Conference Board 03 May 05 Tyco Rfid

End-to-End EPC RFID Solutions:

Making It Play . . . And Pay

George ReynoldsVice President, RFIDTyco Fire & Security

Discussion Topics

Company overview

EPC pilots

A closer look at several deployments

Critical next steps

Tyco / ADT Foundation for Supply Chain Visibility

Logical Layer

Physical Layer

ADT’s RFID Solution

ADT Support Services:Installation, support and remote diagnostics services which provides maximum availability

ADT RFID Services: Systems design, site survey and compliance testing

Sensormatic RFID Readers, Antennas, Printers, and Applicators:Multi-protocol, multi-frequency,intelligent devices

Sensormatic RFID Tags: Multi-protocol, multi-frequency tags

Sensormatic Device Commander: Comprehensive Device Management software

RFID ServicesSupport Services

Global Data

Synch.WMSERP

Systems Integration

Data Management Middleware

22 years of RFID history

• Eureka – first RFID product to show anti-collision (1980)

• Charter member of Auto-ID Center

• Atlanta Olympic Games (1996)

EAS Experience Tagging and Tracking

• 80,000 UHF systems deployed and over 1 million antennas installed

• 10 billion chip-based UHF labels made and sold at ten cent ASP

• 4.0 billion items tagged at point of manufacturer in FY04 with MOQ of $210

• 15,000 items certified for tag design, automated placement, performance

• Source-tagged items from 3,500 manufacturers sold at 25,000 retail outlets

Depth of Experience

Note: the technology / application is different, but the expertise required for label placement and antenna calibration is similar.

Service Portfolio

Lab & Design Services Site Solutions

Compliance Testing Unique RFID Physical

Applications Custom antenna and label

design

Support and MaintenanceDeployment Services

Limited “Launch” solutions Source Tagging Large scale, programmatic

roll-outs Everything in between

Site Surveys (e.g., noise, physical constraints)

Requirements analysis (e.g., read points, work flows, volumes, integration needs)

Solution design

High availability architecture Remote monitoring and

management On-site technical support

Product Components

Antennas

FocusedApplication

Software

Development Software

Readers EPC ClassLabels

Label Printing &

Application

Tyco RFID Architecture

• Multiple interface capacity delivers customer driven innovation.

• N – Tier delivers scalability.

• Separation of AFE and Controller delivers global interface.

• Separation of device and data management functionality delivers flexibility.

• Multi-generation roadmap delivers lower cost of ownership.

Radios - AFE

Radio Controllers

Device Management Data Management

Tags

Standard, Private Published

Private, Private Published, Standard


The Enterprise




Antennas

Ap

plicato

rs - Prin

ters

Discussion Topics

Company overview

EPC pilots


Critical next steps

We have engaged customers in all regions

Multiple Large-Scale Pilots from Off-shore production to store shelves

• Major Consumer Goods Manufacturers - Long-term install of 9 RFID stations from packaging to final shipment - Launch packages for retailer compliance - Full line SKU labeling testing

• Major Mass Merchandisers - 150 readers at 9 RFID stations from incoming goods at DC to store stocking - Enterprise wide install at DC shipping and store receiving facilities for high value goods - Item-level supply chain tracking for apparel

• Major Pharmaceutical Companies - 7 RFID stations tracking from case creation to outbound shipping - Small label printing and encoding - Class II pharm labeling for compliance

• U.S. Government Non-U.S. manufacturing processed and shipped to domestic ports, then to a retail DC

• Major DIY Retailer On-site, custom performance test lab and system integration

• Large National Hospital Asset tracking including the use of RFID data simulation tools

Item-Level Rental Pilot: Inventory management

Video Rental Trial

Programming

Drop Box Readers

Physical Inventory

Self Check-Out

Auto Check-In

Sample Observations

• Reduced time to take physical inventory by 75%

• Real-time display of returned videos improved video “turn rate” on popular videos

• Video self check-in was easy to defeat resulting in loss of late fees

• Self check-out eliminated benefit of “up-selling” the customer

• Difficult to insure good programming compliance with in-store personnel

Item-Level Retail Pilot: Inventory management

High-end Clothing and Firearms Trials

Programming

Inventory counting

Product Locating

POS reconciliation

Sample Observations

• Firearms department inventory took less than 16 minutes versus 1 ¼ hour

• Apparel inventory took 2 minutes versus 1 hour

• Finding missing product took less than 8 minutes

• In-store programming is problematic

• Labor savings may not be sufficient ROI

Pharma Pilot:case creation to outbound shipping

• Manufacturing: Case creation and outbound shipment to DC• DC: Inbound receipt of pallet to outbound at several key touch points

Sample Observations

• Shrink wrap station produced best opportunity to achieve 100% case read on pallet

• Testing of 21 representative sample SKU / pallets provided identification for preferred label placement on cases / pallets

• Case configuration is extremely critical to RFID performance

Sample Lab Test Results

Product Description

Case Label Pass

without Pallet Tag

Cases per SKU/Pallet

Tests per SKU/Pallet

Label Placement High Power

Range (inches)

3Label Write

Portal Pallet Tags - 1 or

more2

12 inches 200 FPM 400 FPM Worst % Ave % Best % 4-8 MPH Worst % Ave % Best %

Plastic 308 719 77 YES YES 97.22% 36

66

116

92.59% 1 4 9Drops YES 60 548 108 YES YES YES 15 41 75 YES 40 63 97

Ointment YES 91 548 77 YES YES YES 4 13 27 81.48% 10 27 39Packs YES 96 548 84 YES YES YES 9 20 37 92.59% 25 39 58

Medium Bottles YES 144 548 82 YES YES YES 9 16 32 96.30% 15 32 43Softgels YES 126 548 62 YES YES YES 6 8 21 YES 6 23 37

Large Bottles 80 836 68 YES YES YES 0 6 20 YES 1 2 26Ointment 175 692 81 YES YES 97.22% 5 10 18 YES 11 19 27

Small Cream 238 980 54 YES YES5

YES5

1 4 8 96.30% 2 5 10Test kit 180 548 73 YES YES 95.80% 4 6 13 YES 7 14 25

Large Cream YES 95 1232 61 YES YES YES 166

286

366

92.59% 7 17 25Mouthwash YES 126 791 52 YES YES YES 4

68

612

6YES 2 9 18

Anti-acid YES 90 908 76 YES YES5

YES5

4 13 29 YES 12 25 47Capsules 120 908 54 YES YES 98.61% 3 10 22 YES 11 18 30

Hygene Pads YES 100 575 53 YES YES YES 46

126

186

77.78% 5 10 16Medicine YES 52 854 6 22 42 YES 23 28 53

Spray Can YES 74 YES YES YESBlister Pack YES 60 YES YES YES

Lotion YES 94 YES YES YESMixed cases YES 50 1007 3 29 54 YES 18 39 48

Soda YES 46 YES YES YESCereal YES 67 YES YES YES

Small Bottles YES 60 YES YES YESPapers YES 76 YES YES YES

Dock Door Case Labels1

Conveyor 100%4

Portal Case Labels1

Discussion Topics

Company overview

EPC pilots


Critical next steps

DC Incoming Receiving

Outbound Shipping

Primary Storage - Single

Primary Storage - Double

Individual Storage Area

Store Incoming Receiving

Stockroom Exits

Store Shelves

Nine Stations: DC processing to Store shelf

Sample Observations

• Real time inventory visibility can reduce out of stocks:

RFID system found pallets that the stock room system didn’t see

• Peripheral devices (optical sensors) can be used to improve system performance by reducing system “noise”

• RFID “Zones” can be created to track flow / directionality of inventory to determine how long it sits, if it’s in the wrong spot, or to help locate it

Retailer Pilot:DC receiving to store shelf stocking

Typical Installations

Shipping doors

Perpetual in-store inventory

More advanced installations

Door to trash compactor

Door to selling floor

Manufacturer Pilot:Launch Package Implementation

Sample Observations

• 100% system performance can be achieved, but may require process work-arounds, significant user training, and specialized back-up components

Readers must have “application agility” – readers that can be configurable to accommodate diverse applications

Network latency issues require “real time” decisions to be performed at the reader level

Not all labels are capable of withstanding supply chain environments: high temperature insensitivity can be a critical feature

Manufacturer Case Example:Manufacturing EPC Process

CLIENT X MANUFACTURING CENTER

• Products:— Food Product ABC— Food Product XYZ

• RFID Equipment— 3 Readers— 4 Antennas— 2 Printers— 10,000 Labels / wk— 1 Server— Launch Software

Manufacturing EPC IT Configuration

Distribution Center EPC Process

CLIENT X DISTRIBUTION CENTER

• Products:— Product X Food Product— Product Y Cleaner

• RFID Equipment— 3 Readers— 5 Antennas— 2 Printers— 10,000 Labels / wk— 1 Server— Launch Software

1

Distribution Center IT Configuration

Manufacturing Station 1

• Current Installation

– Print and Program case level Tags

– Verify Tags

• Integration Path

– Automated Label Applicator

• Log case & pallet level EPC data in RFID database

• Print and program pallet tag

Manufacturing Station 2 & 3

Nine DC Stations: Packaging to Final Shipment Process

Programming

Pallet Creation

Stocking Inbound

Packaging Returns

Shelf Picking

Packaging Outbound

Forklifts

Mixed Pallet Verifier

Dock Doors

Sample Observations

• Software / hardware interoperability issues increased program schedule

• Reader density requires power and synchronization management

• Case association to the pallet provides case / pallet tracking solution

Gillette Ft. Deven DC implementation: packaging to rack storage to store shipment

Program Goals:

• Track 100% of all Product X cases and pallets within Gillette’s ‘Four Walls’

• Test and prove the technology

• Develop a scaleable solution

• Validate the business case

Program Results:

• Customer order verification process time reduced by a factor of ten

• Shipping / loading verification process time reduced in half, system accuracy increased significantly

Manufacturing Case Example: packaging to rack storage to store shipment

Source: Gillette 2005 presentation at the EPC Global BAG

Pilot Overview

UPSConveyor

ExitDoors

Pack ToOrder

Packaging Center

Distribution Center

VerificationTunnel

CasePackingMachine

ConnectingLink

Pick ToOrder

Hand Pallet

Forming


UPSConveyor

ExitDoors

Pack ToOrder

Packaging Center

Distribution Center

VerificationTunnel

CasePackingMachine

ConnectingLink

Pick ToOrder

Hand Pallet

Forming

Step #1


The “flat” cases are tagged

UPSConveyor

ExitDoors

Pack ToOrder

Packaging Center

Distribution Center

VerificationTunnel

CasePackingMachine

ConnectingLink

Pick ToOrder

Hand Pallet

Forming

Step #2


The SKU number is scanned once for each production run

Step #3/4


The SKU number generates the unique EPC. The EPC is written, verified, and recorded

UPSConveyor

ExitDoors

Pack ToOrder

Packaging Center

Distribution Center

VerificationTunnel

CasePackingMachine

ConnectingLink

Pick ToOrder

Hand Pallet

Forming

Cases Are Then Aggregated To A Pallet

• The system creates a pallet EPC…

• And associates those cases with the pallet …

• Allowing unique pallet/case identification throughout the warehouse

UPSConveyor

ExitDoors

Pack ToOrder

Packaging Center

Distribution Center

VerificationTunnel

CasePackingMachine

ConnectingLink

Pick ToOrder

Hand Pallet

Forming


The Pallet Then Moves From The Packaging Center To The Distribution Center…

• The verification tunnel between the pack and distribution areas is equipped with readers and antennae…

UPSConveyor

ExitDoors

Pack ToOrder

Packaging Center

Distribution Center

VerificationTunnel

CasePackingMachine

ConnectingLink

Pick ToOrder

Hand Pallet

Forming




• Pallet is identified using one or more case tags…

UPSConveyor

ExitDoors

Pack ToOrder

Packaging Center

Distribution Center

VerificationTunnel

CasePackingMachine

ConnectingLink

Pick ToOrder

Hand Pallet

Forming




• Pallet is identified using one or more case tags…

• The distribution center receives the goods and the data validates payments to packaging operations

UPSConveyor

ExitDoors

Pack ToOrder

Packaging Center

Distribution Center

VerificationTunnel

CasePackingMachine

ConnectingLink

Pick ToOrder

Hand Pallet

Forming


Comparing The Old Process To The New Process Reveals Significant Benefits…

Current Receiving Process• Five Scans• Three keyboard entries

20 Seconds Per Pallet

• Read container barcode forPart # & Quantity

• Enter Part # & Quantity

• Scan Unit of Measure Barcode

• Scan Reason Barcode

• Tab to Lot Code Field

• Scan Lot Code Barcode

• Scan Pallet ID from TIN

• Scan Bill of Lading

• Press [Enter]



EPC Receiving Process• Automatic data entry



Orders Are Then Processed…


UPSConveyor

ExitDoors

Pack ToOrder

Packaging Center

Distribution Center

VerificationTunnel

CasePackingMachine

ConnectingLink

Pick ToOrder

Hand Pallet

Forming

Customer Orders Are Verified…

• The pallet is spun within a verification tunnel…



Current Order Verification• Labor intensive• Manual process

80 Seconds to 20 minutesPer Pallet


• Prior to shipping, checker must validate product & quantity

• Figures compared to containerpacking list

• Checker validates shipping lane / exit door to ensure loading in proper trailer


EPC Order Verification• Automatic data verification



And The Pallet Transferred For Shipping

• Exit door readers record and confirm correct shipment

UPSConveyor

ExitDoors

Pack ToOrder

Packaging Center

Distribution Center

VerificationTunnel

CasePackingMachine

ConnectingLink

Pick ToOrder

Hand Pallet

Forming



Current Shipping Process• Cycle time relative low…• But $ risk of inventory error

is high

• After checking, operator scans container barcode to confirm correct pallet is being loaded

• Next, operator scans exit door barcode to ensure pallet is being loaded into appropriate trailer




EPC Shipping Process• Process automated• Inventory risk eliminated



Eight Stations across three facilities and two companies

Factory Pack

Factory Ship Out

Split/Merge

Overpack

DC Ship Out

Warehouse Receive

OEM Receive

OEM Inventory

Sample Observations

• Global deployment requires customization as regulations are not harmonized

• Shielding and thoughtful mounting options are important even in a pilot

• Pre-deployment in the lab is important to minimize pilot impact on on-going operations

Intel Manufacturing Case Example: factory packaging to DC to customer inventory

Logistics RFID Pilot

• A series of internal pilots have been performed at Intel

• This is a logistics RFID proof-of-concept that demonstrated product visibility from manufacturing to OEM

– Added UHF tags to cases of silicon microchips as they were packaged at an Intel plant in Malaysia and shipped to the manufacturing plant of an OEM.

– Tracked more than 80,000 Intel processors

– Used UHF RFID readers made by Tyco Fire & Security's Sensormatic* division

– Implemented using 96-bit passive tags

RFID for Mfg

RFID for Logistics

Mgmt

RFID for Enterprise

Infrastructure(Data Center)

RFIDEthnography

Studies

RFID forSupply Chain

Integration

Find the “threadsFind the “threads””Infl

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Source: Intel 2005 presentation at the EPC Global BAG

Product Flow

WarehouseWarehouseDCDC

FactoryPack

FactoryShip Out

WarehouseReceipt

Split / Merge OverpackDC

Ship Out

OEMReceipt

OEMInventory

CPU AssemblyAnd Test

FactoryFactory

OEMOEM

RFID RFID

RFIDRFID RFID

RFID

RFID RFID

OEMFactory Floor


PoC Logical Infrastructure

Intel Server(Factory and Warehouse)

OEM Server

PackPortal

FactoryShip Portal

W/H ReceiptPortal

W/HSplit / Merge

Station

W/HOverpack

Station

OEM Receipt /Inventory Portal

DCShip Out

Portal

Network Bridge

Factory Network

Warehouse Network


Typical RFID Portal

•Each typical portal included:

–Controller PC running Microsoft WindowsXP* operating system

•Connected to ethernet network

•Communicating with RFID database server

•Running custom middleware designed to capture research data

–One Tyco Agile 2* RFID reader

–Two Tyco Omniwave* antennas

–Optionally, a modified Omniwave* antenna used for writing tags

–Optionally, a standard linear barcode reader, if required


Trays holding multiple CPU chips were bundled and strapped before being placed in a shipping box

Shipping box was taped shut and labeled normally

Existing label req’ts on boxes maintained

No changes made to existing info. systems–Parallel “drop-in” PoC implementation reduced integration time


Factory Pack

RFID tags were written with unique identifiers and hand-placed on the shipping boxes.

For the pilot, human-readable labels were also placed to help identify the presence of RFID


Factory Pack

Loaded carts were scanned at the Pack portal to generate a stored list of cart content.

The loaded carts were then set to the factory ship out area.


Factory Pack

At factory ship out, the fully-loaded carts were once again scanned just before exiting the factory on their way to the warehouse.


Factory Ship Out

Similarly at warehouse receipt, the carts were scanned again upon arrival

–Verified that all boxes sent were received

As usual, boxes were unloaded from carts and placed in inventory for later picking.

After being picked for an order, the boxes went through split and merge operations to obtain the correct units for the order.

–This required additional in-process reading and writing of RFID tags


Warehouse Receipt, Inventory, Split, and Merge

The individual boxes of CPUs were put into overpack boxes, which also was RFID tagged

The completed overpack boxes were then placed on pallets for shipment.


Overpack, DC Ship Out

Each pallet also received an RFID tag.

The portal at ship out read all of the stacked overpack box tags and the pallet tag before allowing the shipment

Loaded pallets of product were scanned at the OEM upon receipt and placed in the OEM’s inventory

The individual boxes were scanned for the last time when pulled from inventory for consumption on the OEM’s factory floor

Throughout the entire process chain, all transactions were recorded to databases for later analysis


OEM Receipt and Storage

Outbound Shipping

Store Incoming Receiving

Two: DC processing to Store shelf

Sample Observations

• European regulations are difficult

• The actual RFID equipment is only a portion of the systems that must be engineered to allow mass deployment

• Managing a network of RFID readers and devices requires special cooperation between the end-user, the hardware supplier, and the software integrator

Tesco rollout:DC shipping to store receiving

Tesco’s RFID Goals

• Better for Customers– Reduced prices,

improved availability, better service

• Simpler for Staff– More one touch

replenishment, improved accuracy, a simpler supply chain

• Cheaper for Tesco– Reduced costs, shrink,

waste and stock holdingDemonstration at NRF 2005 Keynote

The two main deployment configurations

DC shipping doors

Store receiving doors

More in-store views

Individual items in tagged RPC’s

Note stock density and variety of metal cages in store receiving area

Discussion Topics

Company overview

EPC pilots


Critical next steps

Lessons Learned: “Top Five Reasons We Might Have Failed”

• When the pilot was started, there was neither end-dates established nor specific success metrics

• The pilot was started by either the R&D, or IT, or RFID teams without input and 100% buy-in from the Operations / Supply Chain team

• The leader of the pilot (internal or outsourced) assumed system interoperability - that all of the technology suppliers would communicate their last-minute “development” product changes amongst each other

• The project partners were chosen more for their “new line of products” rather than their actual experience and existing capabilities

• Products selected for the pilot were chosen without consideration of how RF-friendly they were, creating too many variables at the onset of the pilot

Actual situations encountered…

What are the goals of any technical purchase?

Avoid obsolescence

Support scalability

Avoid technical dead ends

Support extensibility

Getting the Systems Architecture Right.

Is it stackable?

Are the interfaces discrete?

Does it comply with standards?

Is there a test for interoperability . . . .

and an escalation path?

Lessons Applied:Choose Appropriate RFID Technologies

Customer Required Features for RFID Readers

• Customer Driven Innovation

• Interface Backward Compatibility and Flexibility

• Air Protocol Flexibility – Multi-Protocol Operation

• Global Deployability

• Application Specific Form Factors

• Software-defined radio . . . With enough hardware horsepower for the mid-term future

Device and System Performance Management

• Deployment Support

– Identification and Discovery

– Configuration Management

– Firmware management

• Activity Monitoring

– Health monitoring

– Interference management

– Trend Analysis and Reporting

– Alarm Condition Detection and Communication

– Alert Distribution and Event Logging

Key Next Steps

Whether on your own or with a partner, it is important that you begin the RFID implementation process today

• Act now

– Key competitors and trading partners are moving forward

– 3-12 months to implement

• Demand executive attention and resources

– Not just another IT project on the wish-list

– Integral to the success of all IT, Ops and LP projects

• Involve business functions in design and implementation

– It’s your time that’s being wasted if not

– Take advantage of the change to redesign/streamline internal processes

• Leverage outside help – they want you on board

– EPC Global and partners

– Early adopters

– Commercial solution providers

Thank You!

George Reynolds

Vice President, RFID

Tyco Fire & Security

[email protected]

Business

Conference Board 03 May 05 Tyco Rfid