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The initial success of bicycle supplier Pacific Cycle’s pilot radio frequency identification (RFID) program helped it become one of the first suppliers to implement Wal-Mart’s RFID program, making it a technology leader in the bicycle industry.
Wal-Mart requires its top 100 largest suppliers to place RFID tags on all pallets and boxes when they ship to selected distribution centers. An important challenge in the pilot plan is how to integrate RFID technology with the company’s SAP R/3 planning software.
Ed Matthews, director of information systems at Pacific Cycle, said: “An important factor in our early success is that our technology integrator PEAK Technologies provides an integrated total solution.”
By applying RFID tags to individual bicycles to achieve more savings throughout the supply chain, Pacific Cycle is surpassing the requirements of the Wal-Mart program.
As one of the fastest-growing branded consumer products companies in the United States, Pacific Cycle is a leader in the design, sales and distribution of high-quality branded bicycles and other leisure and entertainment products. The company owns many brands including Schwinn, Mongoose, GT, Roadmaster, Pacific, Dyno, Murray and Flexible Flyer. Pacific’s success should be attributed to the combination of its strong brand portfolio with low-cost procurement, effective supply chain management and multi-channel retail distribution. Its distribution channels include leading large-market retailers such as Wal-Mart, Target and Toys “R” Us, sporting goods chains (such as Dick’s, The Sports Authority and Gart Sports), and independent bicycle dealers in local markets. Recently, Pacific Cycle was acquired by global consumer goods company Dorel Industries Ltd. (NASDAQ: DIIB; TSX: DII.A, DII.B).
Huge space saving
Wal-Mart requires its 100 largest suppliers to adopt RFID technology, prompting suppliers to quickly master the wireless technology used to identify and track goods in the supply chain.
Radio waves transmit data between the RFID tag, reader and encoder. The reader sends a signal and the selected tag responds by transmitting its stored data. The reader receives the tag signal and transmits the data to a host computer system. Wal-Mart estimates that when RFID technology is applied to all of its businesses, the total annual savings will be approximately US$8.35 billion. It is estimated that US$6.7 billion in savings will come from a 15% reduction in labor costs. This is because the use of this technology eliminates the need for manual scanning of barcodes on containers and pallets. Wal-Mart plans to eventually apply RFID to individual items so that readers can be used to monitor the quantity of goods on each shelf.
A complete solution provider is essential
When Pacific Cycle learned of Wal-Mart’s plan, the company realized that it needed a technology partner to help it explore the application of RFID technology. Since the company is an advanced user of SAP R/3 and runs a large number of version 4.6C modules, the integration of RFID with its ERP system has become an important consideration. However, the fact that SAP announced but did not release an RFID module for R/3 makes the integration very complicated. Most suppliers in this field tend to provide only hardware, only software, only tags and tags, or form a team of staff from multiple companies to complete a special project. Because it can provide a complete solution that includes all these elements, PEAK Technologies stands out from many vendors. In addition, because PEAK resells rather than produces hardware, the company can assemble a solution completely objectively. PEAK not only has standard products, but also has rich consulting experience in providing SAP interfaces, so that Pacific Cycle can use the interface part to carry out projects before the release of the R/3 RFID module.
Adrian Thomas, President and CEO of PEAK Technologies, said: “Pacific Cycle is a big visionary company. It is not only satisfied with the implementation of Wal-Mart’s plans. The company has fully assessed how to use RFID technology throughout its supply chain to achieve Greater savings and higher efficiency are far beyond the requirements of Wal-Mart’s plan. Companies like Pacific Cycle that complete preparatory work and analyze their supply chain (from the manufacturing level to the retail level) will become through RFID The main beneficiary of the huge return on investment in technology.”
RFID hardware, software and process
Pacific Cycle was the first to trial RFID tags in its distribution centers. PEAK provided it with a solution consisting of Zebra R4Mplus and Printronix T5304e smart label printer/encoder, SAMSys MP9320 UHF portal reader and Moore Wallace RFID tag using Alien Class 1 tag. PEAK embeds the tag in the Moore Wallace tag with a size of 4 inches x 6 inches. Print the UCC128 barcode on the label, so that the barcode can be scanned even when the RFID tag cannot be read. Tag is coded with Electronic Product Code (EPC), this unique number can identify specific goods in the supply chain. When the tag passes through the SAMSys reader, the reader can directly pass the tag information to SAP R/3 with the help of PEAK S/3 interface middleware software.
Pacific Cycle is currently receiving and sorting goods manually, so the use of RFID tags allows the company to skip the intermediate barcode scanning link. In the current pilot plan, Pacific Cycle has defined business processes, completed technical tests, determined the data to be passed to SAP, and started to enter the return on investment evaluation process. In addition, with the support of PEAK, the company also initially started using RFID tags in its manufacturing plant in China.
One of the most important goals of implementing RFID is to save costs. These savings should be enough to offset the costs of implementing RFID and tags. Matthews said: “We want to use the infrastructure we are building to reduce our distribution costs. Due to reduced labor costs and inventory requirements and improved shipping accuracy, we have achieved cost savings. Our warehouse staff are currently available It saves a lot of time on filling out written forms for receiving, storing, sorting, and shipping goods. We will also benefit from updating transactions on our ERP system in real time, instead of waiting for staff to enter manually to complete. Clearly understand that each item is The location of the distribution center can help us reduce the amount of backorders while reducing inventory. In addition, the near-perfect accuracy provided by RFID technology can also shorten the time required to search for products and return orders. At present, we believe that the cost of chips It will decrease with the increase in output, which will bring a reasonable return on our RFID investment.”
The pilot plan has achieved the main goals
Matthews said: “The pilot program has achieved our primary goal, which is to follow Wal-Mart’s requirements. However, we have set higher goals, so we still have a long way to go. Now, the biggest challenge we face This is how to improve the reading rate of a single bicycle tag on the entire pallet. We are now able to read 70% of the individual tags on the pallet. We are very satisfied with this number because Wal-Mart only requires the reading rate of the pallet tag to reach this Numbers. We plan to significantly increase this ratio by tuning the hardware and re-evaluating the pallet configuration. Next, we will install tags in the manufacturing plant and encode them, and implement middleware to connect to the SAP system.” Matthews believes With the use of RFID technology to mark individual items, not just pallets and boxes, even greater savings can be realized in the future. Matthews said: “This can help us track our products throughout the entire process (from warehouse to retail store), so that we can accurately understand which goods have been delivered to the retail store. If we find that the warehouse of a particular store has accumulated With a large number of products, we can send people to find out the problem and solve the problem.”
Matthews concluded: “It is obvious that RFID technology has taken shape. We are very proud to be one of the first Wal-Mart suppliers to meet the retailer’s requirements. But we still face many problems, such as how to deploy RFID technology, Wal-Mart and its suppliers What information should be shared between, etc. However, one thing we can be clear is that this technology can help us improve operational efficiency, cut costs and increase revenue.
PEAK has made an important contribution to the success of our pilot program. The company helped us determine business processes, select and install RFID equipment, and develop SAP interfaces. They have become our long-term business partners and are fully committed to helping us achieve our business goals. ”
About PEAK Technologies, Inc.
As a subsidiary of RR Donnelley, PEAK Technologies is a global provider of automatic identification and data collection (AIDC) systems, enterprise mobility solutions, and related services and support. PEAK’s main applications include solutions for warehousing, manufacturing, distribution and field operations. With market leadership and strong financial management capabilities, PEAK can provide you with stable and reliable solutions and provide long-term support for your solutions. PEAK Technologies is headquartered in Columbia, Maryland, USA, has more than 800 employees, and has branches in the United States, Canada, Mexico and Europe. For more information, please visit: www.peaktech.com, send an email to: [email protected], or call: (888) 275-7325.
About Zebra Technologies
Zebra Technologies Corporation (Nasdaq stock code: ZBRA) is committed to satisfying their needs for business improvement and security applications by providing reliable and innovative on-demand printing solutions to customers in more than 100 countries or regions around the world need. More than 90% of the Fortune 500 companies use Zebra brand printers. Zebra brand thermal barcode, “smart” label and receipt printers, and plastic card printers have a wide range of application advantages, which can enhance safety, increase productivity, improve quality, reduce costs, and provide better customer service. The company has sold more than 5 million printers including RFID printers/encoders and wireless mobile solutions. It also provides related software, connection solutions and printing supplies. About Zebra’s dedicated printing solutions can be obtained from www.zebra.com.cn.
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