Feb. 3, 2003 - Two years ago, Procter & Gamble decided to increase logistics throughput at a manufacturing plant in Spain. The plan called for forklifts to load 33 pallets onto delivery trucks every 20 minutes. The company invested in some new equipment, but it was clear that it also needed to revamp procedures for loading the pallets. Otherwise, the dock area would become a bottleneck.

There were already times when forklift drivers would run out of room on the dock for stacking pallets about to be shipped. That meant some pallets either had to be moved twice or production had to stop and wait for the loading dock to be cleared. To avoid these problems, the company decided to load the pallets directly on trucks, instead of staging them on the dock. The only problem was the pallets were being sent directly to customers. That meant P&G needed a way to guarantee that the wrong pallet would never be put on a truck. And the system had to be fast. There wouldn't be time to have people manually check and double check orders.

Speed and accuracy were critical to the new system

Adam Vilalta, a P&G project engineer, hit on the idea of using radio frequency identification (RFID) to identify the pallets. He and a team of people from operations, engineering, and IT devised a cost-effective system that identified pallets with 100 percent accuracy, enabled the plant to shift to direct loading, and saved money by reducing the number of forklift truck drivers needed. The system has been up and running since last May. "I'm very satisfied with the results," says Vilalta. "But the one that really counts is the distribution center manager, and he's very satisfied."

P&G has been a pioneer in the use of RFID. The company was a founding sponsor of the Auto-ID Center and has played a key role in the center's field test of the technology needed to track Electronic Product Codes. That technology is still under development and may not be adopted for a couple of years. The project in Spain shows how P&G is using existing RFID technology to enhance its operations today.

RFID was actually not Vilalta's first choice. First, his team looked at a bar code scanning system that had been developed by P&G for its SAP warehouse management system. A forklift truck operator would download to a wireless, handheld bar code scanner a list of pallets that he had to load. He would then scan labels on pallets coming off a conveyor from an automated warehouse, pick up two pallets at a time, and bring them to the dock. There, he would scan a bar code identifying the dock. If those pallets didn't belong on the truck at that dock, the system would sound an alert.