Rfid - The Next Revolution In Scm

RFID – The next revolution in SCM Group 9 PGP/12/248 MURALIKRISHNA BATCHALA PGP/12/260 BADRINATH GM PGP/12/261 SAURABH KUMAR PGP/12/262 PIRAMANAYAGAM M. PGP/12/265 RICHIE GIFTSON PAUL J

Introduction Technique for electronic labeling and

identification Considered as the next stage of Barcode Usage in varied sectors Electronic toll pricing RFID car keys for automobiles to detect theft European central bank uses RFID in bank

notes to detect counterfeit Of course used in SCM

Still in infancy when it comes to SCM SCM termed as killer application for RFID Used by Wal-Mart, P&G, Target, Home

depot, Gillette etc

What is RFID System? Consist of RFID readers and tags A microchip attached to an antenna and

embedded in product or put as label RFID Vs Barcode Line of sight not needed unlike barcodes Ability to read it en masse Read Only Vs Read/Write Vs Combination Active Vs Passive RFID tags Frequency bands determines the range of

operation More the frequency, more is the cost of readers and tags

MIT Auto-ID Centre Goal of developing low-cost, open-standard

RFID for SCM Split into two organizations EPC Global – developing and administering

RFID Auto-ID labs – Research and develop new technologies RFID infrastructure developed and known

as EPC network Consist of Electronic Product Code Object Naming Service Product markup language

Using EPC Network to locate

RFID benefits for SCM

Tracking Products Manufacturing uses for closed loop tracking

of parts, components and subassemblies Pallet level tracking can lead to efficient consignment verification Stacks of multiple pallets can be read at a time Automation and streamlining of SC process can reduce cost Pallet and case level tagging can result in significant benefits at shipping, warehouse and DCs Ex – Dell, Ford and many CPGs

Tracking using RFID

Impetus for collaboration Causes of SC inefficiency – lack of

collaboration and visibility Remember Cisco case of inventory write off Visibility can help identify sources of variability and help reducing it EPC provides real time information on internet about the product's presence in SC Improves critical areas such as demand management, planning, forecasting and order management Automatic electronic sharing of data speeds up workflows

Reduce Inventory shrinkage Lower level of inventories – success mantra

for retailers Stock lost due to shrinkage estimates to 1.7% of total annual sales Consumer ends up paying higher for compensating this loss RFID can provide a security staff to curtail the above Security could be alerted if the product leaves without billing Inventory errors occurs as receiving errors or as dead inventory Dead Inventory – inventory that cannot be located

Prevent Stock-Outs Stock outs – KPI for a retailer Loss of sale and customer dissatisfaction Stock outs can occur mainly because of Inaccurate forecasting – 47% Shelf stocking policy, product in store but

cannot be located – 28% The second point could be effectively

addressed using RFID RFID could sense low amount of stock on shelf and raise an alarm, instead of manual tracking Major benefit of RFID id preventing stock

Fair Pricing of Products Most effective way to enhance profit Dynamic Vs Differential pricing Dynamic – market conditions determine

price Differential – Different market segments RFID provides timely demand and inventory in SC provides efficient means to price the product Frequent price changes will be an effortless task with RFID Ex - Ford uses efficient revenue management systems using hybrid

RFID case studies

Impediments to RFID in SCs Lack of universal standards Frequency spectrum mismatch Standards from EPC global might solve this

High cost of tags and readers Wal-Mart needs tags at rates less than a cent Major obstacle for RFID adaptation

Absence of Application software Extracting pertinent information from tags is

difficult Many MIS do not have built in RFID processing capabilities

Other factor – scattering by soda and liquid

detergents Anonymity is a major concern

Thank You