Dollar Store Sees Dollar Signs in RFID

The receiving franchisee then downloads this advance shipping notice, via the Internet, from the central OMS server at Dollar Chest headquarters, and can verify the accuracy of the order using either a portal reader or handheld interrogator to read the EPCs on the cases and pallets it receives. The stores can also employ readers to check inventory of tagged boxes in the back of the store. An interrogator mounted at each participating franchisee's cardboard compactor takes a final tag read as the case is crushed, and, via the Internet the central OMS updates the stockroom inventory level to account for the empty box.

According to Labarces, the franchisor's and franchisees' investment in RFID hardware and software has made the process of receiving and shipping product at the Dollar Chests warehouses more efficient than it had been using bar codes—especially if the shipments are large, since the number of minutes saved increases with the number of pallets processed via RFID. Before the cases were tagged, he said, it took warehouse workers up to 45 minutes to process an order for shipment—now, he says, it can take as few as 6 minutes. For the warehouses, the tagging of inbound cases also speeds the process of adding the products to the warehouse inventory, and helps employees identify missing or erroneous orders more quickly than using the manual, bar-code process.

Using RFID, Labarces adds, also helps the participating franchisees decrease the amount of time spent processing the products they receive.

The benefits go beyond labor savings, however, according to Labarces. He told attendees that results from the company's initial pilot test of RFID technology showed that stock turnaround time on key products increased from 5.5 times per year to 6, indicating that more of the items were in stock more often in the stores using RFID and, therefore, sales of those items lifted.

In the long term, Labarces says, Dollar Chest hopes to work with its suppliers in Asia to begin tagging cases of goods at the point of manufacture. This would save warehouse workers in Canada from having to apply tags, and could help improve the order accuracy of shipments coming from Asia.