Annin Puts ROI on Hold

Annin first became interested in RFID in 2004, in an effort to save labor costs by having employees use RFID instead of scanning bar codes. Expecting most large retailers to issue RFID mandates within three years, the manufacturer wanted to have the technology available to protect its existing customer base and potentially win new accounts. In addition, Annin imagined RFID could eventually provide better control of its inventory, as well as reduce the time spent confirming to retailers that their goods were shipped.

At the time, Annin's SAP systems integrator, CIBER, was looking for a reference customer for an RFID project, and the two teamed up to design and implement an RFID system for the small business. Although Annin produces 10,000 different flags and flag accessories, the firm is still considered a small business, based on its annual sales. In the original business case it used to justify its investment in RFID, Annin calculated that using the technology would improve shipment accuracy, thereby reducing retailer chargebacks.

Since so few Wal-Mart stores are presently RFID-ready, Smith says, Annin opted not to go through the additional effort and expense involved in using the RFID system to reduce chargebacks. He states that Annin will follow Wal-Mart's rollout plan and ultimately determine, at a later date, when to pursue and enhance its present system.

"At the time our project began," Smith recalls, "there were numerous nuances that restricted us from integrating RFID into our order reconciliation process." For now, Annin primarily employs RFID to satisfy the Wal-Mart mandate, placing RFID labels on master cases containing unit boxes during the last production step—packaging.

Based on a paper work order, an employee uses the computer system and a Zebra printer to encode the required number of EPC Class 1 Gen 2 RFID tags. Containing only a unique ID number, each tag is assigned to a particular order in the computer system. Alien Technology inlays, produced by the Kennedy Group, are embedded in a label measuring 2 inches by 4 inches, printed with a bar code and such human-readable information as the tag's EPC number and the EPC trademark. A worker paper-clips an RFID label to each delivery document, then hands the stack of papers to an employee packaging orders.

After being pulled from the warehouse shelves, the order is moved to a work station containing a bar-code scanner. As the employee manually scans each carton's bar code to verify against the order, the specific RFID tag is applied to the master case. The worker visually verifies that the label is correct by matching the global trade identification number (GTIN) from the RFID label to the existing, linear bar-coded GTIN printed on the carton's label.