Implementing RFID for Rapid ROI and Long-term Success

Implementing RFID for Rapid ROI and Long-term Success Radio frequency identification (RFID) technology is poised to dramatically impact and improve the way manufacturers, distributors and retailers do business and interact with each other. RFID technology replaces printed barcodes with electronic tags that can discretely identify individual items and can be automatically tracked as they move through distribution channels. By helping companies observe and understand the movement of inventory in real-time, RFID will reduce instances of out-of-stocks and unsaleable product, reduce shrinkage and product loss due to theft and dramatically reduce the cost and manpower affiliated with moving and monitoring inventory. While many companies have experienced project-specific success with internal RFID-based asset tracking and small-scale pilot programs, larger scale RFID adoption is now being driven by mandates from very large retails and consumer such as Wal-Mart, the United States Department of Defense, Target and Albertson. These purchasers are requiring suppliers to implement RFID tags on all cases and pallets within the next few years. To satisfy these requirements, manufacturers are rapidly designing, testing, and implementing RFID technology specifically to satisfy the conditions of the mandates as they are currently defined. However, analysts warn that companies that rush to develop “slap and ship” RFID programs specifically to satisfy mandates like these are likely to implement technologies that will need to be replaced in just one or two years. In addition, these purely mandate-driven RFID initiatives fail to consider and leverage the many ways that RFID can enable internal improvements in areas such as revenue generation and operational http://www.tibco.com efficiency. Global Headquarters As the world’s largest independent provider of business integration software and 3303 Hillview Avenue a leading enabler of real-time business, TIBCO is uniquely capable of and Palo Alto, CA 94304 Tel: +1 650-846-1000 committed to helping companies implement standards-compliant RFID solutions Toll Free: 1 800-420-8450 that meet today’s requirements while supporting tomorrow’s. Fax: +1 650-846-1005 ©Copyright 2004, TIBCO Software Inc. All This paper is an introduction to the benefits and challenges affiliated with the rights reserved. TIBCO, the TIBCO logo, The implementation of RFID technology, and to TIBCO’s solution for RFID Power of Now, and TIBCO Software are trademarks or registered trademarks of implementation and integration. 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All other product and company names and marks mentioned in this document are the property of their respective owners and are mentioned for identification purposes only. 0204 TIBCO’s Solution for RFID Implementation and Integration Table of Contents The Impact and Importance of RFID ................................................................. 3 The Evolution of RFID Adoption ...................................................................................... 3 Benefits............................................................................................................................ 4 Requirements for Effective RFID Implementation ........................................... 4 Stage I: Tagging and Tracking ........................................................................................ 5 Stage II: Integrating RFID Data into the IT Infrastructure................................................ 6 Stage III: Leveraging RFID to Improve Business Processes .......................................... 6 Stage IV: Moving Toward Predictive Business................................................................ 7 TIBCO’s Solution for RFID Implementation and Integration........................... 7 Why TIBCO?.................................................................................................................... 7 Technology Advantages ......................................................................................................... 7 The Components of TIBCO’s RFID Solution................................................................... 8 Enterprise Backbone Software: Messaging and Monitoring Infrastructure ............................. 8 EPC Agent and Event Cache Software .................................................................................. 8 Business Integration Software: Connectivity and Process Management................................ 8 Business Optimization Software: Business Activity Monitoring............................................... 8 TIBCO’s Solutions in Stage II .......................................................................................... 9 TIBCO’s Solutions in Stage III ....................................................................................... 10 TIBCO’s Solutions in Stage IV....................................................................................... 10 Engaging with TIBCO for RFID Success ........................................................ 11 References ........................................................................................................ 12 2 TIBCO’s Solution for RFID Implementation and Integration The Impact and Importance of RFID Imagine a supply chain where manufacturers, distributors, and retailers can automatically locate any of the items that were shipped in a given case or pallet. Where receiving facilities know immediately whether a shipment’s contents match the advance shipping notice, and the right personnel are immediately notified of any discrepancies. Where manufacturers and retailers automatically adjust forecasts and orders based on sales velocity during promotions. Where theft or tampering is immediately evident, without requiring product inspection. Radio frequency identification (RFID) technology is poised to transform this futuristic vision into reality by replacing printed barcodes with unique tags that store individual item information and transmit the data to RFID readers. RFID tags can store large amounts of unique information (upwards of 64 bits), dramatically surpassing the potential of barcodes which can hold only 12-15 characters of information. This means that RFID tags can be used to identify not just a class of products, but individual instances of pallets, cases and items. Unlike barcodes, which require an established line of sight and correct orientation with a scanner, RFID tags transmit identification data through almost any kind of packaging, so the contents of a case or pallet can be read and confirmed almost instantaneously without requiring individual product scans. By “tracking and tracing” RFID-generated data across the supply network and putting it in the context of detailed business process information (such as manufacturing and shipping history), RFID can provide complete, real-time visibility into product lifecycle and supports strategic demand-driven supply network initiatives. The Evolution of RFID Adoption Although in its early stages, RFID is expected to transform industries by enabling enterprises to gather detailed information at the pallet, case, and product level at any point in the distribution process. Several global companies experimenting with RFID initiatives have already realized exceptional results. By placing RFID tags on their high-value beer kegs, British brewery Scottish and Newcastle saves $25 million annually by reducing the number lost in transit or not returned by customers. After a three-month pilot program, The Gap, Inc. reported that RFID tagging improved in- store inventory accuracy from 85 percent to 99.9 percent. After replacing barcodes on trays, dollies, and roll cages with RFID tags that include the supplier’s name, product information, and sell-by date, Marks & Spencer’s Food and Logistics estimates that they reduced the amount of time required to read stacks of trays by more than 80 percent.