To better understand the scope of RFID (radio frequency identification) technology, let’s take a look at The Gillette Company, based in Boston, and one of its distribution centers.
The Chicago-based center is a 49.4 square metre site with a 50,000 pallet capacity and about $60 million of inventory at any one time.
Following a pilot program, Gillette announced its intention to buy 500,000,000 (that’s half a billion) RFID tags at 10 cents a piece and to tag every pallet and carton coming out of its distribution centres. The company selling the tags to Gillette is US-based Alien Technology.
Imagine the benefits of tracking those pallets, and the cases on the pallets, from manufacturing to the point of sale.
Gillette will be able to reduce losses from out-of-stock, stolen or lost products and, as the company understands the power of this tracking capability, it will increase revenues by leveraging inventory information into smarter marketing to the retailers.
Each pallet will have two tags and will be wheeled past locations in the distribution centre with antennas. The antennas send the information to the shipping dock where the pallet is checked and read again at the back door. There, the pallet is put on the trailer, bound for its final destination.
It doesn’t stop there. At the retailers, the Gillette products will be placed on “smart shelves” which are also tagged. The shelves relay to the stores inventory system what and how many products are sitting there; the data is viewable on any device.
The system also thanks the customer via electronic signage at the shelf and alerts the manager if inventory is getting low. Somehow, it also knows the difference between shoplifting and purchasing.
Supply chain data is just part of the benefits of RFID tagging. Cap Gemini Ernst & Young principal, John Jordan, asked me to imagine a pharmaceutical company tagging all of its samples that it distributes to doctors. When the pharmaceutical sales rep calls on the doctor, the rep can ask to scan the shelves where the samples are kept in order to take a reading on what was distributed, and to see what wasn’t given out to their patients. “Is there something you don’t like about this product, doc?” Or, “I see you only have two boxes of such and such. Do you want to order some?”
From supply chain to powerful marketing tool, all thanks to a 10c piece of wireless technology. Not bad.