SAP REAL WORLD AWARENESS PROGRAM: 10 YEARS INTEGRATING RFID AND AUTO-SENSING TECHNOLOGIES INTO ENTERPRISE BUSINESS PROCESSES
2008 marks the 10-year anniversary of the Real-World Awareness (RWA) Program at SAP. The program has grown to include over 350 companies as customers, spread across 18 countries and representing 16 industries. A review of the program history puts the RFID evolution in perspective and sheds light on the future of auto-ID technologies in the enterprise

The Genesis: 1998-2003
The RWA program at SAP was created in 1998 to explore ways to integrate RFID, sensor networks and auto-sensing technology within the mission critical business processes that over 47,800 customers worldwide run on SAP software everyday. SAP Research - the R&D arm - conducted research to leverage RFID technology to automate and improve logistics processes. Concurrently, several large consumer good companies and prominent academics were also intrigued by the potential of RFID. In 1999 the Massachusetts Institute of Technology (MIT) created the Auto-ID Center where SAP was the first software company to join and collaborate with industry visionaries such as Procter and Gamble and Gillette. The Auto-ID Center would evolve later to create EPCGlobal, the global RFID standards authority.
In 2002, SAP participated in the METRO Group Future Store initiative, established by European giant METRO to modernise the retail industry. At METRO’s Toenisvorst hypermarket, customers experience future retailing today as the retailer and its partners test pilot applications for warehouse management and the sales floor under real-life conditions. The project received market praise - including the 2003 Wall Street Journal European Innovations Award - for its vision and hands - on approach to integrating new technologies into retail operations.
The RWA program continued under the executive sponsorship of Claus Heinrich, Executive Board member of SAP, who envisioned the transformative potential of RFID and wrote two books on the subject including “RFID and Beyond: Growing Your Business Through Real World Awareness”.

The early years: 2004-2005
By 2004 the prototype created by SAP Research was finally ready to be put into commercial use. The offering, named SAP Auto-ID Infrastructure was designed to facilitate the capture of serialised data from devices at local sites and provide the business context to turn the data into meaningful business events.
The SAP Auto-ID Infrastructure was enthusiastically accepted into the marketplace, growing from 25 customers at the end of 2004 to 122 in 2005. The main market driver was compliance with requirements established by the US Department of Defense, retail giants like Wal-Mart, Target, Metro, Tesco, and the ePedigree requirements on the pharmaceutical industry. The technology focus was to make the hardware infrastructure and RF data capture work. There was no pool of experienced integrators to draw from and the technology limitations were not well understood. The early adopters trail-blazed towards successful deployments - trying and testing RFID tags, readers, device integration and management software - while EPCGlobal worked hard to establish standards.
Initially, many companies saw RFID as an additional expense and the deployments were generally not integrated with the business software infrastructure. Later, the tide would change: visionaries like Purdue Pharma, flag manufacturer Annin, kitchenware producer World Kitchen, and bicycle maker Pacific Cycle went public talking about their success in capturing value from automation and increased data accuracy derived from integrating RFID with their day-to-day processes. Consumer goods giant Kimberly-Clark deployed RFID technology to enable electronic proof-of-delivery (ePOD) to improve deduction management and inventory visibility.
As Wal-Mart and other big-box retailers continued expanding their mandates, most consumer goods companies were piloting and deploying RFID. With an explosion of adoption, SAP was voted as number one RFID software by the readers of Consumer Goods Technology magazine. Analyst firm Forrester ranked SAP as market leader in their 2004 RFID “Wave” reports.

Accelerating the pace of innovation:
2006-2007
As the technical difficulties were overcome through the adoption of the Gen2 standard and also better understanding of the technology and its limitations, companies large and small started thinking beyond compliance and into value-added applications that integrated RFID capabilities to their already installed SAP software. Value was created from increased process automation, lower labour costs, improved inventory accuracy and turnover, better visibility and, ultimately, decision making derived from accurate and abundant data gathered using auto-ID technologies.
California, Florida and several other states in the US, concerned with public safety and the danger posed by counterfeit and diverted medicines, issued pedigree laws requiring participants in the value chain to demonstrate and document the ownership and custody history of medicines. Forced to handle complex serialisation and data gathering and formatting requirements, pharmaceutical manufacturers kicked their efforts into high gear spurring innovation in the industry. SAP responded with additional investment in the area that rendered a full solution for serialisation and track and trace which was rapidly adopted by leaders like Novartis, Cephalon, Roche, and many others. In addition, in 2007 SAP unveiled its Auto-ID Enterprise offering which allows companies to manage serialised data and events at the enterprise level and also at manufacturing, distribution, or retail nodes. The solution is compliant with the EPCGlobal’s EPCIS standard and provides a platform for enabling cross company collaborative applications like ePedigree, recall and deduction management, and product tracking and authentication.
The US Department of Defense (DoD) has also seen the advantages that new technologies could bring to its own supply chain and maintenance operations. In 2005 the DoD issued serialisation and Auto-ID requirements –iUID program- covering many of its 43,000 suppliers. SAP quickly grasped the requirements and created a solution for its customers, such as Pratt and Whitney.
Several other companies reaped the rewards offered by Real-World Aware technologies in other areas: chemical manufacturer BASF had deployed SAP Event Management to monitor ocean shipments - especially through unplanned events - and gain visibility and responsiveness in its transportation processes. When Hurricane Katrina hit New Orleans in 2005, BASF was able to quickly redirect in-transit shipments to safe ports and suffered minor disruption in its operations. British Petroleum worked with SAP Research to use a self-aware wireless mesh sensor network to prevent in real-time storage of dangerous combinations of chemical substances in the same facility. BP and SAP also worked in using RFID to enforce environmental, health and safety directives, for example automating real-time verification that a worker has taken the appropriate training and is wearing the mandatory equipment while working in a dangerous zone. On another project, SAP installed a “proof-of-presence” solution for Frankfurt Airport to ensure that the worker in charge of maintaining hard-to-reach assets was in fact physically present doing the work. Airbus and SAP worked together creating a solution that used RFID to more effectively manage the tools loaned to airlines for the maintenance of their planes.
Orthopedic implant manufacturer BIOMET used RFID to automate and improve its surgical-kits consignment inventory process. The University Hospital of Jena (Germany) used RFID to prevent medical errors by verifying in real time the combination of patient, medicine, and medical personnel. Purdue Pharma became the first pharmaceutical company deploying RFID for tracking and tracing individual bottles of drugs. These three SAP customers were honoured at the “RFID Breakthrough Awards” as winners in different categories for their innovative applications.
Daimler - maker of Mercedes Benz automobiles - automated its Kanban “just-in-time” process through RFID and received the European Auto-ID Award for its foresight. The US Navy deployed SAP software to automate the inbound warehousing operations in the nuclear submarine maintenance base at Bangor, WA. Japanese electronics retailer Yodobashi Camera RFID-enabled its inbound logistics, automating the goods receipt process.
By the end of 2007, SAP had over 350 RWA customers, distributed across 18 countries and 16 industries. The leading industries in terms of number and scope of projects were consumer goods, pharmaceuticals, retail, manufacturing, and aerospace and defence.
The RFID solutions enabled included supply chain management, manufacturing, asset management and maintenance, and environmental health and safety.
The Gartner Group issued a report in December 2006 that acknowledged SAP as the absolute leader in the RFID software market with 18 percent market share, more than double that of the closest competitor.

The future: 2008 and on
SAP is focused on supporting end-to-end business processes that incorporate best practices and expand across multiple functions and systems. Weaving RFID and other auto-ID technologies into these will further enrich their value and ease the way to adopting cutting edge technologies.
SAP will also continue promoting auto-ID usage and adoption of standards for global commerce and national security through participation in the standard setting processes and dialogues originally established in 2006 with the US Chamber of Commerce, Chinese leaders, and the European Union.
Finally, SAP will continue removing the barriers to technology adoption. SAP Research has recently collaborated with MIT to study the impact the massive adoption of RFID and other auto-ID technologies would have on global network and IT infrastructures. The results help SAP to continue releasing industrial strength products designed to scale and handle the massive volumes required to benefit from item serialization.

about the author
By Andres Botero, Sr. Director, Solution Marketing, SAP
www.sap.com/rfid

Andres Botero is the Sr. Director, SAP solutions for Auto-ID and Item Serialisation, SAP. He is responsible for coordinating SAP’s global marketing and strategy efforts around RFID, sensors, and other auto-id technologies combined with automated business event identification and handling. Before joining SAP, he served as Vice President, Strategy and Marketing at StepNexus, a smartcard and IC security platform company. Mr Botero spent five years at Siebel Systems serving in strategic roles in sales operations and product management. Other experience includes roles in management consulting with Arthur D. Little, supply chain management and finance with Procter and Gamble and Mobil Oil. Mr Botero holds a MBA from Stanford University and a BS in Industrial Engineering from Universidad De Los Andes.


Industrial Focus July/August 2008