Wednesday, August 10, 2005

Gillette : RFID - Hype To Reality

Infoworld has an interesting article with indicative metrics for returns on RFID investment - though the actual details of solutions,investments, savings and returns computed are not revealed - a peek into process efficiencies makes interesting reading. For Gillette, RFID has improved order processing, streamlined inventory management systems, and increased shipment accuracy, providing operational cost savings in excess of 20 percent per distribution center. The Gillette Company uses RFID for both pallet and case applications. It moves its inventory to a packaging center, where they are placed into cases and moved to the DC to be compiled into customer orders. Before the EPC (Electronic Product Code), this procedure required an operator to scan the cases at least five times, and involved at least three different keyboard operations. For example, somebody had to count the number of cases on each pallet and verify that each case contained the right product. The process for a pallet to go from packaging to the DC took about 20 seconds. With EPC in place, all the cases in a pallet are scanned with RFID readers as they move along the conveyor belt. Moving a pallet to the DC now takes five seconds, or 25 percent less time.
When a customer order is processed out of a DC, it is often a mixed order, meaning different products need to be assembled onto a single pallet. This labor-intensive task used to take anywhere from 80 seconds to 20 minutes. With RFID, the process takes 20 seconds per pallet because each pallet is spun through a “verification tunnel” that knows exactly what the customer ordered and whether the pallet contains the correct products. For special event promotions, earlier the data collection and forecast used to be an output of an erroneous spiral -primarily due to delays and co-ordiantion issuesin logistics. Using RFID, both the retailer and Gillette are able to track the time elapsed between events and strategize how to reduce the pain points the next time. If Gillette can move product so it gets where it needs to be when it needs to be there, it means products are on the shelf when consumers want to buy them - a major step forward. Factoring in productivity savings of 20 percent per DC, in addition to improved product availability on retailer shelves, Gillette estimates it has realized a return on its RFID investments in excess of 25 percent.This makes interesting reading - but lot more details about facilities/processes changed at various supply chain nodes are needed to be fully convinced but no doubt even big number improvement in part of the supply chain after RFID implementation should offer significant benefits.


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