By Mary Catherine O'Connor

Apr. 1, 2006—Gillette, an ardent proponent of using radio frequency identification technology in the supply chain, believes the technology can also provide internal benefits. The company has been running an extensive pilot since 2003 in its packaging facility in Fort Devens, Mass., where Electronic Product Code tags are encoded and placed on cases and pallets of its Venus women's razors.

Sonoco, the packaging company that Gillette contracts to put its products into cardboard cases, applies RFID smart labels to the cases of Venus razors. Once a pallet of the cases is assembled, Sonoco affixes to it an RFID label encoded with a unique ID that links to the EPC on each case and the associated order from Gillette. The pallets are then brought through a tunnel that connects the packaging facility to the distribution center.

Although the adoption curve of RFID is driven by retailer requirements, the value of using RFID in warehouse management systems is clear.

As each pallet enters the DC, a portal RFID interrogator automatically reads the EPC encoded to the pallet tag and sends it to the Provia ViaWare warehouse management system (WMS) software that Gillette uses to operate its DCs. ViaWare compares the EPC assigned to the pallet with an advance shipment notice (ASN). If it finds a match, it automatically adds the contents of the pallet into the DC's inventory and then sends instructions to the workers specifying where the pallet should be directed. This process takes 5 seconds. Before the introduction of RFID, it took workers 20 seconds to receive each pallet of Venus razors because they had to manually scan several bar codes on the cases and pallet and make three keyboard entries to receive it into inventory.

When Venus razors are being prepared to ship out of the Fort Devens DC, an RFID-enabled forklift is used. By interfacing with the ViaWare WMS, the interrogator mounted on the forklift helps the forklift operator pick either full pallets or cases of the razors needed to fulfill an order. Once the pallets are collected or built, an interrogator mounted to a stretch-wrap machine reads all the cases on the pallet as it is being spun and wrapped. The WMS then verifies the order by matching the EPCs to the order being fulfilled. This verification process takes 20 seconds per pallet. The old system, which involved manually reading bar codes attached to the cases as they were picked and then manually comparing them with the order, took anywhere from 80 seconds to 20 minutes.

Once each pallet is assembled, it is brought through portal readers that send the tag data to ViaWare, which again verifies that the order is complete and that it's being loaded onto the correct trailer. This takes 5 seconds, half the time it took to verify pallets of Venus razors using bar codes.

In addition to achieving these time savings, which reduce labor costs, Gillette projects that the use of RFID will lead to increased accuracy over the manual practice of scanning bar codes in each step of the process. Based on its findings with this integrated RFID system at the Fort Devens DC, Gillette says RFID could provide more than 20 percent yearly return on investment in operational costs at each of its DCs.

"While the adoption curve of RFID is driven by retailer requirements, we're seeing the clear value of using RFID within our own four walls," says Paul Fox, Gillette's director of global external relations. An IBM study of RFID within a warehouse environment found that RFID could reduce picking errors and labor costs by 36 percent and reduce labor costs associated with receiving and checking goods into the distribution center by 60 percent to 93 percent.

George Spohrer, an executive with Crowe Chizek and Co., a consulting, risk management and technology services firm based in Indianapolis, says that too often companies miss the benefits of RFID. "Some people who have completed pilots focused only on tag selection, placement on pallets, etc. They didn't see business benefits because they skipped over the business process changes that should accompany RFID integration. So now they are starting to come back around, evaluate process changes, and are starting to make some of those changes so that RFID benefits them, not just their customers. If you can use RFID to process goods better, faster, cheaper than someone else, you might get a new customer."