RFID apps move in-house
Manufacturers find use of RFID technology meets compliance labeling mandates
By Jim Fulcher, contributing editor -- Manufacturing Business Technology, 4/1/2006 7:00:00 AM
So far, the adoption of RFID has been driven primarily by not-so-gentle requests from large customers. That could change as manufacturers discover ways in which this technology can improve internal business processes.
"The need for compliance certainly drives the industry, but there's lots of other activity," says Matt Ream, senior manager of RFID systems for printing solutions vendor Zebra Technologies. "A number of factors—such as the ability to read tags without requiring line-of-sight reading, and the declining cost of technology—make RFID more appealing. Manufacturers are looking for ways to use the technology within the enterprise and throughout the supply chain."
Inquiries multiply
The true value stems from how information derived from RFID is applied to enterprise applications, says Dennis Gaughan, a director with Boston-based AMR Research.
"The issue is that manufacturers must decide how far back into the supply chain they're going to drive RFID—and what the perceived value will be," says Allan Melling, senior director of business development at Symbol Technologies, a data-capture technologies supplier. "If a company must use RFID for compliance labeling, it has already made an investment for tags, readers, and infrastructure." Some say there's been tremendous interest in RFID, says Mike Braatz, a VP with Wi-Fi-based systems and applications provider PanGo Networks. "We used to hear from a few manufacturers interested in RFID each month; now it's hundreds," he says.
"That interest, however, isn't just focused on the supply chain," Braatz adds. "There's also a surge in interest for enterprise activities that could be streamlined and automated by leveraging technology investments made for RFID tagging compliance. The ability to identify, locate, monitor, and even manage products on the plant floor using RFID labels appeals to manufacturers."
That's what is taking place at JVC Disc America, which is using the Compliance Advantage RFID solution from HighJump Software. JVC, a supplier of compact discs, CD-ROMs, and DVDs, implemented the HighJump solution at its fulfillment center in Kennesaw, Ga., to enable its customers to meet retail RFID requirements.
"Initially we investigated RFID technology because our customers needed to meet the RFID labeling mandates of Best Buy and Wal-Mart," says Ron Vangrov, VP and general manager, JVC Disc America. "However, we wanted to provide value to other customers, and further recoup our RFID investment."
JVC Disc America also offers material procurement and supply chain management; multimedia package assembly; warehousing; direct-to-store fulfillment; and reverse-logistics management. The Kennesaw facility ships more than four million units each month directly to stores or distribution centers, with volume peaking at 17 million units per month during the Christmas season.
Flexible processes
"An increasing number of our orders require case- or pallet-level RFID tagging to meet requirements of major retail chains," Vangrov says. "Incorporating RFID tagging with standard distribution operations eliminates the need for a stand-alone work area and manually separate shipments that require RFID. In fact, all order-processing stations are now capable of completing orders with either bar codes or RFID. The result is that every carton goes through the exact same process—it's just that some get an RFID tag and some get bar codes—depending on customer specification."
Other RFID initiatives include putting tags on in-bound pallets of CDs, DVDs, printed boxes, and packages for games and software. That way, during the busy season, employees will be able to easily find products, Vangrov says.
Sometimes products get lost, Vangrov adds, and using RFID technology eliminates walking through the warehouse to look for missing products. Instead, someone can ride down aisles looking for the appropriate RFID signal.
"JVC supports leading interactive entertainment and software publishers whose ship dates are vital to meeting product launches," says Vangrov. "Time-to-market is critical because launch dates often are tied to in-store promos. In other cases, video games must be in stores on the date a movie hits the theaters. The difference between looking for materials in the warehouse for a couple of days and looking for a couple of hours may determine whether or not we make a release date."
The end of stock-outs
Perhaps RFID's greatest potential is in optimizing activities among suppliers and retailers. For example, manufacturers and retailers could work together to ensure, via proper replenishment, that retailers move product from storerooms to shelves often enough to have sufficient stock in the stores.
"That's the Holy Grail for RFID: gaining item-level tracing capabilities to prevent out-of-stock at retailers," says Raymond Blanchard, VP of business development at TrueDemand Software, a supplier of RFID-enabled enterprise applications.
The problem is, given the sheer volume of data, gleaning actionable information may prove difficult. Use of RFID-enabled enterprise applications and analytics can organize and manage the data.
"Instead of doing forecasting and replenishment planning once a week, it should be done on an ongoing basis," says Steve Banker, service director for supply chain management at Dedham, Mass.-based ARC Advisory Group. "RFID promises far more granular data that can be used for this purpose. Instead of just waiting for point-of-sale data that shows how much of a particular SKU has been sold, a manufacturer can improve forecasting and speed up replenishment by monitoring the pull of inventory into the retailer's distribution center, out of their center, into the back of a store, and onto the store floor."
Using analytics is critical in determining how much product is on a shelf, and how much is in the retailers' storeroom. This enables suppliers to make better-informed replenishment decisions that impact profitability, Blanchard says.
That responsiveness appeals to companies such as Kimberly-Clark, the Dallas-based consumer products maker that began working with TrueDemand late last year.
"Kimberly-Clark seeks to create new ways to predict and reduce retail out-of-stock situations, provide new and more responsive replenishment models, and enable continuous replenishment capability based on leveraging RFID information," says Mike O'Shea, director of Auto-ID Sensing Technologies with Kimberly-Clark. "TrueDemand's strategy for exploiting inventory visibility between manufacturers and retailers, through its RFID-enabled replenishment applications, fits very well in supporting our vision of an RFID-enabled, consumer-driven value chain."
Inbound tracking
It's important to note that not all companies using RFID began doing so to comply with labeling mandates.
Consider, for instance, Cambium-Forstbetriebe,Germany's largest independent forest management company. Transporting timber from forests to saw mills is a complex process that involves forestry companies, service providers, and saw mills. Managers with the Fahrenbach-based company knew they needed a better way to track trees—from cutting site to sawmill—to maximize the value of the lumber produced from each tree.
"We have the problem in the forest that lots of trees are cut—and because it's dirty, and frozen, and there's bad weather—it's not possible to follow the tree from the forest to the sawmill," says Gerhard Friemel, company owner.
Cambium worked with DABAC, a solutions partner of Progress Software, to create an information system that integrates ERP, legacy forestry systems, and RFID technology. DABAC leveraged Progress' OpenEdge platform for deploying service-oriented business applications and its Sonic messaging backbone, along with the RFID Accelerator real-time data management solution from ObjectStore—a unit of Progress Software—to create a forestry industry application.
After trees are cut down and trimmed, a unique nail-shaped RFID tag is hammered into each log by the forester to track its movement through the supply chain—from the skidder that removes the tree from the forest to the transportation truck, the railroad car, and so forth. Tags are scanned, and information about the logs is uploaded via a handheld device to a central location where the ObjectStore RFID Accelerator aggregates, normalizes, and propagates the data into DABAC's application.
The DABAC system improves Cambium's yields of finished lumber, reducing lumber inventory, eliminating manual reconciliation between various systems, and accelerating customer payments, says Friemel.
