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Chip Maker Tries 'Snack and Trace'

By using RFID to track shipments within its supply chain, KiMs, a Danish potato-chip maker, not only spiced up its sales but also cut the fat from its inventory and workforce.
By Farhat Khan
Even with the new bar code system, KiMs still had difficulty accurately tracking the locations of its pallets and recording the times they left a staging area or warehouse and arrived at their final destinations. One reason for this problem stemmed from the company’s dependence on the forklift and truck drivers to manually scan the pallets’ bar code labels. Sometimes the drivers would forget to scan a particular pallet or would fail to get a reading because of distance and line-of-sight requirements. Drivers
occasionally had difficulty finding a pallet’s bar code label, and when they did find it, their handheld bar code scanners worked only if the label was no more 750 mm away. Even when drivers successfully recorded a pallet’s bar code, the extra time needed to scan labels resulted in increased salary costs.

To fix these shortcomings, Jens Kjaer, logistics manager at KiMs, and his team searched for a way to improve the bar code system. “We were looking deeper into the EAN-UPC standard SSCC [Serial Shipment Container Code] bar codes in order to find an optimal solution for the lack of product control management,” says Kjaer. But the company had trouble finding a bar code solution that could identify and locate each pallet in the delivery process, given that bar codes need to be scanned manually and required a line of sight between scanner and label.

While seeking a solution to these challenges, KiMs also looked at upgrading its IT systems in order to provide the company with better access to operational data, not only within the organization but also within its supply chain. After conferring with its supply chain partners, KiMs decided that Microsoft’s Axapta ERP application would give the company a better handle on manufacturing, raw-materials procurement, sales order management and warehouse management. Aston Business Solutions, which is the sales partner of Microsoft Business Solutions, was chosen to implement the ERP system.

Coincidentally, Microsoft Business Solutions had been working on launching an RFID-based Axapta system, and it was seeking an innovative, visionary and midsize company to test it. Aston Business Solutions suggested KiMs as a potential candidate that met that criteria and, moreover, was facing challenges that RFID would help overcome.

Microsoft and KiMs met in September 2003, and both parties soon agreed to run a test of the RFID-based Axapta system. KiMs was interested in testing a technology, such as RFID, that would enable the automatic identification of the products and not require human involvement to read data.

Three months later, the roll out of the RFID system began. Marc Kamstrup Jepsen, the lead program manager for Microsoft Business Solutions Denmark, and Bjarne Schon, its director of supply chain solutions, worked with Jens Kjaer, KiMs’s logistics manager, and Jesper Toubol, KiMs’s IT manager, to analyze the context in which the RFID-enabled Axapta was going to be tested. The team decided that scope of the project was to tag the products on pallet level for the Danish market, which is 70 percent of KiMs’s total production, and to use KiMs’s warehouse at its corporate headquarters in Sonderso as the trial site.

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