Pervasive / Wireless e-business

IBM RFID Solutions

IT Solutions for Business Value

Jean-Michel Corrieu
IBM Europe, Pervasive/Wireless e-Business Technical Sales Manager

May 25th
 What is Wireless Computing

“A billion people will interact with

a million e-businesses via a
trillion intelligent interconnected
devices”
– Louis V Gerstner, Jr., 1999

Page 2 e-business on demand

 Any device

Page 3 e-business on demand

 e-BSC La Gaude

What makes RFID relevant now?

 After decades of technology refinement these radio tags have now
become very small and inexpensive

 A great deal of innovation has brought us to the point where the silicon
core of an radio tag is now 0.4mm

 The antenna can be printed onto a product’s packaging at time of

manufacture

 Currently radio tags can be purchased for less that €0.25 in quantity.

=> RFID is small enough, fast enough, and cheap enough to do

real work with today.

4 © Copyright IBM Corporation 2003

4 4
 e-BSC La Gaude

RFID enables End to end IT Solutions (Auto ID drawing)

11
t ONS
Product
Information
12
rne Internet
te Server (PML Format)
In

Antenna
Write data Items with RF Read Transaction Application
Reader
to RF tags RF Tags Manager Data Store Systems
Antenna Trading
Partner
EDI /
1 2 3 4 5 6 7 8 XML
Systems

Tag/Item
Relationship 10
Database 9

5 © Copyright IBM Corporation 2003

5 5
 e-BSC La Gaude

Progressing…… but still not perfect

 Does not work well if the tagged object is made of RF opaque material like metals,
several type of liquids, carbon

 RF can penetrate only up to a limited depth of a material. So it may be impossible to

read all the case tags of a pallet, even if the cases are made of RF-friendly materials

 The number of tags that can be simultaneously read/written is limited to about 50 – 100 /
second

 The following environmental factors can hamper proper reading:

- Speed with which the object is moving
- Human bodies (composed largely of water)
- Presence of RF interference, moisture and metals

 Tag technology is not mature, intensive research is being conducted both at the
theoretical (e.g., antenna design) and manufacturing (e.g., material used, processing
techniques)

6 © Copyright IBM Corporation 2003

6 6
RFID: an ENABLER for Business Value
 Measurable impact to labor costs
 Real reduction in errors via automation – reduction in mis-
shipments, lost inventory, and errors in redundant data reads
 Real gains in productivity by better managing the use of skilled
resources through automation
 Industry recognized qualitative impacts which returns improved
customer service, lessened warrantee handling,
 Driving regulatory impacts through compliance activities to meet
governmental regulations
 Automated POS means skilled resources are in front of your
customers – and not behind a cash register

7
Aligning RFID to business strategy is dependant on
the forces that are driving change - multiple factors
influence how a particular company might view RFID
High TRANSFORMATION

OPTIMIZATION  Transform
Opportunities & Benefits

operating/business models
 Increase throughput  Enable new sources of
 Reduce labor requirements revenue
COMPLIANCE  Enable Warehouse  Enable collaboration with
Management external clients/suppliers
 Meet minimum requirement  Enable JIT  Maintain item historical
(e.g. DoD, Walmart) manufacturing/logistics records (where it has been
 Replace or supplement  Enable real time decision and what it has been
existing barcode support through)
systems/applications  Track/Trace goods
 Provide internal track/trace of
 Increase accuracy and goods/people throughout the value chain
decrease error rates of both internally and externally
 Automate and speed
existing applications
(inventory management, etc.) processes (e.g. cross
Low docking)
Low Complexity High
Source: IBM Business Consulting Services analysis
8
Developing an RFID strategy – Looking for BUSINESS VALUE

Strategic
 How can RFID enable our overall strategic
vision?
 Should we be a leader or a “fast follower”?
 Which trading partners should I pilot with
and when?
 How will we operate in a world of dual
processes? And for how long?
Financial
 What is the expected return on our RFID
investment?
 What specific RFID applications can drive
value for us?
 What is a realistic adoption pattern/rate of
RFID and how will that impact my business
case?

Organizational Technological
 What are the change management  What are our technology requirements for
implications? an RFID implementation?
 What are the risks involved in an RFID  What is the architecture that best delivers
implementation? on my strategic technology plan?
 How will an RFID implementation impact
our current applications?

9
 Business Value

On Demand
Operating
Environment

Bu
Innovative

sin
business designs An IT operating

es
that sharpen focus

sP
environment
and accelerate

roc
optimized for
growth Business

es
Business flexibility and

se
Transformation
Transformation resilience

s
Integrated, end-to-end business
processes that are built to change
Based on real customer cases with
real business processes

Page 10 e-business on demand

Extending On Demand e-business systems

Securely connecting the Physical Plant / Operational Environment to

the IT / Business environment to allow customers to aggregate,
analyze and act upon data to dynamically adjust operations in
response to changes in their business environment

Aggregate

Analyze
Physical On Demand
Environment Infrastructure

Act

Enable operational control systems to be integrated with Business Knowledge in IT

Systems, using open standards-based, Next Generation Pervasive Technologies

11
 RFID Across All Sectors

RFID across industry sectors

Industrial

Healthcare

Retail/CPG

Government

Logistics Field Service

12
IBM’s Divisions Supporting RFID
Industry (S&D, BCS) IGS SWG
Consulting Tech
RFID Focussed Services RFID Group
Software Group
Trained • Solution Development
• Alliances
Systems
Group

Sensors &
Actuators
Personal  Software Development
Systems  Alliances
Group  Standards Bodies

WW RFID Focused
Community

Strategy Solution Development

Pervasive/ Thought Leadership  Alliances
Wireless EBO Standards Bodies

FOAK
Research Solution Development
IBM has a matrix, non-hierarchical teaming approach to RFID
13
IBM’s View – RFID will deliver value in the context of
current mission critical business processes
Strategy Business Strategy Pilot
Services Case Assessment Definition

Partners Exchanges
Partner Collaboration
SC Planning SC Execution Asset Mgmnt CRM

WPS Portal
Business Partner Performance SC Event Mgmnt Security Promotion Mgmnt
VMI/SMI Warehouse Mgmnt Shrink Mgmnt Assortment MgMnt
Process Track & Trace Price Optimization
CPFR/ SC Collabor Order Management
Production Planning Trans. Logistics Counterfeiting Targetted Marketing

Websphere Business Process Modeling / Workflow

Process Websphere
Websphere BusinessBusiness Integration
Integration For Collaboration
Communication
Integration & Connectivity
DB2 Db2 Integrator
Architecture

Registry External Catalog

/Data Pool/PML
Order Mgmnt System Item Master File Internal Catalog / PIM/PML

RFID Middleware Server

Management
Directory

External Data
WBC Gateway
Auto-ID

Acquisition
RFID Edge Server RFID Edge Server
Enablement

/ONS
Reader Reader Reader Reader Reader Reader

Auto-ID
Tags
14
IBM laboratories worldwide - 8 research centers focused
on RFID advanced learnings, 3 testing labs

Almaden Yorktown Zurich Beijing

ISL Hawthorne ISL Zurich

IBM RFID Testing Labs

Gaithersburg
La Gaude

Austin Haifa Delhi Tokyo

15
Customer Reference: Supply Chain: IBM Fishkill Plant
• $2.5B Corporate 'from scratch' investment in 300mm Manufacturing and Development. Fishkill
then made the decision to use RFID after assessing barcode and infra red systems. The plant
Challenge needs to use thousands of different active containers for different functions that are transferred
from storage area, process tools and manufacturing facilities - all of which are very valuable
($1K per container holding goods worth ~$2M). Their challenge was to create a real time,
common container tracking system

• Every container has an integrated passive RFID tag with a unique ID (common across all IBM
sites) - know where its been, where its going and its history
• IBM software is used to create and write the ID to all new containers
Solution • The contents of the container, wafer or recepticle, are associated with the ID in the Factory
Control System's DB2 database
• The transponder is read at every processing step to validate that the correct container and
material are going to the correct process tool result

• Fabs moved from infrared systems to RFID allowing real-time vs. point to point tracking of wafer
Benefits containers (on average 25 wafers in each container) providing true track/trace capability
• RFID enabled increased efficiency, decreased error rates, and reduced labor requirements
• RFID systems facilitated prioritization of orders, processing of specialty orders, and order routing
during retooling or maintenance accelerating time to market
• RFID has enabled IBM’s 300mm fab to run with 60 to 70 people compared with an industry average of
100 to 120, allowing IBM to add value to its products without necessarily adding cost
• With automation enabled by RFID, IBM is able to run the plant with skeleton crew when normally they
would shut it down (e.g. holidays)

16
Customer Reference: Supply Chain: Metro Group
 The Metro Group Initiative has been up and running since April 28, 2003. The
Challenge initiative helps Metro track and manage grocery store inventory from the
distribution centre to and within the retail store environment

 IBM have provided business consulting, middleware, implementation, hardware

and support.
Solution  IBM in collaboration with Intel and SAP have been involved in technology
selection and implementation.

 Metro has decreased misorders and lost inventory due to accurate visibility of inventory
from the distribution centre to the retail store
 Real-time tracking of retail store inventory helps Metro order new inventory on-demand,
reducing “OOS” (out of stock) situations
 POS checkout locations are monitored and staff added during peak hours to avoid
Benefits customer bottlenecks
 Customers have instant access to information about products from kiosks located
through the store, improving customer satisfaction
 Dr. Gerd Wolfram, Executive Project Manager, Metro Group Future Store of the Future
says “The tremendous success of the Metro 'Future Store Initiative' is also driven by
IBM's contribution to this innovative project. In particular IBM developed a RFID
Middleware and integrated a complex RFID solution with multiple functions on pallet,
case and shelf level."
17
Customer Reference: Supply Chain: Philips Semiconductors
• The objective of the project was to help Philips increase inventory turns. The project provides
Challenge near real-time inventory visibility to the Philips Semiconductors business units. It will also enable
changes to policies in production and inventory planning systems which will, in turn, drive
increased inventory turns
• The project is initially between the Philips Semiconductors Kaohsiung (PSK) site and the
Regional Distribution Center Hong Kong (RDC HK) on all packaged quantities and boxes, all
customer direct ships (cartons) in AP from the PSK location, all cartons sent from the RDC HK to
all destinations and for EXEL (3PL) all outbound flows in Hong Kong

• IBM provided an end-to-end solution that encompasses:

Solution • Services to support Philips Semiconductors in the STAR proof of concept project approach will be
delivered during the following project phases (total duration 30 weeks), in particular:
•Vendor selection
•Design and validation
•Construction and testing
•Targeted launch
•Evaluation
• Intellectual property services components; IBM proprietary radio frequency identification (RFID)
framework and documentation
•IBM software licences:
•DB2 UDB Enterprise Edition (including one year maintenance)
•2 Websphere studio application developers for the proof of concept (including one year
maintenance)

Benefits  This project will help PSC to further optimize its supply chain and is another step in the route to
become an on demand company. The savings will be used to reinvest in competitive advantage and
growth.

18
Customer Reference: Supply Chain: US Department of Defense
 The U.S. Department of Defense is dedicated to becoming an early adopter of
Challenge Radio Frequency Identification (RFID) technology. The DoD is currently preparing
to read RFID tags at key sites within their supply chain. Beginning January 1,
Challenge 2005, the Department of Defense has mandated that all suppliers place passive
RFID tags at the case, pallet, and Defense Department Unique Identifier (UID)
item packing level.

IBM is working with the Department of Defense to:

Solution –Develop test pilot milestones and manage test pilot requirements
–Create project metrics and reporting
–Build a business case analysis of the overall RFID implementation
–Monitor implementation issues and resolution
–Assist in the development and release of RFID business rules
–Establish commercial best practices
–Provide Subject Matter Experts to develop the short term and long term
implementation plan

Benefits
Benefits IBM seen as trusted brand for US DoD

19
Customer Reference: Supply Chain: Sara Lee
 Major field trial in RFID USA
Challenge
 Step 1 pilot at one DC in compliance with Wal-Mart Mandate
Challenge  Integrated to WMS
 Step 2 roll-out in 2004 to more DCs (5 to 30)

Solution IBM chosen as RFID System Integrator and RFID Software Infrastructure and
Applications Provider
Solution uses Alien UHF tags and readers and Zebra and Printronix printers

Different RFID Use Cases

Benefits RFID Picking/Labelling
RFID Goods Outbound
Order verification at case level
Load verification
Benefits

20
In Short, How do we Help Companies :

Deliver Business Value

Focus on key industries
Develop end-to-end solutions
Provide Consulting, Integration and Professional
Services
Leverage IBM and non IBM Components
Build a strong RFID ecosystem of Partners
Support and drive open standards

21
IBM: a leader in mobile and wireless computing
The Yankee Group ranked IBM # 1 in
March 2003
“IBM ranks first among the enablers of
enterprise mobile computing solutions”
“IBM also boasts the most successful
professional services business (IBM
Global Services) in the mobile computing
space”
22
A mid-2002 IDC report shows IBM and
PwCC Wireless jointly have close to a
30% market share, and when
combined, are over 5 times the nearest
competitors.
“IBM Global Services (IGS) is by far the
leading provider of mobile and wireless
professional services. One could be
shocked by seeing how far ahead IGS is”
AMR Recent assessment of IBM

 January 2004 release with Metro on Store of the Future and IBM's
involvement

 IBM--The overall systems integrator on the project, IBM is providing

strategic direction, consulting, and implementation expertise. It will
also establish an RFID lab in Germany to test supplier
interoperability in all stages of the initiative.

 The Takeaway: IBM is emerging as the leader in RFID

integration and consulting services.

 http://www.amrresearch.com/Content/view.asp?pmillid=16933

23