The real returns of RFID

Despite the hype associated with RFID, when you hear success stories from a very large organization, you have to believe there really is something there.

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The Gillette Company uses RFID for both pallet and case applications. It moves its Venus razor blades for women from manufacturing to a packaging center, where they are placed into cases and moved to the DC (Distribution Center) 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 of the 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 Gillette, RFID has improved order processing, streamlined inventory management systems, and increased shipment accuracy, according to Dick Cantwell, the company’s vice president of global value chain. With those factors combined, Cantwell says Gillette has seen operational cost savings in excess of 20 percent per distribution center.

For Father’s Day, Gillette worked with a large retailer to advertise a promotion for the Braun electric shaver in 19 of the retailer’s stores. The idea was to get the promotions and products out on the shelves 20 days before Dad’s Day, timed to coincide with print and television advertising.

Of the 19 stores tracked with RFID in the exercise, only about a third managed to get the product onto the floor at the start of the promotion. Five of the 19 stores never got the promotion onto the floor at all, and the rest came in late, some after Father’s Day. The reasons ran the gamut, from promotional items not shipped on time by Gillette, to items not arriving to the retailer’s DC or not being sent from there to the store, to items that were shipped but subsequently misplaced by the store, to shrinkage.

The immediate loss is obvious. But worse still, when the retailer makes a forecast for the next year, it will be based on an erroneous impression of what took place.

Using RFID, both the retailer and Gillette were 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, Cantwell estimates Gillette has realized a return on its RFID investments in excess of 25 percent.

This isn’t hype. This is reality.