1. EPC – new identification technology and applications in Europe Stephane Pique

2. 2 Agenda Introduction GS1/EPCglobal EPC Standards Introduction EPCIS RFID in Europe EPC/RFID Business Cases Retail in Europe

3. 3 Introduction GS1

4. 4 EPCglobal subscribers 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

5. 5 Each EPCglobal member joins once in the location of their head office June 2004 June 2005 June 2006 June 2007 Asia Pacific21117173199 Europe3687166221 Latin America052432 ME & Africa231319 North America132372499652 Total1915848751123 EPCglobal membership in June 2007

6. 6 EPCglobal membership in Europe

7. 7 Agenda Introduction GS1/EPCglobal EPC Standards Introduction EPCIS RFID in Europe EPC/RFID Business Cases Retail in Europe

8. 8 GTIN 1233465712354 Header Company Prefix Trade Item Reference EPC Manager NumberTrade Item Reference 0000000123456 Serial Number GTIN 1234657123546 EPC 8 Electronic Product Code (EPC) The EPC can only be interpreted in combination with the corresponding data base

9. 9 Network standards (Overseen by ARC) Event Registries Search & Discovery Secure Internet Exchange EPC MW EPC IS EPC Gen2 Reader Internal Systems ERP, WMS, etc. Enterprise System EPC Gen2 Tags with EPC EPC MW EPC IS Internal Systems ERP, WMS, etc. Enterprise System ONS Authentication & Authorisation EPC Gen2 Reader EPC Gen2 Tags with EPC

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

11. 11 Agenda Introduction GS1/EPCglobal EPC Standards Introduction EPCIS RFID in Europe EPC/RFID Business Cases Retail in Europe

12. 12 Supply chains are simple… right? 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.

13. 13 EPCIS provides visibility 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…

14. 14 What is EPCIS? EPCIS = EPC Information Services A new EPCglobal standard 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 GS1 EPC and converted GS1 barcodes Communicates via GS1 XML standard

15. 15 Network standards (Overseen by ARC) Event Registries Search & Discovery Secure Internet Exchange EPC MW EPC IS EPC Gen2 Reader Internal Systems ERP, WMS, etc. Enterprise System EPC Gen2 Tags with EPC EPC MW EPC IS Internal Systems ERP, WMS, etc. Enterprise System ONS Authentication & Authorisation EPC Gen2 Reader EPC Gen2 Tags with EPC

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

17. 17 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 10:01AM, 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 12:32PM Core EPCIS event types (1/2)

18. 18 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 3:20PM Transaction Events Records objects associated with a business transaction: Order number 123 was fulfilled with objects x, y and z Core EPCIS event types (2/2)

19. 19 How does EPCIS data sharing works? Manufacturer3PLCustoms EPCIS instances at each enterprise communicate via the EPCIS Query Interface Today, trading partner know each other In the future Discovery Services will find the corresponding partners CarrierImporter EPCIS Query Capture EPCIS Query Capture EPCIS Query Capture EPCIS Query Capture EPCIS Query Capture

20. 20 Example EPCIS analysis in Pharma

21. 21 Agenda Introduction GS1/EPCglobal EPC Standards Introduction EPCIS RFID in Europe EPC/RFID Business Cases Retail in Europe

22. 22 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

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

24. 24 Agenda Introduction GS1/EPCglobal EPC Standards Introduction EPCIS RFID in Europe EPC/RFID Business Cases Retail in Europe

25. 25 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 Source: Ahold 0.2% to 3.4% Soft Benefits Hard Benefits Costs 3.1% to 3.5% -2.5% to -1.3% Percent of Sales 1975 (McKinsey) 1997 (PwC) - Automatic reorder - Shrink control - Improved warehouse operations - Improved DSD control - Inventory reduction - Sales increase - Faster check-out - Reduced check-out errors/loss - Prevention - Elimination of price marking

26. 26 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 (?) Soft Benefits Hard Benefits Costs Percent of Sales TodayFuture

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

28. 28 RFID data captures additional OOS above what retailer reported 3.6% additional OOS found with RFID Shelf visibility 3.6% 2.7% 0.0% 2.0% 4.0% 6.0% 8.0% OOS Without RFIDOOS With RFID What is the True Out-of-Stock? Reported Store OOSFloor OOSAdditional Store OOS No RFID Data. Only Retail OOS Report 7.2% 0.9%

29. 29 Product placement analysis

30. 30 Retail promotions 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: Timeliness: is promotional packaging reaching consumer in time? Effectiveness: is promotional item selling better? Manufacturing Mfr’s Distribution Center Retail Store Retailer’s Distribution Center

31. 31 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 € 8.5mio (German estimation only)

32. 32 Agenda Introduction GS1/EPCglobal EPC Standards Introduction EPCIS RFID in Europe EPC/RFID Business Cases Retail in Europe

33. 33 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 Feasibility study with SRS pallets in open system

34. 34 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 Planned trial on item level in Belgium

35. 35 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

36. 36 METRO Group Roll out in October 07 with 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 Prototype at order picking

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

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

39. 39 Contact details Stephane Pique European Director EPC/RFID M+49 163 771 2938 Estephane.pique@gs1eu.org Wwww.gs1eu.org and www.epcglobalinc.org