ASSIGNMENT 06

Prepared by Shahida Akhter Khanam ID# 1130152660

1. Quantify how RFID can reduce of a Wal-Mart store?(estimate data

with or without RFID)

Technology is inevitable in every sphere of life today; it has always made things easier. Wal-Mart works on the same strategy, from the above description; we can understand how diversified Wal-Mart is and the volume of cargo it needs to handle for each of its businesss. Traditionally, it had started with computerization of individual stores with small billing machines and had then led to centralized billing for record keeping. The technology has grown by leaps and bounds and has become increasingly challenging to maintain large databases of information and maintain records. Traditionally, technology has been upgraded in billing systems and for storage purposes. Wal-Mart being so huge needed to keep track of men and material sent across different countries and had to maintain hundreds of warehouses across the world. Bar-codes have been initially identified as a suitable technology to meet the purpose. But due to the limitations of barcodes, a new emerging technology called RFID has been identified to meet the demands. RFID is low cost Radio Frequency Identification system which requires minimum human intervention to carry out tasks ranging from billing to materials tracking and supply chain management. Wal-Mart with RFID Wal-Mart, which has mandated that its suppliers use RFID technology, conducted a 29-week study to analyze out-of-stock merchandise at 12 pilot stores with RFID and 12 control stores without the technology. The study found a 16% reduction in out-ofstocks and that out-of-stock items with RFID were replenished three times faster than comparable items using traditional bar codes. Wal-Mart also saw a 10% reduction in manual orders, which mean a reduction of excess inventory. The study also showed that RFID-enabled stores were 63% more effective in replenishing out-of-stocks than the control stores.

Wal-Mart without RFID Throughout the test period the analysis consistently found that the RFID-enabled pilot stores statistically outperformed the control stores without RFID technology, in terms of providing improved on-shelf availability of items for customers. Essentially, this meant fewer total out-of-stock items and fewer occurrences of empty shelves when the merchandise was in the backroom. However Using RFID Wal-Mart can generate the following cost benefits. Decrease in out-of-stock items A consumer complaint about retail stores has always been that there are too many out-of-stock items; however, with RFID in place many of these stores should see a significant decrease in out-of-stock items. Once RFID tags are able to be used on food products it will make a recall on a certain item much easier and it could potentially save lives. Decreases Waiting Time Consumers use RFID everyday and many do not realize the benefits they are receiving from the technology. Wal-Mart can use a Speedpass as contactless form of payment allowing customers to wave the card in front of a reader to pay for gas or anything in the convenient store. Visa and Mastercard are the two biggest developers of this technology, claiming that it will benefit everyone from consumers to businesses. It allows people to have preset money on a card which decreases waiting time at check-out stands and increases loyalty to companies that offer this feature. Labor Reduction Combining auto-picking with RFID would reduce man-power needed, time needed to move pallets and cartons around a warehouse, and time needed to send pallets to their proper destination. The goal of a company's supply chain should be to reduce time needed to be productive, by automating as much of the supply chain as possible. It reduces human error, and machines are capable of running twenty-four hours a day and cost less than human labor. The application of RFID for a large

company like Wal-Mart or Target, as well as smaller retail stores can ensure a better shopping experience with more in-stock items and a more knowledgeable store Reduction of supply chain shrinkage Opportunities for reducing shrinkage within supply chains as a result of diversion of goods or losses, are ostensibly in the region of 50% at case level and between 1015% at pallet level Sortation of items - Opportunities for enhancing item sortation processes, such as those encountered in clothing manufacture and distribution, time and associated cost savings of greater than 40% may be achieved Flexible manufacturing Opportunities for more item-specific manufacturing operations to be performed using automated read and control functions to achieve more efficient processes, process improvements of greater than 10% may be achieved Item Identification in Condition Monitoring Opportunities for improved identification of system components and tools for conditioning monitoring purposes, management may be achieved more efficiently with potential cost savings greater than 10%. Also, by sticking RFID tags on products, the company is able to locate them wherever they are, and quickly. Reductions in inventory RFID creates opportunities to reduce inventory by more than 5% or more in appropriately selected circumstances. In 2007, Wal-Mart faced around 2% of all lost sales are due to the simple fact a store has run out of an item, but 41% of lost sales are due to inventory problems. However, If RFID can fix just 10% of that problem; Wal-Mart will gain $287 million per year by avoiding lost sales. Wal-Mart ensures that unproductive inventory is as less as possible, by allowing the stores to manage their own stocks, thereby reducing pack sizes across many categories and timely price markdowns. Wal-Mart makes full use of its IT infrastructure to make more inventories available in case of items that customers wanted most, while reducing overall inventory.

Improved Asset Management and Maintenance RFID also ensures opportunities for improved management and utilisation of assets, such as reusable containers, savings in time and associated cost and maintenance could be greater than 10%. Enhanced Field Services RFID creates opportunities for location, plant and item tagging that can facilitate more efficient and effective field maintenance and support services, savings in time and associated costs, yielding savings in excess of 20%. Wal-Mart's RFID mandate has enormous strategic implications, not just for their direct suppliers, but the suppliers own operations and vendors in turn.The ripple effect of the mandate will cause RFID costs to drop in general, opening the door for RFID applicability to smaller companies and industries that to this point haven't been able to cost justify using RFID.

2. How Nike and BexTex can optimize their supply chain with IS? (Internally & Externally)

The supply chain plays a critical role in the transformation and global growth of a company especially in the current economic situation. The global supply chain is the transformation flow linking the raw materials, parts suppliers, manufacturers, and service support operations into products and services and distributing these products locally for consumers.

CASE-NIKE: Optimizing Supply Chain with IS

Enterprise Resource Planning (ERP) The Enterprise Resource Planning (ERP) which is a business management system that incorporates all component of the business as well as planning, manufacturing, sales, and marketing. Information Management To run their supply chain, Nike uses HP servers, software, and consulting services as HPs single platform is capable of running both UNIX and Microsoft Windows NT systems. HP is able to provide Nike with the right technology needed to operate successfully its global supply chain. This technology helps Nike review its supply chain past performance, monitor current performance and predict when and how much of certain products need to be produced. The innovative opportunities of electronic commerce through the internet increases information technology whose primary goal is to link the point of production effortlessly with the point of delivery or purchase. The information trail from IT allows planning, tracking and estimating lead times based on real data which is accessible in the system where managers analyze, plan activities and make decisions based on information from the entire supply chain. To be effective in its operations, the information is shared among vendors, customers and internal departments.

Demand and Supply chain planning: I2 TradeMatrix Plan Solution Nike implemented the first part of its supply chain strategy; the demand and supply chain planning application software from i2 technologies. This software was intended to help the company match its supply with demand by mapping out the manufacturing of specific products This module is linked with other ERP and back-end systems as well. The i2 project replaced an earlier implementation by Manugistics. The project was supposed to reduce the amount of rubber; canvas and other materials that Nike needed to produce for its wide range of footwear products with a variety of sizes and styles. Nike also wanted to make sure that it built more shoes that fulfilled customers demand. The cost of the i2 project was estimated to be around $40 million. Nike went ahead with the deployment using its legacy systems rather than implementing it as part of its SAP ERP project.

SAP Apparel and Footwear Solution (SAP AFS) SAP AFS is an integrated and comprehensive solution to address the particular needs of the apparel and footwear industry. It puts apparel and footwear companies in complete control of their supply chain, from procuring raw materials to delivering finished styles. The solution integrates global sourcing, in-house and offshore manufacturing, subcontracting, and direct shipment processes so that global strategies can be implemented and a consistent quality ensured. This major supply chain represents a significant building block for future growth by allowing the company to implement updated systems that will streamline processes and create new efficiencies for both Nike and its customers. With the SAP solution, Nike have implemented a sophisticated IT system that will allow Nike to improve manufacturing lead times, increase the performance of supply chain, and present a more consistent face to our retail customers The SAP Apparel and Footwear Solution is the foundation system for the Nike Supply Chain (NSC) project. The NSC project ultimately will consolidate a wide variety of legacy application subsystems into approximately five core systems. SAP AFS provides Nike with a complete enterprise management system, including

capabilities for financials, order fulfillment, and logistics. The solution's data structure, designed specifically to meet the unique requirements of the apparel and footwear industry will allow Nike to more effectively manage its inventory. Nike Intranet: Electronic Data Interchange (EDI) Nikes supply chain technology consists of Electronic Data Interchange (EDI) which transmits the data between different companies using networks, such as VAN or the Internet. Value Added Network (VAN) is a private network provider that leases communication lines to its subscribers and the internet as the backbone for supply chain links companies to their suppliers and vice versa and is also used to connect with customers. However, internet and the web technologies can enhance effective communication. Nike Extranet: mySAP.com In addition, Nike has selected the mySAP.com family of solutions as the core information technology platform for its worldwide operations. Through the mySAP.com e-business platform, people in businesses around the globe are improving relationships with customers and partners, streamlining operations, and achieving significant efficiencies throughout their supply chains.

However, supply chain is a highly complex area. As a result, it can be a source of great efficiency and cost-savings gains. Nike realized that more than ever, supply chain excellence drives competitive advantage, customer relationships and shareholder value

CASE-BexTex: Optimizing Supply Chain with IS

Sharing of Information Proper flow of information among supply chain member is very crucial. Such flow of information can influence the performance of overall supply chain operations. It includes data about customers and their demand, inventory status, production and promotion plan, shipment schedules, payment details, etc. Bar coding and Electronic data interchange are the two information technology tools which can facilitate information integration. Planning and Coordination Planning and coordination are very important issues in supply chain management. The next step after sharing information is planning which includes joint design and implementation for product introduction, demand forecasting and replenishment. Supply chain members decide their roles and responsibility which is coordinated through the IT system. Various software tools like MRP, MRP-II, APSS facilitates planning and coordination between different functional areas within the organization. Material Requirements planning (MRP): it helps in managing manufacturing processes based on production planning and inventory control system. Proper implementation of MRP ensures availability of material for production and product for consumption at right time optimizes the level of inventory and helps in scheduling various activities. MRP system uses computer databases to store lead times and order quantity. MRP includes mainly three steps: 1. First assessing the requirement of how many units of components is required to produce a final product. 2. Second step includes deducting the stock in hand from gross to find out net requirement. 3. Finally, scheduling manufacturing activities such that finished goods are available when required, assuming the lead time.

Manufacturing Resource planning (MRPII) system is a logical extension of MRP system which covers the entire manufacturing function. This typically includes machine loading, scheduling, feedback and Software extension programmes in addition to material requirement planning. It provides the mechanism to evaluate the feasibility of a production schedule under a given set of constraints. The Advance planning and Scheduling (APSS) system includes both material focus of MRP and rapid response scheduling power of MRP-II. Quality Management

The Quality Management system provides a platform for interaction between the enterprises quality department and its vendors. Through this system the quality department can easily publish quality requirements and inspection results to the vendor. This helps vendors stay up-date with requirements and get feedback on quality problems quickly, thereby speeding up the quality control cycle. Coordination of logistics flows Workflow coordination can include activities such as procurement, order execution, implementing changes, design optimization, and financial exchanges which results in cost and time efficiency. The results are cost-effective, speedy and reliable supply chain operations. IT contributes towards the maximizing the value of BexTex supply chain through integrating supply chain operations within and outside the organization and collaborating the acts of vendors and customers based on shared forecasts. Internet adds to IT contribution towards supply chain management through coordination, integration and even automation of critical business processes. New system of the supply chain game emerges as a result of business innovation fuelled by the Internet. Many supplying companies maintain demand data by style, size, fabric and color to replenish inventory at retail outlet. Level of replenishing is predetermined by both parties after reviewing history of sales by product and buying behavior of the community.

Data Mining and Data Warehousing Data mining is the process of analyzing data from different viewpoints and summarizing it into useful information that can be used as a basis of monitoring and control, enabling companies to focus on the most important aspects of their business. It allows users to analyze data from many different dimensions, categorize it, and summarize the relationships identified. In short it is the process of finding correlations or relationship among dozens of fields in large relational databases. Data warehousing is the repository of data and can be defined as a process of centralized data management and retrieval. Centralization of data maximizes user access and analysis. Intranets and Extranets for SCM in BexTex Intranets: To improve coordination among internal supply chain processes Extranets: To coordinate supply chain processes shared with their business partners The textile-retail giants are adding an Internet shopping-component to their offering. It has affected their distribution and warehousing infrastructure. As a result of going online, retailers have changed their supply chain strategy. High volume products with stable demand are stocked in local stores, while low-volume products are stocked centrally for online purchasing. Companies prefer a direct route to consumers by closely scrutinizing individual customer's tastes, preferences, habits, and buying patterns. Instead of waiting for consumers to visit their stores, retailers simply send them e-mails with offers. Internet has facilitated quick response system. With the use of web-enabled technology it is possible to have automatic customer replenishment system.

3. List the Business Value of each System (RFID & SCM)

Business Value of RFID Radio frequency identification (RFID) is a data collection system based on tiny microchips attached to a box, pallet or individual item that communicate with other devices using radio waves. Device readers capture data from the tags and, in some cases, write to them as well. Software then collects, organizes and distributes the data. The combination of these chips, sensors and software technology vastly improves supply chain operations and is increasingly providing substantial business benefits in other venues. Use of RFID technology can increase business productivity and reduce associated costs. To ensure that companies benefit from the advantages RFID provides it is important to understand how to adopt this technology Improving Operational Efficiency RFID technology within manufacturing helps in achieving significant operational benefits. Tracking goods moving through the supply chain can provide total supply chain visibility. This makes it possible to shorten the order-to-cash cycle, detect and resolve delivery exceptions, prevent out-of-stock situations, and pinpoint affected product in a recall, while minimizing inventory and safety stock levels. Real-time visibility supports vendor-managed inventory programs, helps prevent shrinkage and diversion and discourages counterfeiting by making it easier to identify fake products. Below are the operational scenarios due to usage of RFID: The manufacturing floor: RFID can help track work-in-process and provide predictive analytics and an early warning of pending system failure. It also can be used to track reusable assets such as rolling cages, pallets, racks and ingredient vessels. Distribution centers: RFID can impact both sending and receiving of goods. Automating receiving reduces the amount of labor needed to manually check-in incoming items as well as the time and energy spent resolving proof of delivery

issues. RFID can also confirm that outgoing shipments are accurate, complete and loaded on the correct truck. Because RFID tracks the movement of goods/assets within a facility and beyond it also can help combat theft and shrinkage. Shipping: With products in transit, RFID can help protect against theft, diversion and tampering. When combined with environmental sensors to monitor ambient conditions like temperature, light, humidity, radiation, shock and vibration, the technology can also provide a warning if environmental parameters are exceeded and help pinpoint the time/place where the problem occurred. Retail supply chain: RFID can provide the visibility needed to prevent out-ofstock situations throughout the supply chain, but particularly in the critical geography between the stores loading dock and its stock room. The system will be able to identify the location of goods outside of the stock room and can help prevent lost goods which were really just misplaced. The technology can support promotions management, ensuring product is delivered in a timely manner and moves to the sales floor to meet demand. It also can help discourage diversion of product to stores not included in the promotion. Vendor-managed inventory: The improved visibility RFID provides into product movement gives vendors the information they need to automatically replenish fast-moving items or take steps to boost sales of slow-moving product. Smart shelves and cabinets: RFID opens the door to smart items that can communicate with other systems and generate alerts to problems. For example, a smart shelf on a sales floor can provide an alert when its time to restock or of a potential shoplifting situation if an unusual number of products are removed simultaneously. In hospital settings, an RFID-equipped drug cabinet can provide better control of access and inventory and provide alerts when supplies run low. Smart appliances: An RFID-equipped microwave oven could communicate with the package and set itself up to cook or warm the food at optimal settings. RFID-enabling a medicine cabinet could provide the patient with alerts about when to take a medication, calculate when its time to order a refill and analyze whether a new prescription will pose an interaction problem with existing medications.

Decreased Cycle Time and Taking Costs Out RFID scanning is not a serial process, like traditional Barcode scanning, so the business can perform identical tasks much more quickly. This means processes moving goods through a supply chain are more efficient leading to a reduction in the need for larger inventories. Reduced Rework As RFID scanning has a greater first time pass accuracy this reduces the number of errors that are generated and retries needed. Reduced Business Risk & Control of Assets RFID tagging enables better audit and asset control. The ability to track and trace items better means assets can be located more easily. The opportunity for enhanced data collection leads to increased accuracy of record keeping and improved asset maintenance. Regulatory compliance can be achieved more effectively. Improved Security and Service Being able to validate information relating to an item enables increased security. This individual identification contributes to more effective access control, reductions in shrinkage and other losses and the ability to provide fast and efficient services at the point of need. Ability to authenticate information can prevent activities like counterfeiting and fraud. Improved Utilisation of Resources Information obtained by RFID scanning can be used to improve planning. Processes can be improved, time can be saved, assets can be utilised better. Increased Revenues By eliminating uncertainty companies will suffer less out of stock situations and obtain greater item availability, reducing lost sales and increasing choice leading to more sales. Exception Management RFID enables processes and procedures to be measured better. Until a process can be measured accurately it often cant be improved. Decisions that are based on limited, inaccurate, out-of-date information are often poor decisions. The contribution

information captured by RFID offers to IT applications will allow managers in companies to be alerted when compensatory business decisions need to be taken.

Business Value of Supply Chain Management (SCM):

Supply chain software can offer tremendous value to any company that relies on the smooth planning and execution of related operations to achieve long-term profitability and maintain a solid competitive edge. Thats why more and more organizations are purchasing and implementing supply chain applications. Improve Supply Chain Network Supply chain softwares provide complete, 360 degree visibility across the entire supply chain network, something that cannot be easily achieved with disjointed manual processes. With supply chain, users can monitor the status of all activities across all suppliers, production plants, storage facilities, and distribution centers. This enables more effective tracking and management of all related processes, from the ordering and acquisition of raw materials, through manufacturing and shipping of finished goods to customers or retail outlets. So the status of mission-critical activities can be tracked at all times, and potential inefficiencies or problems can be identified and corrected immediately, before they become unmanageable. Faster Response to changes in Supply and Demand With increased visibility into the supply chain and adaptive supply chain networks, business can be more responsive, can sense and respond quickly to changes and quickly capitalize on new opportunities. Minimized Delays Many supply chains, particularly those that havent been enhanced with a supply chain application, are plagued by delays that can result in poor relationships and lost business. Late shipments from vendors, slow downs on production lines, and

logistical errors in distribution channels are all common issues that can negatively impact a companys ability to satisfy customer demand for its products. With supply chain software, all activities can be seamlessly coordinated and executed from start to finish, ensuring much higher levels of on-time delivery across the board. Enhanced Collaboration Supply chain softwares bridge the gap between disparate business softwares at remote locations to dramatically improve collaboration among supply chain partners. With supply chain softwares, all participants can dynamically share vital information, such as demand trend reports, forecasts, inventory levels, order statuses, and transportation plans in real-time. This type of instantaneous, unhindered

communication and data-sharing will help keep all key stakeholders informed, so supply chain processes can run as flawlessly as possible. Reduced Costs Supply chain software can help reduce overhead expenses in a variety of ways. For example, it can: Improve inventory management, facilitating the successful implementation of just-in-time stock models, and eliminating the strain on real estate and financial resources caused by the need to store excess components and finished goods. Enable more effective demand planning, so production output levels can be set to most effectively address customer requirements without the shortages that result in lost sales, or the waste that drains budgets. Improve relationships with vendors and distributors, so purchasing and logistics professionals can identify cost-cutting opportunities such as volume discounts. Increased Customer Satisfaction By offering a common information framework that supports communication and collaboration, SCM enables business to better adapt to and meet customer demands. Accurate planning improves customer service and in turn customer

retention. SCM enables business to respond to unanticipated demand to commit to more orders and to respond to changing customer requirements quickly and efficiently. Compliance with Regulatory Requirements Management can track and monitor compliance in areas such as environment, health, and safety.

In summary, to get the greatest benefits from an information system, be it RFID ir SCM or other Information System, business enviroment must consider it an adaptable tool that progresses as business progresses.