Oct 19, 2011Alpha Baking Co. has begun employing passive EPC Gen 2 RFID tags to track the shipping and return of some of the trays in which its bakery products are transported, thereby affording it visibility into how long it takes for the trays to pass through its depots and routes to customers, as well as when particular trays do not return. By using RFID technology, the company is able to identify on which routes trays end up missing, and thus take corrective actions in order to ensure that the trays return in a timely manner. Alpha's reusable-tray provider, Orbis, is providing the baking company with trays fitted with passive ultrahigh-frequency (UHF) EPC Gen 2 labels, provided by The Kennedy Group, which also supplied Alpha with RFID readers, ePReusable software and integration and installation services. The solution was first deployed as a pilot in January of this year, and was trialed for approximately nine months before Alpha opted to make the installation permanent.
Without an RFID system, a company has little visibility into where trays are located, or which customers have them, and thus can not ensure that the trays are returned, says Bob McGuire, Alpha Baking Co.'s VP and director of logistics, as well as the chairman of the American Bakers Association's Fleet and Distribution Committee. Although each tray is valued at only about $5, the company utilizes more than 350,000 trays, so the cost of replacing large number of lost trays can be significant. What's more, the company incurs a high number of associated expenses when it lacks a sufficient amount of trays at specific locations and times.
Based in Chicago, Alpha Baking Co. is one of the United States' largest providers of specialty bakery items, selling its breads, rolls and buns in 11 Midwestern states, with four bakeries and 15 depots through which the products are transported before being driven by truck to restaurants, stores and other customers. At the bakeries, workers load the company's products onto reusable plastic trays that are then stacked on pallets. When the loaded pallets arrive at one of Alpha's depots, the trays are often removed from the pallets, and are then loaded onto trucks for delivery to customers. Each route driver later returns to the customers' sites to retrieve the empty trays and return them to the depot. The empty trays are then transported back to the bakeries for reuse. The company must purchase additional trays when the numbers dwindle, as some simply never return—though the firm previously lacked a means of determining the exact number that failed to be returned, or the point at which they went missing.
There are many opportunities for trays to become lost, McGuire says. Drivers from other bakeries or food companies may accidentally pick them up, they may be discarded when a driver fails to return promptly, or they may be stolen—thieves often take plastic items in order to sell them to recycling centers. Therefore, Alpha sought a system that would enable it to know where trays were sent, the party responsible for them, and how long they took to return—or if they were never returned at all.
The solution consists of RFID readers installed at portals through which loaded trays on pallets are rolled on their way to a truck. Two UHF Gen 2 passive RFID tags are attached to each plastic tray, according to Patrick Kennedy, The Kennedy Group's VP of marketing and sales; to date, approximately 10 percent of the company's trays have been tagged. Now that the pilot is complete, says Bob Klimko, Orbis' director of retail supply chain marketing, the baking company intends to continue tagging all of its new trays, with the goal of achieving 100 percent RFID coverage of the trays once all old, non-tagged trays have been replaced due to wear or loss.
The four bakeries have installed interrogators at a variety of points through which the trays pass (such as at loading docks), with the smallest bakery installing just a single reader portal, and the largest deploying 16. In the software, Alpha Baking Co. links the RFID number on the pallet or cart tag with the tray's destination—for instance, the particular depot to which it will be shipped. In the case of a completed order of trays on a single pallet that will not need to be broken down at the depot—but rather shipped to just one customer—the route number and the identity of the customer are also saved in the software, along with the pallet's ID number. As the pallet is rolled through the portal, the ID number of its "ship-to" tag is married to each tray's ID, thereby indicating where that tray is destined. The system then knows the time and date at which specific trays left the facility, and where they were headed.
Upon being returned, the empty trays pass through the portal once more, thus indicating that they have been received.
With this data, McGuire says he is able to determine which depots—and, in some cases (in the event that an order is placed allowing the warehouse staff to load an entire pallet of trays designated for a single specific route), which drivers—are responsible for losses or delays. The results, he adds, have been surprising.
"We've learned the amount of time it takes for returns, in general, was longer than we'd theorized, and that has a very negative impact on tray utilization," McGuire states. When trays are not returned in a timely fashion, additional trays must be purchased. What's more, he says, "We found the areas where we thought we'd had problems weren't as bad as some other areas." The delays and losses, he determined, were concentrated among specific depots and routes. In fact, he adds, about 80 to 90 percent of shrinkage occurred along 10 percent of the shipping routes. In some cases, he has been able to follow up with the drivers of those routes, learn the cause of the problems, or gain the drivers' assurance that the issues would be addressed—and he has already seen an increase in the speed and frequency of tray returns, he says, for some of those drivers and routes.
"We believe there is a return on investment," McGuire says, though his company has yet to calculate the amount of return that it has achieved. The firm is continuing to examine how it can best utilize the system's data, he says, noting that the solution "will only be as good as what we do with the data."
The solution that Orbis developed with The Kennedy Group for Alpha will now also be marketed to the reusable tray company's other customers, Klimko says. "We found many of our customers were having problems with asset loss," he states, "so instead of just ignoring the problem, we decided to get together with The Kennedy Group for the RFID technology."
"Our long-term plan," Klimko adds, "is to roll it out for the industry," with The Kennedy Group providing the RFID hardware, ePReusable software and integration and installation services, just as it did for Alpha Baking Co.
A measurable sign of the baking company's successful use of the system, Klimko notes, occurred on Labor Day—a holiday on which bakeries typically receive extra orders, and must thus order larger stock of trays. For the first time, Klimko says, "We didn't have any orders from Alpha."
