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Greek 3PL Sees Major Benefits at All-RFID Warehouse

Greek 3PL Diakinisis has elected to tag all pallets at a major distribution center to facilitate shipment handling. RFID-enabled putaway, picking, and shipment verification operations have reportedly reduced shipping errors and related costs by 80 percent, reduced overtime expenses 20 percent, and provided other benefits.
Jan 28, 2008This article was originally published by RFID Update.

January 28, 2008—Diakinisis, the largest third-party logistics (3PL) provider in Greece, is using RFID to manage all pallet operations at a major consumer goods distribution center. The 25,000-square-meter facility has RFID tags beneath the floor to direct automatic guided vehicles (AGVs) to picking and putaway locations, each of which has a permanent RFID tag encoded with the location ID. Diakinisis applies an RFID smart label to every pallet in the facility, and tracks them with forklift-mounted readers, dock-door portals, and handheld readers. The company uses RFID purely to drive its internal systems; no products that pass through the facility need to be tagged to satisfy any compliance requirements.

"This is a truly integrated system, perhaps the first-of-its-kind 3PL installation," said Ronny Haraldsvik, vice president of marketing and industry relations at Alien Technology, which announced its involvement with the system today. "Diakinisis implemented RFID so they can know at any time where any pallet is for any customer."

The facility tracked between 300,000 and 400,000 pallets last year after becoming fully operational, according to Haraldsvik. He said Diakinisis reported numerous operational improvements and benefits, including:
  1. An 80 percent reduction in shipping errors, plus an 80 percent reduction in shipping costs related to error reconciliation;
  2. 25 percent reduction in pallet putaway time;
  3. 20 percent reduction in overtime.
"The project's focus was to achieve 100 percent traceability in the incoming pallet shipments," Nikos Koromilas, director of executive operations and administration at Diakinisis, said in Alien's announcement. "We soon realized that RFID could be expanded to include additional benefits: using shelf tags to verify use of the correct storage location to automate control of outgoing shipments."

Diakinisis began piloting RFID in 2006, and after encouraging results, went fully operational with the system in mid-2007, according to Haraldsvik. He said the company did not complete a formal return-on-investment (ROI) analysis, but learned enough from the pilot to commit to the technology. Business Effectiveness, an RFID integration and consulting firm in Athens, Greece, worked with Diakinisis to design and install the system.

Alien's Gen2 M tags are embedded beneath the facility's concrete floor to guide AGVs equipped with RFID readers to specific storage locations. Each warehouse rack and shelf location has its location code encoded in an Alien Squiggle tag that is encased in a special housing to minimize interference from the metal racks.

The location tags are read every time pallets are placed or removed from storage. Forklift-mounted RFID readers automatically capture and record the pallet ID and location code to build an accurate storage record. System software dispatches forklift drivers or AGVs to specific locations to pick products for orders. In the shipping area, assembled orders are passed through a portal reader, which checks the pallets against the order to make sure there are no missing or extra products. Several handheld RFID readers are also used for miscellaneous operations.

The facility handles products for multiple customers, but Diakinisis is not disclosing which customers' products pass through its RFID-enabled facility. The customer list on Diakinisis' site includes several major consumer products manufacturers including Nestlé, which is the world's leading packaged food supplier.

The Diakinisis facility stands out among other warehouse and distribution center RFID implementations because it relies exclusively on RFID for pallet identification and for the volume of goods processed there, Haraldsvik said. It is also notable because there are no customer requirements that compel the RFID tagging.

US dairy food supplier Daisy Brand recently announced it was tracking all of its pallets with RFID (see Daisy Brand Expands RFID Use, Asserts ROI), but many of its products require tagging for Wal-Mart. Imperial Sugar also announced it is transitioning to tracking all pallets with RFID (see RFID Just Icing for Imperial's New Pallet Program).

A common thread in these programs is that the companies consider it more efficient to use a single RFID system to manage pallets rather than a combination of RFID, bar code, and other legacy processes. Portuguese bookseller Byblos Amoreiras has applied this principle at the item level, using RFID instead of traditional EAN/UPC bar codes to manage all merchandise at its flagship store in Lisbon (see World's Largest Item-Level RFID Application Launches).
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