Jan 24, 2006Dick Cantwell said that following Procter & Gamble's acquisition of the Gillette Co., the two organizations combined their efforts to deploy radio frequency identification technologies based on the Electronic Product Code standard. Cantwell, vice president of the Gillette division and head of P&G's RFID efforts, said the company developed the "EPC Advantaged Strategy" to guide its implementation of the technology. "Our commitment to EPC has not changed," Cantwell said. "In fact, it has accelerated."
Cantwell told an invitation-only audience at the MIT RFID Academic Convocation that P&G has identified several areas where RFID can deliver benefits: better customer service, reduced product loss, fewer data inaccuracies and greater product availability.
As part of the EPC Advantaged Strategy, P&G identifies products that have high value, are fast moving and often suffer from high-levels of shrinkage. The business case for these products is strong, and the company reportedly intends to move forward with RFID deployments to get the business benefits quickly. Among the products in this category, dubbed "advantage," are Crest Whitestrips and Gillette blades and razors.
In the "testable" category, P&G puts products for which a return on investment might exist for tracking with RFID tags, but with more work required first to determine the potential benefits. Among those products are Swiffer floor sweepers and Braun appliances.
The final category is for "challenging" products. These are hard to tag because they have metal packaging or liquid contents, or the ROI is not clear for another reason. Such products include Pringles potato chips and Cascade dishwashing detergent.
Cantwell said the "lion's share of the opportunity is in the collaboration zone"—that is, applications involving a retail partner. These include promotion tracking, electronic proof of delivery, reduced inventory and improved working capital.
P&G and Gillette each launched pilots in 2005 to track promotions of products now in the "advantage" category. One pilot involved tracking promotional displays of Venus disposable razors. It was heavily advertised and promoted in stores, and the product was delivered in displays to retail stores. However, EPC data provided by the retail partner showed that one-third of the displays were put out on the sales floor late or not at all.
Another example involved a Father's Day promotion for the Braun CruZer electric shaver. Again, the promotion was comprised of significant advertising and in-store promotion. The program was time-sensitive because the aim was to get people to buy the razor as a Father's Day gift, and Gillette analyzed EPC data from 19 test stores in which the promotion was run. Only six of the stores got the displays out on the retail floor on time. Five stores set them up on Father's Day or after, while eight stores got them out between the target date and Father's Day. Gillette found that stores that put the displays out on time had 61 percent greater sales than those that got them out late.
Gillette also used EPC data to measure the effectiveness of the launch of its new Oral-B Pulsar battery-powered toothbrush. "Our research said advertising would generate strong consumer demand, and the results in all our premarket testing supported that," said Cantwell. "We worked with our retail partners, and they determined that the displays should be moved to the retail floor within 3.8 days of being delivered to the store. It took 8.8 days on average. The delay in getting the product to the retail shelves resulted in an average of 600 lost sales, or about $3,000. If you multiply that cross a retailer's entire chain, the lost revenue could be half a million dollars or more."
Based on the results of these pilots, P&G and its Gillette division are planning to roll out RFID applications for tracking promotions and new product introduction. In addition, Jamshed Dubash, Gillette's director of technology/auto-ID, will be speaking at RFID Journal LIVE! (May 1-3 in Las Vegas) about the benefits of using EPC to track promotions and the progress P&G and Gillette have made on their RFID deployment plans.
