RFID Projects in Japan- an Update

Dec, 2018

Consumer Affairs, Distribution and Retail Industry Division

Ministry of Economy, Trade and Industry (METI) Government of Japan

1

１．Analysis of Present State

２．RFID Policy Initiative

３. RFID Demonstration Project

４．Prospective View

1.0

1.5

2.0

2.5

3.0

3.5

900

920

940

960

980

1000

1020

1040

Jan

-20

14

May

Sep

Jan

-20

15

May

Sep

Jan

-20

16

May

Sep

Jan

-20

17

May

Sep

Jan

-20

18

May

Sep

Per-Hour Wages（Left）

Jobs-to-Applicants Ratio（Right）

125

130

135

140

145

150

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2

Retail Sales Trend

（JPY Trillions）

Hourly Wages of Part-time Workers / Effective Job

Opening to Applicant Ratio

Source： 「Retail Sales Trends」: METI「Commerce Statistics」.「Changes in Attitude with Respect to Price & Consumer Preference」：NRI「Survey of 10,000 Consumers」(CY2000, CY2003, CY2006, CY2009, CY2012). 「Hourly Wages of Part-time Workers/ Effective Job Opening to Applicant Ratio」: (Hourly Wage) Recruite Jobs, （Effective Job Opening to Applicant Ratio）MoHW Trends in General Job Placements. Hourly wage data is the average wage in 「Sales/Services」 sector in the Greater Tokyo Area (Tokyo, Kanagawa, Chiba, Saitama Prefectures), the Tokai Area (Aichi, Mie, Gifu, Shizuoka Prefectures), the Kansai Area (Osaka, Hyogo, Kyoto, Nara, Shiga, and Wakayama Prefectures). Effective Job to Applicant Ratio is the index of Labor Market by Occupation「Product Sales Occupation」. Through 2011, benchmarked against 1999, from 2012 benchmarked against 2013.

20

30

40

50

Desire for Low Price & what is

Economical

Desire for QualityEven at

Higher Prices

Desire for Products MeetingOne’s Lifestyle

2000 2003 2006 2009 2012

Changes in Attitude with Respect to Price & Consumer

Preferences

（%） （JPY）

① Securing New Demand

② Accurate Understanding of

Consumers

③ Productivity Enhancement

The Changing Environment of Retail

703 688 649 562

831 846668

658

229 253

235208

0

500

1000

1500

2000

2014 2015 2016 2017

Processed Food Daily Goods OTC Drugs

3Source: Food Loss – MoAFF (2015) estimates and/or WFP Report (FY2014). Product Returns – Annual Coordinated Discussion Round Table amongst manufacturing, distribution, and sales／

Forum Reports.

Food Loss（CY2015）

Estimated Value of Returned Products

（Wholesaler to Manufacturer）

Food LossIn Japan

6.46Million Tons

World-wide Food Donations

3.20Million Tons

Loss Equivalent to a Bowl of Food by Every Japanese

Everyday

Supply Chain Waste

Unit: JPY 100 Million

4

Penetration of Electronic Commerce

Source: METI「FY2016: Survey of the Electronic Commerce Market」

EC Aggregate Merchandise Salesand Percent Market Share

＜Consumer Data Acquisition＞

Consumer IDPage View HistoryPurchase HistoryProducts Placed in Shopping CartProducts Removed from CartPurchases of Ancillary ProductsSettlement Methodetc…

（JPY Billions）

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

2000

3000

4000

5000

6000

7000

8000

9000

10000

2010 2011 2012 2013 2014 2015 2016 2017

EC市場規模 EC化率

5.8%

JPY 8.6 Trillion

EC Market Size

EC Market Share

5

Smart Supply Chain

Individualize &Inventory Data

RFIDSpace Data

Cameras

Settlement Data

Cashless

Electronic Receipts

PurchasingData

Forecast/Identification

AI

Logistics Data

GPS

Platform

EPCIS

Smart Home

User Data

＜Physical Space ＞Data collection from point of contact

with things, people and places

＜Cyber Space＞Data coordination through designing

standard region

Standardization

Specification

WiFi/Beacon

Location DataDigital Signage

Delivered Data

APP

Browsing History

Product Data

Database

6

RFID

Cash Register-less,Cashless, Receipt-less via “Walk Through”

Settlements

Individual Identificationand Behavior TrackingVia Camera Imaging

Camera

Electronic Price Tags

Supply Chain DataSharing System

Maker

Wholesale

Logistics

Cater to Inbound Traffic viaMulti-language Product

Information

Open & Close StrategyFor Coordinated Data

Data Coordination at Each Supply

Chain Level

Multi-languageInformation

Cashless

Smart Store Conceptual Framework

Digitalization of Product Inventory

via Smart Shelf

Dynamic Pricing via Coordination with Supply/Demand

and Expiry Data

7

１．Analysis of Present State

２．RFID Policy Initiative

３. RFID Demonstration Project

４．Prospective View

RFID tags attached to products by the manufacturers.

Product tracking in & out of plants and warehouses. Road-side gates allow tracking of product location.

Fast capture of product movement whether it be delivery inspection, inventory, POS settlement.

Consumers able to readily see food status inside RFID compatible refrigerators and closets.

【Manufacturer】 【Retail】【Logistics・Wholesale】 【Consumer】

Data Platform Built on Speed

Prevention of theft via RFID gates.

Confirmation of food expiry in refrigerators via smartphone.

Joint shipments via visibility of shipping routes/ volumes. Beneficial in natural disasters.

Accurate traceability of defective product.

Labor savings at cash registers and reduction to food loss via efficient inventory management.

ProductionData

Truck CargoVolume Data

InventoryData

Sales Data Loss DataDelivery Data Expiry Data ConsumptionData (※)

Distribution of RFID tagged products, automated acquisition of supply chain data

※As merchandise management of consumers falls within the realm of individual privacy, it is assumed in this model that the consumer will personally control related data. 8

The Future Shape of RFID & Example of Diffusion Benefit

9

Text of the declaration

• By 2025, Seven-Eleven Japan Co., Ltd., FamilyMart Co., Ltd., Lawson, Inc., Ministop Co., Ltd., and JR East Retail Net Co., Ltd. (operator of NewDays convenience store chains) should attach electronic tags to all products sold in their convenience stores (estimated to be 100 billion products per year) and achieve individual-item monitoring for every product.

• In this process, the companies must consider providing a portion of the information that they acquire through using such electronic tags to supply chains.

• The companies should start electronic tag demonstrations around 2018 by attaching such tags to products in their convenience stores in certain areas, aiming to achieve individual-item monitoring for every product.

Qualification conditions involving the declaration

• The companies should set the unit production price of a “dissemination-type” electronic tags to one yen or less (cost taken for processing such tags, including a combination of an IC chip, antenna and creating seals), to be attached to all applicable products (some products have special disqualifying conditions for the time being, e.g., those warmed by microwave, stored in metal containers, frozen/chilled and ultra-thin).

• They should develop a system for fully accomplishing source tagging, where manufacturers themselves attach the electronic tags to their products, and in which nearly all their products can be incorporated into their system using radio-frequency identification (RFID) technology.

Source of the logos：The website of each company

The Declaration of Plan to Introduce 100 Billion Electronic Tags for Products in Convenience Stores (April 18, 2017)

10

Text of the declaration

• The Japan Association of Chain Drug Stores (JACDS), jointly with the Ministry of Economy, Trade and Industry (METI), will aim to realize a smart store system.

• METI and JACDS will launch research for electronic tags using the radio-frequency identification (RFID) technology as the first step in this initiative. They agree on the purpose of the Plan to Introduce 100 Billion Electronic Tags for Products in Convenience Stores** and JACDS will aim to attach electronic tags on all products sold in drug stores by 2025 and to realize individual-based management of these products.

• METI and JACDS will start a new project titled “Growth Strategy Project” in 2018 and conduct a demonstration test on the use of electronic tags in drug stores.

• Through these efforts, METI and JACDS will enhance the expertise and knowledge of related staff by removing the burdens of monotonous and repetitive work and will improve the quality of services. Moreover, they will take on the creation of new value added using data acquired from IoT-based devices, e.g., electronic tags.

The Declaration of Initiatives for Making Drug Stores Smarter(March 16, 2018)

Source of the logos and the pictures：The website of Japan Association of Chain Drug Stores

11

１．Analysis of Present State

２．RFID Policy Initiative

３. RFID Demonstration Project

４．Prospective View

12

Issue of RFID

RFID Tag/Reader

Implementation on products

Value Creation

High Cost

The Performance does not meet the requirements of users

・Improvement of encode efficiency

There is no fast and inexpensive method

・ Marketing

・ New service to consumer

The benefits of product manufacturers are uncertain

・Embedding tags in packages・Printed implementation

・Realization of 1￠ tags

・ Resistant to microwave・ Improvement of read accuracy

・Share of inventory information

13

Item Detail

Term 14~23 February 2018

Place・FamilyMart METI Store・Lawson Marunouchi Park Bldg Store・MiniStop Kanda Nishiki-cho 3-chome Store

Purpose

To realize the “Sharing of Supply Chain Data” as set forth under the “100 Billion Electronic Tags Declaration,” and to create and test a working model of the Supply Chain Data Sharing System.

Outline of the RFID Demonstration Project

14

Image Illustration of the Demonstration

LogisticsRead Point

TagAttachment

Supply Chain DataSharing System

(EPCIS)

Logistics Center

Manufacturer

Data Cooperation

METI Store

Marunouchi ParkBldg Store

Kanda Nichiki-cho3-chome Store

Source: Logos from websites of relevant company

Image of Supply Chain Data Sharing System

LogisticsCenter (LC) A

Store B

② Delivery Of 001① Shipment of 001 ③ Sale of 001

ItemJANCode

Serial Status

Cookie4912345678901

0013/22 12:00Shipment fm LC A

Cookie 4912345678901

002Inventoried at LC A

Cookie4912345678901

003Inventoried at LC A

・・・

・・・

・・・

・・・

RFID Tag Code：4912345678901-001

ItemJANCode

Serial Status

Cookie4912345678901

0013/22 13:00Deivery at Store B

Cookie 4912345678901

002Inventoriedat LC A

Cookie 4912345678901

003Inventoried at LC A

・・・

・・・

・・・

・・・

ItemJANCode

Serial Status

Cookie4912345678901

0013/23 11:00Sale at Store B

Cookie 4912345678901

002Inventoried at LC A

Cookie 4912345678901

003Inventoriedat LC A

・・・

・・・

・・・

・・・

【②Delivery of 001】【①Shipment of 001】 【③Sale of 001】

15

16

１．Analysis of Present State

２．RFID Policy Initiative

３. RFID Demonstration Project

４．Prospective View

17

Expansion of the Project

Recog-nition

Induc-tion

Custo-meri-zation

Loyali-zation

Repurchase

Tag Imple-menta-

tion

LogisticsUtility ValueLoyalization

product planning

Procurement & Production

EPCISLinkage

Read of Arrival & shipment

Display in

Stores

Read of Sales Goods

Supply Chain Management Consumer Relationship Management

Visualization of Product Flow

Visualization of Perception Flow

Previous Demonstration

Next Step

Sale

18

Image Illustration: Visualization of Perception Flow

Digital Signage

RFID Reader Shelf

Electronic Price Tag

WiFi（Linkage to App）

An Item attached a RFID tag

When taking an item on the shelf, advertisement of the item is shown from the digital signage.

APP Usage History & Visitor Traffic Line

Visitor’s Age / Gender

Linkage of Digital Signage and an Item which is picked up

Whether or not the item has been purchased

WiFi RFID

＋ ＋ ＋ ＝

Verifying whether sales promotion affects purchasing

More Accurate Marketing

Electronic Receipts

Cameras Electronic Receipts

A camera that guesses age &

genderof visitors

19

RFID Tag/Reader

Implementation on products

Value Creation

High Cost

The Performance does not meet the requirements of users

・Improvement of Encode Efficiency

There is no fast and inexpensive method

・ Marketing

・ New service to consumer

The benefits of product manufacturers are uncertain

・Embedding tags in packages・Printed implementation

・Realization of 1￠ tags

・ Resistant to microwave・ Improvement of read accuracy

・Share of inventory information

Issue of RFID