Business Strategy and the RFID Challenge Dr. John Hamilton Consortium for Supply Chain Management Studies Saint Louis University October 20, 2004

Key Discussion Points StrategyTechnology Value proposition Transition

Strategy Forward looking –3 to 5 years Environmental impact –WalMart & DOD RFID requirement Provides direction and communicates to stakeholders When effective --- competitive advantage

Why Strategy? Customer demand Competitiveness Cost impact Seize opportunities

Why Strategy? Communication to executive management A way to measure progress A plan for the future Minimize the total costs of RFID

Technology Current RFID issues –Will not replace bar codes –Must co-exist –Costs TagsReaders –Reliability TagsReaders

Technology Data impact –Supplier & customer synchronization How to gain value? –Item level, 20 billion Business process impact –Do we know the cost or the value?

Value Proposition Tactical versus strategic –Short term response, high cost –Long term response, lower costs Cost absorption –This cycle

Value Proposition Next cycle –Competitor & supplier response Future RFID costs will decline –Economies of scale –The experience curve –Implementation and process improvements

Value Proposition Value chain –Internal analysis –External support How to attain an internal ROI from RFID? An integral part of corporate strategy

Support Activities Primary Activities Technological Development Human Resource Management Firm Infrastructure Procurement InboundLogistics Operations OutboundLogistics Marketing & Sales Service MARGIN MARGIN Value Proposition Value Chain Analysis Value Proposition Value Chain Analysis Identifying Resources and Capabilities That Can Add Value

Transition Customer demand RFID maturity Dual purpose technology System flexibility Strategic value –Who will be the winners? How long?

Thank You Success with partners