Woolworths Case Presentation

1
Woolworths Case Presentation

• Allison Bass
• Wen-Chi Chen
• Jeremy Haubrich
• Scott Kincaid
• Zach Roberson

2
What We Are

• Experienced
• Independent
• Sizable (800 stores)
• Challenged by competition

3
Current ProblemInventory Shrinkage
56 shrinkage occurs in the Supply Chain
42 million

• Incorrect shipment
• Losses in DC
• Theft of goods in transit
• Shoplifting

4
The Cost of RFID in a full scale

• 1,000,000 for system hardware
• 400,000 for software integration
• 1,000,000 for vehicle telemetric system

5
Woolworths Flow Chart
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RFDI Trial Benefits

• Shrinkage
• Eliminated incorrect deliveries
• Automated tracking in the event of a loss
• Bookstock Accuracy
• Real time update from stores
• ? availability from ? inventory
• Reduced labor costs- automated inventory
  verification
• ? manual check-in/updating of stock records
• ?hours required to investigate stock losses

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RFID Trial Benefits (cont.)

• Asset Management
• Visibility of blockages and loss points
• Improved utilization and decreased need for
  capital expenditures
• Transport efficiency
• Vehicle tracking leads to ? vehicle and driver
  efficiency
• ID of future RFID applications
• Employee involvement/excitement led to
  suggestions for future RFID applications

8
Potential Benefits From Full Scale Implementation

• Reduce supply chain theft/loss
• Product tracking
• Accountability
• Improved vehicle utilization
• Estimated 8-10 savings
• Improved asset utilization
• Accountability
• Estimated 2,500 cages saved

9
Potential Benefits From Full Scale Implementation

• Reduced paperwork
• No paper documentation
• Staff reductions
• Estimated 350,000 savings
• Inventory availability
• Reduction in safety stock and/or availability
  increase
• Study 1 ? availability, .25-.5 ? sales

10
Challenges

• Cost
• Implementation

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Cost Challenges

• Chips Technology
• Maintenance
• Loss of productivity
• Training

12
Implementation Challenges

• Training
• Employee resistance
• Changing responsibilities
• Sharing business information
• First to market disadvantages
• Systematic approach to tags and GPS
• Entire supply chain buy-in

13
Substantial Savings

• 1,050,000 in the first year after expenses
• 4,050,000 in subsequent years after expenses and
  maintenance
• ROI in under 10 months
• These are the conservative estimates

14
First Year Costs

• System Costs
• 1,000,000 Hardware

15
First Year Costs

• System Costs
• 1,000,000 Hardware
• 400,000 Software

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First Year Costs

• System Costs
• 1,000,000 Hardware
• 400,000 Software
• 1,000,000 Telemetry

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First Year Costs

• System Costs
• 1,000,000 Hardware
• 400,000 Software
• 1,000,000 Telemetry
• 600,000 Project Padding

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First Year Costs

• System Costs
• 1,000,000 Hardware
• 400,000 Software
• 1,000,000 Telemetry
• 600,000 Project Padding
• 750,000 Extra Insurance
• Total 3.75 Million

19
First Year Savings

• Savings
• Roll Cages 250,000/year
• Paperwork 350,000 /year
• Supply Chain Shrinkage 4.2Million/year
• Total Savings 4.8 Million/year

20
Additional Savings

• Doesnt even include
• Transportation Savings
• Inventory and availability benefits
• Savings from resolving errors from manual data
  entry

21
Rapid ROI

• Worst case system implementation expenses are
  3.75 Million
• Conservative first year savings are 4.8 Million
• ROI can be achieved in under 10 months

22
Manageable Maintenance

• Tag Replacement
• 5 per tag with 20 replacement rate per year on
  100,000 tags 100,000 / year
• Additional Full-Time Staff
• 5 full time staff to oversee RFID operations
• 50,000 / year salary
• 250,000 / year total cost
• Routine Maintenance
• Repairs and replacement parts
• Estimated 10 of system cost
• 375,000 / year
• Total Maintenance / year 725,000

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Ongoing Benefits

• After year one, the system will save over 4
  million per year while only costing 750,000 to
  maintain.
• Additional benefits to the supply chain and
  increased inventory visibility will be possible

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Woolworths Case Presentation

• Allison Bass
• Wen-Chi Chen
• Jeremy Haubrich
• Scott Kincaid
• Zach Roberson