Cisco And Intel Collaborate In Building The Next-Generation Supply Chain

Collaboration Between Cisco and Intel Enables EPCnetwork Infrastructure

HONG KONG, Sept. 27, 2005 – Cisco Systems® and Intel Corporation today announced a collaborative effort to support EPCglobal Hong Kong’s EPCnetwork initiative to bring end-to-end supply chain visibility to the Pan Pearl River Delta (PPRD) region. Building on their technology leadership and expertise, Cisco and Intel are developing Electronic Product Code™/ Radio Frequency Identification (EPC/RFID) enabled solutions for EPCglobal Hong Kong’s EPCnetwork infrastructure, which will connect manufacturers and logistics companies in the PPRD with retailers worldwide.

The collaboration is one of many programs underpinning the two companies’ allied vision of enabling organizations and consumers to improve the way they do business, interact and stay connected through innovative, standards-based solutions.

The EPC is a unique number that identifies a specific item in the supply chain. RFID is a method of storing and remotely retrieving data using small electronic tags that feature a silicon chip and an antenna. The EPC is stored on an RFID tag, which can be attached to or incorporated into a product or an item for shipment. Once the EPC is retrieved from the tag, it can be associated with dynamic data such as where an item originated or the date of its production.

The use of EPC and RFID together makes individual items and their movements throughout the supply chain more visible to all parties, who can use these technologies to retrieve pertinent product data quickly and easily at any time without human intervention or error. Among other things, this means that ongoing issues in inventory management, shrinkage, fraud and theft that retailers and distributors face can be addressed. For instance, an out-of-stock average of 9 percent for retailers worldwide translates into U.S. $69 billion in lost sales each year, and global counterfeiting adds a further U.S. $305 billion annually†. The use of RFID and the adoption of global standards can reduce this loss as it improves visibility for all parties throughout the supply chain network.

With more than 2,400 retail locations in 30 countries, METRO Group is the third-largest retailer in the world and sources a range of products from around the globe. “The adoption of EPCglobal standards for object identification and RFID technology is very important and will help METRO Group as well as the retail sector adopt next generation supply chain solutions much faster,” said Dr. Gerd Wolfram, managing director, MGI METRO Group Information Technology GmbH. “METRO Group operates six different retail brands and sources products from all over the world. This requires increasing collaboration, integration and visibility with our suppliers around the world. To help build a real-time digital supply chain from China to our warehouses and distribution centers in Germany, METRO Group is pleased to be joining EPCglobal Hong Kong’s EPCnetwork infrastructure initiative for the Pan Pearl River Delta region.”

The collaboration between Cisco and Intel reflects their commitment to delivering a next-generation supply chain solution based on the EPCnetwork infrastructure, which will allow manufacturers, logistics firms and global retailers to reduce operational costs and improve profitability through real-time data utilization and highly effective collaboration that enables better, faster and smarter decisions. Currently, an average of 11 weeks of inventory stock is held in warehouses and distribution centers around the world‡. Better supply chain management can reduce this considerably, thus helping to cut both the volume of items in inventory and the associated rental or fixed asset costs of storage and distribution.

As a demonstration of their commitment to linking the world’s leading manufacturing hub with the global retail market, Cisco and Intel are poised to provide manufacturers and logistics companies with EPC compliant solutions that allow users to realize the values of using EPC to track and trace goods in real time on the EPCnetwork. EPCglobal Hong Kong is the only organization in Hong Kong authorized to issue EPC Manager numbers and is championing the EPCnetwork initiative to create end-to-end supply chain visibility for PPRD-based suppliers.

“I’m pleased that Cisco and Intel have provided tremendous support to our EPCnetwork infrastructure initiative,” said Anna Lin, Chief Executive of EPCglobal Hong Kong. “In close collaboration with EPCglobal Hong Kong, Cisco and Intel will build on their technology leadership and expertise in delivering EPC/RFID-based solutions. The experience that Cisco and Intel exchanges with us will be valuable for the development and implementation of our EPCnetwork initiative for creating supply chain visibility that connects Hong Kong and Pearl River Delta manufacturers with global retailers.”

Based on the recently announced Cisco RFID Solution, the EPC intelligent network infrastructure will help enterprises to increase visibility into product information, thus improving business flow and lowering operating costs. The key elements of the Cisco RFID Solution include the Cisco Application Oriented Network for RFID, Cisco Services for RFID and the Cisco Wireless Location Service, which together deliver integrated RFID capabilities that support enterprises’ need to optimize available network capacity while simplifying RFID infrastructure deployment.

“As a global technology leader and an EPCglobal Inc. board of governors member, Cisco looks to work with companies to become EPC-ready by being actively involved in the EPCnetwork infrastructure project and offering RFID-enabled networking technologies and solutions,” said Mohsen Moazami, vice president of Retail-Consumer Products-Distribution at Cisco and a member of the Board of Governors for EPCglobal Inc. “If you work in one of the leading vertical industries where RFID applications will be deployed, it’s time to consider the impact of this technology on your network.”

Intel, together with leading technology companies, has also been heavily involved in helping retailers and consumer products manufacturers to deploy next-generation supply chain solutions based on RFID and mobile devices. Working with Cisco, Intel develops industry standard-based platforms that provide integration, collaboration, visibility and high performance through dual-core technology and convenient access using wireless handheld devices. Intel also supports global retailers, logistics companies and industry bodies with research and development and architectural guidance in deploying projects and pilots based on RFID technologies. For instance, Intel worked with METRO Group to build its Store of the Future as well as its 13,000-square-meter RFID Innovation Centre, which runs on Intel technology. The findings became best practices that can be used throughout the industry.

“The convergence of computing and communication, along with the advances of EPC/RFID, represent an inflection point for participants in the global consumer products supply chain,” said Jon Stine, Intel global industry manager, Retail-Consumer Packaged Goods. “Together with Cisco, Intel will collaborate to support EPCglobal Hong Kong’s EPCnetwork infrastructure, which will facilitate logistics companies, global retailers and manufacturers based in the Pan Pearl River Delta region to adopt EPC standards. Cisco and Intel are longstanding collaborators in the delivery of industry-leading retail solutions, and this initiative expands our collaboration to support Cisco’s creation of intelligent RFID networks optimized for a platform supporting business applications.”

About the Cisco and Intel Strategic Alliance
This collaboration is an expansion of an ongoing strategic alliance, under which Cisco and Intel collaborate on various technology and marketing initiatives. In addition to RFID, the collaboration includes bringing Business Class Wireless Suite and security solutions to enterprise customers. Cisco and Intel share a goal of developing and bringing to market technology solutions that will help businesses increase productivity and reduce the costs of managing their networks. As global business technology leaders, Cisco and Intel together are helping to transform businesses and industries worldwide, enabling the benefits of this new computing and networking model to be universally available today. For more information, please visit www.ciscointelalliance.com.

About Cisco Systems
Cisco Systems Inc. (NASDAQ: CSCO) is the worldwide leader in networking for the Internet. Information about Cisco can be found at www.cisco.com. For ongoing news, please go to newsroom.cisco.com. Asia Pacific news and information are available at www.cisco.com/asiapac/news.

About Intel
Intel, the world’s largest chip maker, is also a leading manufacturer of computer, networking and communications products. Additional information about Intel is available at www.intel.com/pressroom.

Cisco, Cisco Systems, the Cisco Systems logo and Cisco IOS are registered trademarks of Cisco Systems Inc. in the U.S. and certain other countries. Intel is a trademark or registered trademark of Intel Corporation or its subsidiaries in the United States and other countries. All other trademarks mentioned in this document are the property of their respective owners.

* Other names and brands may be claimed as the property of others.

† Source: Oat Systems, 2005. Unisys, Inc., 2004. EPCglobal, 2004. *Gerry Jastremski of Gillette in RFID Journal, March/April 2005.

‡ Source: Dr. Sanjay Sarma, MIT Auto-ID Center, 2005.