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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
A financial benefit of the pilot project for KiMs was that Microsoft paid the amount of US$275,000 for running the test, which covered the costs of the RFID tags, readers, the development of RFID application in Axapta and system integration. The reader, including its cables, antennas and sensors (due to EU regulations, the readers stay turned off most of the time; light sensors activate the readers whenever a forklift passes by), cost $5,000; each tag cost 75 cents. So far, 17,000 tags have been applied, and KiMs is expected to order 30,000 more tags, although not all pallets are being tagged at this stage of the project, says Schon, of Microsoft Business Solutions. Because KiMs’s downstream supply chain partners have not yet deployed
their own RFID systems, the tags are not being reused, leading to a loss of the tags once the pallets reach the retailers. But this situation could be corrected, says Schon, by involving the supply chain partners so they can also benefit from the tagging of pallets.

KiMs’s Kjaer says that a major benefit of the RFID system is the real-time information management it provides. Although KiMs still cannot quantify that value five months after the pilot’s roll out, the improved visibility in the supply chain has reduced the risk of shrinkage and enabled the tracking and tracing of the products in the delivery process. Another advantage of the RFID tags is the trimming of inventory levels at the distribution center due to increased data accuracy, improving the quality of operations, reducing out-of-stocks in retail stores and cutting labor costs related to shipping and record-keeping. With more accurate information on inventory and shipping, KiMs can better plan its production and related processes, which facilitates better service to its retailer customers. Not only can KiMs fulfill sales orders on time due to accurate knowledge of its inventory, the company has also improved its demand forecasting by having access to information about which products are being sold most to which retailers in a certain geographical area.

At a strategic level, Jorn Tolstrup, CEO at KiMs, sees many benefits of having initiated an RFID implementation at a time when large Danish retailers are still looking at the RFID technology. He believes that being an early adopter of RFID has given KiMs a competitive advantage.

“We are the leading manufacturer of chips and snacks and in growth at the export market,” Tolstrup says. “We have achieved that position by being good at predicting future customer and market demands. Therefore, it is important for us to be aware of the latest technologies. In the future we can expect retail outlets without human personnel at the point of sales, where only RFID technology registers the transactions. Only by adopting the technology now can we evaluate the benefits and limitations of RFID technology for future use. KiMs is taking a step into the future supply chain management by having applied RFID to its existing supply chain applications.”

Farhat Khan is a Danish freelance writer.

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