Improving supply chains with RFID data

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 7/19/2005

In return for tagging cartons and pallets, Wal-Mart has promised to provide five points of information previously unavailable to its vendors: when their product arrives at a Wal-Mart distribution center; when it leaves; when it arrives at a Wal-Mart store; when it leaves the store room; and when the product is consumed and the carton goes to the crusher.

That sounds good. But that information has little value if vendors don’t have systems in place to take advantage of that information.

Two new solutions have been introduced to address just that. Neither company is trying to save the world with software. Instead, they have created applications specifically designed to use this new data to solve old problems.

The first solution (OATSystems, 781-907-6100) uses data collected at the receiving dock to settle billing disputes between what you shipped and what your customers say they received. “If you think you shipped ten cartons and your customer asks for a credit because they say they only received nine, you can show them where in their supply chain they read the ten cartons,” says Jon Karlen, OATSystems’ director of product marketing.

The same solution can track when promotional items arrive at the retail storeroom, and, more importantly, when they’re put out on the floor for sale. “Manufacturers spend up to 30% of their revenues on promotions,” Karlen says. “Now, before a launch, they can check to see what stores have promotional items and check to see that they hit the floor on time.”

The second solution (TrueDemand, 408-399-1924) is designed to receive and make sense of the real-time data coming from RFID reads from a planning point of view.

“RFID will give manufacturers and distributors real-time visibility into the movement of their product through the supply chain,” says CEO Eric Peters. “The problem is, the planning systems they use are batch-based systems. They’re good at planning two months or four months. They don’t know what to do with real-time information.”

TrueDemand’s planning engine can take RFID information, along with data from warehouse, transportation and yard management systems to answer questions about which stores are running promotions, how fast product is being consumed and how much safety stock you should produce to avoid an out-of-stock position. “RFID is giving me another level of granularity because it gives me a new level of velocity,” says Peters.