EPC new identification technology and applications in Europe

EPC – new identification technology and applications in Europe Stephane Pique

Agenda 2 • Introduction GS 1/EPCglobal • EPC Standards • Introduction EPCIS • RFID in Europe • EPC/RFID Business Cases • Retail in Europe

Introduction GS 1 3

EPCglobal subscribers 4 • Over 1000 Companies with $3 Trillion in Revenues • 20 out of Top 31 Fortune 500 • Over 390 out of Global 2000 • Over 12 Major Industries and 51 industry segments • Over 350 Solution Providers • Over 3, 000 global participants in standardisation process

EPCglobal membership in June 2007 June 2004 June 2005 June 2006 June 2007 Asia Pacific 21 117 173 199 Europe 36 87 166 221 Latin America 0 5 24 32 ME & Africa 2 3 13 19 North America 132 372 499 652 Total 191 584 875 1123 Each EPCglobal member joins once in the location of their head office 5

EPCglobal membership in Europe 6

Agenda 7 • Introduction GS 1/EPCglobal • EPC Standards • Introduction EPCIS • RFID in Europe • EPC/RFID Business Cases • Retail in Europe

Electronic Product Code (EPC) GTIN 1 2 3 4 5 6 7 1 2 3 4 5 8 0000000123456 He ad er 3 3 Trade Item Reference Company Prefix EPC 2 EPC Manager Number Trade Item Reference GTIN The EPC can only be interpreted in combination with the corresponding data base 8 Serial Number

Network standards (Overseen by ARC) Secure Internet Exchange Event Registries EPC IS Internal Systems ERP, WMS, etc. Enterprise System 9 ONS Authentication & Authorisation Search & Discovery EPC IS EPC MW EPC Gen 2 Reader EPC Gen 2 Tags with EPC Internal Systems ERP, WMS, etc. Enterprise System

EPCglobal Standards Development Structure Discussion Groups (no opt-in/IP and open to everybody) Level 0 Aerospace & Defense Chemical Automotive Packaging Requested Provision Industry Action Groups (optional opt-in/IP) Level 1 Retail SC FMCG/AFF HLS CE TLS Information Business Drivers and Use Cases Joint Requirement Groups (opt-in/IP) Level 2 Item Level Tagging Active Tagging Tag Data Reusable Transport Item Data Exchange Sensors & Batteries Cross Industry Adoption & Implementation Groups (no opt-in/IP) Implementation Sharing Requirements Technical Action Groups (opt-in/IP) Level 3 10 Software Action Group Hardware Action Group Information Adoption Programmes

Agenda 11 • Introduction GS 1/EPCglobal • EPC Standards • Introduction EPCIS • RFID in Europe • EPC/RFID Business Cases • Retail in Europe

Supply chains are simple… right? • • 12 Even “Simple” supply chains have multiple touch points and handlers before reaching a final destination. Complex supply chains, with multiple product owners, have a greater need to locate products and ensure they were sold through the proper channels.

EPCIS provides visibility 13 • When can I expect my product delivery? • Where did my product come from? • Can the chain of custody be trusted? • Where is my product located now? • Was my product sold and distributed via the expected channels? • Have counterfeit products entered the supply chain? • Has the product been authenticated? • Have the products reached the needed intermediate locations? • Where are the products in the lot that I need to recall now? • And many more…

What is EPCIS? • EPCIS = EPC Information Services • A new EPCglobal standard • 14 • Data model for events in life of uniquely identified objects • Interfaces for capture and query of events • Ratified 12 April 2007 Industry and application agnostic • Cross-industry framework • Cross-industry and industry-specific vocabularies and extensions • Supports GS 1 EPC and converted GS 1 barcodes • Communicates via GS 1 XML standard

Network standards (Overseen by ARC) Secure Internet Exchange Event Registries EPC IS Internal Systems ERP, WMS, etc. Enterprise System 15 ONS Authentication & Authorisation Search & Discovery EPC IS EPC MW EPC Gen 2 Reader EPC Gen 2 Tags with EPC Internal Systems ERP, WMS, etc. Enterprise System

What is EPCIS data? What Where • Location (can be fixed or moving - leverage master data - GLN) When • Event Time • Record Time Why 16 • EPC number (can leverage master data - GTIN) • Manufacturing Data (lot, batch, expiration date) • Transactional Data (PO, Shipment, Invoice) • Business Process Step - e. g. Receiving, Shipping • Product State - e. g. Saleable, Active, In Transit • Current Conditions - e. g. Temperature

Core EPCIS event types (1/2) • Object Events Observation of a collection of EPCs during business step at a location & time: This list of objects was observed entering DC #9 at 10: 01 AM, during Receiving • Aggregation Events Physical association of a set of EPCs with a parent EPC along with a business step at a location & time: This list of objects was just Palletized with this Pallet ID at Palletizer #27 at 12: 32 PM 17

Core EPCIS event types (2/2) • Quantity Events Statements about an object Class (not individual objects), a quantity, a location & time: There were 200 bottles of Brand X cola in store #4123 backroom at 3: 20 PM • Transaction Events Records objects associated with a business transaction: Order number 123 was fulfilled with objects x, y and z 18

How does EPCIS data sharing works? EPCIS instances at each enterprise communicate via the EPCIS Query Interface Query Query EPCIS EPCIS Capture Capture Manufacturer 3 PL Customs Carrier Importer Today, trading partner know each other In the future Discovery Services will find the corresponding partners 19

Example EPCIS analysis in Pharma 20

Agenda 21 • Introduction GS 1/EPCglobal • EPC Standards • Introduction EPCIS • RFID in Europe • EPC/RFID Business Cases • Retail in Europe

Major challenges in Europe for passive RFID • The maturity of passive RFID technology is still not sufficient for many applications. It still requires significant effort to develop solutions that meet specific requirements. Using passive RFID for baggage tracking for example requires different tag and reader design from tracking pallets in a warehouse. It simply takes time for the industry to develop these application-specific solutions. • European regulations did it difficult to use many UHF readers in lose proximity. This has clearly been a major issue for companies such as Tesco and Metro in their supply chain implementations. • Current implementation costs remain prohibitive for many business cases. Despite recent cost reductions, especially in tag prices, many business applications will only take off at lower hardware prices. • The distribution of costs and benefits between companies in an open environment remains complex. This has clearly been a problem in the retail and consumer goods supply chain. Source: BRIDGE report, European passive RFID Market Size 2007 -2022, Fevruary 2007 22

Passive RFID Market Europe in 2007 & 2012 Source: BRIDGE report, European passive RFID Market Size 2007 -2022, Fevruary 2007 23

Agenda 24 • Introduction GS 1/EPCglobal • EPC Standards • Introduction EPCIS • RFID in Europe • EPC/RFID Business Cases • Retail in Europe

Barcode business case • The 1975 barcode business case proved to be too conservative • Final benefits were double than anticipated • Final costs were half than anticipated Soft Benefits - Automatic reorder - Shrink control - Improved warehouse operations - Improved DSD control - Inventory reduction - Sales increase Hard Benefits - Faster check-out - Reduced check-out errors/loss - Prevention - Elimination of price marking Percent of Sales 0. 2% to 3. 4% 3. 1% to 3. 5% 1975 (Mc. Kinsey) 25 Costs -2. 5% to -1. 3% 1997 (Pw. C) Source: Ahold

RFID business case • The RFID business case could also be too conservative (? ) • Final benefits could also be double than anticipated (? ) • Final costs could also be half than anticipated (? ) Percent of Sales Soft Benefits Hard Benefits Costs Today 26 Future

Drivers and benefits Increased Outcome Higher Quality Hard Benefits Tracking Traceability Control Automation Increased Visibility New Service Reduce Cost Increase Security Generate Value Fulfill Require ments Authentication Law New Product Feature CRM Soft Benefits 27 Mandate © Stephane Pique

Shelf visibility RFID data captures additional OOS above what retailer reported What is the True Out-of-Stock? 8. 0% 7. 2% No RFID Data. Only Retail OOS Report 0. 9% 6. 0% 2. 7% 4. 0% 2. 0% 3. 6% 0. 0% OOS Without RFID Reported Store OOS 28 OOS With RFID Floor OOS Additional Store OOS 3. 6% additional OOS found with RFID

Product placement analysis 29

Retail promotions Manufacturing • • • Retailer’s Distribution Center Retail Store Give unique EPC to each case of promotion-packaged item, on RFID tag Equip facilities with RFID readers: loading dock doors, trucks, retail back-room door, dumpster Can now measure & drive promotion: • • 30 Mfr’s Distribution Center Timeliness: is promotional packaging reaching consumer in time? Effectiveness: is promotional item selling better?

RFID benefits at METRO Group • Increased process efficiency by 12% to 17% (incoming merch. and shelving) • Reduction of loss/theft by 11% to 18% (depends on category) • Increased goods availability by 9% to 14% (reduction OOS) • Incoming goods cost reduction of € 8. 5 mio (German estimation only) 31

Agenda 32 • Introduction GS 1/EPCglobal • EPC Standards • Introduction EPCIS • RFID in Europe • EPC/RFID Business Cases • Retail in Europe

Ahold • Roll out of RTI for Pharmacy Supply Chain • Roll out of Crates Identification within Ahold SC • Proof of concept with Roll Cages • Proof of concept with Crates for Fresh Food in open system • 33 Feasibility study with SRS pallets in open system

Carrefour • Pilot planned with games CD and software CD involving one store and warehouse • Trial planned to track and trace tagged pallets between DC and store • 34 Planned trial on item level in Belgium

DELHAIZE • Reusable plastic containers (RPCs) are valuable assets • Tracking of these assets is a costly activity • RPC can be tagged and tracked like items within the supply chain • RPC are owned by Delhaize and therefore the full scope of the project is under control 35

METRO Group • Roll out in October 07 with 150 suppliers, 180 stores and 10 DCs for incoming and outgoing goods • Promotion execution excellence tests in 3 stores • Pilot in October at one of the men department at Kaufhof to tag items • Test with RFID enabled forklifts and RTIs • Feasibility study with sensor based temperature tracking of cool chain 36

REWE Group • Roll out with 150 suppliers by tagging trolley and pallets involving 500 stores and one DC 37 • Pilot to track and trace RTIs from slaugther house up to store

TESCO 38 • High value items (razor blades) on smart shelves • Entertainment (DVD’s) on smart shelves • Trial with 37 stores and one DC in Ireland involving 70 k cages for tracking of the loading and delivery to store • Trial of asset tracking with milk supplier

Contact details Stephane Pique European Director EPC/RFID M +49 163 771 2938 E stephane. pique@gs 1 eu. org W www. gs 1 eu. org and www. epcglobalinc. org 39