The Impact of RFID on Warehouse and Distribution

The Impact of RFID on
Warehouse and
Distribution
Dr. Christoph Leßmöllmann, SAP AG
The Wal*Mart
effect
1

Scenario: Retailer wants RFID tagging
Whichtag frequencies
and protocols will
you support? How will you make
Will you recycle the tags?
Can we get them back?
2
ã SAP AG 2003, Dr. Christoph Leßmöllmann
On Pallet and Case Level
Manufacturer Distribution Center Retail Store
Goods Issue
send
ASN
Detect
Differences
and handle
automated
Updates
Load and
register
Handling Unit
Assign RFID
tagged
Handling Unit
Delivery
Questions
What information do you
want from your suppliers
and in what data format(s)?
d. Could a situation arise where some cases on a pallet are required to be tagged and some are not?
e. If products are shipped directly to Wal-Mart retail stores, will these products need to be tagged?
f. Are some product classes be expected to be tagged before others?
4. IT Landscape and Services
a. Will ONS and PML servers on the Internet be utilized in your app roach?
i. If not, what will you use as equivalent services?
b. Will you require 3rd party services to manage and provide EPC information or do you expect
manufacturers to send the information directly to Wal-Mart data center(s)?
c. Will RFID read information at Wal-Mart distribution centers be passed back to respective manufactures to
utilize in their supply chain monitoring and optimization ?
i. How will this information be conveyed? Via a Savant like system or at a
higher level? How frequently do you plan on communicating this i nformation? Daily, twice daily, batch
mode, real-time?
5. RFID Hardware/Physical Structure
a. Which tag frequencies and protocols will Wal-Mart support?
i. Class 0, Class 1, will they vary by application?
b. Do you plan on re-writing, updating or adding additional data to the tags other than the EPC
i. If so, when and where and for which processes?
c. Do you plan on mixing/supporting multiple tag types mixed on thesame pallet?
d. Will there be tagged, re-useable material, such as pallets or packing material, and should this material
retain its tagged identity or be re-tagged?
e. Where do you plan on physically installing readers/antennae in 2005 and what data do you plan on
communicating from various readers to your suppliers?
f. Will Wal -Mart wish to receive Kill Code information for Type 1 tags? How?
g. The new Object Type field within the GEPC may need to be known f or some optimized RFID reading
scenarios.
i. Will Wal -Mart use this field?
h. How will Wal-Mart wish to get information on the Object Type field for each product?
i. What procedures will you ask your suppliers to put in place to ensure that all the tags on a pallet can be
reliably read?
j. Will you establish software and hardware compliance tests?
i. If so, what are your plans and requirements?
k. Do you have a target read accuracy rate at the case/pallet level?
l. Are you considering using other forms of media to communicate the EPC?
i. If so, what forms?
m. Will you require reads for cases within cases, such as tagged-packs within cases?
n. Can you give some indication of the total quantity per day of tagged cases and pallets that is anticipated
to flow through an individual distribution center during 2005 and later with full deployment?
i. How many times do you anticipate each tag will be read? This kind of
information would help us size the capacity and performance needs in our products for our EPC
customers.
1. The EPC:
a. Which version of the EPC code (i.e., 64 bit, 96 bit, GEPC…) will be used in 2004 and 2005?
b. What information do you want from your suppliers and in what data format(s)?
c. How will EPC information be provided? Will it be attached to exi sting ASNscarried via conventional EDI
or by some other means?
i. What exact information will you require on the ASN or in the EDI
message?
d. How will case/pallet level tag identities be related to Wal-Mart orders and suppliers shipments? Do you
want a handling-unit identifier on the EPC itself?
e. How will you resolve EPC data discrepancies with your suppliers, such as unverified or potentially
fraudulent EPC numbers?
2. Processes:
a. Please describe the overall structure and information flow that you plan for your suppliers for case and
pallet level EPC tagging?
b. Which business processes do you plan to enable within Wal -Mart utilizing EPC information?
c. What can you tell us about packing and unpacking processes within your DCs?
d. Will your system provide instructions for packing, cross-docking and unpacking, or will the system
receive inputs from users?
i. Is specific information needed from your suppliers to support your
packing and unpacking processes?
e. Will you process EPC-enabled goods receiving and order-to-cash processes with existing ASNs/EDI
methods?
i. If yes, how, if no, how?
f. Will you require your suppliers to support EPC-enabled cross-docking?
i. If so, what is your proposed process?
g. What are the expected physical processes from supplier through Wal-Mart stores?
h. Beside the pallet and (lowest) case level: Is there further nesting to track via RFID? Big Cartons in bigger
boxes and little cartons in big cartons? How many of such levelsmust be tracked?
i. Which business processes at your suppliers will be changed?
j. Will overall goods receipt information be passed back to supplie rs? How?
k. Will billing and payment processes change with EPC?
l. What process and business changes will happen? How can this be reflected in efficiencies back to Wal-
Mart suppliers?
m. What are your plans with medical products and processes? Will th is differ from other merchandise?
n. Will there be a uniform process for monitoring and reporting tag read errors, both internally and to your
suppliers if necessary?
i. If so, what is the proposed process?
3. Rollout
a. How will the EPC approach be rolled out by business process, application(s), time and phase?
b. Will you start with a single distribution centerand every loading dock door, or a subset of doors at more
than one DC, etc?
c. Will vendors have to tag some orders and not other orders depending on where the products will be
sold?
d.
use of the tags /
the provided data?
Do you plan on mixing/
supporting multiple tag
Types mixedon the same
pallet?
Do you plan on re-writing,
updating or adding
additional data to theWtahgisc?h information
Whichstandards will will you provide back?
you support?

Options – what can you do?
How the RFID Information is stored in SAP
3
n Let the Logistics Service Provider do the tagging
uNo impact on existing business processes
uNearly no change on business processes
uRequirements fulfilled
n Partner with packaging companies (eg CHEP)
uPurchase Packaging material pretagged
uAssociate tags to shipped goods
n Partner with other Suppliers
uConsolidate tagging operation
n Request your suppliers to tag
uEnable your systems to track / trace tags
n BYO – buy your own tags
uAssociate separate to label
uPrint with the label
uMake Maximum use of tag investment
l Investigate ROI inside your supply chain
l Investigate ROI outside your company
l Request Information back from business partner
Content Quantity
Pallet
EPC
Case
EPC
Item
EPC
(if necessary)

Demo: Integration through 4 different layers
Create Event Handler Alert Differences Goods Issue
The key components to enable RFID processes
Any of the mentioned components are optional for RFID enablement
But a combined usage enables integrated business processes with highest
flexibility
4
Event Management
Logistics Execution
Auto ID Infrastructure
Create Task
Create Assign HU
Delivery
Task & Resource Management
Update Delivery
and post
Goods Issue
Confirm Task
Portal Frame Reader
Save
Send Task and ID‘s
Receive Task withID‘s Compare Actual
versus Plan
Send Actual
ASN
ASN
Status Unexpected Event
Difference
Status Status
l Events
l Objects
l Responses
l Performance
l Distributed
Data
Event
Management
Auto ID
Infrastructure
Master
Data
Management
SAP
Auto ID
Management
Warehouse
Management

Implementation Scenarios for SAP Auto ID
broad SAP user
5
External
External
WM
Customerwithout
SAP Functions
Enterprise
Execution
Materialfow
Hardware
External
External
External
External
External
External External
!! Customers do not have to replace their existing systems to enable RFID !!
SAP Auto ID
Infrastructure

IT Infrastructure – The Need
AutoID Infrastructure Architecture – High Level
Human Integration
Core Services
Action & Process
Management
6
n Highly scalable
uBillions of communicating items
uup to 30.000 events per second per value chain
n Minimum Cost
uNo extensive replication of data
n Flexible and adaptive
uHardware diagnostic, Plug&Play, self-configuring, real-time,
adaptive response
uinteract with various different applications:
l SAP and non-SAP
l SCM, CRM, PLM etc etc
n Context-aware
uLocation, time, business contextetc.
ulocalized versus centralized event handling / business
logic
n Based on open standards
n Security
uAuthorization to read / write data
uVisibility
n Leverage and protect customer‘s existing investments
Logging & Archiving
Device Integration
Configuration & Admin
Management
Association Data
Management
Backend System Integration
SAP ERP
SAP SCM
ONS/PML
Server
Other
Execution
Devices
Backend Systems
SAVANT
Device
Controller

AutoID Infrastructure - Device Controller
7
Auto-ID Infrastructure
RFID Device Controller RFID Device Controller
Software Component
responsible for controlling the
operation of specific physical
AutoID readers
Functions
n Read / Write of RFID tags
n Local filtering and aggregation
of RFID data
n Abstraction from the physical
hardware through generic RFID
reader API
n Extensible: Possibly controlof
attached equipment like lights
of a gate reader
RFID Device Integration
Operation
Control
Filtering &
Aggregation
Configuration
Generic RFID Reader API
Physical RFID Reader
Master Data Management
SRM
CRM
Financials
Depth of Integration – updating the world
Goods
Receipt
Event Management
InventoryManagement
Warehouse Management
Goods
Issue
Change
Bin
Location
Supply Chain Planning
Unexpected
Pallet
Arrival
Change
Pallet
Ownership
Update

8
SRM
CRM
Financials
Depth of Integration – retrieving data
Where is
Item ID?
Which Item
Ids were in
that pallet?
Event Management
InventoryManagement
Where
is Pallet
ID?
Where is
CaseID?
Supply Chain Planning
How many
Do I have?
Which Pallet
was shipped
to which
Customer?
Communication
HUB
Master Data
Management

SAP NetWeaver – Delivering on the promise of ESA
Master Data Harmonization
9
lSAP NetWeaver is
lthe application and
lintegration platform
lto unify and align
lpeople,
linformation, and
lbusiness processes
lacross
ltechnologies and
lorganizations.
SAP NetWeaver
COMPOSITE APPLICATION FRAMEWORK
PEOPLE INTEGRATION
Multi channel access
Portal Collaboration
INFORMATION INTEGRATION
Knowledge Mgmt
Bus. Intelligence
PROCESS INTEGRATION
Integration
Broker
Bus. Process
Mgmt
APPLICATION PLATFORM
J2EE
DB and OS Abstraction
ABAP
LIFE CYCLE MANAGEMENT
...
MMDDMM
Client
SAP
Client
non SAP
Client
SAP
Client
non SAP
Master data harmonization
n All of Content Consolidation PLUS
n Central management and
distribution of global attributes
n Post editing in client systems
n Controlled distribution of
local changes
Examples:
n Business Partner administration
n Central provision of sales articles
n Definition and administration of
non- variable parts

10
Content Consolidation
Content Consolidation
n Cleanse, normalize data
n Aggregate, search, and cross
reference data from connected
systems
n Duplicate finding
Examples:
n Business- wide analyses
(e.g. global spend Analysis),
n Creation of central catalogs
(e.g. of supplier products)
MMDDMM
Client
SAP
Client
non SAP
Client
non SAP
Client
SAP
Client
non SAP
Supply Chain
Event
Management

SAP Event Management – Architectural landscape
11
Mobile
Devices
Internet
Services
RF
RFID
SSAAPP EEMM
Internet
Services
SSAAPP BBWW - KKPPIIss
Exec.
Quality
Report.
Compl.
Business
Systems
Mobile
Devices
Status Retrieval
EDI
XML
Technical
Systems
Actual Events
Plug
In
Legacy or
3rd Party
System
R/3
APO
...
mySAP
Business Suite
BAPI
Event
Handler
BAPI
Event
Handler
Event
Handler
Plug
In
XML/PML
Warehouse
Management

From Picking towards Cross Docking -
Material Flow in a typical todays Warehouse
Yard In Out
The need for direct connection to automation
Manufacturing
Real Time Data
Handling
Robots
12
Dock, Stage
Pack, Sort,
Add Value
Store, Pick
SAP WMS Solution 2003
Yard Management
Dock Scheduling
Trailer Visibility
Extended Cross Docking
Planned Cross Docking
Opportunistic Cross Docking
Value Added Services
Handling Unit Management
Direct Radio Frequency Support
Task & Resource Management
Labor Optimization and Control
Direct Connection to Automation
Wave Planning, Workload Planning
Monitoring & Alerts
Storage & Facility Management
High Bay
(ASR) SShhuuttttleless CCoonnvveeyyoorr
High Bay
(ASR)
Scanner
Stations RFID RFID VVooicicee
TTaasskk && RReessoouurrccee MMaannaaggeemmeenntt
SSoorrttaattioionn PPaallleletitzizeerr Handling
Robots
Purchasing
Inventory
Management
Customer
Order
Management
Quality
Management
SSccaaleless
3PL
Collaboration
Supply Chain
Planning
BBaarrccooddee
PPrrininteterr
Scanner
Stations

SAP Mobile Multimodal Architecture –
merging technologies for maximum efficiency
Dynpro Info
Barcode
Content
Integration into external WM:
RFID based Case Picking
13
mySAP Supply Chain
Execution
SAPConsole
Web enhanced
Voice
Recognition
Text to
Speech
VoXML
Client
Voice Recognition
Mobile Device
VoXML
Voice Content
Converter
Hardware
Adapter
RFID
Rules
RFID Node
RFID Content
SALT
Mat 1, Bin 1
Mat 2, Bin 2
Auto ID functions
Receive Pick orders from WM
(SAP or external)
Containing Bin location from / to
Material / Quantity
Destination
Allocate resource to Pick order
Display to worker
Confirm picking (RFID)
Send confirmation to WM
Update Auto ID Data Model
Trigger replenishment for pick face

RFID supported Case Picking without SAP WM
(simple)
RFID supported Case Picking without SAP WM
14
External WM / IM / Sales Order / Delivery
Pick Items
(Mobile)
Build HU
Hierarchy
PPiicckk LLiisstt RReeaadd TTaaggss
CCoonnffiirrm LLiisstt
PPiicckk RReeqquueesstt
External WM
CCrreeaattee TTaasskk((ss)) Allocate
Resource(s)
TRM
Confirm
Task / Request
Build HU
Hierarchy
Request
Management
Route
Management
Bin
Management
Resource
Management
Monitoring
TRM
Packages
Used:
Mobile
Support
RReeaadd TTaaggss

RFID supported Case Picking with SAP WM
DDeelliivveerryy
Monitoring Strategies WM
Packages
Used:
15
Pick Transfer
Order
WM
CCoonnffiirrm TTOO
Bin
Management
Mobile
Support
Allocate
Resource(s)
Handling Unit
Management
Build HU
RReeaadd TTaaggss Hierarchy
How will SAP
enable RFID
processes in WM /
SCM ?

Prime Processes to enable AutoID in SCM
Handling Unit packing and unpacking
n Focus on creating Handling
Units with RFID info
n Capability to check content of
HU through RFID
n using mobile handheld device
n Enable to control the movement of goods in the supply chain
n Low investment into equipment
n Loading and unloading using a fixed reader at the gate
n Focus on automated reading
n Alert when wrong sequence or pallet
What are these scenarios providing ?
16
Loading and unloading of pallets
(Goods issue and Goods receipt)
Auto ID enable the business networks
n Start tagging at warehouse or production level
n Possibly through Logistics Service Providers
n HU Packing could be also last step of production
Provide first ROI
n Loading / Unloading provides visibility, reduces
errors
n Provide basis for Tracking and Tracing
n Across different systems and distribution centers
n Help theft reduction
n Reduce Labor at loading and unloading

Goods Receipt Process with RFID
Packing and Goods Issue Process with RFID
CRM Sales Order
17
Auto-ID
Infra-structure
SAP EM
SAP Warehouse
Management
Warehouse
Vendor
Adv. Ship
Notification
Delivery
Check and
Receive Goods
Ship Goods
Scan IDs
Check consistency
Create Event Handler
Register IDs
of expected Goods
Vendor
Buyer
Post
Goods
Receipt
Post Event
Create HU
Auto-ID
Infra-structure
SAP EM
R/3
Enterprise
Warehouse
Buyer
Delivery
Issue Goods
(Loading)
Vendor
Buyer
Cust.
Order
SAP WM
Build HU
Associate
Items / Pallet /
Tags Register ID
of Pallet
Create Event Handler
for Delivery
Pick
or
Produce
Ship Goods
Adv. Ship
Notification
Verify IDs
Goods
Issue

Example for Order fulfillment process
Status of
my items? ? ?
SOSO e netnrtyry Production PaPcakcakgaignigng WWHH ShSihpippipnigng
• Drive business process out of SAP backend
• Track and trace and queryon HU / item level done on SAP EM
• Tag readings processed by SAP AutoID Infrastructure
RFID based Case Picking
18
Oper. 1 Oper. 2 Oper. n
Sales
in
shop
Sales
in
shop
Item
tagging
HU
tagging
Order
entry
Start
Production
Sell
item
SAP backend
SAP EM
SAP AutoID
Infrastructure
Mat 1, Bin 1
Mat 2, Bin 2
Auto ID functions
Receive Pick orders from WM
(SAP or external)
Containing Bin location from / to
Material / Quantity
Destination
Allocate resource to Pick order
Display to worker
Confirm picking (RFID)
Send confirmation to WM
Update Auto ID Data Model
Trigger replenishment for pick face

What is the effect
to the existing
systems ?
Central System Landscape
Business Analytics
PLM
SRM ERP
CRM
SCM
Planning
Execution
Netweaver
Master Data Management People, Device, Process and Information Integration
19
Systems Landscape
Auto ID
Infrastructure 1
Auto ID
Infrastructure 1
Manufacturing
Plant
Distribution Center Retail Store
Auto ID
Infrastructure 1

The Vision of RFID for
Warehouse Management /
Distribution
What happens to Enterprises today ?
20
Focus on End to
End Processes
Build a
dynamic
Network
Focus on
Core Competencies
Handle multiple /
competitive Partners
Shorter Product
Life Time
Merger &
Akquisitions
Outsourcing
Higher Flexibility and Success
through Partnerships

How does it change the Supply Chain ?
1. Production-stage
2. Production-stage
Fragmentation needs Consolidation
21
Warehouse Retail Store Customer
1st tier
Supplier
Transport
Enterprise
Manufacturer
Carrier
2nd tier
Manufacturer
Contract Packer
Regional DC
VAS
2nd tier
Supplier
Customer
Subcontractor
1st tier
Supplier
2. Assembly
1. Assembly
Retail Store
Customer
Retail DC
Central DC
Postponement
LLiinneeaarr SSuuppppllyy CChhaaiinn
SSuuppppllyy NNeettwwoorrkk
Parcel Carrier
From
presenting your internal
organization to your customers…
To
one face to the customer for a
customer-centric business
Business
Division
C
Business
Division
A
Business
Division
B
CRM
Business
Division
Business
Division
B
A
Business
Division
C
Supplier
Transform
Customer
Logistics
Service
Providers
Supplier
Logistics
Service
Providers
Customer

Fragmentation needs Visibility
Fragmentation needs Coordination
SAP Extended Order Management
SAP NetWeaver*
22
Insp. Lot
Created
Defects
Recorded
Q-Task
Released
Notif.
Quality Control
Visibility
Delivery
~
Production Order
~
Picking
Packing
Depart.
Plant
Arrival
Carrier
Depart.
Hub
Arrival
Hub
Arrival
Customer
POD
Customer
Start Delay
Manuf.
Completed
Q-Task
Completed
End
Manuf.
Usage
Decision
Made
Goods
Receipt
Posted
Fulfillment Visibility
Manufacturing
Warehouse
Delivery
SSuuppppllyy CChhaaiinn E Evveenntt M Maannaaggeemmeenntt
EXTENDED ORDER
FULFILLMENT
Business
Division
A
Business
Division
B
Merge Centers
Logistics
Service
Providers
MULTI-CHANNEL
ORDER ACQUISITION
Mobile
Phone
Sales
Portal
Customer
Suppliers
Dynamic
Sourcing
Multi-Channel
Order
Management
Fulfillment
Coordination Settlement
*feat. SAP Master Data Management

GATP
Example Scenario: Extended Order Management
23
Fulfillment Cycle
Confirmation
Customer
Centric
CRM
Transport TM
Request
Billing
Engine
Partner
ascertainment
Transportation
planning
TM
Transportation
processing
WM
Pick-ing
Goods
issue
SCM
Start
Transportation
processing
Pack
Load
WM
Request
Save
order
Transport
rqmts
Invoice WM request
Shipment
Execution
Order
Pick order
verification
Planned
shipments
Shipment
Billing
trigger
XI
Delivery Delivery
SShhDiDippee lPlPaaryryii n noottfefe prpr rtrtioionn FtFteeaarrcctt
SShhiipp mmaatt.. TToo ffaaccttoorryy
AAsssseemmbbllyy PPCC
PPaacckk pprroodduuccttss
CCrroossssddoocckkaatt MMCC
SShhiipp ttoo ccuussttoommeerr
Merge center
3 PL
Information
Goods flow
Central order entry
PC – Configure to order
SSCC EEvveenntt MMggmmtt..
Save/send
PPrrooooff ooff d deelliivveerryy
FFuullffiillllmmeenntt CCoooorrddiinnaattiioonn
PPaarrttnneerr AAsscceerrttaaiinnmmeenntt
Dynamic Process
Determination
SScchheedd..
PPrroocceessss MMoonniittoorriinngg
Logistic request
GGlloobbaall AATTPP
Multi-tier ATP
ATP request
XI
Dynamic process
determination
PPrroocceessss NNeettwwoorrkk SScchheedd..
OOrrddeerr e ennttrryy
Supplier
OEM
Assembly
factory
XI

Extended Order Fulfillment Process Architecture
Process
Integration
SCM SERVICE
Service driven approach for Fulfillment
.... ....
Supplier OEM LSP Consignee
24
LAYER
Information
Integration
SCE
People
Integration
Order Promising
Sourcing Service
Order Decomposition
Fulfillment
Coordination
OPERATIONAL
CRM
Multichannel
OrderMgmt.
Settlement
Customer
SCE
SCE
~
Real Time
Data Integration
Orrderr Managementt
Fullffiillllmentt Serrviices
TTrraannssppoorrtt Exxeecc
Waarreehhoouussiinngg
Vaalluuee Addddeedd
TTrraacckk & TTrraaccee
Crroossss Doocckk
Inventory
Management
Reepplleenniisshhmeenntt
Soouurrcciinngg
Performance
Measure
Decision
Support
....

SAP‘s solution: Adaptive Supply Chain Networks
25
n Global Visibility
n Event driven
Coordination
n Adaptive Planning
and Execution
n Integration
Integration
Adaptive Planning
& Execution
Coordination
Visibility
Questions?

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26
software vendors.
Microsoft Corporation.
Massachusetts Institute of Technology.
and implemented by Netscape.

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