RFID Compliance: Trial and Error

$3 billion Del Monte Foods details the trials and lessons learned as it became Wal-Mart compliant — and the challenges still to come

Integrated Solutions, August 2005
Written by Khristen Chapin

It’s been almost eight months since Wal-Mart’s first RFID compliance mandate went into effect. The mega-retailer’s top 100 suppliers rushed to comply, some implementing the technology far back in their supply chains, and others using a slap-and-ship method. No matter the technique, these suppliers faced challenges in their programs — and many are still working to overcome them. One such supplier is $3 billion Del Monte Foods.

The top 100 suppliers include CPG (consumer packaged goods) companies producing many types of products, from computer printers and DVD players to razor blades and soda pop. These products have a wide variety of price points, so a company can be on Wal-Mart’s top 100 list because it supplies high-priced products at low volumes or high-volume products at low prices. Where you fall on this spectrum drives the decisions you’ll make regarding RFID implementations, as evidenced by Del Monte, whose product lineup includes canned fruits and vegetables, StarKist Tuna, and many pet product brands.

TESTING AND PLANNING CAN REDUCE THE PAIN OF RFID COSTS
The costs associated with implementing RFID are well-known throughout the CPG industry. The most painful expense, at least in Del Monte’s eyes, is the RFID tags, which cost approximately 50 cents each. “We ship in high volumes, but our price per case is still low,” says Jim Lamagna, application project manager in Del Monte’s IT department. “Because of that, we could spend a lot of money on tags.”

Del Monte knew it had to accept the expenses and comply, so it made every effort to take as much cost out of the project as possible. Under the Wal-Mart mandate, CPG suppliers are only required to tag a percentage of their shipped SKU numbers. When looking at the SKUs it should tag, Del Monte chose several in its StarKist Tuna product line, which is one of its higher-priced product lines. Del Monte also spent three to four months researching tag technology by reading white papers and press articles and by talking to other companies implementing RFID. “We needed to educate ourselves with this new technology and develop a plan,” says Lamagna. “Once we had a better understanding of what we were trying to tackle, we started our second phase, which involved constructing a working lab.”

Knowing the read-rate and range problems it would face, Del Monte decided to work through the problems in a warehouse environment, but not in a shipping situation. The food manufacturer built a lab in its Pittsburgh manufacturing and warehouse site, installing it between aisles of product in the warehouse. “We wanted to test the technology in the same environment in which it would be used, but not where it would interfere with any processes,” says Lamagna. “This way, we could see how the moving forklifts, pallet stacks, noise, and even dirt would affect the technology.” Del Monte’s lab consists of a conveyer belt; stacks of products; several brands of RFID antennas, readers, and printers; a PC; and many RFID tags.

STRATEGICALLY PLACE RFID TAGS FOR BEST READS
In the lab, Del Monte quickly realized the biggest problem it would face: where to place the tags. Cases of tuna are only a few inches tall — the height of a can — and the cans are packed closely together. Del Monte knew it needed 4-inch by 2-inch tags to fit on the cases, and the tags needed to be carefully placed for the best read. “Metal and fluids interfere with the RFID reads,” says Lamagna. “Imagine tagging case after case of a product with fluid in a metal container.” After intensive trial and error, Lamagna and his team came up with a solution. They determined that the tags need to be placed on the cases so that the tag antennas fall in the spaces between the cans, where the least amounts of metal and fluid exist. Because of this, the concept of slap and ship took on a new meaning for Del Monte. “It’s really more strategically place and ship,” quips Lamagna.

Through its testing environment, Del Monte was also able to determine the best combination of RFID technology to implement in its Fort Worth, TX distribution center (DC). “The printers posed a big problem for us, because we were specific about the tag we wanted [Class 1] and some printers couldn’t support it,” says Lamagna. After performing speed and distance testing with several printers, Del Monte decided on Paxar’s Monarch printer. “The Paxar printer gave us a much higher yield rate of good tags than other printers,” says Lamagna. “With most printers, the yield was approximately 80%, and the Monarch’s yield was 98%. We also chose Paxar because of the service offered — they had people at our site when printers were delivered to assist us in setting them up.” Del Monte purchases its RFID tags, which are inlaid with an Alien squiggle RFID antenna, from Paxar, too. Del Monte’s final RFID solution also includes Matrics readers and antennas with middleware from OATSystems.

Del Monte met Wal-Mart’s compliance deadline and continues to use the technology on selected SKUs. RFID is still an expense to the food manufacturer, as the benefits have not yet justified the costs. “Like most high-volume suppliers, we have not seen an ROI beyond compliance,” says Lamagna. He has hopes, though, that eventually Del Monte will be able to use data generated by RFID to better plan its distribution and manufacturing processes.