Four Ways to Make RFID Work for 100 Percent Shipping Accuracy

By: Jamie Barnett

Blue Vector's Director of Marketing offers pointers to serve as guidelines for retail companies looking to find ROI in large-scale RFID implementation.

Blue Vector's smart portals replace all paperwork at the dock door. They receive RFID data, automatically compare it to pre-received shipment lists, and provide immediate feedback to operators.

One hundred percent shipping accuracy in retail was one of the big promises in the early days of RFID. Technology pundits envisioned the Nirvana of product-level visibility from manufacture to in-store shelf and beyond. But the dream faded as implementers struggled with high tag costs, inconsistent read rates, software immaturity, lack of standards, and an unintegrated smattering of products on the market. On top of that, the obligation of upstream and downstream supply chain partners to collaborate made RFID implementation a high-risk, longterm proposition with disproportionate costs and benefits among partners (not a good investment profile for what was then a newfangled technology).

As RFID vendors regrouped and the technology improved, a small handful of forward-thinking retailers found a way to make the business case of RFID in shipping accuracy work for them. But do companies really need to improve their shipping accuracy? According to a Warehouse Education and Research Council (WERC) study conducted earlier this year, companies report shipping accuracy upwards of 99%. That sounds pretty high, right? What this measure doesn't highlight, however, is the high cost of mis-shipments of goods in a supply chain. We do hear about the havoc caused by mis-shipments of high-cost or high-consequence goods (like drugs, gases, or explosives), but what about toothpaste? According to one of our customers, the cost to correct such a mis-shipment of a case of toothpaste is about $70 when all is said-and-done. Take that across all of the goods that go through a distribution center in a year, and even at 99% accuracy, that's still a pretty high cost.

A success story we point to for RFID-gone-right is one of the nation's top retailers. This company successfully implemented a largescale RFID solution to achieve shipping accuracy, improve distribution productivity, and better utilize its assets. We boil down the company's success factors to four main pointers that we believe serve as guidelines for other companies looking to do likewise.

1. Make the RFID case about you,not your partners.

Rather than rely on an elaborate network of partners to adopt the same technology on the same schedule and perform integration miracles in order to realize the benefits of RFID investment, the retailer built the business case on its own merits for its own business, making the argument that the cost savings associated with error- proofing its distribution processes would make the investment pay off, and quickly. This made the project more palatable to management, while making it easier for the implementation team to control outcomes – the business was responsible for its own success or failure.

2. Change your processes to take advantage of the technology.

The retailer looked at the old shipping process within its DCs – green-screen computer monitors flashing arcane instructions at workers and paperwork, loads of it, at shipping dock doors. The implementation team realized it had an opportunity to reconfigure the process to take full advantage of the technology. It installed a set of “smart” portals at each shipping dock door. Designed to replace all paperwork at the dock door, these portals receive RFID data, automatically compare those data to pre-received shipment lists, and provide immediate feedback to operators if a shipment is headed onto the wrong truck, or even if a shipment is headed onto a truck in the wrong order (since one truck can service multiple stores and therefore must take a first-in, last-out approach to loading and unloading). This new process enabled not only greater shipping accuracy, but improved employee productivity in the DC.

3. Think “inside” the box: tag containers, not items.

One very specific thing this retailer did was to tag totes of items rather than items themselves. One of the big arguments against RFID is that the tags are too expensive: Why on earth would anyone put a tag on such low-cost items as toothpaste, cans of shaving cream,and packages of gum? The beauty of this retailer's approach is that the company never had to answer that question. Not only did the company not tag items, but they tagged reusable totes, nearly 200,000 per DC. That way, the tags pay for themselves over and over until they wear out. And the company can still track individual items – they're just associated with the tagged totes. Genius!

4. Leverage your investment for multiple purposes.

Rather than solving just one use case with RFID, this retailer found as many ways to leverage the investment as possible. They use the RFID implementation not only for shipping accuracy, but also to gain productivity improvements in their DC. One way they do this is by providing information (such as an order) and feedback (such as instructions on where to take a mis-loaded pallet for correct loading) to workers in the DC to make those workers more efficient. They also use it to achieve higher asset utilization by tagging and having full visibility of assets – totes, dollies, and cages – in their facilities.

Doing RFID wrong can be the technology equivalent of Alaska's Bridge to Nowhere – where the cost and implementation time can dwarf the intended benefit. But our retail success story showed us how to do it right. Like anyone implementing a new technology and changing a bunch of processes along the way, the company encountered a few challenges. But the smart decisions they made – bounding the project to their own business, changing process to take full advantage of the technology, tagging assets rather than items, and leveraging their investment for multiple benefits – has paid off and certainly has made RFID a winning campaign.