Woolworths and RFID Technology

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Woolworths and RFID Technology

• Presented By
• Jessica Burdette
• Kyle Kjergaard
• Marina Parashkevova
• Jim Walker

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• Should RFID be expanded into Woolworths entire
  supply chain?

3
Issues for Analysis

• Key Issues of Implementation
• Advantages of RFID
• Disadvantages of RFID
• Recommendations for Woolworth

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Key Issues

• Inventory Shrinkage
• Affordability
• Reliable RFID Technology

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Inventory Shrinkage

• 75 million per year loss
• Due to
• Incorrect shipment deliveries
• Stock losses in distribution center
• Theft of goods in transit
• Shoplifting in store
• 56 of loss due to internal supply chain errors
• 44 of loss due to shoplifting
• Goal tracking goods through entire supply chain
  will reduce property crime and benefit retail
  industry

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Affordability

• Tight information technology budget that could
  contribute to the success or failure of the
  program
• Cost of full deployment 2-3 million
• 1million for system hardware, but potentially
  less for tag costs
• 400,000 for software integration, minimal
  efforts to incorporate roll cages after pilot
• 1million for vehicle telemetric system, for
  GPS-enabled capabilities

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Reality of RFID Technology

• Scarce funding for information technology
  implementation
• Questionable returns for shareholders

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Advantages of RFID

• Reducing Inventory Shrinkage
• Stock Records Accuracy and Availability
• Reduction in Paperwork and Labor Costs
• Improved Vehicle Utilization and Reduced
  Transportation Costs
• Asset Management and Utilization

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Reducing Inventory Shrinkage

• Improved inventory visibility
• Reduction of process errors
• Timely correction of process errors
• Automated audit travel prevents theft/loss of
  inventory

10
Stock Records Accuracy and Availability

• Automated book stock records will improve
  inventory availability
• Accurate stock count could improve both
  availability and lower safety stock
• Improved customer service
• According to studies, a 1 increase in
  availability translates into .25-.5 increase in
  sales

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Reduction in Paperwork and Labor Costs

• Automated tracking and signature system instead
  of paper documents
• Increased accuracy reduced labor costs for
  investigating stock loss
• Savings from purchasing paper forms and staff
  reduction estimated to be 350,000 p/yr not
  including savings from resolving errors with
  manual data entry

12
Improved Vehicle Utilization and Reduced
Transportation Costs

• Three-in-one single black box can handle RFID,
  Working Time Directive, and Vehicle Telemetric
  System
• Working Time Directive ensuring drivers
  compliance with regulations concerning daily
  driving time
• Vehicle Telemetric System prolonging vehicle
  lives and reducing down time by using measures
  and preventive maintenance (fuel economy, brake
  usage, vehicle abuse)
• Transportation costs could be reduced by 8-10
  and investment potentially shared with a
  strategic partner

13
Asset Management and Utilization

• Roll cages, dollies, and tote boxes are expensive
  assets
• Assets are often misplaced, forgotten, or stolen
• Asset visibility and tracking allow for
  identifying blockages and loss points
• About 2,500 cages could be saved each year,
  saving additional expenses for buying new assets

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Disadvantages of RFID

• Operational problems
• Cost barriers

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Operational Problems

• Limited range
• Orientation and shielding of tags
• Interaction with other technologies (i.e. GPS,
  WAN, LAN, etc.)
• Requirement of human interaction

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Cost Barriers

• High cost of tags and transceivers
• Inverse log pricing curve over time
• Maintenance costs

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Recommendations

• Do not fully implement RFID throughout Woolworths
  supply chain
• Continue trial runs for certain stores
• RFID technology will inevitably be developed. Let
  someone else develop the technology until it
  becomes cost effective.
• Use GPS in transportation logistics as an
  alternative tracking device. (Cheaper)