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Schiff Puts a New Spin on RFID Compliance

Vitamin manufacturer Schiff Nutrition International reads RFID smart labels on cases as they spin on a shrinkwrap machine, then uses the data to build EPC Gen 2 pallet labels to comply with Wal-Mart's RFID tagging requirement. Schiff Nutrition shared its experience, including implementation cost data and ROI prospects.
Feb 22, 2007This article was originally published by RFID Update.

February 22, 2007—Vitamin producer Schiff Nutrition International met its Wal-Mart RFID labeling compliance requirement with a twist -- literally. The company reads RFID labels on cases as they are spinning on a pallet shrinkwrap machine, and gets 100 percent read rates while doing so. The case read data is aggregated in real time to produce the EPC pallet label required for shipping to Wal-Mart.

"We think we're the first company to read RFID labels as they're spinning in the shrinkwrap machine," Schiff Nutrition International's business analysis manager Rod Farrimond told RFID Update. "Our challenge is we always provide mixed pallets to Wal-Mart. We tested various process points and determined this was the best time and place to read."

Schiff Nutrition supplies Wal-Mart with an average of 180 cases of vitamins, supplements, and nutrition bars each week, which is less than one percent of the total product volume it ships. It faced a January, 2007 deadline for Wal-Mart RFID labeling compliance, and began planning its system in April, 2006. Workers apply RFID labels to cases as they are picked for orders, and the company's non-RFID material handling system routes the goods for each order to a specific spur. When all cases for an order are picked, workers build the pallet and bring it to a shrinkwrap machine, where a stationary RFID reader identifies each case during the wrapping process.

Schiff Nutrition did extensive process analysis, testing, and equipment evaluation to determine the best method for it to label and read goods. Farrimond himself spent three days at IBM's RFID Lab to do testing and analysis. Access to the lab was a major reason Schiff Nutrition chose IBM as a service provider for the project. Professionals from IBM Business Services also provided extensive equipment and label testing.

"I can't estimate how much time we saved by having access to the lab and to IBM's knowledge," said Farrimond. "We couldn't have done all the testing that they did."

Farrimond observed that some reader and tag models performed better at the case level and others at the pallet level, forcing the company to make tradeoffs. The company decided to go with the components that provided the best performance on cases, because it needs to process more cases, and pallets are easier to read. Schiff Nutrition reports Wal-Mart's read rate for its products is 96 percent, which is considered successful.

Schiff Nutrition eventually selected RFID readers and EPC Gen2 Squiggle tags from Alien Technology, a Printronix RFID printer/encoder, IBM's WebSphere RFID Premises Server, and OATSystems' OATXpress software for filtering RFID data. Farrimond said the complete system cost $323,000 to implement.

Currently Schiff Nutrition runs its system purely for compliance, but Farrimond recognizes several additional uses that could provide internal benefits. The company's products are regulated by the U.S. Food and Drug Administration (FDA), which requires Schiff Nutrition to comply with a variety of Current Good Manufacturing Practices (CGMPs) related to lot control and traceability. RFID could help capture and share that data. Farrimond said the company could also use automatic RFID reads to replace labor-intensive bar code scanning to collect data for advance ship notices (ASNs), but the practice would not be cost effective now because less than one percent of the company's products are RFID tagged.

"Our ROI will be seen more in sales growth than in replacing bar code. Bar coding is not going away any time soon," said Farrimond. "If Wal-Mart can reduce out-of-stocks of our product, that will help improve our top line. We'll probably never be able to say exactly whether that occurred because of RFID, but we can say we have an excellent supply chain with one of our top customers, and we are positioned to grow."

IBM says the project is a good example of how small and midsize businesses can efficiently manage RFID projects.
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