RFID Warehouse Solution Delivers ROI Within Months

By Bob Violino

Mission Foods is tracking reusable plastic trays at the food supplier's Texas warehouse to reduce loss, and plans to roll out the RFID system to its 33 other U.S. facilities.

Reusable plastic trays that cost $8 apiece might not sound like vital assets to a company, or items that need to be tracked carefully. But each year, Mission Foods, an Irving, Tex., supplier of taco shells, tortillas, wraps, salsas, snacks and other food products, loses thousands of these trays—at a cost of approximately $3.5 million.

Food products come into Mission Foods' U.S. warehouses from its manufacturing plants on the plastic trays, which then go out when Mission Food's independent distributors pick up orders. The company did not have good control over the number of trays coming and going, and they were often misplaced or stolen—or not returned by distributors. "Plastic is a commodity in the street," says Eduardo Valdes, the VP of MIS at Gruma, a company in Monterrey, Mexico, that owns Mission Foods. Local authorities in Southern California, for example, recently called the company to notify it that more than 250 trays had been found in a location that was processing plastic items.


Food products come into Mission Foods' U.S. warehouses from its manufacturing plants on plastic trays, which then go out when the company's independent distributors pick up orders.



Mission Foods is one of the world's largest producers of corn flour and tortilla products, providing nearly one-quarter of all tortillas sold throughout the world. The company operates production plants throughout the United States, as well as in Europe and China.

In 2009, the firm's managers decided they needed to halt the loss of trays, and set out to find a technology solution to the problem. "We were looking for a system that wouldn't create extra work for our warehouse personnel," Valdes says, "something that would follow the natural picking and shipping process, but that would tell us who is taking the trays."

After evaluating several options, the company deployed an RFID-based tracking system from Intermec at its warehouse in Dallas, Texas, in December of last year. "It took us four months to test and implement the system," Valdes says. Among other benefits, the system enables Mission Foods to keep tabs on which independent distributors are removing trays from its warehouse at a given time, as well as which are returning them, thereby providing greater accountability for missing trays.


By replacing the cartons with returnable plastic trays, the company hoped to save money, with RFID helping to ensure that the trays are returned.



While Mission Foods was testing the RFID system with the plastic trays used to transport heavier products, such as tortillas, management opted to replace the non-returnable carton containers used to carry lighter items—tortilla chips, for instance—with the returnable plastic trays. The carton containers cost about $1 apiece, Valdes says, so "we were basically throwing a dollar away" each time such a container was used.

By replacing the cartons with returnable plastic trays, Valdes explains, the company would ultimately save money. But the key to making the investment work was ensuring that the trays would indeed be returned to the company—and that's where the RFID solution would be a huge help.

How It Works


The system includes three fixed RFID readers, placed strategically within the 150,000-square-foot warehouse. One is located near the shipping area, where forklift drivers leave the facility on their way to the trucks. A second is near the receiving area, where empty trays are returned after use. And a third, situated toward the middle of the warehouse, is employed for both receiving and shipping when there is especially high traffic at either of the other areas.

The solution also includes reader software, four RFID printers to encode the labels and two types of passive Gen 2 RFID tags—one with a permanent adhesive and another with a regular adhesive. Mission Foods purchased more than 250,000 labels with permanent adhesive, to be applied to the trays. The company also uses, on average, more than 10,000 labels with regular adhesive per month, which are temporarily applied to pallets used in the warehouse.


Mission Foods purchased more than 250,000 labels with permanent adhesive, to be applied to the trays.



Packaged food products are picked and loaded onto the RFID-labeled plastic trays. The trays are then loaded onto pallets, and an RFID tag, indicating the independent distributor number and the order number, is encoded by the Intermec printer and applied to the pallet. The reader software associates the pallet and tray numbers.

As a forklift drives though the warehouse and down a corridor prior to loading the route trucks bound for distribution centers, an Intermec reader records both the pallet and tray numbers. When the vehicles return to the warehouse, the trays are processed through an inbound portal, to reconcile the trays per route. The interrogators are positioned based on the flow of pallets into and out of the warehouse, located in an area near the docks by which the forklifts must drive before unloading the empty trays in the warehouse.

As is often the case with tagging assets in a warehouse environment, one of the greatest challenges Mission Foods faced in the implementation involved determining the best tags to affix to the trays. "We tried a couple of rigid ones [from Intermec], but they were more expensive and hard to install," Valdes recalls. Mission Foods discussed the problem with Intermec, which recommended a tag that is weather-resistant and has an adhesive that, with time, gets stronger and more difficult to remove.


The trays are processed through an inbound portal, to reconcile the trays per route.



Another challenge Mission Foods faced, once the system was live, was identifying good reads from bad. For example, when a tray was located near an area in which an RFID reader was placed, the device might recognize the tray as having passed through the portal, even though it was still in the warehouse. "We had to implement logic in our reports," Valdes states, "where if a tag is read multiple times during a day and in a short period of time, then it means it is sitting nearby, and we need to ignore [those reports of] a tray leaving the warehouse or coming in."

Mission Foods now collects information from the RFID readers and processes it daily on a server, in order to generate reports for better control of the trays. The reports are developed internally by Mission Foods, using Microsoft's SQL Server Reporting Services, a server-based reporting platform that provides reporting for a variety of data sources.

According to Valdes, processes within the warehouse have not changed much as a result of the RFID implementation. "This was one of the objectives," he says, "so we don't have to train anyone on doing something different."

The Benefits


The RFID system is helping Mission Foods improve its control over the original plastic trays. Valdes says it's too soon to determine exactly how much the company will save from avoiding losses of the plastic trays, though he expects the savings to be significant.

The system has also helped make the move from non-returnable carton containers to returnable plastic trays cost-effective. The new trays cost about $7 each, Valdes says. Since the original cartons cost $1, the company determined that it needed to reach seven turns with each new tray in order to recover its investment.


The interrogators are positioned based on the flow of pallets into and out of the warehouse, located in an area near the docks by which the forklifts must drive before unloading the empty trays in the warehouse.



"Right now we are averaging 20 turns per [container]," Valdes says, since the new containers were first used in December 2009. He credits the RFID system with helping to ensure that distributors return the containers, noting, "Also, our product is more protected since [the container] is more resistant to rain and moisture."

The savings on the elimination of cartons is measurable, according to Valdes, and helps the company evaluate the RFID solution's worth. The system, including readers, tags and software, cost about $100,000, he says. "So far, we have saved close to $500,000 this year in carton boxes," he states, "so the return on investment is basically within a few months."

What's more, Valdes adds, by not having to worry about missing assets, Mission Foods' management can focus its attention on finding additional ways to enhance warehouse operations and improve the customer experience. For example, the company is implementing an updated warehouse-management system to ensure that the correct product is shipped to the right customer at the proper time.

Mission Foods plans to roll out the RFID system at its 33 other U.S. warehouses and plants throughout 2011. The facilities are located in Arizona, California, Colorado, Georgia, Minnesota, Oregon, Pennsylvania, South Carolina and Washington.

In addition, Mission Foods is in discussions with its sister company, Azteca Milling, to have RFID implemented to improve the control of pallets at Azteca's facilities. The firms are still trying to figure out the best way to employ the technology. "They could use manual handheld readers at the time of loading the pallets, so we wouldn't have to install readers," Valdes says, "but it is too soon to know."