paul freeman rfid director, best buy april 11, 2005 freeman rfid director, best buy april 11, ......
TRANSCRIPT
April 15, 2005 1
EPC/RFID in Action at Best BuyPaul FreemanRFID Director, Best Buy
April 11, 2005
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About Best Buy
• Best Buy Co., Inc. (NYSE: BBY) • Fortune 100 growth company• $27 Billion in sales revenue
• 830 retail stores across the United States and in Canada• connect customers with
technology and entertainment products and services that make life easier and more fun
• We sell: • consumer electronics, • home-office products, • entertainment software, • appliances and related
services. • A Minneapolis Minnesota based
company, our operations include: • Best Buy• Future Shop• Geek Squad• Magnolia Audio Video
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Today’s presentation
• Best Buy’s EPC/RFID Program
• Where does Best Buy see ROI from EPC/RFID?
• Our requirements for Item Level EPC/RFID tags
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Shared Item Location and Event Data
Shared Item Attribute and Sales Data
•Pass-through cost savings
•Rich product detail via electronic signage
•Merchandise location, availability & selection
•Self check-out•VIP treatment and loyalty benefits
•Express warranty and returns
•Long term asset protection (fraud, loss)
•Supply chain visibility•Lower distribution costs•Improve order accuracy and fill rates
•Increase product sell through
•Promotion effectiveness•Reduce shrink and theft•Lower returns processing cost
•Streamline warranty claims authorization
•Customer insight
•Increase distribution velocity and capacity utilization
•Lower distribution cost•Improve SC execution and inventory accuracy
•Dynamic sorting, allocation, and network balancing
Suppliers Best Buy Supply Chain Best Buy Store Customers
Physical Flow
Physical Flow
Physical Flow
WWRE
•Improve Customer Encountered In-stocks and space utilization
•Reduce store stocking and farming labor
•Reduce discounting•Improve pricing and promotion efficiency
•Dynamic automated planograming
Consumer BenefitsIn-store BenefitsDistribution BenefitsSupplier Benefits
Benefits
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Internal Readiness
Supplier Readiness
EPC/RFID Value Creation
(R&D)
Supplier discussions, planningSupplier impact analysis –benefits & costsClear comprehensive requirements and timelineQuarterly Vendor Milestones & reviewLocation selection and preparation Pilots and tests with select early adopters in FY06SKU Product selection for pilotTest design and executionBlueprint for supplier data exchange model
High level value targetingRFID Demo Lab RFID internal Education Strategy developmentFacility testingPilot planningPilot Implementation & runRollout planningRollout ImplementationProduction cutover
EPC Global participationItem level work groupHardware, software work group
Internal training & educationRetail RFID execution
Item level & smart shelf R&D
Involve key technology partnersProgram management and execution
Best Buy RFID Program Structureand Key Deliverables
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• Suppliers place RFID tags on cartons and pallets
• Suppliers send carton and pallet EPC information to BBY via Advanced Ship Notice (EDI ASN-856)
Supplier Pilot Overview, Starts January 2006
• Pilot suppliers represent 80% of total shipment volume
• All major product categories represented
• EPC reads will be captured at RFID enabled dock doors.
• Reporting will compare EPC reads to ASN and actual PO receiving.
• EPC reads, read rate, tag, and ASN performance reporting will be shared with suppliers via portal
Pilot runs in parallel with current processes for shipping, routing,
receiving, packaging, labeling, and invoicing.
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End-state Vision
• What can happen over the next 48 months?• You might have your new car paid off• Your Son or Daughter maybe starting
college• You will hit the day after Thanksgiving sale
at Best Buy 4 times• EPC/RFID has broad marketplace
adoption
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Day in the Life with EPC – Retail Store Operations
On the Store Floor
Increase customer satisfaction, & revenue
Opt-in programs allow customers access to in store promotions and improved customer service.
Lower labor cost; increase customer encountered in
stock
At the Store Shelf
RFID-enabled “smart shelves” can predict, identify, and report shelf stock levels to store employees.
Improve customer service; reduce returns fraud
At the Checkout Lane
Serialized EPC codes increase the speed and accuracy of customer checkout and returns processing.
In the Store Back Room
Reduce store labor cost
RFID readers automatically confirm receipts and update store inventory as product is unloaded.
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Day in the Life with EPC – Merchandising
On the Store Floor
Increase revenue and margins
RFID-enabled smart shelves enable visibility on sales performance by store.
At Best Buy Corporate
Increase revenue and margins
RFID-enabled smart shelves can report on actual versus originally recommended store plan-o-grams.
At the Store Shelf
Increase revenue and margins
RFID can be used to develop insight into consumer behavior, and shape our assortment to serve our customers.
With the Supplier
Increase revenue and margins
Data from RFID-enabled smart shelves correlate sales to promotions and product placement.
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Day in the Life with EPC – Inventory Planning
In Inventory Control
Reduce DC and corporate labor costs; increase
revenue
Store and distribution center RFID provide real-time, accurate inventory at the serial number level.
Working with Suppliers
Decrease operating cost
RFID provides a low cost means for exchanging the data inputs for demand and inventory planning.
In Demand Planning
Increase forecast accuracy and revenue
RFID captures real time demand and inventory information across multiple tiers of the supply chain.
For Replenishment
Increase forecast and inventory accuracy
RFID provides real-time, accurate inventory data that can be used to optimize store replenishment.
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Day in the Life with EPC – Fulfillment
During the Pick Wave
Increase inventory accuracy and revenue; reduce labor
cost
RFID-directed picking allows material handlers to focus on product movement and eliminate data entry tasks.
At the Shipping Door
Increase DC velocity; reduce labor cost
RFID eliminates the need to manually scan barcodes and enter data for outbound shipments.
During Put Away
Increase DC velocity and inventory accuracy; reduce
labor cost
RFID enables directed put away both to distribution center shelves and also cross-dock locations.
At the Receiving Door
Reduce labor cost; increase inventory
accuracy
RFID readers automatically confirm receipts and update inventory as product is unloaded.
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• Sources of Value
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EPC/RFID Sources of Value
1. Lower Cost of Data Capture 2. Increased Data Accuracy and
Granularity3. Higher Distribution Velocity4. Enhanced Track and Trace Ability5. Lower Cost of Data Access &
Collaboration
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Sample Business Opportunities at Best Buy
Business Opportunity How RFID Helps Value Lever
SG&ACOGS
• RFID readers at shipping and receiving bays reduce the labor required to handle and distribute products.
Distribution Labor
• Higher accuracy of perpetual inventory data improves forecast accuracy and replenishment quality.
Customer Availability and Inventory Optimization
RevenueInventory
• RFID portals differentiate product location between sales floor and stockroom/up-stock locations (CA vs. CEIS).
Customer Encountered In-stocks
Revenue
• RFID captures and reports real-time exceptions in the distribution network
Event and exception Management
Inventory TurnsCustomer AvailabilityRevenueClose RateSales per SF
• RFID can be used to track location-specific sales within the store and correlate placement-to-purchase statistics.n
• Serialized EPC tags provide immediate identification and dispensation for return, service, and warranty products.
Merchandising, assortment, and space optimizatio
Returns, service, and warranty processing
COGSSG&A
• RFID enables the systemic receipt and reconciliation of ASNs and receipt confirmation.
Supplier Management SG&A
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Retail Requirements
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• Suppliers should only have to apply one RFID Tag• The RFID Tag needs to provide benefit as far up and
down the value chain as possible• Manufacturing, Transportation, Retail, Consumer
• It must improve on, and replace current solutions • Bar Code, Loss Prevention Systems
• It must be reliable• 100% accurate read rate
• It must be affordable• Hardware, Software, Tags
Best Buy Requirements for the RFID Industry
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Our requirements for EPC/RFID Tags
• Supply Chain Footprint• Pallet• Case• Item
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• At Shelf Level • The same RFID tag must
work at the shelf location at the Item Level
Our requirements for EPC/RFID Tags
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• At Point of Sale• The same RFID tag must
read at the Item Level through POS
Our requirements for EPC/RFID Tags
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• Loss Prevention• The same RFID tag must
read through the front door LP systems
Our requirements for EPC/RFID Tags
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Our requirements for EPC/RFID Tags
• Item Authentication• The same RFID tag must
read at the Customer Service Counter when product is returned
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Today’s presentation
• Best Buy has an established EPC/RFID Program
• Best Buy sees strong benefits from EPC/RFID
• There are retail needs for Item Level EPC solutions
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• Thank you for the opportunity to share what Best Buy is doing, and for your time
• Questions?