Look To Print-And-Apply To Improve Distribution Efficiency

Though RFID has seen the lion’s share of press in regards to data collection and identification compliance, bar codes have not gone away. According to analyst firm VDC, the bar code scanning market reached $1.6 billion in 2005, and the bar code printing market hit $1.8 billion. Both are expected to grow over the next several years as well. The RFID market, which includes hardware, software, and services, reached $1.8 billion, with only $250 million in the supply chain in 2005. The majority of companies are implementing RFID at the most basic level to comply with RFID mandates — RFID printers are relegated to a corner of the DC, printed labels are manually applied, and the labels are read via dock door RFID readers. This method is not efficient, but it’s what companies are doing for now. However, as the volume of RFID-tagged goods increases, sustaining slap-and-ship RFID will be nearly impossible. Integrating RFID into DC sorting lines — or even production — is the next step, and you only have to look at the efficiencies inline print-and-apply bar coding has provided to appreciate the benefits.

RFID ADOPTION PROPELLED BY MANDATES

Because RFID adoption is largely driven by compliance mandates, companies will continue with a bare-bones approach until the mandates ramp up. Some companies are skeptical of the rate at which that ramping up will happen. In the September issue of Integrated Solutions we profiled Wal-Mart and Target supplier Conair Corp., which was using slap-and-ship to comply with retailer RFID mandates. In the article, the director of warehousing and distribution said he anticipated moving to an automated approach to RFID when the volume of shipped products reached 40%. He also expressed skepticism as to the scope and speed of the drive toward RFID. Linda Delaney, senior director of product management for Paxar Corp., can vouch for this criticism. “The organizations requiring RFID — Wal-Mart, Target, the DoD — haven’t put their teeth into the mandates yet,” she says. “They aren’t charging customers back yet for bad or missing RFID labels, for example.”

But, according to a recent VDC study, the ramp-up will happen. A May 2005 white paper states that the RFID market is in its last test stage. With all of the retailer (Wal-Mart, Target, Tesco, Metro, Albertsons) and government (DoD, FDA) RFID initiatives, most major corporations are piloting, evaluating, and deploying RFID. VDC anticipates the RFID market to reach $5.9 billion in revenues by 2008.

Applying RFID tags in a slap-and-ship method can only last so long before the tag volume becomes too high. At that point, called the “tipping point,” moving RFID label application into the production line makes the most business sense. There is no set rule as to what that tipping point is, however. But a general rule of thumb is when companies are shipping at least 30% of their products with RFID tags. As mandates gather more and more steam, and more DCs are equipped to receive RFID shipments, suppliers will see that increase and volume. You can reduce the pain of tagging a larger volume of products by automating your procedures and considering print-and-apply.

PRINT-AND-APPLY INCREASES RFID TAGGING EFFICIENCY

Print-and-apply describes the process where a label is printed (or encoded), verified (sometimes), then automatically applied. “Print-and-apply is still largely used in bar coding applications,” says Stephen Hull, RFID product manager for SATO America. “We haven’t seen a large adoption of printer applicators in RFID, largely due to price. A company will spend $4,000 for a desktop printer, as opposed to $20,000 for a printer applicator, because the company is only trying to meet the bare minimum of a mandate. We’re still not seeing a mass adoption of suppliers who want to use RFID to increase their own operational efficiency.” 

If you look at the bar code print-and-apply processes being used by companies today, the operational efficiencies are evident, however. “Companies using printer/applicators in manufacturing and distribution are highly automated,” says Delaney. “Walking back and forth to a stationary printer isn’t productive, and companies want to print at the point they need to.” Several of Paxar’s customers using print-and-apply have experienced significant savings due to the improved process automation. In one case, a retail goods manufacturer saved $146,575 after an $84,945 investment in print-and-apply item labeling. In another, an apparel manufacturer used inline printing for inbound carton labeling in its DC and saved $1,062,229 — with an investment of less than $250,000.

Companies could also make the case for applying RFID tags in production if their trading partners depend on cross-docking in the DCs (e.g. breaking down and repalletizing shipments to fit specific orders for stores). In this situation, there may not be time to take pallets out of the distribution process to apply RFID tags. “Slap and ship might not be sufficient in cross-docking situations,” says Andrew Moore, senior product marketing manager for Printronix. “We have a customer that ships only 25 RFID-tagged cases at a time, but the cross-docking window of its partner is so narrow they’ve had to move the tagging to the sorting line.”

When implementing RFID printers/encoders/applicators into your sorting or production lines, you’ll need to consider more elements than if it were a designated area of the DC. Some factors to keep in mind include:
• There is a great deal of moving metal in production. You’ll need to find an area with the least amount of radio frequency interference.
• Production speed will be affected by the added step of RFID tagging. You might need to integrate two to three RFID applicators per production line to maintain production speeds.
• Remember that RFID applicators need to be accessible for maintenance, printer ribbon changes, bad tag removal, etc.

Additionally, whether you’re implementing RFID applicators in the DC or in production lines, you’ll want to ensure the printer is compatible with your existing systems. “Companies need to understand the IT requirements going in and make sure all necessary printer drivers and languages are compatible with their legacy systems,” says Moore. “Ask applicator vendors if their hardware is compatible with your WMS (warehouse management system) and if it is working in an environment today.”