By John Edwards
As the largest bicycle supplier in the United States and maker of some of the world’s best known models, there was no hiding from Wal-Mart’s RFID edict.
And even though Pacific Cycle had no experience with RFID and Ed Matthews, the Wisconsin company’s director of information systems, possessed only a passing knowledge of the technology, all that had to change—fast. “I was both intrigued to be able to use this emerging technology as well as a little upset that we were being forced into something,” Matthews says. “Wal-Mart is our largest customer, so that definitely pushed things to the forefront.”
Matthews quickly began identifying appropriate technologies and vendors and laying the groundwork for a pilot program 18 months before the January 2005 deadline. He started with Class 1, 64-bit, 915 MHz Squiggle tags from Alien Technology and MP9320 UHF long-range readers from SAMSys Technologies. The tags were embedded in a 4-inch by 6-inch Moore Wallace label and printed by R4Mplus thermal printers from Zebra Technologies. The tags were applied manually. A UCC128 barcode was printed on the label so that it can be scanned in case it becomes impossible to read the tag. The pilot project got underway in March 2004, just nine months after Wal-Mart’s announcement.
Working out the bugs
Matthews admits that RFID presents a steep learning curve. “Our biggest challenge has been trying to get the tags read,” Matthews says. The project was complicated by the fact that bicycles contain a large amount of metal and are packaged using high-density foam, both of which tend to interfere with RF reception. At first, directional Yagi antennas were used to read tags from up to 20 feet away as the products moved through the shipping dock doors. But what sounded good in concept proved to be unacceptable in the real world, since even slight misalignments in package positions caused read rates to drop through the floor.
Omnidirectional hemi antennas were brought in to fix the problem, but the changeover led to a different kind of trouble. The readers started detecting tags on accompanying shipping docks, throwing the entire system in confusion. A spate of faulty tags created additional problems.
After much tinkering, Matthews switched to Class 0+ AR400 readers and tags from Matrics, a company since acquired by Symbol Technologies. The changeover also required buying new Zebra R110xi III plus thermal printers.
The new technology solved the problems. “With the Class 1 technology we were only getting 70% read rates on the case level through the portal and with Class 0+ we are getting 99%-plus,” he says. Tag failures through the printer have also decreased, dropping “from around 20% to 10% when we first changed over to Class 0+, and now [they] are around 2%,” says Matthews, who attributes the problems with the Class 1 tags to “a combination of the antenna design on the tag, the reader performance and the physics of our products.”
Things ran much more smoothly on the pilot program’s software side. Matthews enlisted the help of systems integrator Peak Technologies to connect the new RFID technology into the company’s existing SAP R/3 enterprise resource planning software.
The pilot test concluded in September 2004, when the company took the system live. The company is already working on an RFID test project with Target. “Target is not quite as strong [on RFID] as Wal-Mart at this point, but we have been required to go live in June with one of their distribution centers in the Dallas area,” Matthews says.
More than meeting a mandate
By providing better product tracking, RFID helps Pacific Cycle and its retail partners like Toys “R” Us, Sports Authority, and independent dealers gain better inventory control. “It’s knowing what’s sitting in the back room and what’s on the retail floor,” says Matthew. “If somebody buys [a bicycle], we can replenish it.” There have been other benefits, too. By eliminating the need for manual barcode scanning, the system has led to better utilization of warehouse employees. It has also helped Pacific Cycle reduce the costs associated with shipping the wrong products or failing to ship products on time.
Yet there’s still plenty of room for improvement. Matthews is particularly concerned about the technology’s price. “The tags themselves cost us about 35 cents apiece,” he says. It also costs the company about 25 cents to place a tag on each package. “So for every bike that goes out the door, it’s costing us about 60 cents.”
Total RFID costs of $2 million may be recovered in two to three years. Matthews says he believes that ROI will be achieved through less idle inventory, better warehouse management, fewer retailer chargebacks and lower equipment costs as RFID prices come down. “We clearly see that this is a long-term project, and that this is where things are headed.”
This article originally appeared in the Premiere issue of RFID Operations.