Mike Singer Director, RFID Global Business Development Tyco Fire & Security

1. “Coopetition” & PartneringUnderstanding the benefits and gaps of existing RFID partner eco-systems Mike Singer Director, RFID Global Business Development Tyco Fire & Security

2. Discussion Topics • How do we view the market / how are we positioned? • How are the main RFID logical partner domains characterized? • Data Collection • Information Management • Business Improvement • What do we recommend as critical next steps?

3. Drivers for EPC / RFID Momentum • Focus is on retailer initiatives though closed-loop, niche apps exist • Potential for “trough of disillusionment” if retailers ease initiatives and customers identify technology gaps • Customers have altered their focus from reading tags to taking a holistic IT perspective where connectivity and openness of component architectures are valued • Maturity of complementary technologies beginning to reach parity (labels, readers, middleware), though deploying RFID today is still more “art” than “science” • RFID supplier competition expected to shift as the boundaries between the physical layer, the logical layer, and the business layer become more pronounced Adoption is occurring globally at an exponential pace

4. Who is Tyco? Keeping people healthier Keeping the environment cleaner Making life more convenient Helping make the world safer Making life easier $ 9.1 Billion $ 6.0 Billion $ 1.8 Billion $ 11.5 Billion $ 11.8 Billion • World’s 35th largest company ($40.2 billion USD) • A diversified manufacturing and service company which operates in over 100 countries • Employs over 250,000 employees worldwide

5. Systems Integration ERP Global DataSynch. WMS Data Management Software Tyco’s RFID Solution Tyco Support Services:Installation, support and remote diagnostics services which provides maximum availability Tyco RFID Services:Systems design, site survey and compliance testing Tyco Device Management: Comprehensive Device Management software Tyco RFID Hardware (Readers, Antennas, Printers, and Applicators):Multi-protocol, multi-frequency,intelligent devices Tyco RFID Tags: Multi-protocol, multi-frequency tags What Products & Services Do We Offer? Logical Layer Support Services RFID Services Physical Layer

6. Discussion Topics • How do we view the market / how are we positioned? • How are the main RFID logical partner domains characterized? • Data Collection • Information Management • Business Improvement • What do we recommend as critical next steps?

7. Strategy, BPR, & Deployment Business Apps & Integration EPC / RFID Partner Eco-System Data Collection Information Management System Deployment Business Improvement Data Apps & Integration Performance Testing Device Mgmt Software CFPR OOS DSD Order Mgmt Hardware (readers, etc...) Fulfillment TMS ERP WMS No one company delivers a complete, end-to-end RFID solution

8. Illustrative Lessons Learned: “Top Five Reasons We Might Have Failed” Actual situations encountered… • When the pilot was started, there was no end-date established nor were there specific metrics in place to declare success or failure • The pilot was started by either the R&D, or IT, or RFID teams without input and 100% buy-in from the Operations / Supply Chain team • The leader of the pilot (internal or outsourced) assumed system interoperability - that all of the technology suppliers would communicate their last-minute “development” product changes amongst each other • The project partners chosen for each component of the pilot were chosen more for their “new line of business/products” rather than their actual experience and existing capabilities • Products selected for the pilot were chosen without consideration for their interference characteristics with RF-technology creating too many variables at the onset of the pilot

9. Illustrative With more “art” than “science” in deployments, integrators are challenged to provide single point of contact support Potential Partner Scenarios to Avoid

10. RFID Deployment Case Example: Manufacturer 4-wall Pilot Programming Nine DC Stations: Packaging to Final Shipment Process Pallet Creation Packaging Outbound Stocking Inbound Packaging Returns Shelf Picking Forklifts Mixed Pallet Verifier Dock Doors

11. Strategy, BPR, & Change Mgmt Business Apps & Integration Data Collection Players Data Collection Information Management System Design Business Improvement Data Apps & Integration System Deployment Components CFPR OOS DSD Order Mgmt System Management Fulfillment TMS ERP WMS

12. Desired Partner Characteristics Domain Dynamics • Standards stabilizing • Designs evolving rapidly • Component interdependence is high • Performance issues difficult to isolate • Environments, Products, and Packaging still largely addressed as “one offs” • Reader footprints evolving with technology • Limited “in-house” understanding Resources • Scalable to support production deployments • PM expertise to manage through integration and deployment challenges Technology Depth • System-level engineering skills to deliver solutions … • … and component depth to drive reliable and supportable environments Technology Approach • Open approach at standard interface points to protect investments • Support for Best of Breed components to drive effectiveness Data Collection Partnering Considerations

13. Data Collection Observations • A very crowded field of players, though demand may outpace supply • Most providers focused at a component level with good technology but little systems orientation • Many providers are small start-ups with limited scale so be careful • There are many good pilot partners … • … but deploying and supporting a high density production environment that is reliably maintained and continually upgraded in rural China is another story! • Standards commitments vary – providers embracing modular architectures with open protocol support will be in the best position to support upgrade paths • Nobody does it all … but some tightly coupled partnerships are emerging (i.e. Intel-ADT-Tyco-Oat)

14. Strategy, BPR, & Change Mgmt Business Apps & Integration Information Management Players Data Collection Information Management System Design Business Improvement Data Apps & Integration System Deployment Components CFPR OOS DSD Order Mgmt System Management Fulfillment TMS ERP WMS

15. Desired Partner Characteristics Domain Dynamics • Limited new supply chain functionality • Application breakthroughs will require core logic and data structure changes • Basic reader interfaces stable • Middleware workflows limited but growing rapidly • Largely represent extensions to existing environments so applications technology risk limited • Applications expertise to develop as applications evolve Resources • Supply chain execution expertise to drive new application visions • Robust M/W expertise to support work flows Technology Depth • Ability to integrate M/W and application logic • Support of device independent applications • Support of real time environments Technology Approach • Open and modular! • Real time platforms • Flexible, tool oriented middleware Information Management Partnering Considerations

16. Information Management Observations • Application providers reticent to push the envelope on new RFID enabled plays as investment to support data schema and logic changes are significant – Providers with scale will be in a better position to lead • Supply Chain execution vendors are best positioned to take advantage of the real time data feeds of RFID – dominant ERP/WMS vendors may gain momentum over time and overtake many of the niche data management players • Middleware will be critical for building the robust applications of the future as work flow functionality will pushed down to this level to filter, pre-process, and direct massive reader data feeds • Given the tight relationship between the applications and supporting workflows, middleware partners should be chosen carefully -- focus more on workflow architecture than platform environment or black boxed capabilities • View device management capabilities separate from data management as these are more relevant and integral to the data collection layer as a device management / support enabler – embrace partners with this perspective

17. Strategy, BPR, & Change Mgmt Business Apps & Integration Business Improvement Players Data Collection Information Management System Design Business Improvement Data Apps & Integration System Deployment Components CFPR OOS DSD Order Mgmt System Management Fulfillment TMS ERP WMS

18. Domain Dynamics Desired Partner Characteristics • Business benefits in the near term through focused plays • Full implementation needed to drive ROI • “Slap-n-Ship” impact minimal (cost, change management, and benefit) • Full implementation will spawn dramatic new cross-process opportunities Resources • RFID and supply chain experience and depth to support realistic business cases • Core BPR and CM capabilities needed when programs become renewals in 6-18 months Process Depth • Distribution and warehouse operations now … • … lean supply chain operations in 6-12 months … • … real time optimization in 18 to 36 months Business Improvement Partnering Considerations

19. Business Improvement Observations • ROI plays are emerging now for products with high unit cost, high liability, and high turn profiles – look for business counsel here from committed providers • Most potential partners in this space have been working with RFID for an extended period of time and are fairly fluent – the risk of an overly rosy perspective is low • However, there is some frustration with the slow pace of adoption resulting in: • the pushing down of consultancy and integrator services into the data collection domain – this will be expensive and likely not justified • Some backing-off by first tier consultancies, opening the door for smaller, RFID focused firms who can serve more cost effectively • In general, working with a trusted consultancy or integration partner to understand the economics and map a strategy for moving forward should serve you well

20. Contextual Partnering Factors Your Industry and Position in Value Chain Suppliers have vertical expertise, do your homework Your Objectives Compliance • Drive for low cost but ensure RF capability is there • Limit integration and process change ROI • Use long term partners for business and information solutions • Look for expertise and scale for data collection systems

21. Contextual Partnering Factors Your Capabilities and Relationships Data Collection • Few can or should do it themselves, look hard in the mirror … • … Its likely that you’ll need partners • Lean toward partners with systems capabilities, a proven track record, and scale Information Management • Build on existing platforms • If renewing, consider integration architecture as a key foundation Business Improvement • You’ve been down this path before and know if and where you need help • For now its evolution … recognize when its time to truly reengineer

22. Key Next Steps • Act now • Key competitors and trading partners are moving forward • 3-12 months to implement • Demand executive attention and resources • Not just another IT project on the wish-list • Integral to the success of all IT and LP projects • Involve business functions in design and implementation • It’s your time that’s being wasted • Take advantage of the change to redesign/streamline internal processes • Leverage outside help – they want you on board • EPC Global and partners • Early adopters • Commercial solution providers • Partner Eco-systems!

23. Summary Just think of RFID as the Wild West … • It’s a bar room brawl at the data collection level … look for the solutions sheriff who can bring order • It’s about to be an information management shoot-out … get behind the gunner you trust • Business improvement is the unexplored wilderness … embrace your business guides

24. Thank You! Mike Singer Director, RFID Global Business Development Tyco Fire & Security misinger@tycoint.com

25. How Deep Is Our Experience? 22 years of RFID history • Eureka – first RFID product to show anti-collision (1980) • Charter member of Auto-ID Center • Atlanta Olympic Games (1996) EAS Experience Tagging and Tracking • 80,000 UHF systems deployed and over 1 million antennas installed • 10 billion chip-based UHF labels made and sold at ten cent ASP • 4.0 billion items tagged at point of manufacturer in FY04 with MOQ of $210 • 15,000 items certified for tag design, automated placement, performance • Source-tagged items from 3,500 manufacturers sold at 25,000 retail outlets • Note: the technology / application is different, but the expertise required for label placement and antenna calibration is similar

26. RFID Deployment Case Example: Retailer Distribution Pilot DC Incoming Receiving Nine Stations: DC processing to Store shelf Outbound Shipping Store Incoming Receiving Primary Storage - Single Primary Storage - Double Individual Storage Area Stockroom Exits Store Shelves Store Exits