1. By: Stan A. Szlapetis Director of Software Services RFID

2. By: Stan A. Szlapetis Director of Software Services Agenda  What is RFID  History of RFID  How is RFID Used and by Whom  RFID In Distribution  RFID Basics  RFID Tags and Equipment  EPC Global

3. By: Stan A. Szlapetis Director of Software Services What is RFID  Radio Frequency Identification  “Smart Label”

4. By: Stan A. Szlapetis Director of Software Services RFID History  Developed in 1940’s  Commercialized in early 1980’s  Smart Labels introduced in late 1990’s  EPCglobal US™ was formed in 2003  Significant supply chain utilization 2004

5. By: Stan A. Szlapetis Director of Software Services RFID Applications  Military  Livestock Tracking  Industrial/Production Process  Sortation Systems (Travel & Post)  Access Control  Pharmaceutical Electronic Pedigree  Asset Tracking  Supply Chain/Distribution

6. By: Stan A. Szlapetis Director of Software Services Real Customer RFID Deployment  Manufacturing and Item Level Tagging  Purdue, HD Smith, Astra-Zenica  Industrial Manufacturing  Pacific Cycle, Boeing, International Paper  Supply Chain and Retail  Wal-Mart, Target, Albertsons, Sam’s Club  Routing and Sortation (luggage & parcels)  Virgin Atlantic, Hong Kong Intl Airport

7. By: Stan A. Szlapetis Director of Software Services Retail Supply Chain RFID Adopters  Wal-Mart  Target  Albertsons  CCE  Price Club

8. By: Stan A. Szlapetis Director of Software Services Example of RFID Implementation

9. By: Stan A. Szlapetis Director of Software Services Advantages over Similar Barcode Systems  All RFID tags are read on the pallet at once*  Save time in scanning each box individually as you would with barcodes  Handles variable size boxes more effectively than scanner based system  Less sensitive to label orientation * Theoretically – some products may be more difficult to read than others

10. By: Stan A. Szlapetis Director of Software Services Benefits of RFID in Distribution  Reduce labor  Smart shelves tell you when you’re out of stock  Reduce theft  Full visibility through supply chain  Reduce Inventory (safety stock)  Certification of authenticity

11. By: Stan A. Szlapetis Director of Software Services Wal-Mart Overview SupplierWal-Mart DC Wal-Mart Store 1 Wal-Mart Store 2 Wal-Mart Store 3 Retail Link

12. By: Stan A. Szlapetis Director of Software Services RFID In The Warehouse

13. By: Stan A. Szlapetis Director of Software Services RFID Standards  Several Application & Communication Standards Exist  Tracking Animals  Smart Card  EPC Global Gen 1 & Gen 2  ISO 18000-3 (HF)  ISO 18000-6 A/B (UHF)  Wal-Mart Adopted EPC Standard

14. By: Stan A. Szlapetis Director of Software Services Difference between ISO and EPC  The Electronic Product Code (EPC) is a standard created by EPCglobal.  EPC is more than tags and reader communication. EPCglobal wants a network standard for how data is shared among various organizations.  ISO is also working on standards for tracking goods in the supply chain using HF and UHF tags  It is envisioned that EPC standard will also become ISO 18000-6C standard

15. By: Stan A. Szlapetis Director of Software Services RFID Tag Basics  An RFID tag contains a small Chip (computer, memory, radio, and power) and Antennas, mounted on a Substrate  Active, Semi-Passive, or Passive  Single or Double Dipole  Read/Write, Write Once/Read Many, Read-Only

16. By: Stan A. Szlapetis Director of Software Services Common Frequencies  Low Frequency (125 and 134.2 kHz)  High Frequency (13.56 MHz)  Ultra High Frequency* (865-869 MHz in Europe, 902-928 MHz in US, 905- 956 MHz in Japan)  Microwave (2.54 GHz and 5.8 GHz) * EPC Gen 2 Frequency Range

17. By: Stan A. Szlapetis Director of Software Services Active & Passive Tags  Passive RFID requires reader to create an RF field that energizes the tag for communication (reader talks first)  Active RFID requires the tag to have it’s own power and normally the tag broadcasts it’s presence to the reader first (tag talks first)

18. By: Stan A. Szlapetis Director of Software Services EPC Tag Classes CLASSTAG CAPABILITY Class 0Read Only (64 or 96 bits) Class 1Write Once, Read Many (64 or 96 bits) Class 0+, Class 2 Read, Write (96 or 256 or 512 bits) Class 3 Class 2 Capabilities + Power for longer range or advanced functions. Class 4 Class 3 Capabilities + Ability to communicate with other active tags. Class 5 Class 4 Capabilities + Ability to communicate with passive tags.

19. By: Stan A. Szlapetis Director of Software Services Generation 2 Characteristics  Single world wide standard  Less power to power the tag up (more time, longer reader distance)  Faster tag to reader communication  Improved write speed (5 tags/sec vs. 3)  Improved singulation protocol (“Q” Protocol)  Encryption of tag to reader communication  Dense reader operation  Up to 512 bit item ID (vs. 96 bit item ID)  32 bit lock and kill password (vs. 8 bit)

20. By: Stan A. Szlapetis Director of Software Services RFID vs. Barcode BARCODERFID Optical, line of sight required Wireless, no line of sight required Reads one object at a time Read many objects at once Changes require a new label to be printed Changes can be reprogrammed on the fly Labels are less expensive Tags are more expensive

21. By: Stan A. Szlapetis Director of Software Services Mapping Barcodes to EPC GTIN

22. By: Stan A. Szlapetis Director of Software Services RFID Tags READ ONLY AND READ/WRITE INLAYS FOR PALLET TAGSINLAYS FOR CASE INLAYS FOR ITEM TAGS Best Performance 4x41x6 2 x 2 Better Performance 3x32x41x4 Good Performance 1x61x41x1

23. By: Stan A. Szlapetis Director of Software Services RFID Equipment

24. By: Stan A. Szlapetis Director of Software Services RD5000 Reader  Compact, Rugged, Portable  Can be installed almost anywhere on material handling equipment such as forklifts and clamp trucks, on mobile carts, portable skate wheel conveyors or even in hard to reach locations where a cabled fixed reader would not be practical.  EPC Gen 2 Only Features 100% free of network, power and antenna cables Integrated 802.11a/b/g WLAN radios Integrated Bluetooth Integrated rugged antenna Integrated battery with optional external power source Interactive sensing technologies: acceleration sensor and proximity sensor IP66 sealing MC9000 series compatible battery and chargers

25. By: Stan A. Szlapetis Director of Software Services XR400 Smart Reader  Simultaneous support for EPC Gen 1 & Gen 2 tags  Hosts applications directly on the reader  Enterprise connectivity (Ethernet, Serial, USB, digital I/O) & Remote Management  Up to 4 read points  Best in class reader performance  Best in class dense reader performance  Reads as well as writes to tags

26. By: Stan A. Szlapetis Director of Software Services XR400 Smart Reader Applications  Conveyor Readers  Forklift Readers  Dock Door Readers

27. By: Stan A. Szlapetis Director of Software Services Reader Forklift Mount  Forklift still needs a RF terminal with a display for commands and direction

28. By: Stan A. Szlapetis Director of Software Services DC600 Advanced Portal System  Turn-key solution  Integrated XR400 Reader and High performance antennas  Enterprise deployable  Easy to install, manage and maintain  Modular  Audio & visual alerts

29. By: Stan A. Szlapetis Director of Software Services MC9000-G RFID Rugged Handheld  ¼ VGA Display  Variable Distance Barcode Reader  EPC Class 0, 1 & Gen 2 Compliant RFID Reader  Integrated Directional Antenna  802.11b Connectivity  Programmable  Microsoft Windows CE.NET, Microsoft Mobile 2003

30. By: Stan A. Szlapetis Director of Software Services Printing  Number of printers and printer/applicators are available on the market that print, encode and verify RFID labels  Toshiba TEC offers 4 RFID Ready Thermal Printers: BSX-4, BSX-5, BSX-8 and the B-SA4.  Can print and encode HF or UHF tags  Toshiba TEC has successfully used back-scatter UHF in R/W tests.  Ribbon Save, BCI and the RFID Analyze Tool are unique to Toshiba TEC.

31. By: Stan A. Szlapetis Director of Software Services EPC Global  EPCglobal Inc™ is a joint venture of GS1 US™ (formerly the Uniform Code Council, Inc.®) and GS1 (formerly EAN International)  Committed to standards-based global supply chain solutions  EPCglobal Inc is an open, worldwide, not-for-profit consortium of supply chain partners working to drive global adoption of the EPCglobal Network™.  EPCglobal Network will provide for immediate, automatic and accurate identification of any item in the supply chain of any company, in any industry, anywhere in the world.

32. By: Stan A. Szlapetis Director of Software Services EPCglobal Inc™ Standard  EPC deals with more than just how tags and readers communicate.  Create network standards to govern how EPC data is shared among companies and other organizations

33. By: Stan A. Szlapetis Director of Software Services Data Exchange  Data synchronization is required through the GS1 – Global Data Synchronization Network (GDSN)  Tags must be in EPC Data Format  UCCnet is Wal-Mart’s network partner

34. By: Stan A. Szlapetis Director of Software Services What is GDSN  GDSN performs 3 key functions:  Item Registry  Standards Validation  Data Synchronization of Item Data

35. By: Stan A. Szlapetis Director of Software Services Purpose of GDSN

36. By: Stan A. Szlapetis Director of Software Services Benefits of GDSN  Eliminates re-keying of data  Maintains accuracy of data  Sets Standards  Speeds Up Item Introduction and Creation  Wide scope RFID Identification of Items  Delivers Trade Item data in consistent format  Simplifies Supply Chain Management

37. By: Stan A. Szlapetis Director of Software Services Wal-Mart’s Retail Link  Wal-Mart will NOT use the EPC Network at this time  Wal-Mart will use Retail Link  Primary method for sharing EPC information  Allows Suppliers to see the same information that Buyers and Replenishment Managers can see

38. By: Stan A. Szlapetis Director of Software Services Automation Associates   RFID Technology is not perfect but great strides are being made   AAI is Symbol RFID certified   Ready to help you with your RFID project

39. By: Stan A. Szlapetis Director of Software Services Terminology  EPC – Electronic Product Code  GTIN – Global Trade Item Number  SGTIN – Serialize GTIN  ONS – Object Name Services  RFID – Radio Frequency Identification  SSCC – Serialized Shipping Container Code  GDSN – Global Data Synchronization Network  EPCIS – EPC Information Services  GIAI – Global Individual Asset Identifier  GRAL – Global Returnable Asset Identifier  URI – Uniform Resource Identifier  URN – Uniform Resource Name  SGLN – Serialized Global Location Number

40. By: Stan A. Szlapetis Director of Software Services Why RFID in Distribution  On average 7.1%* of SKU’s are Out-of- stock (up to 30% in some categories)  Out of stock costs retailers $69B in lost revenue**  Delays in getting the product to the store and to the shelf impacts sales  Most stock is available but not on shelf *Source: Efficient Consumer Response (ECR) Europe ** ** Retail Out of Stocks: A Worldwide Examination of Extent, Causes and Consumer Response, Emory Univ, Univ. of St Gallen, and Unvi. Of Colorado, 2002

41. By: Stan A. Szlapetis Director of Software Services Wal-Mart’s Cost Justification  $6.7 Billion: Reduce labor costs by 15%. Eliminating scanning of bar codes on pallets and cases in the supply chain and on items in the store.  $600 Million: Reduce out-of-stock situations. The company boosts its bottom line by using smart shelves to monitor on-shelf availability.  $575 Million: Reduces administrative error and vendor fraud by scanning products automatically. Knowing where products are at all times makes it harder for employees to steal goods from warehouses.  $300 Million: Better tracking of the more than 1 billion pallets and cases that move through its distribution centers each year.  $180 Million: Reduce inventory and the annual cost of carrying that inventory. Improved visibility in the supply chain, in its own distribution centers and its suppliers' warehouses.  $8.35 Billion: Total pre-tax saving is higher than the total revenue of more than half the companies on the Fortune 500.

42. By: Stan A. Szlapetis Director of Software Services Scope of Wal-Mart RFID Requirements  Wal-Mart is responsible for 17 percent of retail volume worldwide  Receives on average 8 billion cartons a year  First phase targets its top 100 suppliers who are responsible for one-eighth of those cartons  In other words, 1 billion cartons will need to be tagged.

43. By: Stan A. Szlapetis Director of Software Services Wal-Mart RFID Tagging Guide

44. By: Stan A. Szlapetis Director of Software Services Quality Expectations  Case & Pallet tag data needs to be verified prior to receipt at Wal-Mart  100% Read Rate for Pallet Tags, but not all cases need to be readable from in the pallet configuration  100% Read Rate of Case Tags on Conveyor  96 bit Class 0, 1,0+and Gen 2 tags are accepted

45. By: Stan A. Szlapetis Director of Software Services Tag Data

46. By: Stan A. Szlapetis Director of Software Services e.g.

47. By: Stan A. Szlapetis Director of Software Services Retail Link  Wal-Mart will NOT use the EPC Network at this time  Wal-Mart will use Retail Link hosted by UCCnet  Primary method for sharing EPC information  Allows Suppliers to see the same information that Buyers and Replenishment Managers can see

48. By: Stan A. Szlapetis Director of Software Services Where Are My Products  Retail Link will allow you to see where in the supply chain your product is  In Transit or in DC  DC & Store Stock Outs  DC in Yard - not yet received  EPC Updates will be done at DC Receiving, DC Shipping, Store Receiving, Backroom to Store Floor, Destroyed

49. By: Stan A. Szlapetis Director of Software Services Recent Results  Wal-Mart commissioned the University of Arkansas to conduct an independent study  Wal-Mart RFID Trial Shows 16% Reduction In Product Stock-Outs  Study also shows that RFID-equipped stores were 63% more effective in replenishing out-of-stock merchandise compared to stores without the technology.  An RFID tagged item made it to the shelf three times quicker than a non-tagged item.  These items were identified as being in the back room three times quicker than those without RFID tags.

50. By: Stan A. Szlapetis Director of Software Services 2006 & 2007  In 2006, Wal-Mart will double the number of stores that are RFID-enabled, along with distribution centers that service stores. By the end of 2006, more than 1,000 stores, clubs, and distribution centers will be using RFID. In January 2007, Wal-Mart expects the next wave of 300 suppliers to start shipping tagged cases and pallets. That will bring the total number of suppliers using RFID in early 2007 to over 600.

51. By: Stan A. Szlapetis Director of Software Services Wal-Mart & Target EPC  Oct. 17, 2005—Target and Wal-Mart, two of the largest retailers in the United States, are sharing Electronic Product Code (EPC) data with 13 manufacturers as part of a pilot. The data is being transmitted in a standardized format via an Internet- based electronic data interchange called applicability statement 2 (AS2). TargetWal-MartTargetWal-Mart

52. By: Stan A. Szlapetis Director of Software Services Thank You! Questions