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Walgreens RFID Deployment Announced

Walgreens is using RFID at its most advanced distribution center to make sure orders sent to stores are complete and loaded in the right truck in the right sequence. The largest drug store chain in the US is currently outfitting a second DC with the system, which will go online next year.
Sep 16, 2008This article was originally published by RFID Update.

September 16, 2008—Walgreens, the largest US drug store chain, has integrated RFID with its shipping, warehouse management and material handling operations at its Anderson, South Carolina distribution center to prevent shipping errors and track all products sent to the hundreds of stores it supports. The system includes 45 dock doors with integrated RFID readers that track more than 170,000 shipping totes and other reusable assets.

"The significant thing is that Walgreens is using RFID in the core of its systems and they vitally depend on it. There is no backup system," John Beans, vice president of marketing at Blue Vector, told RFID Update. Blue Vector worked with Walgreens to design and implement the RFID system. "If the system isn't running, they're not shipping."

The system has been running since last year but was only announced today. When Walgreens announced the Anderson facility's opening last June, it called it its most advanced distribution center and predicted it would be 20 percent more efficient than its previous-generation DCs.

"Walgreens has a long tradition of pioneering break-through technologies in the industry," Randy Lewis, Walgreens' senior vice president of distribution and logistics, said in the Blue Vector announcement. "Today, we're leading the charge to revolutionize our distribution center systems and processes to drive significantly higher efficiency, accuracy, and ultimately higher margins."

More than 40 percent of the workers at the Anderson DC have autism and other developmental or physical disabilities.

"Part of Walgreens' motivation for using RFID was to make their processes as easy as possible," said Beans. "What they discovered is that the best system for their employees with disabilities is actually the best system for everyone."

Walgreens has permanently attached passive UHF RFID tags to the reusable totes that are used to ship products from the DC to stores. When workers pick a product to fill an order, they scan the product's bar code as they load it into the tote. The scan associates the product with the tote, which has already been associated with a specific order. After totes are filled, they are tracked by mobile and conveyor-mounted readers as they move to the staging and shipping areas. Dock door portal readers automatically read the RFID tag as the tote is being loaded onto the truck. A Blue Vector edge manager is built into the reader to process tag reads and apply business logic to verify that the tote contains the correct items for the order, that all totes required for the order are present, and that totes are loaded onto the truck in the proper order.

"The edge manager has the manifest, so there is intelligence right there at the dock door," said Beans. "We're not piping all those reads across the network to a central server for lookup."

Blue Vector had the portals custom built to integrate its edge manager with a Motorola fixed-position reader. Motorola readers are also used elsewhere in the DC, and the totes include RFID tags from Avery Dennison that are permanently encoded with a unique serial number.

The system prevents loading errors and incomplete shipments, and requires less time and effort to document shipment details than the bar code-based processes used at other Walgreen DCs, according to Beans. Walgreens is not releasing any system results or benefit information, he said.

"This system doesn't tell you there's an error, it prevents them," he said. "Workers don't have to check anything off, they just have to load the truck. If they do it correctly there is no paperwork or system updating required."

Walgreens is currently installing an RFID system to support the same processes at its distribution center in Windsor, Connecticut, according to Beans. The facility is scheduled to open in 2009. The company currently operates 12 full-service DCs. It has 6,300 retail locations in the US and recently made a bid to acquire the 490-store Longs Drugs chain.

The Walgreens' RFID implementation manages internal distribution and is independent of any external supply chain or traceability requirements. It does not depend on the use of RFID tags on pharmaceutical products, which frequently has been suggested to provide track-and-trace and pedigree information (see Newest Drug Pedigree Proposal Highlights RFID). Walgreens' tote-tracking application is similar to the one recently announced by general merchandise retailer Manor, which also reads RFID-tagged totes at its stores (see Swiss Retailer Using RFID to Track Cases in Reusable Containers).
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