Parma’s RFID Lab Extends Logistics Pilot to the Manufacturer

Nov 29, 2012The University of Parma's RFID Lab launched a pilot last month that aims to assess the value of RFID-based data in reducing the incidence of perishable product shrinkage due to expiration, by using radio frequency identification tags from the point of manufacture to the trash compactors utilized at stores after products are put out on the sales floor. Participants—currently just a single manufacturer, Danone, and a lone retailer, Auchan—can share the cloud-based server data. The project is the third, and possibly final, in a series of RFID logistics pilots conducted by the university's RFID Lab under the leadership of Antonio Rizzi, the lab's founder and project coordinator, who is also a professor of industrial logistics and supply chain management. Unlike the RFID Lab's previous two RFID logistics pilots, the goal of the current project is to transition into permanent deployments.

The present project follows RFID Logistics Pilot II, held in 2011, which included retailers Auchan, Coop Italia and Conad, as well as manufacturers Danone, Lavazza, Nestlé, Parmacotto and Parmalat. During Pilot II, approximately 70 different types of perishable goods were tracked, using passive EPC Gen 2 UHF RFID tags applied to cases, from each retailer's distribution center to the store. According to Rizzi, the pilot found that by reducing the quantity of spoiled or expired products, the retailers were able to increase the sales of fresh food products by 1.75 percent (see Italian Study Shows How RFID Can Help Reduce Supermarket Overstocks).

This latest pilot continues on that model, Rizzi says, but also includes the application of RFID tags by the product manufacturer, Danone, which is attaching RFID labels made with Smartrac DogBone EPC Gen 2 passive ultrahigh-frequency (UHF) tags to cases of its yogurt products within its own warehouse. The tags are then tracked through Auchan's DC, to three of its stores and finally at the trash compactor as the empty boxes are destroyed, thereby indicating that the goods were sold.

While Pilot II tracked approximately 30,000 cases, Rizzi notes, Pilot III will include about twice that number during its first phase, and will track 110 different product types. Danone expects to tag approximately 60,000 cases for the three stores over the course of five months. The first phase of the third pilot commenced in October 2012, and is expected to continue until spring 2013, at which time—assuming the technology works well—additional manufacturers and retailers may opt to join for the launch of the second, larger phase.

For the current phase, Danone is applying the RFID labels to cases of yogurt products after they are packed at its warehouse, according to orders received from Auchan stores. Danone's workers utilize a Zebra Technologies RP4T mobile thermal-transfer printer to encode each RFID label with an ID number and then link that ID to the product's stock-keeping unit (SKU), as well as the manufacturing date for the goods packed in the carton. Danone is not reading the tags as part of its picking, packing or shipping processes, but sends an advance shipping notice to Auchan indicating which products are en route.

When the tagged boxes are received at Auchan's DC, they are directed to an RFID gate through which tagged cartons are moved. Each tag's ID number is sent via a wired connection to the project's middleware, provided by ID-Solutions, an Italian software firm spun off from the University of Parma. The software then forwards each tag's RFID number—along with that carton's product details, and a date and time stamp—to ID-Solutions' Electronic Product Code Information Services (EPCIS) software, which creates a record of when each carton of a specific product was received from the manufacturer. The system also compares the read data with a list of goods expected to be received (based on the advance shipping notice), and displays an alert on a dashboard in the event of a discrepancy, such as goods missing from an order.

At Auchan's distribution center, the cartons are then moved into cold storage until being shipped to the stores. Three of Auchan's stores, all located in northern Italy, are participating in the pilot. When tagged cartons or goods are shipped to stores, they again pass through the DC's RFID portal, thereby creating a record of that shipment in the software.

The goods are received at the store dock doors and are interrogated once more, and the EPCIS software then updates each tagged carton's status as received at the retail location. To track when goods are placed on shelves, the researchers installed an RFID reader at each of the three stores' trash compactors. Store employees remove the goods from the cartons, place those products on the shelves and send the empty boxes to be compacted, at which time the interrogator reads the tag a final time, in order to indicate that the products are now on the store shelf. Auchan's legacy point-of-sale (POS) system collects data regarding the actual sale date and time of the items packed in the boxes, and shares that information with the EPCIS system.

The EPCIS software can provide alerting to notify store employees when they should bring additional product to the shelf, based on the POS data collected. The software knows how many items have been placed on the shelf, based on the tag reads at the trash compactor, and the number sold, thanks to the POS information. In that way, it can calculate, for example, that only three items are on the shelf—a pre-set threshold that would then indicate more goods need to be retrieved from the backroom and placed onto the shelf. In so doing, the store is able to reduce the occurrence of unstocked shelves, which can decrease sales.

The RFID read data is also being shared with Danone, so that the manufacturer can view when its products were delivered to a particular location, and when they are being placed onto store shelves. In that way, the company can anticipate more orders.

The pilot utilizes a combination of Motorola FX-9500 and Impinj Speedway Revolution R420 fixed readers at the stores and DC, Rizzi reports. The DC's staff are also equipped with Motorola MC3190-Z handheld interrogators, enabling them to resolve any read discrepancies.