Pete Abell Senior Partner/Cofounder

Pete AbellPete AbellSenior Partner/Cofounder

The ePC Group, Ltd.Senior Partner/Cofounder

The ePC Group, Ltd.

Making waves……..work

What’s in Store for

Retail Technology

The Retail Conference

March 2004

Pete AbellSenior PartnerePC Group, Ltd


Agenda

• Retail Technology Trends• Data Standards• Collaboration Areas• Additional Technologies• EPC RFID• Business Issues• Supply Chain Benefits


Retail Technology Trends

• Standards– Wal*Mart– GCI

• Other Industries/Regulators– Payment– Homeland Security etc.

• Wireless• Store Level vs HQ


Data Standards• Data standards will impact entire

infrastructure :

• EPC- visibility throughout supply chain– Stores - Limited– Home - On Horizon

• Sunrise 2005

• Data Synchronization


Payment Methods

• Smart Card Convergence:

• Application Slots- Enable cross-company loyalty programs

• Wireless Options- Major trend in drive-through usage.

Needed for Web-order/store pickup.

• Biometrics- Decrease fraud– Fingerprint and other biometrics consumers

– Employee and supplier verification


Transportation Management

• Web-based real-time transportation management

• Transportation optimization visibility across the entire supply chain.

• Technology is available now.


Supplier Collaboration• Collaboration with suppliers enables lowest cost of

goods.

• PTX , CTX or ?:

• Private Trading Exchange• Wal-Mart using Verticalnet/Retaillink• Target using Yantra

• Consortium Trading Exchanges- i.e. GNX, WWRE, Transora

• Extranet- One way to suppliers


Vertical Partnerships

• Retailer/Manufacturer or Complementary Retailers

– Partner to Broaden Reach to Consumer

• Hypothetical Examples:

– Return Block Buster videos to any Walgreens location

– Amazon.com order delivered to Sears stores for pick up


Workforce Management

• Employee Information Portal

– Integrate information for closed-loop workflow – Single, role based interface for the store and field

personnel.

• Clientelling Devices•

– Combo PDA/Cell phone or special purpose PDAs

– Retail employees sell to consumers on store floor.


Advanced Retail Planning & Optimization:

•

• Forecast-based financial/assortment plans,• Attribute affinities between old and new items• Local Market Assortments• Multiple Consumer Channels (e.g. Maytag –

Retailer Sales + Service site)• Integration of Advertising, Marketing and

Promotions (AMP)• Retail Revenue Management


Brand Asset Management

• Content

• Digital Assets

• Product Content Management

• Specification Management


EPC RFID Mega-Transformational Impact

• Early Signs of Rapid Adoption $1T in sales– Marks & Spencer, Wal-Mart, DOD, Tesco,

Metro, Target, Albertsons, etc.

– More Retailers to come this year– Supply Chain - First– Large and Small Suppliers– Supermarkets/FMCG – Must Keep Supply Chain

Costs Within Shooting Distance of Wal-Mart

• Scratching the Surface of RFID’s Potential


Retail Industry Perspective

– Watching Closely– Negative to Change– Unaware of Realities

• Regulatory Bodies Pushing Adoption– Homeland Security - 2003– FDA Counterfeit Drugs - 2004– BioTerrorism Preparedness Act - 2002– COOL– EU Food Act


150+ RFID Projects (ePC Group Tracking)

• Marks & Spencer – All Fresh Food Trays

– 230 Suppliers 10% increase productivity-

No cost increase• Goldwin Sportswear – Grey Market Reduction –

2% of sales• Findus – Temperature Sensing Frozen

Meat/Chicken/Fish 2 Weeks extra Shelf Life• EU - Tesco, Metro, Sainsbury, Woolworths, Waitrose,

Carrefour, DHL, Nokia, Argos, etc. • US – Wal-Mart, Home Depot, CVS, Target, AHOLD,

Gillette, Kimberly Clark, P&G, UniLever, etc.


RFID Themes

• Bulk Read, No Line of Sight, Space, Time and Status

• Multiple Industries Beyond Retail/CPG

– DOD, DHL, Payment Systems

• Faster Adoption Item Level– Homeland Security

– Bio Terrorism Act

– FDA Guidelines on Drugs

– High Value Business Cases

• Understand the Technology Choice• Benefits and Savings Counterbalance Costs


EPC RFID

•A Short Primer on RFID


EPC RFID Definitions

• EPC - Electronic Product Code– 96 Bits + (128 R/W) – AI + GTIN + Serial Number + Addtl. User

defined data

• RFID - Radio Frequency Identification– The Technology– Frequencies– Range


Source Marking Technology


DC/Truck/Store/Home Technology


Apply the Right Technology to the Conveyance

Layer 5: Movement Vehicle

Layer 4: Container

Layer 3: Unit Load

Layer 2: Transport Unit

Layer 1: Packaging

Layer 0: Item

ActiveRFID

Satellite

Passive RFID


Level of Automation

Device Cost ($)

Real-time locating sys. (RTLS) $20-100 Two-way active RFID – GTAG $5-$25

Active beacon RFID $1.25-$5.00

Short range passive RFID $.15-.50

Other Satellite

GPS - $75-300

Very short range passive RFID $.02-.06 (EAS)

Bar code - $.001

Semi-Active RFID $.50-5.00

Costs and Types of RFID

Manual entry


Which offers a large opportunity for value-added solutions

Worldwide

Total Annual Global Supply Chain Spending

$3 Trillion

Estimated Loss and Waste Due to Poor Supply Chain Visibility Per Year1

6-10%

Cost of Waste $180 B – $300 B

1. Carnegie Mellon, Stanford University, AMR Research


Standards Bodies

• Global Standards designed EAN.UCC- EPCglobal

• Continued Research - Auto-ID Labs - US, UK, Australia, Switzerland, Japan, China

• ISO and ANSI


Bar Code Differences

• No line-of-sight required• 100-1,000 Tags per Sec Read Rate• Passive & active chips• Read only or read/write (with

‘locked’ sections)• Long & short range• Carrier for sensing devices


Estimated Total Costs - Supply Chain Today

• Warehouse incl. HW/SW/Integration - $1-2M

• Per Store (50K sq. ft coverage) $100K• HQ Systems $10-40M• Annual Tag costs $.15-.90 per tagged item

(Supplier/Private Label)


Recommendations• Remember “The Graduate” - Buy Plastic

• Establish Global RFID Policy• Use Professional RF Engineers to assess

problems and suggest solutions• Do not do this just for Wal*Mart• Make it work within your own 4 walls• Look at your own Supply Chain for savings• Establish behavior change leadership • “RFID vendors want to ship silicon not solve

your problem” - John Greaves


[email protected]

Pete Abell Senior Partner/Cofounder

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