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Dollar Store Sees Dollar Signs in RFID

The Dollar Chest and its six franchisees are using the technology to improve order accuracy and visibility into available stock.
By Mary Catherine O'Connor
Nov 29, 2007What type of retailer has the most to gain from deploying RFID for automatic identification? Pose that question, and you'll get a range of answers, depending on whom you ask, but it's unlikely a dollar-store franchise would be among them. Nonetheless, Dollar Chest, a Montreal-based franchisor of retail stores selling products with a price tag of a dollar or less, has deployed RFID across its operations, which it says has improved inventory accuracy and helped increase sales.

Many retailers that sell high-value items, such as jewelry or consumer electronics, have tested and, in some cases, embraced RFID because it allows them to uniquely identify and track cases of goods as well as individual items. Since all items that Dollar Chest sells retail for a Canadian dollar or less, the franchisor isn't interested in tagging at the product level because that would erase its profit margins. Instead, it's applying tags to cases of goods that arrive at its two warehouse facilities in Montreal, then using the RFID labels to receive goods into inventory while verifying order accuracy against an advance shipping notice (ASN). Dollar Chest then uses the tags to confirm orders pulled for shipment to the six stores its franchisees operate.

Alex Labarces, CIO of Dollar Chest, told attendees at this week's RFID Journal LIVE! Canada 2007 conference that the company's RFID system, which uses EPC UHF Gen 2 tags and readers, has afforded the corporation better visibility into and control over the accuracy of its inbound shipments, as well as the shipments of product it then sends to its six franchisees. For the four franchisees that are reading the RFID tags on incoming shipments and utilizing the tags to track in-store inventory of cases, he said, the system provides better visibility into what they receive from the corporation, while also improving the accuracy of their inventory records.

Dollar Chest worked with RFID systems integrator Ship2Save to design and deploy the RFID system. When a shipment arrives at either warehouse, workers pull pallets into a staging area, where each case is verified against an ASN and tagged. The tagged cases are then reassembled back onto the pallets, with workers employing handheld readers to capture the EPC on each case as it is added to the pallet. Once a pallet is built, Ship2Save's Order Management System (OMS) software generates an EPC that is encoded to the RFID inlay embedded in a label used to identify the pallet. The pallet is then placed into inventory.

To fulfill an order from a franchisee, full pallets are pulled and mixed pallets are built up. Using either a portal RFID reader or handheld interrogators, workers collect all of the EPCs from a full order, and the OMS software generates an ASN containing the type and number of each product shipped, along with the EPCs of all tagged cases and pallets.

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