Mike Graen is joined by a panel of guests as he attends the Auburn RFID Lab to discuss a variety of topics about the future of RFID including inventory accuracy, asset protection, claims reduction, inventory sales and sensor platforms.

Industry experts include:

• Brand Elverston | Elverston Consulting LLC
• Bill Hardgrave | University of Memphis President
• Justin Patton | Auburn University RFID Lab - Director
• Dan Hardy | Hanes brand
• Senthilkumar CP | Auburn University RFID Lab - Director of Technology

Hello, my name is Mike Graen, I have an

opportunity to really have a special treat for you today. We

recently had a chance at the Auburn RFID board meeting, to

have a panel of experts that that covers retail, suppliers,

and industry experts. There's over 130 years of expertise on

this particular board, and I got a chance to actually moderate

it, which is a great thrill for me. But you get to hear from

research experts, practitioners, who are both retailers and

suppliers and industry experts talk about RFID today and the

future of RFID at retail. Let's go ahead and join the podcast in

progress. Thanks for taking the time. For those of you who don't

know, my name is Mike Graen. I've had the pleasure of working

with this group for the past 20 years in the RFID space. What

you have is a collection of industry experts. I added it up

the other day and they have over 130 years in retail RFID. Isn't

that amazing. That's pretty amazing. I'm including myself in

part of that as well. So one of the things that I that I've I

constantly challenge Justin is how are we going to be better

and I still I told the story to Senthil and to Justin yesterday,

so I'll repeat it. I believe we have somebody on the phone from

Chick-fil-A. And it's interesting that I chose this

particular example because Dan Cathy is the CEO of Chick fil A,

he is a extremely successful businessman. He probably doesn't

have to work, but he enjoys it. And one of the things that he

was sitting in a group of his his team meeting and Amy, I told

you this little story this morning, he sat across his team

meeting and they were all talking about we got to get

bigger, we got to expand, we got to do this, we got to do that,

we got to do this. And finally at the end of the meeting, I

think he is a pretty quiet individual. But he literally

slammed his hand down on the table and said, stop talking

about getting bigger. We don't want to talk about getting

bigger. It's like, we want to grow. Yeah, but that's not how

we do it. We want to focus on getting better, and if we get

better, our customers will force us to get bigger. So in the

spirit of challenging, one of the things we want to do is talk

about where is RFID in retail today? Where is the roadmap

because we've been talking, Dr. Hardgrave, about on hand

accuracy for 20 years. There's a lot of other stuff we can do

with RFID. So here's what I'm gonna ask. Number one, we're

gonna go through about 45 minutes of me just asking them

questions about where they see the future in retail, number

one. Number two, what I want you to do is think about your cells

as a customer for the well today we call the RFID Lab, whatever

we're going to call them in the future. What are the things the

RFID lab needs to deliver to enable us to get to to get to

the future? That makes sense? We're gonna do a little exercise

after this. So 45 minutes of question and answer, I'll be

asking them questions. We will have a time where you can ask

your question at the end, we'll get about 15 minutes for

questions at the end, including the zoom. And then we're going

to do a little bit of a brainstorm exercise because I'm

really working on doing a strategy document for Justin

about what does the roadmap look like? And what help does this

group need from them to do that? So let's go ahead and start out.

Start out with Brand Elverston, just go ahead, and I believe

you're all unmuted, so you can just talk. But go ahead and

introduce yourself.

Yeah. So Brand Elverston, 22 years with

Walmart, retired in March of 17, been in the independent space

ever since. And we were having a chat at the table with Dr.

Hardgrave that we can remember as far back as the auto ID

center days in the late 90s, with Kevin Ashton and Dr. Sarma

at MIT. And that it was probably a tipping point around oh, five

ish that the shrink visibility add on. Because you know, as we

know, their roots were in supply chain heavily until about the

mid 2000s. So this is part of what I do. And so glad to be

here and add some flavor on the shrink visibility piece.

Awesome. So also served in the military. Thank

you for your service, don't want to forget that. But basically 22

years with Walmart in asset protection, and he is one of,

one of the biggest fans of the RFID technology with Myron and I

were working in that space to figure out how do we leverage

RFID technology and specifically the ID and RFID for the asset

protection space. So great, Dr. Hardgrave.

So from an RFID perspective, when Walmart

announced in 2003, that they would, by 2005, want their top

100 suppliers to tag pallet in case. That's that's Walmart

pulled me. I was already doing some work for Walmart at the

time, I was professor at the University of Arkansas. And so

I've been working with RFID, since June of 2003, when Walmart

first made that decision, and continue to work in RFID in the

retail space and, and then on the side, run a business school,

run a university or two, so.

That's classic, that's just classic. And I asked

him at the table, whether he was able to find a parking spot so

it's his building and everything and he said, No, he was not able

to find a parking spot. And I think that's just hilarious. You

go to another university, and suddenly. I'll bet his car, your

car gets towed. Mr. Patton, you started this in 2023 roughly?

I'm sorry, 2003. My bad.

No, I was a grad student. And I was this, I

guess, Berkeley boy, pretty much. So I remember I walked in

his office and I needed a GA position. I was in engineering

and business. So I remember I was still doing my masters, and

we were building this lab and it just kind of went from a

conference room to a basement to a warehouse in about six months.

One day he said, Man, this thing is getting out of control we

need someone to run this place. And I was like, Yeah, we do,

this is a mess. And he said, Well, I don't know where we're

gonna possibly do this. Like, I don't need it, that sounds like

a sweet job. He gave me a Blackberry and he's like, Hey,

you want to be the lab manager? Yeah, it's amazing. So I had a

job before I graduated university. Which is ironic,

because I'm supposed to be helping all these kids go out

there and get industry jobs, and everybody brings me the resume

and asks me how to do job interviews, I say I have no idea

I've never done one. But uh, I've been around in the RFID lab

ever since, 17 years.

So how many current Auburn RFID lab students have

heard that story before? Yeah, you too, could run the lab one

day. Right? Myron Burke.

Good afternoon, Myron Bruke, a total of 26 years

of experience in retail with Walmart stores. I'd started in

high school. About 20 years in RFID was in first on site lab

and then an old television studio, Rob and Bill Hardgrave

labs, in Justin's labs of various formats across multiple

states. It's been an amazing learning curve. And the groups

of people we've worked with, from Department of Defense to

NASA to some of the best academic minds in the world, and

technology developing minds as well. Learned use cases working

with Mike and other folks from serialized shipping container

code. Jean and I were talking about hexadecimal conversion and

different things earlier today. To now we have tags that are

more sensitive than we ever thought physically possible. And

so it's it's it's an amazing, it's amazing to see where the

industry is. I think there's lots of opportunities ahead that

we haven't yet really fathomed the opportunities that this

technology can bring.

Awesome, and by the way, if you ever have a chance,

he's a great guy to work with and for. So thank you, Myron. So

we got Brand now at the end is a retailer, Myrons got retailer.

Gotta get the suppliers in there. Mr. Hardy

Gotta get the brand side.

Gotta get the brands in there. That's right.

Dan Hardy, with Hanesbrands, been with

Hanesbrands for about 23 years, various operations roles. We

were on that top 100 supplier list back in 2003 so I've been

working with Myron and Mike, back in the original days, got

out of the kind of out of the RFID world for about 10 years,

and had another role in Hanes and I'm new back in it again,

since about February. So a lot has changed and a lot still

remains the same, I would say in the industry. A lot of the

issues are still there, and we'll talk about some of those

today and some of the opportunities so. Happy to see

progress that's been made. And yeah.

Awesome. Thanks for being here. Last but not least,

we all know Senthil. I bet 90% of you don't know how to

pronounce his last name, but you all know Senthil. And when you

think about the RFID lab, one of the first things most people say

is they say ark, and of course they ask what Ark stands for and

nobody knows. What does Ark stand for Senthil.

So that's a good story because

I didn't ask for a story I just asked him. You've

been hanging around Justin too long.

Even at the university, you know, having an event at

lab, and the arcmin came up, and whenever you work in university,

they don't like acronyms. They want, you know, expansions. So

they kept insisting on what is ark you know, and we just kept

saying it's just ark. And, you know, I think on the third try

you had to say if you really want to use it, you know, call

it Arkansas radio compliance, or stay ark and university said,

we'll just keep it on. So.

So is it now Auburn radio compliance, or is it still

Arkansas. Alright, fair enough. All right. Well, let's get into

some of the questions. So incredible panel. I'm really

excited to get into this. But again, remember the homework

assignment is think about for the future, what are the things

that we need the Auburn, whatever we're calling ourselves

in the future, for right now, the RFID lab to do to help

unlock some of this stuff. So we're gonna start with today.

And I'll, I'll start with Justin, which is, how would you

describe the utilization of RFID and retail today? Who's using

it, what are they using it for, etc.

Well apparel is penetration in apparel is real

high as y'all know. So and that's going up. I think a lot

of the vertical retailers have had a much easier time with

getting going. And then I think even going into the multi

brands, I think apparel is becoming a just table stakes, I

think to get in the game. It was important before COVID, when it

came to inventory accuracy and out of stock replenishment, but

I think now, especially with bopis, and especially with all

the pressure we have on labor operations and stores, I think

it's it's kind of just makes sense. And, and we're starting

to see a push out beyond apparel into these new product

categories, which is crucial, because that takes us to the

next step. This is kind of it's not just a gradual, you know it

goes out and tags everything in the store, which is what a lot

of people thought when we initially went into RFID. But

it's which categories make the most sense, which are the most

advantage, and then how do we step out, step out, step out

into more. And it may not make sense everywhere, I don't think

we're ever gonna put an RFID tag on a watermelon. I doubt it. But

I think that at some point, we're going to start seeing some

of these merge together with some of these other patient

technologies. So it's on a good trajectory right now, for sure.

So real specifically, you guys used to

do a utilization study. And I remember one status a few years

ago that said, 70 of the top 100 global retailers are in some

stage of RFID. Where's that now? Do you still see it continue to

grow? And maybe that's a question for Dr. Hardgrave.

We have. And we did that study for about seven

years running. And we really reached that point, kind of

almost a saturation point where we had moved down the adoption

curve. And that was, you know, pre pandemic, we were in that

70% had started somewhere on the adoption curve, right, some

further along than others. What we saw with the pandemic,

though, was, I mean, within within three, four months after

the pandemic shut everything down in March of 2020, we had,

gosh, probably more retailers come to us in that next six

months than we had in the previous few years. Because with

everything shut down, we all knew inventory accuracy was a

problem, but it really shined a huge light on the inventory

accuracy issues that retailers had in the stores, right. When

you shut the stores down, the stores go dark, and you're

trying to source from the store, or the consumers are demanding

buy online pick up in store as a way to do that. You really got

to know what you have. And so for those retailers who kind of

been on the sidelines, who were just kind of getting started, it

really escalated during that time.

Yeah, so that's a great segue to the impact of the

global pandemic, to the utilization of RFID for

specifically omni channel purposes. I'm sure that put the

entire industry into a tailspin and how fast can we get there

because of that, so speak a little bit about pre pre

pandemic, and then post pandemic.

Yeah, it, you know, again, we talked about

inventory accuracy and either retailers either failed to

acknowledge they had an inventory accuracy issue, or

just chose to ignore that they had an inventory accuracy issue.

But when you're forced into sourcing from stores, when the

stores are dark, we're allowing consumers to come in and pick up

items through bopis, and we'll talk more about that later I'm

sure. It just kind of highlight just highlighted that issue. And

many retailers, just and maybe some of you in the room just

could not execute during that time. Yet, we saw retailers like

Lululemon who was all in, who executed perfectly during that

time, whose sales actually started increasing even with

everything shut down. And it was because they could continue

executing and those type of things then really highlighted

the need for RFID to know what you have, where you have it, and

in what condition. I'll note one other thing that the pandemic

did for us as well. From, I guess from industry perspective,

if we think about where, where we find ourselves in retail now,

you know, we talk about retail 1.0, 2.0. and 3.0. And 1.0 was,

you know, when when retail was in its infancy, you know, for

many, many, many years retail 1.0 was the suppliers were in

charge. You know suppliers made products, and they actually

determined which retailers could sell them, how much they charge

for them, suppliers controlled retail. And then as we as we had

more retailers come online and, onlines not the right word, but

but more retailers come into play and bigger retailers, that

the emphasis shifted to the retailer because the retailer

then drove the retail industry because they determined what

they were going to sell and how much they were going to sell it

for. And we started this transition over a decade ago to

retail 3.0 where this consumer was getting more and more power.

And what the pandemic did was really fast forward what we were

seeing as the transition to really full in to retail 3.0

where the consumer absolutely is in charge now. The consumer has

all the power in retail they and they demand and they drive what

what retailers provide, and when they provide it and lettin you

know what they have.

Great. Great perspective. Brand and Myron,

what's in it for the retailers, both today and in the future?

What do they see is from a retail point of view the value

proposition for this technology retail. So No, you go first, No,

you go first. No, you go first.

Want me to go?

Yeah.

So just as a as a baseline. So in retail for

those that aren't retailers, the the parallel does not exist

between asset protection or loss prevention, and the

sophistication of technology with the store ops. So the value

prop that really highlights quickly is the shrink not only

the shrink visibility, but it allows in most retailers a dark

space of knowing exactly, when you do the annual inventory,

what's missing beyond a financial statement of saying,

Look, you you shrink out a million dollars this year and

not really have a whole lot of intelligence under it. It causes

us the asset protection professionals to do a lot of

guessing. I'll be fairly sophisticated, we can get pretty

close approximations, but when the operation side can tell you

within 30 seconds we sold a tube of Crest toothpaste mint

flavored in shinzin. But on annual inventory, when we get

that million dollar number, we haven't a clue how to piece that

together to add up to a million dollars. We know some of its

electronics, some of its face care, some of its, you know dog

food, power drills, etc. So that incongruity, if you will,

between the sophistication of those two divisions RFID really

opens the door with that profession to step in and be a

player in decision level with true information and data, and

that's a first, that has not existed prior to RFID.

Awesome, Myron anything to add?

I think, I think building on what Brand said is

if you look at a retail operation, the two most

important lines to the P&L are the wage expense or productivity

and the inventory expense. Those are the two most influential

numbers and the two most controllable numbers. So if you

can speed up the productivity of your workers, by making sure

they do tasks that matter. When I load stuff onto a truck, it's

stuff that I need at a store, when it gets to the store, I

know it's gonna fit to the shelf. We started, when I was at

Walmart, we started an engineering innovation team

where we started actually calculating what's the cost of

pulling a box from the back room and then having to take it back

to the sales floor, and when you do that 50 times a night in 4000

stores times that number which I can't disclose that number, you

start sitting back in your chair and saying we got to figure this

out. So as you look at a world that's moving toward automation,

and saying how do I get automation systems for the

capital expenditure to pay for itself, if I'm sending it bad

needs data, I'm sending it bad inventory data. I can't make

that system more efficient than a person to justify the capital

expense. So you have this improvement in productivity,

which improves the wage line, which helps you run a more

profitable, better served business for the customers. And

then on the other side, you're better leveraging your

inventory. And you're actually able to separate what we call

real shrink from fallacy shrink, process shrink. I thought there

were 50 units of bread, and there were 60. I miscounted

because it was stacked in opposing directions. That's a 10

unit delta that shows up in that annual inventory that had

nothing to do with someone walking out the front door, or

someone sticking it in their duffel bag, it had to do with an

order of operations. And statistics, some of us were

talking about statistics class earlier tonight, tells us that

you know, by rule of, by rule you're gonna get one out of ten

on average to be an error of a human engagement. So being able

to catch those things in near real time, even if it's within

the week, helps you resolve your financial accounting to make

retail math work more like a cost math infrastructure,

without having to run a dead unit inventory every single day.

And I think that's a bit of an unlock that we don't talk about

very often is running retail math in a cost inventory model,

but not having to run the cost, cost inventory overdue.

That's why I love working for Myron, and after

that sermon he would go, so Mike go figured that out. There would

always be a so go, go come to me with a proposal tomorrow. Great.

It's very true, very true. And and man if he had a whiteboard

right now, he would be all scribbled up. Dan, brand owner,

you've heard all of the retailer benefits. What are the, what are

the brand

He's been scribbling since we've been up

Has he been really?

He's got his whiteboard. You know, I think

from a brand perspective, so we kind of see ourselves we're in

apparel, as you can imagine. We kind of see ourselves as a

consumer packaged goods and highly in our in our businesses

and placed very highly replenishable businesses, right.

And so we are completely in line with the retailers around the

importance of OSA or on on shelf availability. So this is a major

driver for that not only because, you know, the end

consumer needs to know that the product is on shelf when they're

actually in the retail store, but or buy online, pick up in

store and ship from store and all of those things. So we

actually have seen that benefit on on the brand side, when we

when we've seen our major retailers turn that on, not only

did we see a true bump in the inventory at the stores, we saw

that come through in our you know, in terms of orders on our

side to refill that inventory. We see that kind of true up on

our on a weekly basis. So that's really, that's really important.

What it does, we've always had these debates internally at

Hanes since as long as I've been there about, you know, is a

retailer carrying enough inventory to support our sales.

And so our product marketing teams are always all over, you

know, we're not performing as well as we should be. And it's

because of inventory. So this takes that away in a large, to a

large degree, takes that off the table and brings you to kind of

a level playing field from from a sales team. There's another

benefit that I think, you know, we've recognized that Hanes

don't think we talk enough about and this is about the whole

demand variability or volatility. Do you have that

slide?

Yeah, go to slide 31 for me, it's a graph slide.

Supply chain graph slide. Go ahead, keep talking while you

bring that up.

So we when we went to go to talk to our retail

partners, planning and replenishment teams, we would

always plan the slide. So we we have a very kind of steady POS

rate, you know, if you look at POS of our inventory, or POS of

our products at store, again, highly replenishable, fairly

predictable, that's the dotted line that you see on the in the

middle of the page and we can predict that. If you look at the

year over year of that same line, it would look fairly

similar.

So folks in the back, what is the red line

triangles versus the squares the red lines are point of sale?

Yeah, the red lines are our POS in store sales.

And the blue lines are shipments to

The blue lines are shipments, so we see this highly

variable pattern of shipments versus versus POS and we would

always say that creates a lot of inventory, not on the retailer's

end, but also on our end too. So this is something that I think

that is an important thing is it doesn't have a message for the

retailers. If you're sort of selling this end to your

suppliers, that's something to talk about. You can bring those

two together and you can you can really optimize your supply

chain and

Yeah and by the way, if those are shipments, what is

that back all the way to your raw material suppliers, what's

their bullwhip? That's the term for that. What's their bullwhip

effect? So great point. So if you get the accuracy at the

store right, we know how much you have, and you know how much

you're selling.

That's right

factoring that back throughout the supply chain is a

very big opportunity

Certainly, that's not the only component, but it is

probably a third of it in

Senthil. We've been talking about this RFID for apparel for

a long time. And we have seen big retailers like Walmart

publicly announce they want to get into the automotive tires

and the automotive batteries and the electronics and the sporting

goods and hunting and fishing supplies and homes, etc. Where's

this thing going? What are you seeing? Because you're the ones

that is being asked for the arc specs to be able to make this

work? What do you seein from a roadmap perspective from a

category expansion?

I think what I think COVID did was it basically, you know,

shined a light on the problems that we have in retail and

ensure that all the inventory accuracy problems that we are

talking about is not only specific to apparel, it sort of

exist in pretty much every other department or category that we

sell, and in some cases, much worse than a brand. So I think

there is a broad set of interest in lightening up the whole store

pretty much from a general merchandise standpoint. But we

look at at industry level, I think where we're seeing the

next wave of adoption coming from as definitely sporting

goods is an area where I think it's following right now for

apparel, entertainment, which is toys and electronics, we see a

lot of interest both from the retailers, and in some cases,

even the suppliers. Home and home improvement has been

something that a few retailers have explored for quite some

time, but I think that's getting a lot of traction. And then

yeah, pretty much automotive, health and beauty is all pulling

up be it took us probably like 10 years to get to where we were

at apparel, I think we're at probably 30 to 40% with the

whole apparel market. I don't think we take that long for all

these categories.

Awesome. So if it's a good idea in apparel, it's a

good idea in other categories as well, right. So here's the big

question that I hear all the time. And I have an answer for

it, but I love to hear your point of view. Yeah, but I

really can't do that because there's an RFID chip shortage. I

don't think there's chip capacity to meet the needs. So

should we really be moving forward your reaction and Justin

as well, but Senthil and Justin your reaction to that statement?

I think we have enough people in the room that

can give better answers, but if I had to give a general

feedback, I think that's probably something that we count

almost daily, you know, early in 2022, and a whole lot in 2021.

When talking about expansion, that has come down alot, it's

not, at least for the people that are rolling out and

sourcing that

The concern has gone down a lot or the capacity has

gone down? The concern, I just want to clarify.

Exactly so that's the feedback we get, right. So when

suppliers reach out to the retailers reach out to their

suppliers and say, hey, you need to tag and you know, they need

to be able to source dyes and put it on their products. So was

probably one of the most discussed topics. So it's

definitely the number of concerns we are hearing from

suppliers which are coming down, which means they are able to

source tag and based on what's going on on the industry side,

it looks like things are getting a lot better. So in 2023 things

should get almost back to normal.

So there was a check step in some of these big

retailer expansions to let's check, do a tag capacity check

before we go do a big launch, are you still providing that

level of guidance at least until 2023?

Still providing miscibility at an industry level

to our technology. Because there's a lot of stuff that is

happening, you know, in a lot of places and it happens to silos.

So ingesting, sort of providing business level guidance so that

the technology bullet is

Perfect.

We don't know, like the market grows, right? So

we had about 50% growth from 2021 to 2022. And we're looking

at almost 100% growth, I think, again going into this year in

terms of capacity and volume. And we're at this weird phase

where we're growing quickly, but we're still small enough where

somebody could start a new project and knock a pretty big

chunk out of that. I mean, there's some, you know, 5 to 10

billion unit projects out there. So it's one of the things I

think we do real well. And I'm glad you're all here for this,

this is figuring out what those unknown projects are and putting

those in the mix so that they don't surprise anybody without

breaking any NDAs or, or anything like that. So

Can I add a point to that?

Sure.

Because I think we're talking about inventory

management and inventory improvement and accuracy, and

all of that stems from a demand and a forecast. And I'm just

gonna leave that from Dan here, the slide he had up there awhile

ago, I don't think you have to go back to it. But if if we

don't know as an industry, that somebody's going to pump 2

billion tags out of the market, and it's, it just happens. It's

no different in this industry than it is in the retail

industry. So if companies aren't talking to the university or to

supplier groups about what they're going to do, there's not

really a big competitive advantage and having RFID or not

having RFID, you actually improve your advantage to your

customers, but I don't know that you take something away from

somebody else. We could make the RFID tag inlay business just as

bad as the retail underwear business was at some point,

because we're not sharing good forecast information. So I think

there's just a, there's a lesson to learn within the project

here, that we got to be better stewards for the industry, and

not turn around and chastise an inlay company or an IC company,

because they didn't know because we didn't tell anybody that

we're gonna pull two billion tags on the market. You know,

it's kind of the devils in the details here, but it would be

really ironic to do that to ourselves, when we're trying to

solve that very problem.

Great point. All right, I'm gonna switch gears

away from category. And I'm looking for a very quick

soundbite future roadmap of business use, we've been talking

about RFID to improve accuracy for 25 years, Jonathan, really,

I mean, same thing over and over again, there are more unlocks

than just improving inventory accuracy. And Dr. Hardgrave will

tell you, that's the basis the inner. But first one I want to

talk about is this triangle. This is just my rendition of

what some of the use cases are. The second one, Dr. Hardgrave is

bopis and a brand new term that you taught me the other day I

had never heard before ropis. Talk to us about the unlock that

RFID plays in the omni channel world.

So the when we talk about being omni channel,

and as far back as 2018, 80% of retailers out there on the

channel, and they're not, they're not even close. Buy

online pickup in store is the easiest, should be the easiest

capability for omni channel enablement, and most retailers

are still very, very bad at buy online pick up in store. The

execution is poor, 50% execution errors of some type, whether

it's a pic or following through. Only about 35% of retailers

actually show their inventory levels on on when you go in to

do that. But kind of the hidden one here is and that's the

research on research online, buy in store, research online pickup

in store. That's that's the one that most retailers don't have

any visibility to and 74% of consumers now, and think about

yourself as a consumer, if you're going to the store 74% of

consumers now, at some point during their shopping year, will

go online to see if you have the product. They don't they don't

reserve it, they don't buy it, they don't, but they go online,

see if you have it, and then they go the store from there.

And if you don't have it, if you don't show them online, that you

have it in stock, you've missed out on a sale, and you've missed

out on getting that person in the store, which right now about

25% attachment sales when you get somebody into the store who

looked online. That's, that's again, that's kind of a simple

use case. And so you talked about future ones, you got to

unlock that right now because that's that's the easiest

capability there is.

And what if they, what if a customer doesn't share

that inventory information to their potential customers or

their potentials that they will go to another retailer that can

fulfill that need?

Yeah, and that's that's part of that retail 3.0

right? If I go I'm looking at Chuck you know, if I if I go on,

I'm gonna buy I want to buy a white shirt in a certain size

and I go out there to look and to see if you have it, and if

Dillards doesn't have it, and I need that shirt. I'm gonna go to

another retailer, right? I mean, and if Dillards does not show me

whether they have it or not, then I'm not going to take the

gamble, I'm gonna go to the store and hope that they have

it. No, I'll find another retailer who will have that

shirt that I can go get it. So they've missed out on that sale

and maybe even missed it, and maybe missed out on something

else I would have bought while I was there, and maybe missed out

on because the next time I may not even go to that website to

even check.

Perfect, perfect. Part of the next one, Brand

Elverston, is basically leveraging, from my perspective,

the ID in RFID. Yes, RF allows you to be able to read things,

but without your line of sight and things like that, but the

ability to uniquely know where things are in the supply chain

coming into the store. Talk to us about the asset protection

uses, where you can leverage the ID in RFID for asset protection

purposes.

So going back to to my earlier comment about

sophistication of technology and the mainstream ops versus that

of asset protection loss prevention. Most all retailers,

to build Dr. Hardgraves point, have some idea of what they own,

it may not be right, but they have a system where when it

comes in the back door somewhere it's being accounted for.

Imagine if that didn't exist. That's where asset protection

loss prevention is. So it's not an incremental step forward. It

is now for the first time ever being able to know and this is a

good conversation to have because the I believe it was NRF

just released their annual study. And if you don't know

what's under the covers, you can walk away from that and saying,

the $600 trillion of shrink, God, that's a lot of theft. If

you don't know the end to end from OEM to the customer, it's

not all of that. But RFID allows us to understand what component

is theft or what did we never receive in the first place? Or

is it you know, somewhere else in the store and stock room

number 36? We don't know that. So you know, while it sounds

from an operational perspective, there's a different value

property extension for asset protection is huge. Because it

will also the reaction we have when we make the mistake and say

it's all theft. You walk into a store, guess what? Everything's

locked up. We all see it on LinkedIn, you can't go three

posts without somebody saying, you know, organized retail

crime, they robbed the store. So we become tone deaf and thinking

that everything is theft. Well, it's not Maslow's, you know,

what is the saying is all you sell with a hammer, everything's

a nail. We start locking up everything, when in fact, it may

not be a theft issue at all and be a supply chain issue. We have

no idea. So it's a huge deal for the asset protection industry.

It's giving us intelligence we don't have today.

So I want to give some credit to Sensormatic when

we when Brand and I and Myron were all at Walmart, and this is

not in use in any different production environment, but one

of the things we did to actually demonstrate the capability is

what you see on the top left hand corner is what did I

receive in the back of the store versus what I expected. Today,

we don't measure that, unless you're going to open every box

and count every item etc. So the ability to put infrastructure

and that actually reads that. And you'll know that two items

that didn't show up that you expect it that's shrink. The

second one on the bottom, these are the things that physically

left the store that we never saw a POS transaction for. Did they

steal it? Maybe, probably. Was it a customer? Don't know. Was

it a was a associate from the store? Don't know, but we know

those particular items, in this case eight of them, left the

store that didn't get paid for. Two things, number one, you

didn't get the money for it as a retailer. Number two, we still

think we have a quantity on the shelf and we disappoint the next

customer. So again, this is not exactly the way some retailers

are implemented, and I think several of you have seen Joe

Cole from Macy's implementation that that he has talked about

numerous times. But the power of actually using serialized data

for the purpose of asset protection is a huge enabler. I

don't think people are really taking advantage of it the way

they should be. I think that's one of the next big unlocks.

Upstream supply chain, Dan Hardy, back to you. So there's

this dirty little word in retail called claims.

Yes. Chargebacks.

Talk to chargebacks, claims, clients claims. Talk to

us about the role they could play with with that.

Yeah, so so at Hanes about two there's four major

drivers of our chargeback claims with our retail partners and two

of those have to do with inventory accuracy and shipment

accuracy. So we really see a big opportunity here to be able to

use and you were talking about things like internal carton

shortages and overages. So think about pick the store carton, it

may not have the right number of items that are the right items

period. The other side of that is carton shortages and overages

so we say we ship 100 cartons, the retailer says they received

98. And so but if you think about our compliance claims it's

about a third that those two backers are about a third of our

total compliance claims. The cash flow implications are even

bigger, though. But those two accommodate for about 60, 65% of

the cash flow tie up with these claims as we try to negotiate

with the retailer. So all sets up to be a very nice way to try

to try to validate those outbound shipments, validate

inventory from our internal supply chain. And that's really

kind of the long term vision that we see is if you can push

that back into the supply chain into your manufacturing plant,

then you can start to automate things in your distribution

center. So we got to start up again, and work backwards from

here.

Yep, absolutely. All right, another big opportunity.

So we talked category expansion was simple. I'm going to put

Justin on the spot. When you first opened the lab back in

2005 ish or so, I'm not sure what year it was. One of the

things you had was a dressing room or changing room to mock up

what a potential customer experience could look like. I

haven't seen RFID used a whole lot in retail. So talk to us

about what you think the future is in terms of leveraging that

RFID information from a consumer engagement or customer

engagement perspective.

Time is well overdue. You know Lauren's

here's someone and we've been working on this for a long time

with her team, but there's not a lot of data that goes into

customer experience with respect to store operations. So for

example, we were dealing with the chain, national chain,

upscale apparel vertical, they have, you know, thousands of

stores across the US so we asked them, what percentage of your

customers use the dressing room? And they're like that's a great

question. So we're pretty surprised by the fact that they

had so much focus and emphasis on the dressing rooms in the

space and did not really know how everybody was utilizing it

when they were going through there. So we have never really

found any studies or anybody who's doing it beyond some

smaller onesie twosie consulting projects of just quantifying

what is consumer experience in the store, like what constitutes

a good or bad experience, we always quantify that in sales,

right? Did they buy something or not. So we don't really know

what they do a lot of times when they go through there, and we're

starting to see a big push from retail in terms of changing the

model or changing the format. So you think see things like that

we'll hear people talk about dark stores, or you'll hear

people talk about the ghost stores with the just walk out

technology and things like that as well. So there's a lot of

stuff that's, that's changing the customer experience, but we

don't really know, you know, what's sticking and what's not.

Lauren recently went out there and looked at a whole bunch of

stores that had kind of been in the headlines for the last five

or six years for new store formats and new store models,

and a lot of them, when we went back to check on them, had

switched back to the traditional models. So what didn't work and

why? We don't know. So the key though, we feel like is we need

to be able to more manutely monitor and locate the inventory

in the store. I think it's following the inventory and not

necessarily the customers as they go through there. And then

trying to figure out what they're responding to and what

they're not responding to. The crazy thing about, like, you

know, you look at those Amazon just walk out stores, and

they're pretty awesome, right. But like, from a customer

experience perspective, there's very little change in that from

a traditional retail store. The only difference is when you go,

yeah the checkout. So when you walk in the store, you actually

add to that because you have to check in. And then when you

leave, you just walk through instead of taking the stuff out

of your basket and checking out, but the entire rest of the

shopping experience is the same. But from a customer's

perspective, that's a full, they walk in, look at these videos

this is amazing. This is like the future. So it doesn't take

much I think to really shift the customer's mindset in stores,

but we have a hard time quantifying that in a way that

makes it sticky when it comes to implementing

In reality, they just redistributed the checkout

experience.

Right, they moved it to the front, right?

Yeah

But that little shift was a big, big difference.

Yep. All right. I have one more question. I'm just

Competing or completing?

gonna get ready for you so if you have a question, kind of be

Competing or completing. Are they going to

thinking of it, raise your hand, we'll have two mics going. But

last question, probably for Senthil and Myron and Justin.

There's other technologies out there. computer vision, willian,

bluetooth, augmented reality, you name it, that a lot of

people are looking at as potential competing solutions to

our current RFID technology. Talk to us of whether you think

they're really competing technologies or whether they're

completing technologies.

work together or does one replace the other?

Since I'm, since I'm talking on asking a clarifying

question, I would sort of step out on a limb and say they're

complementing technologies. I think we, I think we have to

remove the term this versus that when we're talking about

technology solutions from our vocabulary. Because we think

about being retail innovators in the future. There's no more

silver bullet, so to speak, retail has gotten incredibly

more complicated from the supply chain and sourcing all the way

through to the post, post sale customer experience. And I'll

just kind of tie a couple of things together here that I

think are critical to that. I'm a big fan of understanding the

state and status of assets in a business. Whether it's a

capitalized asset that we own, like a server or something

that's really expensive, and I need to get so much life out of.

I need to know where that is, and make sure some guy doesn't

come in as maintenance and unplug one and take it out and

walk out with an extra 20,000 bucks in his pocket, black

market. I also need to know where all of the inventory is

and what's the state of that? Is it a display? Meaning it's a Do

Not inventory item, but I've paid for it so I've got to write

that off, so I want to keep it as long as I can. Is it

Awesome. Justin and Senthil any other bills from

something that's been claimed and returned? Is it one that I

paid for or not paid for and RFID gives you that visibility.

But I think there's things that RFID doesn't do well with the

UHF spectrum. It's it's not a great post sale customer support

experience at home. I think your NFC Bluetooth stuff is going to

be very valuable in that space. I just spent two years leading a

computer vision company and there's things that computer

vision can do faster than RFID, but it doesn't count well

because it doesn't know if I counted that one already or not

in a different highlighter moving around. So I think this

concept of Justin used earlier been a big word of mine of

sensor fusion that's coupling, Mike's gonna have flashbacks

around these things, this coupling state and status with

fixed architecture. Say I can create a virtual basket that

moves around the store, and as I aggregate things together, I

don't need to know who's pushing it at the time, I can know those

things are together, and then tie that transaction to the

credit card or debit card or all types of things at the end for

loyalty and things. But I can also track the life of that

asset and the lifetime value of a customer and start stitching

all this stuff together in really unique ways. And having

those sensor fusion items work together takes pressure off of

Professor Burke's.

one senior failure point. And we have to do that across our

businesses as well.

I think what I would say after what Myron said is it

really depends upon the perspective you have to the

project. If you think of that project as an RFID project or

appeal enlarging then they become competing, but if you

take the other perspective of what am I solving, is it a

traceability project, is it an inventory accuracy project, is

it a consumer experience project, then you start to

realize I got have inventory. So it almost looks like whose name

everybody's trying to achieve, and you can see that in the same

organization, but I think we are seeing a shift in you know, RFID

being part of traceability projects. RFID being part of

supply chain group projects, and when that happens, you know,

people realize everybody has a role to play.

Awesome. Justin, anything to add?

Well just want a tool, right. So not everybody

wants to start out on an innovation project, nobody wants

to do a moon program to just get solved their problems store. So

they want things to be you know, more stable, they want things to

know that they work. They want to invest in a market that

there's a lot of other people using it, that they feel like

that they're gonna get their value out of there, and they're

not taking a risk on this. And I think that we create a lot of

problems for ourselves as an industry, especially with

solution providers, when we start getting in each other's

lanes and being a little bit argumentative sometimes about

you know, this versus that. And I think that creates a lot of

bud for the users, right? So I think we just need to be

responsible stewards of the space, focus on what is the

primary value that they're trying to get to, and then focus

on whatever technology will get them there because there's

there's a little bit of room for everything. But we're trying to

present this space whether it comes to serialized

identification technologies or serialized product

identification, inventory tracking is something that is a

mature space that people can work in and invest in without

getting into a confusing tech they call.

Awesome. Perfect. All right, we're gonna open it

up for questions. We've got a mic here, we got a mic here.

Whose got the first question? Jonathan, of course.

Great presentation. Thank you. My question is what

so I was keying in on what you said, Dan, as far as the value

to a brand owner regarding like demand forecasting. What other

carrot or carrots can a retailer offer a brand owner to entice

them to RFID tag its source?

Yeah, so I think, you know, I kind of said this

initially, I think it's all about ensuring that you have a

good story to paint to say, my retail inventories are going to

be accurate, but I don't think this on a regular basis on a

weekly basis, we're gonna have to remember inventories. And so

what you see in the store, and you can count on being there. So

you can take all of that variability out of the picture.

So that I can I can go back to my management and say, hey, you

know, this is the true read of what our what POS on our item,

our store item combination is actually doing right. And so

there's no debate about, well, there's a lot of noise in there,

because they don't have enough in the store. You may have that

conversation, but it's all about I can now believe and so it's it

is that level playing field for your eyes, I think that's kind

of the biggest benefit. And then I think the the other benefits

that fall from that are, hey, you know, you're gonna see

you're gonna see a regular replenishment coming through to

kind of true up that inventory, you should see that so you would

expect that, but it's also going to stabilize that demand signal

that you're getting from your retailer, right. And that has

implications all the way back in your supply chain. So I don't

think that's talked about enough. And, and I think we you

know we're doing a lot of work on that at Hanes, and then

trying to figure that out from an OSA standpoint, but but I

think that's important for retailers to copy or communicate

to their suppliers. And retailers and the retailers in

the room and on the call and may look at this in terms of you

know, this is where big taking the students supplier community,

but if you really want them to jump on board and embrace it,

there's a sales piece of it, like you'd have to sell that to

them in a way and help them to understand what the benefits

are, but by making that investment.

Okay, so question, John from UPS. One, very great, then

I wish you'd give the group a round of applause, that was

really something. So two questions, one for you. On the

RFID side, and we've talked briefly about this, but I'm

curious and the other panelist, is there um , I'm UPS. So you

guys talked a lot about retail, little blink about supply chain.

I think there's, obviously I'm bias, big opportunity on the

supply chain side. So one, is there room for universal label,

and what are your thoughts on that as it goes from retail,

Hanes, Walmart, and comes into my four walls of UPS or even my

great competitors, FedEx. Is is there a scenario there? And then

two maybe for Myron, because he talked about the financial part

of RFID, what is it traditional sort of ROIC on an RFID project?

What What should people expect when they invest in these

projects? So two questions, thank you very much.

I'll take the first one. I think that's all that's

what we're working for, right is sort of a alignment, both our

performance and to even extend that alignment on data

standards. So when, let's say the retailer is putting an RFID

tag on the product, and shipping to the customer, and it goes

through UPS or FedEx, you know, you already have an orbiting

label, that's part of the product that's in the box,

that's going through your supply chain. So you know, how do we

leverage that, right? You know, is there anything that we can do

to leverage that existing data and, and slapping another tag on

it, right? You know, of course, the tag is would love to, you

know, send two tags, but there is I think a lot of discussions.

So that's probably going to be one of the big topics that we

have scaling up tomorrow and Thursday, is to sort of get

cross industry alignment, and having a baseline of performance

so we can expect the minimum volume performance across the

entire supply chain, whether it is a supplier, whether it's at

the retail level, but I think it makes sense, not just Aquaporins

even.

The second question just for the folks who are on

the Zoom call. The second question was specifically of

Myron and the question was, what's the ROI of these kinds of

investments?

The ROI or expectations?

Was it ROI, right? They want to promise, Myron,

they want a promise.

A little bit of an impossible question to answer in

a broad in a broad way, because it's, it's going to depend on

how, how good or bad your organization is. So I can I can

tell you we've seen, I've seen ROI is from the 3% to the 20%.

Okay, some of those are, our ROI wasn't on the inventory, because

we were paying a whole bunch of extra people to double count

everything that went on and off of every truck. The ROI was, you

could cut a thousand people out of your head count, because you

don't need to count everything twice anymore. So it's a very

different ROI model because nobody wants to talk about an

attrition model and an ROI discussion. But it also says

your original operational processes weren't as good as you

thought they were because you just kept stacking people on top

to do the same work which is not productive in any operation. And

then you see, some that are, I think, you know, when you first

said, expectations, I sort of the word I threw up my shoulder

to Justin was chaotic. When you start an RFID project, I would

expect some chaos, because it will make people and executives

of areas that were sort of the golden child at an organization

look really bad. It will expose things in an organization that

are non discriminant because it doesn't care whose P&L it is. It

doesn't care anything about how well the organization has been

awarded or recognized. It just says, there's a lot of things

here happening under the covers that we don't have data on, kind

of like the dressing rooms from that perspective. And that's

where I think the state and status becomes very important.

And it kind of parlays into what Senthil was talking about in

your question about, you know, could one tag work across the

industry? I would affirmatively say absolutely. The problem is

the enterprise ERP infrastructure can't support

real time data flows, because most are 24 hour batch process

systems. And they can't respond fast enough to the EDI flow that

we need on edge networks. So there's a lot of other

paralyzing factors in the compute industry and data

transfer industry that is beyond a tag illuminating factor. I

think the tags can do way more than we can functionally process

within our enterprise systems today. And let's be honest,

nobody wants to go rewrite or redo enterprise systems on

capitalized budgets because they're crazy expensive and by

the time you get them done, they're out of date from that

perspective, so I hope that hope that answers your question.

Thank you. Well, first of all, thank you very much for

sharing your experience with us, it was pretty informative. We

appreciate that. I'm Gilda from Golden State Foods and I do have

a two part question to ask anybody. All of you can answer

this question. How vulnerable is RFID to cybersecurity threats?

That's part one. And part two, based on your experience, have

you seen any cybersecurity attacks on this technology?

We did, we did some of this with the DoD in the

past. So they tend to have a lot of different rankings

hierarchies for cybersecurity threat when it comes to RFID.

For passive UHF, it's never really been a concern, because

the amount of data that we're loading on the tag is limited.

So for the most part, if you're using an EPC or an SG 10, it

identifies what type of product the item is, and then possibly a

serial number that's associated with that item, which is not

meaningful unless you have an associated database. It's kind

of like your license plate for your car, like anybody can read

your license plate, it's not really a security issue,

nobody's gonna steal your social security number from it, unless

they're already in the DMV database anyway, then you got a

bigger problem. So I don't think that passive UHF has been an

issue, except for whenever people irresponsibly load data

on there, and go off standards. That's a big plug for staying on

standards, right. But um, there are some, RFID is a big world,

right, so there's, there's hundreds of different kinds of

technology of RFID and some of them are active, and they can

load a lot of data on there. So I don't know if we can speak

definitively to every single way that every single person is

using RFID data. But I can tell you that um, you know, I people

think of weird things. I saw something the other day about

Fitbits. So some of the active military operations were

actually looking at some of the online posted Fitbit on the

health and fitness websites to figure out where troops were in

different countries, because some of the soldiers were out

there running routes in the morning, and then uploading

their Fitbit data to some type of health and fitness site. And

they didn't realize it, but it's not hard to scrape that through

there and figure out where a lot of people are. So I don't know,

there's there's odd ways that people may not intend, but we've

never come across a major issue, to my knowledge, with any type

of malicious capability of using the base level data that we're

putting on when we talked about passive UHF.

Alright, did they answer both your questions? All

right. Two logistical things. First and foremost, you guys

stay here, but we want to appreciate you and thank you for

130 years of experience in this space. Well, I hope you enjoyed

that podcast with all of the experts in RFID and retail.

Again, some incredible thoughts and perspectives from where we

are today as well where we're going in the future from an

industry perspective. Next podcast, we're going to be

focusing on computer vision and product recognition. Whether you

have a shelf scanning robot or a fixed camera in a store or even

just people who are collecting in store conditions with their

cell phones, the ability to take that information and turn it

into what are the on shelf availability issues on the

shelf, all that's driven by computer vision and product

recognition software. So I've got four individual companies

that are going to be spending some time looking at how this

particular software can be used to deliver on shelf availability