For many companies, radio frequency identification at the DC appears to have more downside than upside. RFID adds costs, more steps to shipping and a certain degree of change to the handling of shipments. Worse yet, use of RFID is being required by major retailer such as Wal-Mart as well as the Department of Defense.

But where others see downside, Karl Paepke sees upside. He's vice president of operations for beef jerky supplier Jack Link's, one of the volunteers in the first wave of Wal-Mart suppliers using RFID. In fact, Paepke is leading the charge to make RFID a change agent in his company's operations from shipping all the way back to the manufacturing floor.

"We have three principle objectives with RFID," says Paepke. "The first one is customer compliance, pure and simple, and being proactive about it rather than waiting for deadlines. Second, we want to achieve full visualization of our supply chain, using RFID to enable that. Our third objective is automated lot tracking and traceability using RFID within our plants."

RFID compliance was inevitable for Jack Link's, says Paepke. In addition to Wal-Mart, Jack Link's also supplies products for the military, and expects to fall under RFID mandates from the Department of Defense.

Jack Link's operates seven plants, including one in Minong, Wis. where it launched RFID and where corporate headquarters is located. The company also uses a third-party logistics (3PL) provider. And although the company is currently tagging only one product for Wal-Mart, plans call for RFID tagging and reading across all products including those handled by the 3PL. When combined with plant-focused use of RFID, the company foresees significant benefits.

"We're hoping to uncover areas of our business we can improve or that we might not know about right now, or are that hard to pinpoint," says Paepke. "For example, in the plant, we may be ignorant of slight increases in yield we could be achieving. On the finished goods side, we hope to shrink our supply chain, both in terms of inventory and time. And when we start getting information [from RFID reads] back from our customers, that will allow us to plan production better."

Jack Link's sells dozens of meat snack products, so placement of RFID tags on cases and pallets of one product destined for Wal-Mart is hardly the finish line for its RFID rollout. Yet because of the complex technology and business considerations involved with RFID, successfully shipping just one RFID-tagged stock keeping unit—which the company began doing last September—ranks as a major milestone.

For a mid-sized enterprise like Jack Link's, however, RFID was a bit daunting, admits Paepke.

"We began discussing RFID in the middle of 2003, shortly after some of the mandates were first announced. Those plans made us look long and hard at the technology and what it would take to be compliant, so we went to our [enterprise system integrator] and challenged them to find out what RFID would mean for us. Once we understood the nuts and bolts of it, and its potential benefits, we sat back and said, if RFID can achieve this sort of traceability for a whole supply chain, we could use it to meet similar objectives internally," he says.

Among the steps needed to reach this first stage were the installation of RFID label printer and reader hardware, careful testing of tag orientation and other readability factors, and deployment of an RFID middleware solution to filter and hold RFID data. What's more, says Paepke, these steps are tactical ones needed for early compliance tagging that can lead to broader use of the technology and its data.

Early on, says Paepke, it was appar-ent that some data from RFID reads would have to feed back into the company's enterprise resources planning (ERP) system (Microsoft Business Solutions, 888-477-7989).

Jack Link's turned to its ERP reseller (ABC Computers, 715-258-6000) for advice on RFID and how to integrate it with ERP. The integrator also helped identify RFID systems vendors.

Though Jack Link's isn't one of the top 100 suppliers asked by Wal-Mart to begin shipping tagged cases and pallets early this year, it decided to be proactive and begin tagging early. The initial stock keeping unit selected was a one-pound bag of beef jerky. This was a good test product, according to Paepke, because it's produced at the Minong plant where the company has more support staff, and it's also a lower volume item.

The initial deployment has RFID reads occurring at a couple of locations after the end of the production line, says Paepke. At the very end of the packaging line, an RFID label printer encodes and prints RFID case labels. The labels are hand applied to each case, just before the cases move along a conveyor to an automatic case sealing machine. Paepke says the company is looking at print and apply units to speed case tagging of higher volume lines.

As the cases exit the sealer, an RFID reader verifies the tags. The cases then move along a conveyer to a hand palletizing area. There are 90 cases to a pallet, so once the 90^th tag is printed, the RFID printer automatically generates a pallet label. The tag is then applied to the pallet, and the pallet is moved to an automatic shrink wrapping machine where another RFID reader verifies the pallet tag.

During 2005, says Paepke, Jack Link's will begin tagging more of its products at multiple plants. It may be late this year, however, before most stock keeping units are being tagged for shipment. The company also envisions placing RFID readers at some receiving and shipping areas to verify shipments—not just to cus-tomers—but also for internal transfer of finished goods to its DC, or any interplant shipments. The RFID middleware will ensure that the latest shipment data generated by RFID is visible to managers.

While the rollout of finished goods tagging continues, the company will deploy RFID-enabled lot traceability and work status tracking at its plant in Minong. The key to this application will be reusable RFID tags that will be placed on totes and other containers.

As of early this year, this plant-focused deployment was just getting underway, but Paepke says plans call for about seven RFID readers. When raw materials are received, a lot number will be assigned to them. That lot number will be associated with the appropriate tagged containers as the lot travels through the manufacturing process. Containers at the plant include re-usable plastic totes for bulk material, as well as stainless steel totes used in manufacturing. The smart label supplier had to come up with a tag capable of withstanding the process conditions.

"In essence, it's a bin location system that will tell us exactly where a given container is in the process, and we'll know what vendor the material in that bin came from," says Paepke. Additionally, the technology should allow for the tracking of changes in weight and other factors as containers move through the manufacturing process.

The end result will be fully automated lot traceability if problems should ever occur. The system also will feed real-time work-in-process information to managers.

But this is only the beginning. Using RFID to track and trace in manufacturing and distribution is only half the story, says Paepke. He expects that for the true power of RFID to be unleashed, supply chain partners will have to share their RFID data. "I'm confident both sides will share this information effectively, but getting to that stage may take time."