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Wells' Dairy Milks RFID for Benefits

The nation's largest family-owned dairy-products manufacturer not only met Wal-Mart's mandate, but also developed an RFID system to drive improved performance and profits.
By Samuel Greengard
Jan 15, 2007—Balancing tradition and innovation is essential for Wells' Dairy, the nation's largest family-owned dairy-products manufacturer. While the LeMars, Iowa, company strives to maintain high-quality standards for its ice cream and other dairy products, it also needs to leverage information technology to cope with pricing pressures in the intensely competitive dairy industry.

Thus, when Wal-Mart mandated that its top 100 suppliers adopt radio frequency identification in its supply chain by January 2005, Wells' Dairy—which falls into that category—recognized that by extending the technology beyond the tagging of cases and pallets, the 93-year-old company could improve inventory management, boost quality control and gain greater insights into its production and supply-chain practices. "We developed a business case, and it demonstrated that RFID offers significant benefits," says Brad Galles, Wells' process-controls and electrical-engineering manager.

Wells' Dairy built a tagging system for cases and pallets of ice cream to comply with the Wal-Mart mandate. But instead of stopping there, the supplier turned to Rockwell Automation to develop an RFID solution that could pull data from its production-line control system and provide information about the specific location of a case or pallet within its facilities. "It offers a window into our production process," Galles explains.

Wells' Dairy rolled out a pilot study in October 2004, which ultimately proved the feasibility of the technology. Along the way, the company overcame an array of obstacles, including attaching tags to 22-degree ice cream pails and high tag failure rates caused by difficult environmental conditions. Within the next few years, tag prices are expected to drop from the current cost of 15 cents each to roughly 5 cents apiece. Assuming this happens, Wells' Dairy is poised to deploy the system throughout its production facility, improving productivity and cutting costs. RFID will help the company reengineer its supply-chain processes and gain greater visibility into production.

From the outset, Wells' Dairy viewed RFID as a catalyst for making business-process changes that could improve internal performance. But developing both the RFID tagging system and a system for integrating the data into its IT infrastructure required a good deal of research and experimentation. When Wells' Dairy began looking into adopting an RFID solution in June 2004, the idea of tracking ice cream tubs was new and untested. Despite this, Wells' Dairy aimed to complete the pilot project by the January 2005 Wal-Mart deadline to ensure that both systems worked together seamlessly.

Galles approached the initiative with the mindset that the Wal-Mart RFID mandate wasn't so much a problem as an opportunity to leverage information technology for internal gain. To that end, he began formalizing a strategy. Initially, Galles met with internal engineers and IT staff, as well as representatives of Rockwell Automation, to solicit ideas and map out the program's scope and parameters. He also turned to various industry suppliers to gather information about RFID tags, interrogators and automation control systems. "We were starting at ground zero," he says.
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