Andrew S. Houlberg
General Manager
November 23, 2004
andrew_houlberg@gillette.com
Agenda

Company background

Main message:
RFID: An Enabling Technology for Maximizing Retail Availability

Case study details

Video of the project

Summary & Next Steps

Q&A
 Global Company with well known brands
 Sales worth US$9.3 Billion
 60% of sales & profits originate outside U.S.A.
 Selling products in over 200 countries
 More than 30 manufacturing facilities worldwide
…each day, more than a billion
consumers choose our products
In the shops:
An Empty Shelf Is Often a Reality
Everyone Suffers:
Retailers, Consumers & Manufacturers
High Velocity Items Suffer Even Higher Rates
of Out-of-Stock, Varying by Hour
Number of OOS Items – Top 2000 UPCs
18%
360
350
340
Number
of OOS Items
per Store
330
320
310
300
290
280
15%
270
260
250
Sat
Sun
Sun
Mon Mon Tue
Tue
Wed Wed Thu
Thu
Fri
Fri
Sat
12pm 12am 12pm 12am 12pm 12am 12pm 12am 12pm 12am 12pm 12am 12pm 12am
First the Brand Suffers, then the Store
Consumer Reaction to Stockouts (%)
Substitution
69%
50%
31%
No Purchase /
Change to
Different Store
31%
50%
69%
1st Time
2nd Time
3rd Time
Source: ECR Europe
The Causes:
Numerous and Often Unclear
 Store staff don’t know
when shelves are empty
 Can’t find the product in
the backroom to restock
 Book inventory records
not accurate
 Supply
chain shrinkage
further corrupts the data
 Automatic
replenishment
programs compromised
Store Shelf
Store
‘Backroom’
Customer
Distribution Center
Transportation
Manufacturer’s
Warehouse
Packaging
Manufacturing
Today’s Supply Chain are Functional Silos
Goal: That Gillette Products be
Available to Shoppers All the Time
Main Message:
Size of the Prize is Huge: US$1Billion
 Gillette is a $10 billion Company:

At 10% Out of Stocks maximum today

Cost the Company up to US$1 billion in lost sales

Discounted by 50%, still worth US$500 million in new sales!
 RFID enabling technology could be the “Silver Bullet“
 Create Electronic
Product Codes (EPC) storing needed data
For Manufacturer, Retailer & Consumer,
New RFID Based EPC Offers Benefits
Global Value Chain: Seamless Interaction & No Out-Of-Stocks
Manufacturing
Packaging
Manufacturer’s
Transportation
Warehouse
Tagged cases/pallets –
Within Gillette’s '4 Walls'
Customer
Distribution
Center
Store
Backroom
Store
Shelf
Tagged cases/inner
packs/pallets –
Collaborate with Customer
Unit level
tagging
How is Gillette Getting Ready?

Organizational Structure

Strategic Focus

Pilot Testing & Learning

Business Case

Working with Retailers
RFID & EPC Have CEO Support
Gillette CEO
Gillette Senior EPC Steering Committee
Gillette EPC Implementation Team
(Cross-Functional)
Value
Chain
RFID
IT
Engineering
MFG
Marketing
Customer/
Sales
Corporate
Communications
Finance
Legal
EPC Implementation Team
"Work Groups" Focus on Key Priorities
Technology








Hardware / Software Development
System Integration
EPC Standards
Engineering
Research
"Strategic Roadmap"
Business Case Development
Implementation Strategy
Strategy
Process



Process Mapping
Change Process Development
Sharing Key Learning's



Strategic Partnerships
Pilot Testing
Implementation
Customer
Breakthrough Goal
Research
& Development
Oct. 99
00
01
02
Tests
& Pilots
03
04
Early
Adopters
Early
Followers
Breakthrough
Zone
Stretch
Zone
05
06
07
08
09
Followers
Predictable Zone
10
Auto-ID Center
Launch Symposium
Aggressive timetable set for limited early adoption at case and
pallet level beginning in late 2004 and expanding in 2005
Manufacturers Ship Tagged Pallets/Inner Packs/
Cases to Retailer Distribution Centers
What’s happening
• Cases/inner packs are tagged by CPG
manufacturers
Benefits
• Throughout the rest of the supply chain,
each case/inner pack can be tracked
and counted
• Orders are shipped with 100% accuracy
Shipping dock door
MANUFACTURING PLANT OR DISTRIBUTION CENTER
XPLANATiONS® BY XPLANE®
Gillette Warehouse Pilot
Goal

Track 100% of all Venus
cartridges (cases/pallets)
within Gillette’s ‘4 Walls’

Prove the technology

Develop a scaleable solution

Validate the business case

Video explanation
Pilot Summary
 Cases had been RFID tagged & correctly scanned:


100% were successfully aggregated to pallets
All were verified moving from Pack Center to DC to "exit points"
 Significant




learning
Process
Technology
Data capture and management
Infrastructure
 Continuing
to test, learn and expand
 Connecting with key customer (Wal-Mart)
Designing the Value Chain of the Future
with Electronic Product Coding (EPC)
EPC
Manufacturing
Packaging
EPC
EPC
Manufacturer’s
Transportation
Warehouse
EPC
Customer
Distribution
Center
EPC
Store
Backroom
Store
Shelf
EPC
In Customer: “Tagged” Cases/Inner Packs Arrive
at Store and Read, Real-Time, in Back Room
Back room inventory
EPC-tagged cases/inner packs
are received and automatically
reflected in system as backroom
inventory.
Backroom to
sales floor
POS system
Receiving doors
RETAIL STORE
XPLANATiONS® BY XPLANE®
Retailer: Real-Time POS Combined with
Accurate Book Inventory Predicts OOS
EPOS
•
24 units sold from floor
•
12 cases in backroom
EPC
INITIATE
• Restock shelves
• Re-order
BACKROOM AND CHECKOUT
XPLANATiONS® BY XPLANE®
If RFID EPC Works: Benefits are
Increased Sales & Profits
As a retailer,
Shoppers will be more satisfied, buy more products, and be
more loyal if they find what they are looking for the first time ...
.......results in more profits
As a manufacturer or supplier,
Retailers will buy more because they sell more, less urgent
deliveries, and greater market share.......
......results in more profits
EPC Adoption Timetable 'Best Guess'
Expansion
Early Adoption
by Lead Retailers
(More Retailers,
Products & Locations)
Becomes the
Standard
Case / Inner Pack / Pallet
2005-7
2008-12
2013+
Unit / Shelf
2007-9
2010-14
2015+
How Do We Recommend Getting Started?
1. Gain top management support
2. Understand your business case – create a vision
3. Map your current processes: physical, network, trading partners, etc.
4. Determine your plan: hardware, software, infrastructure, etc.
5. Assemble cross functional team
6. Begin pilot implementation
7. Measure and capture learning
8. Develop your change process and business case
9. "Launch & Learn”
10. Join Global Data Synchronization initiative and EPCglobal
Join EPCglobal

Visit site

Understand their role

Review benefits

Vendor lists/contacts

Business cases

Other resources
www.epcglobalinc.org
Thank You!