Auto-ID (RFID) Solution Proposal

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Auto-ID (RFID) Solution Proposal
Business and TechnicalObjectives for Low-Cost
Smart Items Dr. Richard SwanSAP Corporate
Research Center Palo Alto Richard.Swan_at_SAP.com
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Smart Items - Real World Business Visibility

• Smart Items
• Connecting the corporate world to digitally
  enabled objects that represent their goods,
  services and assets
• Enterprise Software Challenges
• Scalable infrastructures
• Effective support of existing applications
• New applications to support newly available
  information
• Smart Items Infrastructure - Auto-ID
• Tracking and responding to a high volume of
  products throughout the supply chain and beyond

• Digitally enabled
• Goods
• Services
• Assets

• Where is it?
• What is our current inventory?

• Will the right product be there when my customer
  wants to buy?

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Some Core Consumer Product Goals for Auto-ID

• Timely, accurate, detailed information
• improves the customer experience,
• increases sales - right product in the right
  location
• reduces costs -reduce waste and fraud
• Reduce overhead and allowances in supply chain
• aids regulatory compliance
• For example

• Reduce Out-Of-Stock 2.5 of sales

• Reduce Theft (internal shrinkage and
  shoplifting) 1 - 4 sales

• Reduce Diversion, Gray/Counterfeit Market -
  Up to 45 product
• Improve Regulatory Compliance -

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RFID applies to several product and business
process areas
http//www.sap.com/mk/get/rfid_survey
SAP survey of executive and senior-level
management from over 20 industries. N320
respondents as of 3/03.
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Customers want to use RFID across multiple
locations and most have no visibility across
value chain
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Public Standards
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Auto-ID Center

• Founded at MIT in October, 1999
• Currently has over 100 members and new Centers in
  England, Switzerland, Australia, China and Japan
• SAP is founding sponsor

http//www.autoidcenter.org/
Global benefits of an integrated Smart Item
network estimated to be over U.S.240 billion
annually.
Over 550 billion different items pass through the
members supply chains every year.
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Auto-ID Center

• Remarkably successful Industry Consortium
• Dramatically reduced cost of deploying RFID
• Created royalty free standards (transition to UCC
  - EAN)
• EAN-UCC IP firm declares no patent barrier found
  for new Class 1 UHF Tags
• Enabled new and existing suppliers
• Tag costs 1.00 gt 0.50 gt 0.15 gt 0.05 ? gt
  ?
• Gillette - Alien announce 500,000,000 unit order
• RFID Reader costs - new vendors
• 5,000 gt 1,000 gt 300 gt 100 gt ??
• Software
• Interchange standards and reference
  implementations
• RFID Reader protocol for both EPC and existing
  readers likely to be adopted by most vendors
  (structure follows proposal from SAP)
• Identity, Discovery, Configuration
• Reading, Writing
• Administration and Management

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Core of Auto-ID EPC Unique Identity Required
2 21 17 24 64
2 15 13 34 64
2 26 13 23 64
8 28 24 36 96
8 32 56 192 256
8 64 56 128 256
8 128 56 64 256

• Unambiguously globally identifies
• Manufacturer (EPC Manager)
• Product Class (SKU)
• Individual Item (serial)

• However common interchange information is not
  present Must utilize network for
• Shipment hierarchy (Container, pallet, case,
  item)
• Product description (class, type, shelf life,
  etc.)
• Individual information (manufacturing date,
  batch, other properties, history )
• Transition between GTIN and EPC extensions under
  consideration

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Privacy Concerns

• All consumer manufacturers and retailers are
  concerned about consumer backlash due to privacy
• Many individuals ask about privacy
• Auto-ID Center standard provides for permanent
  killing of tag at check-out (consumer option)
• Not just into reversible hibernation
• Standard has 16-bit secret key to kill tag
• Air protocol requires full sequence of steps to
  invoke kill, that can be monitored in-store to
  detect malicious use of kill
• However, significant value to keeping tag active
  after consumer sale in order to support returns,
  warrantees, in-home technology, etc.

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SAP RFID Pilot Activity
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US Pilot - Procter Gamble
PG Distribution
Retailer DC
Retail Store
BackroomFront roomSmart Shelf
Tote Building
Cross-Dock
Customer Demand
MIT-Auto-ID SavantCaptures events
MITSavant
SII provides visibility(application
agnostic) Traditional applicationsdrive business
processes
SAP SII prototypeInterprets events toprovide
business information
AdaptiveResponse
SAP Landscape
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Opening of Metro Future Store (SAP Pilot)

• Rheiberg Store and Essen Warehouse
• Includes RFID tagging of most goods at case and
  pallet level
• CDs and other goods at item level
• Three smart shelves for item level goods
• Provide visibility at warehouse and store level

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Future Store Smart Shelves
Goods movements are tracked by RFID data capture
Gillette

• Features
• Remote control of shelf inventory
• Control of reminaing shelf life
• Analysis on Goods movements from and to shelf

Kraft Foods
Procter Gamble
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Backroom at Metro Future Store
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RFID/Auto-ID Infrastructure
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Core Issues for Auto-ID and Enterprise Software

• Key mismatch 1
• Tag readers provide notification events when tags
  are sighted
• Locally thousands/sec, nationally millions or
  billions of events
• Enterprise Software do not want low level
  notification events!
• Business decision makers and Enterprise software
  want clean, stable information about the location
  and status of every tagged object and the
  relationship of those objects to other objects
  and to business documents and processes.
• Key mismatch 2
• Tagged objects originated from many different
  manufacturers who expect their own enterprises to
  benefit from the tag-reader beeps from throughout
  the supply chain.
• Most Enterprise Software applications are geared
  to support a single enterprise and not oriented
  to share information with other enterprises
• Key mismatch 3
• Most Enterprise applications are not designed to
  deal with huge numbers of serialized items.
• Most Enterprise Systems will fail if given 106
  more data.
• Most Enterprise applications do not need serial
  number specific data but certain core uses of
  RFID tags, such as item history tracking, proof
  of ownership and product recall depend on serial
  number level information.

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Fully Exploit Opportunity of Auto-ID

• Cross Enterprise Information
• The big news with Auto-ID is the opportunity to
  share detailed information throughout a supply
  chain in a retailer driven way
• gt Design system from the core to share
  information both within an enterprise and between
  enterprises to gain maximum return on auto-id
  investment

• Recognize Variety of Landscapes
• Manufacturers sometimes have different Enterprise
  landscapes for each brand or category
• Retailers also have a wide variety of landscapes
  and business processes which vary by category and
  supplier relationship
• gt Must provide information in the easiest way
  to absorb and be Application Agnostic

• Support Business Continuation at each level
• Retail sites often lack good telecommunications
  and IT support
• gt Enable local operation through network
  outages and unsupervised recovery from power and
  other failures

• Get full information value of Auto-ID
• Individual items can be tracked at serial number
  level
• gt Provide distributed object system to
  represent each item

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New Capabilities from Auto-ID - Item Level

• What information is stored at the item level?
• Items are no longer generic.
• Create, store and update information at the item
  level and make it accessible across the supply
  chain
• Handle promotions at item level
• EPC discount0.50 promotion code567
• Support customer loyalty, warrantee and life
  cycle of item
• EPC sold-retail location987 5/9/02 loyalty
  card23458967 price 35050
• Support duty, taxation and other regulatory
  issues
• EPC duty_paid date, ref,R CA_tax ref,
  inspected XXX
• Manage returns with convenience and minimum fraud
• EPC sold-retail location967 5/8/02 returned
  6/3/03 refund 27.50
• Reduce shrinkage through detail tracking and
  legal prove of ownership
• EPC missing - last seen 2/7/03 truck-driver
  J.Smith
• Targeted recalls at item level
• EPC anti-skid breaks, batch345 recall 6/3/03 -
  unreliable electronics

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Where and Auto-ID Infrastructure Fits
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Core Auto-ID Node

• PML/XML
• Master Data
• Item specific data
• Distributed synchronization

• Plug-Play
• Central configuration and monitoring
• Filtering at reader level
• Full support for writable tags

• Cached on demand
• Master data
• Item level information
• Other related info

Wired and Wireless Network
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Basic Item level information flow
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Cross Industry Information Flow
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Does it Scale?
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Brute Force Approach

• Assumptions
• 10,000 Stores
• 10 readers each
• 100 items/sec
• 100 Bytes per lookup
• All taken to a Central Repository
• gt 10,000,000 lookups per secondgt 8 Gbits per
  secondgt 40 Terabytes /day (11 hours)

Wrong Approach!
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Approach for High Volume Individual Item Tracking

• Caching at each level dramatically reduces
• data bandwidth to repository
• Enables item level tracking and recording

Core Version
Cache
Cache
Cache
Node
Node
Node
Node
Node
Node
Node
Retail
Manufacturer
Distribution
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Data Volume ( 1 billions items/year)

• Assumptions
• Items per year 1,000,000,000
• gt 4,000,000 items per day (255 working
  days)
• gt 360,000 /hr (11 hrs/day)
• gt 100 items/sec sold
• Levels of distribution 3 ( of sites touched by
  each item)
• 100 Bytes per update
• Aggregate data bandwidth (at top level) with good
  caching
• 100 items 3 levels 3 synchronization 100
  Bytes
• gt 90 Kbytes/sec
• 0.72 Mbits/sec ( Less than 1 T1)
• Store 1 KByte per Item
• gt 4 G Bytes/day of shipments (lt 20 day )

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Concluding Thoughts
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World Changes One Step at a Time

• Usage mode and adoption of Auto-ID will vary
  widely
• Specific value to product categories and
  individual corporations
• Market power of beneficiaries
• Meeting regulatory mandates
• Price curves of technology
• Basic Building Block for long term Architecture
• Core local, real time Auto-ID node
• Also supports traditional RFID, writable tags
• Pathway for flexible adoption
• Single Enterprise
• Extended Enterprise -
• Cross Enterprise
• Added dimension of granularity and business need
• Pallet
• Case
• Generic Item
• Individual item with full history

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Billing and Reconciliation

• As Auto-ID becomes accepted as reliable evidence
  of transfer of goods
• At case and Pallet level, large retailers will
  pay on goods receipt, rather than through billing
• At item level, consignment sale, or pay-on-sale,
  will become much easier.
• Retailers may merely lease out shelf space and
  take no other financial risk

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Summary

• Auto-ID can have a BIG impact on supply chains,
  and operating practices in warehouses and
  particularly at retail.
• Auto-ID using inexpensive RFID technology is
  backed by very powerful market forces (Wal-Mart
  alone is 244B net sales)
• The Auto-ID driven software and hardware
  standards will eventually drive out older, more
  expensive RFID products and standards(20
  billion units forecast in 5 years)
• The challenge is to make effective use of the new
  data
• The SII (Smart Items Infrastructure) prototype
  provides the basis for large scale Auto-ID
  deployment and is the core of SAP product
  developments.
• An expansive long term vision is need to get the
  full business value out of Auto-ID

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Thank You