- Reduce labor in DC operations
- Improve yard management
- Improve inventory management and asset management
RFID Improving Extended Supply Chain Execution
RFID Improving Internal Supply Chain Execution
Low
High
Degree of Collaboration and Linkage Between
Planning and Execution
Source The Yankee Group, 2004
22Benefits
Compliance Conservative Committed
Benefits/Advantages Benefits/Advantages Benefits/Advantages
Minimize capital expenditures Minimize operational impact Minimal (if any) operational benefits Conserve capital Defer committing to a particular technology vendor Hedge against additional customer requirements Small labor savings Volume discounts/ leverage with vendor Identify internal savings Logistics cost Inventory Demand planning Supply planning Revenue
Source The Yankee Group, 2004
23Benefits Gaining Value from RFID
Analyze, Model, Redesign, Execute Extended Supply
Chain Flows
Supply Chain Partner n
Supply Chain Partner 1
RFID Data
Transactions (EDI, XML,)
The sooner you implement technology that enables
you to understand inter-enterprise supply chain
flows, the faster you can improve the flow of
goods through the supply chain
Source The Yankee Group, 2004
24Will RFID deliver ROI?
Hosted by
- Yes, for the extended supply chain but not my
operations - Yes, for the extended supply chain and my
operations - Yes, for my operations but not the extended
supply chain - No, ROI for my operations or the extended supply
chain - Dont know
25Benefits Survey Says Most (57) of SAP Users
See ROI in RFID
Source The Yankee Group, 2004
26Agenda
- RFID Basics
- Implementation Strategies
- Costs and Risks
- Benefits
- Best Practices
27Best Practices
- Get started now! Set-up a RFID lab
- Target problem areas
- Begin with a manageable project
- Look beyond generic benefits
- Put ROI in perspective
- Ask, What if?
- Develop a business and migration road map
Source The Yankee Group, 2004
28Yankee Group Recommendations
- Use RFID to establish a supply chain road map
- From chains to networks
- View RFID as one element of your wireless supply
chain strategy - Turn to the right migration manager
- Who understands supply chain networks?
- Who understands RFID and complementary wireless
technologies? - WHO DO YOU TRUST?
- Use best practice selection and decision
processes for selecting vendors
Next-generation SCM marries traditional and
wireless supply chains
29Thank You!
- mdominy_at_yankeegroup.com