At Familia Sancela, RFID Reduces Shrinkage

By Claire Swedberg

The South American manufacturer of disposable diapers and other personal hygiene products uses RFID to track goods from factory to distribution center.

Familia Sancela, a South American manufacturer of disposable diapers, baby wipes, toilet paper, napkins and other personal hygiene products, is employing radio frequency identification at its plants in Colombia to provide 100 percent accuracy in inventory as the products are packed, stored and loaded for shipping. The company has been using the system at its facilities in Cajicá and Medellin since 2007, and installation is currently underway at a third plant and warehouse in Caloto.

One of Familia Sancela's customers, Colombian retailer Almacenes Exito, is considering requiring RFID labels on products shipped to its stores, and has been warning for several years that it might issue a mandate requiring suppliers to tag cartons destined for its stores. Familia Sancela has designed a system that would not only help it comply with that mandate, when and if it is launched, but also improve its own visibility of products as they pass from production to distribution.

Elkin Alonso Diez Arango

Familia Sancela ships out approximately 250 pallets loaded with its products each day. Until recently, the company relied solely on a manual method for tracking the manufacturing and shipment of its products. At both sites, the production plant is separated from the warehouse by a 5-meter-wide (16.4-foot-wide) passageway through which handcarts pass carrying pallets of goods. Trucks also park in that passage area between the two facilities. With the manual method, employees would count the number of cartons on the pallet, ensure the boxes matched the pallets' SKU and manually enter that information into the company's SAP system. The firm would then move the loaded pallet from the production plant to the distribution center.

The process of manually recording and inputting data was time-consuming and prone to errors, and because there was often a delay between when the pallet cartons were counted and when information was input into the system, the company found it difficult to track shipments in real time. Security was another problem. Products would often end up missing between the time the pallets were loaded at the processing plant and when they should have arrived at the warehouse. Goods were sometimes stolen, with thieves loading pallets onto trucks and driving them away. In other cases, pallets or cartons were simply misplaced, either at the plant or at the DC. Either way, the company was unable to identify the cause of the problem.

With the help of systems integrator and software provider InfoTrack (a partner of Intermec), Familia Sancela began implementing the RFID system in January 2007 with a three-month trial that led to a permanent deployment in April of that same year. Employees at the plant utilize Intermec PM4i RFID printers to create RFID labels, which contain EPC Gen 2 passive UHF tags, and attach them to cartons of products to be shipped, as well as to the pallets on which they are loaded. The pallets then pass a fixed RFID interrogator as they are moved by hand truck from production to the DC, says Elkin Alonso Diez Arango, Familia Sancela's supplier relationship manager, who oversaw the system's implementation.

Employees of Familia Sancela also wear badges with EPC Gen 2 RFID tags encoded with a unique ID number that links to data about that employee in the company's ERP system. Pallet tags are encoded with a SKU code and lot number, as well as a unique ID number.

When an order is placed, an employee loads a pallet and wheels it past an Intermec EF5 portal. The portal's RFID interrogators are not designed to read consistently. Instead, the company has installed heat sensors. When a sensor detects a certain rise in temperature, that is interpreted as a sign that someone is approaching the portal, and the sensor trigger is sent to the RFID interrogators to begin reading. At the same time, digital cameras constantly capture footage of the event as the employee, pulling the hand truck, proceeds through the portal.

Once the reader captures data from the pallet and carton tags, InfoTrack software running on a back-end server translates that information to alert management that a specific pallet and cartons are loaded and ready to be shipped to a retailer. The employee then has 30 seconds to move the pallet past a second Intermec EF5 portal at the warehouse entrance. If 30 seconds passes without a pallet read at the second portal, an alarm sounds and an e-mail or text message is sent to Familia Sancela's management, who can then view video footage to determine what occurred and take corrective action. In this way, Arango says, the company avoids the accumulation of pallets that might sit waiting without being transferred to the warehouse, as well as discourage theft that could occur near trucks, where the products are most vulnerable.

InfoTrack developed the software the company uses to locate the pallets and cartons within the plant and warehouse, as well as to receive alerts when the pallets are not moved within the expected time frame.

"There were several challenges that were presented to us for this project," Arango says. First, he had to sell the technology's benefits to his company's senior management, then proceed with what would be Colombia's first RFID installation for tracking products as they leave production and enter distribution. This was especially challenging, he notes, since it was InfoTrack's first RFID project.

To convince management of the benefits, Arango worked with several vendors to determine the best solution. "We researched successful cases around the world," he states. Familia Sancela also installed the system for the first three months within a limited scope, "so its complexity wouldn't go out of our hands and control."

Familia Sancela now attaches approximately 100,000 tags on pallets and cartons per month, Arango says. Visibility has vastly improved, he adds, and the company has achieved 100 percent inventory accuracy. The firm continues to expand the system with the intention of installing it at all six of its facilities in Colombia, Ecuador and the Dominican Republic.