Jun 24, 2015Many companies have difficulty dealing with change, but Interstate Batteries thinks change is essential. For 63 years, the company has been powering vehicles with its starting, lighting, ignition (SLI) batteries. Interstate sells more than 17 million SLI batteries annually through its distributor network of 300 wholesale warehouses that supply 200,000 dealers in the United States, Canada and other countries. The company also sells 16,000 other types of batteries for marine, commercial/fleet, motorcycle, lawn and garden, and other products.
Interstate Batteries is the No. 1 brand of auto-replacement battery in North America—a position that can be attributed, in part, to the company's "focus on making sure dealers are well supplied with the products they need" and its "very sustained legacy of innovation," says Bruce Hellen, director of business practices for the company.
Interstate realized it had to respond to changing markets if it wanted to remain the battery supplier of choice to dealerships, Hellen says. In November 2011, the company partnered with RFID solution provider Seeonic to develop a new, more efficient way to resupply dealers. The RFID initiative enables Interstate to improve its ability to help its dealers manage inventory, Hellen says, and support its goal of being a good environmental steward.
Since November 2013, five distributors, 29 trucks and 2,000 dealerships in five markets across the United States have participated in the project's validation phase. Interstate has RFID-tagged two million batteries, which are tracked on 2,000 RFID-enabled IBSmartRack storage or display racks. The solution eliminates the need to send personnel to dealerships to count battery stock, a process that was time-consuming and prone to human error.
The company is still determining when to end field-testing, but it is confident enough in the RFID solution that it is expanding the validation phase into six new markets (as yet unnamed) this summer. The validation phase has proven to the company that the system is very reliable, stable and scalable, Hellen says.
"RFID certainly has strong promise to be a solid foundation for tracking inventory of all types," even lead- and liquid-filled batteries that present some natural hurdles, Hellen says. "If you compare today to 30 or 40 years ago, those who clung to old distribution models have probably become so inefficient that they are out of business now. If you don't evaluate and improve your distribution model, you will get left behind by those who do."
Powering a Solution
Interstate Batteries considered several options for improving inventory management, and determined RFID technology was the most scalable and economical solution, Hellen says. But, he notes, there were two significant obstacles: There was no off-the-shelf solution and it would be hard to read tags on lead- and liquid-filled batteries. A program manager in charge of the project, supported by an evaluation committee and the company's executive board, determined that Seeonic fit their description of a development partner that had "an entrepreneurial spirit and a willingness to think out of the box," he says.
It took roughly 18 months to customize Seeonic's core RFID reader technology and develop a commercial device now known as SightWare. The SightWare devices, manufactured by ThingMagic, are placed on the top section of an IBSmartRack, available in seven sizes.
Each rack is equipped with patented Eye antennas, created by Seeonic. The antennas are placed in various locations to ensure maximum coverage and reliable reads of the EPC Gen 2 passive ultrahigh-frequency tags, which are encoded with a unique ID number. Smartrac developed RFID inlays that could be read on lead- and liquid-filled batteries, and Flexo-Graphics attaches the inlays to the labels it produces for Interstate.
On a preset schedule, the SightWare device powers up from a sleep state to take inventory of the batteries on the rack. The device decodes the tag data into SKUs, and then transmits the information via cellular connection—either GSM or CDMA—to a cloud-based controller called Seeniq, which manages the IBSmartRacks and processes the data for delivery to Interstate's View My SmartRack business application.
Dealers can have one or more IBSmartRacks in their stores, depending on store size. For stores with multiple racks, Seeniq can deconflict any crossreads, to send concise, accurate inventory information.
Interstate also equipped 29 trucks used by distributors with SightWare devices. The IBSmartTrucks enable faster, more accurate inventory verification of the 350 to 400 batteries each may be carrying at any time, Hellen says. The data is sent to the driver's handheld mobile computer via a wired connection.
SightWare and Seeniq are delivering data from IBSmartRacks in stores on a daily basis at a 99.8 percent cellular throughput rate and extremely high accuracy, Interstate reports. Roughly one million cellular connections have been made with the SightWare devices. "We have products in so many locations where we don't have access to Wi-Fi systems," Hellen says, "so there is no other way to export the data on a consistent, reliable platform other than cellular."
Interstate had to make modifications to antenna placement on the IBSmartRacks and IBSmartTrucks to ensure coverage. Additionally, there was so much data pumping in from multiple systems that the company experienced problems processing the inventory information each night until it settled on a compatible data protocol, Hellen says.
Powerful Benefits
Interstate Batteries uses the RFID data to understand the status of inventory at dealers, Hellen says. The View My SmartRack application gives distributors an automated way to get accurate visibility into dealership requirements, so they can make smart business decisions and better service their customers—and that, he says, enhances their relationships with the dealers. In addition, by knowing precisely what inventory needs to be replenished, distributors can optimize their truckloads and maximize service call outcomes.
Hellen emphasizes that while dealers benefit from the improved service, they haven't had to change a thing in their own operations. They do not have to maintain the IBSmartRacks or be involved in the automated inventory process. "We respect that dealers need to be engaged with customers," he says.
The IBSmartTrucks provide additional benefits. "We believe we are saving approximately 30 minutes per day per truck in inventory-management time," Hellen says. "You can imagine, if your intention is to load 400 batteries onto a truck, how easy it is to not be sure if you loaded 398 or 402 batteries. There are just inherent efficiencies in being able to electronically count large quantities of products."
One of Interstate's key goals is to leverage its RFID deployment to achieve a 30 percent reduction in fuel consumption, depending on the magnitude of the final rollout. And from what it's seen so far, the company believes it could achieve that, Hellen says. Distributors that have a better understanding of what's selling at various dealerships can use smaller vehicles to resupply stores and optimize distribution routes.
"In our test environment right now, we can see a path that would allow us to reduce fuel consumption," Hellen says. "As an environmentally conscious company, that's very appealing to us. We're focused on using RFID data to eliminate as many inefficiencies as possible throughout the distribution process, thus producing a positive environmental impact."
In the future, Interstate believes, it will be able to leverage RFID data to further promote environmental responsibility. Requirements from the U.S. Environmental Protection Agency regarding battery management are becoming more comprehensive. "We embrace that," he says. "The lead that acid batteries contain is a valuable material if used appropriately, but there are hazards associated with it. This valuable product should be managed with all appropriate safeguards. Elevating the system to track things better is simply the right thing to do."
Getting additional data from batteries via RFID reads could also help dealers better manage "this hazardous, heavy and perishable product, [so] they are free to focus on interacting with their customers," Hellen says. It may be possible, for example, to give distributors greater insight into the age of their battery inventory, so they increase their ability to resupply dealers with products that still have a timely shelf life.
What's more, using RFID data to manage the supply chain back to the point of manufacture is an important issue for Interstate, Hellen notes. "We are not at that phase of the program yet, to utilize the data upstream that far, but we can envision it," he says. "We understand there are many other uses of the data that could be developed in the future."
Meanwhile, Hellen believes that even before Interstate's expansion into six new field test markets, the company has one of the largest commercial Internet of Things RFID networks. "The value of good data can't be understated," he says. "So, however you can obtain that data, and the more reliable it is, the better the chance you have of making good business decisions."
Interstate's RFID initiative has been a multicompany project involving hundreds of people, for which Heller says he's incredibly grateful. "It's been a team effort in every way imaginable, and I am excited about its future and what else RFID technology can bring to this market," he says. "Our model has served us well for 60 years. But that doesn't mean not to strive for ways to improve.
"We needed something that was very flexible, could be deployed in thousands of locations around the country, was autonomous and accurate, and had great cell connectivity," Hellen says. "To my knowledge, there is no other device like SightWare—it is second to none for customers looking for the ability to track inventory remotely. It will be one of the biggest unlocks for RFID because, at the end of the day, the more automated the system is, the more value the end user is going to harvest out of it."
Interstate Batteries has put thousands of IBSmartRacks in dealerships, Hellen adds, and they have performed reliably for months on end. "The vast majority of our dealer base appreciates the quality of the product," he says, "and Interstate is exploring innovation and not resting on what it has accomplished in the past."
Photos courtesy of Interstate Batteries.