Speed to Market RFID at Liz Claiborne Solving an Internal Distribution Issue Brian O’Donnell 7/22/04

Driving RFID Compliance Return on Investment Solve an internal requirement / issue

Compliance Compliance mandates are driving the majority of all RFID implementations –To meet this challenge, corporations are utilizing RFID in the last steps in the distribution process. Potential save/return for the originating corporation is limited. Many are not reaping any benefit in the implementation

ROI Cost of chips still in the $.30 - $.45 range –To be financially attractive Cost per tag / unit must be in the $ $.02 –Need ability to drive down cost of usage Reuse tags Increase the quantity per tag Additional cost must also be factored in

Additional Costs Reader - $1,000 - $10,000 Software –Middleware –Modifications to current platform to accommodate data Conversion Cost –Attaching tag to item –Associating a tag with a number Integration Costs –Modifying current systems to handle large amounts of data Ongoing Maintenance

Reuse tags Tags can be applied to reusable items –Pallets –Totes –Trolleys

Solve Current Material Handling Problem Identify an area within the supply chain that would benefit from the technology –Traditional methods are not meeting requirements Barcodes Automation Manual operation

RFID vs. Barcodes BARCODE Read one barcode at a time Requires line of site Information fairly limited – do not track sku’s uniquely Can’t update information on a label RFID Read multiple ID’s simultaneous 1000’s per second Does not require line of site Store more information Ability to write/update information on a tag

Problems with RFID Tags are still very expensive –Chip based tags: $.30 - $.45 Standardization of EPC not final Privacy Concerns Paybacks are still risky

Solving an Internal Issue

Conventional GOH Trolleys Trolleys are utilized to transport garment on hanger goods through out the distribution center Diverting is controlled by a switch manually set on a trolley Divert mechanisms are preset for

Conventional Trolley System

Problems with Conventional Trolleys Pins are constantly breaking –Ongoing maintenance Bent trolley cause misdiverts Divert mechanism are constantly out of alignment Destinations are limited –50 distinct location Multi pin trolleys are expensive

Solve Issue with Barcodes? Cost of implementation is high –Scanner at each divert point Barcodes consistently are damaged Misreads are high Requires additional interfaces with WMS

Utilized SmartTrak. SmartTrak is an RFID based routing system using Read-Write tags embedded in the trolley. First Distribution center in the US to utilize RFID to route trolleys Each trolley knows its destination, and at each switching point, tells the switch to open or not. Issue solved with RFID

Programming the Trolley Targeting the trolley. –Hand Held version. The operator sets the destination with a portable programming unit by simply keying the desired location and pressing the enter button on the programmer while pointing the unit at the trolley. –Touch Screen version. The operator presses the destination on a display and each trolley is programmed for the selected destination. –The trolley is now programmed with the desired location. The trolley now may be inducted onto the overhead garment conveyor randomly.

Diverting Diverting. When the trolley comes into the range of the antenna, the destination is read from the programmable computer chip. – If the Destination code contained in the chip matches the destination code for the antenna, the switch is opened for the trolley.

Liz Claiborne - Cincinnati

Cincinnati Facility Located in West Chester, OH 900,000 Sq. Ft. Opened August 2002 Product Mix - Accessories and Apparel Design Capacity mm Units GOH Storage Capacity – 1.5mm Units Technology Deployed –Cross Belt Sortation –GOH Sortation –High Speed Carton Sortation –SmartTrak

Smarttrac System

The Tag Read/Write incased in glass. Operates on the kHZ Frequency Dimensions ~ ¼ ” x 1 ¾”. Range +/- 3” when used in a trolley. Live cycle >100,000 writes. Cost about $3.50 each. Tag, not to scale. Tag embedded in trolley.

Receiving Write Station 3 Level Mezzanine Transfer Station Divert Points Empty Trolley Write Station Write Station/Divert Point

Advantages No moving mechanical parts to jamb or break in the reader. –Durable transponder is embedded in the trolley. Distributed switching application highly robust as encoders and tracking PLCs are not required.

Advantages con’t Virtually unlimited number of destinations possible The system works with a lighter duty, less expensive trolley than those required with conventional pin readers Less expensive and more reliable than a barcode based application

Conclusion RFID as a technology by itself will not be the end all solution. Companies must redefine their operation and make smart decisions of where this technology is applicable.