Oct 21, 2008Peter Wtulich and Jim Farmer, the CIO and director of distribution operations, respectively, of Pacific Coast Producers, expected that it would not be easy for their company to meet Wal-Mart's RFID mandate. "We have a horrible [RFID] tagging environment," Wtulich told attendees at last week's EPC Connection 2008 conference in Chicago, describing the $450 million California-based private-label packer of canned fruits and tomatoes. "It contains liquid, metal, large magnets [which can interfere with RF signals]," he explained. "So the first year, it was just ugly—like a 60-ton locomotive coming at us."
But by starting early and devoting resources to the project—which included setting up a closed-loop conveyor belt to determine the optimal tag type, label placement, RFID interrogator model and antenna placement for reading tags adhered to cases of its canned products—the company succeeded in meeting its 2006 tagging deadline. Eventually, Wtulich says, the company began reaping internal business benefits from its use of the technology.
Initially, the firm tested EPC Gen 1 inlays, which performed poorly, given the inhospitable environment. "Our initial read rates were 33 percent," Wtulich says. By determining the optimal tag placement on the cases, and by tweaking the reader antenna placement on the conveyors, the company boosted the read rate to the low 90s percentile. But this shot up to 99.7 percent with the use of EPC Gen 2 tags, he notes, which perform much better than the first-generation tags. "Now, we get 99.7 percent [successful] reads, but we ship with 100 percent [readability] by using a verification system," he says.
When describing how his company approached meeting the mandate, Wtulich said Pacific Coast Producers knew immediately that taking a slap-and-ship approach—that is, manually diverting shipments requiring RFID tags and applying them manually, by hand, rather than automating and integrating the process into its business—would be neither cost-effective nor scalable.
Instead, Pacific Coast Producers integrated the tagging process into its existing business steps. Originally, the company tagged only two stock-keeping units (SKUs)—and of those, only the ones bound for two Wal-Mart distribution centers. It has since increased that number to four SKUs bound for four DCs.
The cases bearing RFID labels then move past an RFID interrogator mounted on the conveyor system. This step is performed to verify that all of the RFID inlays can be read, and that they have not been damaged during the printing and encoding process prior to application. If the RFID tag embedded in a case's label cannot be read, that case is diverted from the packaging line, fitted with a new RFID label and moved past the conveyor's RFID interrogator a second time.
At the end of the packaging line, the RFID-tagged cases are palletized and stretch-wrapped, and a pallet tag is then affixed, by hand, to the plastic wrap. The EPC encoded to this pallet tag is associated with the EPCs encoded onto each case tag on the pallet. An RFID interrogator mounted by a dock door, through which the pallet is moved as it's loaded onto a truck, reads the pallet tag and confirms that the pallet has headed out.
Pacific Coast Producers uses dcLINK data-collection software from Data Systems International (DSI) to manage the RFID hardware, and to pull the order information from the ERP and link it to IBM's WebSphere middleware, as well as OATSystems' OATxpress software, which generates and manages the EPC data encoded to the tags. Once Wal-Mart receives the tagged shipment and its associated data is uploaded to the retailer's Retail Link database, OATSystems' OATaxiom software collects and analyzes that information.
Pacific Coast Producers utilizes OATaxiom to put the tag read events into business context, in order to leverage the added supply chain visibility that RFID enables. In 2006, for instance, the company used the software as part of a study to determine whether applying RFID tags to cases of goods helps improve product availability within RFID-enabled Wal-Mart stores. And last year, Pacific Coast Producers employed the software to support an effort to track the effectiveness of product promotions.
To conduct its product promotion study, Pacific Coast Producers first identified stores—out of those receiving its RFID-tagged cases—that it suspected had failed to comply with promotion schedules, based on low sell-through rates for the promoted products. The company studied RFID data from Wal-Mart that tracked the movements of the tagged cases and tagged product promotion displays in those stores (both in the back room and as the cases moved onto the sales floor and—once empty—to a box crusher). It then combined this information with point-of-sale and inventory data.
Consequently, the firm was able to determine which stores were not complying with the promotion schedule. At one store, for example, the staff was placing promotion product on the floor too early, causing those items to end up being out of stock prior to a promotion's completion. Pacific Coast Producers' sales staff subsequently worked with those retail stores to remedy the problems associated with poor promotion execution.
According to Wtulich and Farmer, using RFID has not provided benefits in terms of Pacific Coast Producers' own order and shipment management, because those processes were already honed. However, it did help the company to quickly resolve receiving discrepancies with stores, by making it easy to determine exactly when tagged shipments left the DC.
Another important benefit—albeit, one more difficult to quantify, they say—is the good standing that the firm enjoys with Wal-Mart, its largest customer, thanks to the effort it has put into tagging and improving product availability in the stores. Although Pacific Coast Producers does not currently tag any product for its other retailer customers, Wtulich and Farmer say they're ready to do so whenever those customers are.
