Progress Software and BGN Pioneers Retail Automation With

Progress Software and BGN Pioneers Retail Automation With World’s First “Live” Item-Level RFID Deployment in an SOA Environment Mark Palmer Vice President & General Manager Apama Products

The Role of the Progress Family of Products § Open. Edge: § § § 2 Rapid time to market for business applications Apama: Real-time automation and inventory visibility Sonic: SOA-based connectivity for the distributed enterprise Easy. Ask: Turning browsers into buyers © 2006 Progress Software Corporation

Progress Software and BGN Pioneers Retail Automation With World’s First “Live” Item-Level RFID Deployment in an SOA Environment Selexyz Dutch Bookstore Jan Vink Chief Information Officer BGN (The Netherlands)

Selexyz largest bookseller in Holland 4 © 2006 Progress Software Corporation

Company Overview BGN § § § § § 5 #1 Bookseller in NL (18% market share) #2 Dutch internet bookseller 16 Large consumer stores, 26 campus stores 3 Customer target groups: • Consumers – 60% • Businesses – 10% • Students – 30% Annual sales: > $ 220 million (2005) Net profit: $ 4. 3 million (2005) 750 employees Shareholders: publisher, 2 VC’s, and the management Our oldest store dated 1753 © 2006 Progress Software Corporation

A Short History § 1998: Perfect year, shareholders decide to divest § Consultant advised to invest in ‘one group’ philosophy § Investments in: § § 6 • New software application • Central distribution warehouse • Remodeling two stores 2000: Almost bankrupt 2001 March: • No investments allowed • Focus on cash flow • Sells off bleeder • New management with retail knowledge 2002 -2004: Results improve (negative wk) • Reduction employees: 35% 2005: Best year in history (T 2 G) © 2006 Progress Software Corporation

To Manage Information in Real Time § Customer Satisfaction • • Increase Supply Chain Accuracy Link product - customer - internet Information improvement for customer Natural language, self-service capabilities § § 7 Inventory Leadership • Stock reliability • Tighten store, supplier and corporate inventory information… • Central infrastructure is ready for new business process improvements • Real-time management information © 2006 Progress Software Corporation

Changing Application Environment Change: Natural Search Processing Accidental Change: Event Stream Processing 8 Change: Transactional Processing BGN Legacy Systems Architecture Change: Open Database Processing © 2006 Progress Software Corporation

Changing Application Environment Progress Easy. Ask Progress Sonic ESB BGN Legacy Systems Progress Apama

Changing Application Environment Progress Easy. Ask Service Oriented Progress Sonic ESB BGN Legacy Systems

Extend the Business Case Radio Frequency Identification Stock Internet Brick & click Redesign & integration 11 Customers Individual marketing Self service Participation © 2006 Progress Software Corporation

Why RFID? § § § § § 12 Every single copy a unique identification By using kiosks customer knows in-stock position and location of book Exact location in each store always known Exact in-stock position near real time Very fast and simple receiving process Returns are send to the correct supplier Semi automated replenishment process Reduce out-of-stock Real time customer order process © 2006 Progress Software Corporation

Challenges We Faced Before We Started § All parties inclusive our own staff were § § § 13 skeptical Market claimed it could not be done Finding the correct partners We wanted to be fast Privacy sentiments Price of tags HF or UHF © 2006 Progress Software Corporation

Just Go for It § § § § 14 We attended the ‘RFi. D now!’ conference in NL, Oct 05 We were amazed that nobody jumped at it (opportunities) Books are simple, average price is high (justification) We outsourced distribution to one party: CB Sheer luck brought us Capture. Tech Salesmanship made Progress join in UHF Gen 2 came to the market on time We did not look at obstructions but oversimplified on purpose © 2006 Progress Software Corporation

Barcoding vs. Tagging New Situation: § Tag-ID is unique § Reliable stock § Link with CRM-system Existing Situation: § Barcode is not unique § Uncertain stock level § Operational focused Partnership between CB and BGN 15 © 2006 Progress Software Corporation

Integrating Supply Chain into Retail CB produces order CB shipment of the goods Store Receipt Check Stocking Store Shelves Exit check Locate Check-Out Security Customer special orders are tagged and held until pickup. Customer kiosks power RFID inventory search and location Through RFID tag, product and price details will be made available for the POS. Tag killed at POS RFID tag can be used to extend or replace EAS selexyz Centraal Boekhuis Order Shipment Receiving Stock RFID Tag is printed and linked to a book + check of the tag 16 Check-Out Customer Search & Notification Shipping note with RFID article identification will be sent electronically to receiver Received goods will be matched through RFID with the ASN Through shelf plan and RFID check the employee knows where to place a book. Special order pickup notice sent to customer © 2006 Progress Software Corporation

Store Receipt Check 17 © 2006 Progress Software Corporation

Apama: Benefits in the Event Driven Process § Apama transforms event signals § § § 18 (RFID receipts) into real-time business updates and opportunities Decreases manual error and labor savings in unpacking and sorting Directs ‘Special Order’ books to a holding shelf Identifies and addresses reconciliation errors immediately, for example: • Post-dated orders: when actual activity has been lost or no longer reconcilable • Receipts, overages, shortages reported or tracked within central application • Invoice matching with quoted costs and settlement © 2006 Progress Software Corporation

Stocking Store Shelves 19 © 2006 Progress Software Corporation

Customer Search and Notification 20 © 2006 Progress Software Corporation

Progress® Easy. Ask Search & Merchandising § § § 21 Natural Language Search Engine Text Search Engine Guided Search & Refinement Navigation Engine Advanced Merchandising & Marketing Manager Federated Search & Question/Answer Ultra High-Speed Data Store © 2006 Progress Software Corporation

Progress® Easy. Ask User Interface Experience Multiple Search Techniques (title, author, keywords, ID) Refinement Advanced Merchandising Relevant Results Generated with Easy. Ask Natural Language Query 22 © 2006 Progress Software Corporation

Centraal Boekhuis Open. Edge “Nobis” Back Office Application Open. Edge RFID Services BGN Central Books Tagged & Packaged Sonic Enterprise Service Bus Books Shipped to Store Info Advanced Shipping Notice Issued Easy. Ask Natural Language Search Web. Speed Customer Info Portal ASN Processing selexyz store Customer Self-Service Kiosk Shop Staff Inventory Access Sonic Enterprise Service Bus RFID Tunnel at store Capture. Tech RFID Gate Apama ESP ASN Reconciliation Customer Orders Await Pickup 23 Open. Edge “Atlas” Stock Tracking Store Shelves Cash Register © 2006 Progress Software Corporation

Pitfalls 1. It solves all your existing IT problems 2. Expectations to high 3. It’s a technological trick 4. It will automatically change 5. RFID solves your BP black holes 6. Smart shelving is the only RFID solution 24 © 2006 Progress Software Corporation

Changing How BGN Does Business The Old Way § Ad-Hoc Customer Self-Service • Customers need the help of employees for advice and guidance § Ad-Hoc Special Order Processing • Special order shipments not identified – shipped with general inventory • Special order handling is ad-hoc and errorprone § Inventory Identification is Estimated • Individual books not identified • Identification is by number of books shipped, validated only by random test § Estimated Inventory Management • Books unpacked by hand • 2, 000 books a day makes shipment validation impossible • Shipment errors are hard to detect 25 The New Way § Accurate Self-Service • Selexyz shoppers have real-time insight into the availability of a book • RFID tags will help customers and staff find individual books more easily § Automated Special Order Processing • Special customer orders and general inventory receipts handled automatically • Eliminates labor intensive ad-hoc process & improves shopper experience § Inventory Identification at the Book Level • Books are tagged and tracked at the individual level • Random tests eliminated § Automated, Accurate Inventory Management • Shipment from Centraal Boekhuis handled automatically • Errors handled immediately © 2006 Progress Software Corporation

Partners Involved 1. Centraal Boekhuis 2. Progress Software 3. Capture. Tech 4. BGN 26

Results for Now § § § § § 27 We opened the first smart store end of April 2 nd smart store to be opened beginning of October We processed 40, 000 books in a few hours Kiosk gives exact information on availability and location of titles If not on-stock: Order at kiosks Daily check on item level the receipt of books We scan the stock (manually) weekly Daily shrinkage is traced on item level Special orders (9% of business) are identified before they go to the shelf © 2006 Progress Software Corporation

Achievements § We will implement RFID throughout § § § 28 BGN in 2007 Reliability stock from < 60% to > 96% Additional sales growth: + 12% (order possibility) PR worldwide: Est. > $ 600. 000 Improved intake process: 100% checked (< 10 min) Daily shrinkage is reduced by 60% Costs are visible: Better ABC © 2006 Progress Software Corporation

Next RFID Project: selexyz dominicaner § Historical Building § Traditional Product § Innovative Technology § Results 2006: § Two ‘Smart. Stores’ launched (incl. security) § New ‘selexyz’ brand introduced § April in Almere § October in Maastricht § Fully automated § Every book in store will be tagged (100 k) 29 © 2006 Progress Software Corporation

2007 selexyz Plan § § § § 30 16 consumer stores upgrades to smart stores 80% of total stock tagged (> 2 million books) Retail store processes RFID-covered (incl. anti-theft) Brick and click concept activated Full natural search engine capability Automated stock replenishment fast movers Pilot: Loyal customer program based on RFID Concept: Develop smart displays © 2006 Progress Software Corporation

Progress Software and BGN Pioneers Retail Automation With World’s First “Live” Item-Level RFID Deployment in an SOA Environment Lisle Holgate Senior Director Easy. Ask Products

The Role of the Progress Family of Products § Open. Edge: § § § ce n Rapid time to market for business rie e applications Apama: Real-time automation and inventory visibility Sonic: SOA-based connectivity for the distributed enterprise Easy. Ask: Turning browsers into buyers ng pi S e u iq xp E op h n U 32 © 2006 Progress Software Corporation