IndustrialTransformationandITRFIDintheRetail.pptVIP

Industrial Transformation and IT: RFID in the Retail Industry Brad Herman Vincent Mercadier Madeleine Moss Harsha Tummala March 19, 2007 Technology Overview RFID System Components Primary Advantages over Existing Technology Identify Products on an Item-by-Item Basis Dynamically Update Information on Tag Barriers to Adoption Cost Considerations “I need the cost to really drop because were a fairly low-margin business. Just do the math: 20 cents times hundreds of millions of units.” -- Gary Cooper, CTO of Tyson Foods, Inc. “This is the ultimate chicken-and-egg scenario. More people wont do RFID until the tag costs come down, but the tag costs wont come down until more people do it.” -- Dennis Gaughan, Analyst at AMR Research Inc. Possible Solutions Standardization Consideration of consumer-facing applications Barriers to Adoption Reliability Manufacturing Failure Rates Interference Issues Security/Privacy Concerns Ability to read information without consent Authenticity of data Technological solutions being researched ‘Kill’ commands Encryption algorithms Barriers to Adoption RFID in Retail In the Supply Chain WalMart. Department of Defense. Consumer-facing Walgreens – tracking effectiveness of in-store displays. Japan’s Ginza district – help shoppers navigate the shopping area. Mitsukoshi (retailer in Japan) – improve staff efficiency and customer service. Targeted advertising. In the future: Payments. Surveillance tags. Perishable inventory. Catalyst for differential pricing. Complementary technologies Strategic Considerations Pricing Smart Shelves and Demand-based Pricing Improved Customer Loyalty Programs Strategic Considerations Network Effects Significant in supply chain applications Automated inventory management, perishables The value of RFID to each retailer or supplier increases as more suppliers or retailers adopt. Still an i