Jack Link's Beef Jerky Case Study: "Wal-Mart Didn't Make Me Do It" Part Two: An Approach to RFID Implementation
Written By: Joseph J. Strub
Published On: March 9 2005
Approach to RFID Implementation
Some companies want the benefits of new technology, such as RFID, on their timetable without a gun, loaded with threats of lost customer sales, pointed at their corporate heads. This article looks at a company that chose to get in front of the technology curve before the information highway passed it by.
Jack Link's Beef Jerky, like so many small and medium enterprises (SMEs), had been intensely focused on manufacturing and making the best beef jerky available. As a result, the company had neglected its supply chain for several years. The company decided to reverse this set of circumstances by implementing radio frequency identification (RFID) technology together with its underlying best practices and the support of Microsoft.
This article examines
- RFID philosophy for SMEs (see Part One)
- Company background (see Part One)
- Approaches to RFID implementation
- Expected benefits
- Lessons learned
In this Jack Link's Beef Jerky case study, the reader will see how a four-phased approach allowed for the gradual assimilation of a new technology into an organization - an approach that might bear repeating.
As typical with any new technology, it makes senses to start small, and feel your way around, but to also think and plan for bigger opportunities. This describes the approach Jack Link's Beef Jerky adopted in implementing RFID. The company knew that false starts could occur, some backtracking might be required, and a certain amount of trial-and-error would be part of the discovery process. Given these caveats, the company was confident of the benefits to be gained. Furthermore, it knew that eventually the technology would be deployed throughout all of the manufacturing and distribution facilities. To this end, a four-phase implementation plan was devised, consisting of the following:
- Phase I Pilot RFID (completed)
- Phase II Establish Manufacturing Foundation (in process)
- Phase III Gain Manufacturing Visibility and Lot Tracking (in process)
- Phase IV Redesign Logistic and Distribution Processes (forthcoming)
Before getting into the details of the project, it is important to understand the cast of players or vendors and roles that they played.
- Microsoft's enterprise resource planning (ERP) offering, Navision, and an early version of its RFID middleware were used as the central data repository and processor.
- ABC Computers, a Microsoft Business Solutions Value Added Reseller, was responsible for overall project management, business process redesign, and integration services.
- SAMSys provided the antennas and transceivers/readers.
- Sato Printers provided the RFID label printers.
- Avery Dennison was the source for passive RFID tags and compliance services.
Of particular interest, in the aforementioned case study on KiMS, a similar and varied list of vendors was utilized, putting a premium on the need for effective and continual project management. As has been said previously, while this article is not an endorsement of these vendors, full and careful consideration should be given to vendors who have experience "laboring in the trenches" and have conducted such implementations before. The "been there—done that" mentality comes to mind.
This is Part Two of a three-part note.
Part One presented an RFID philosophy for SMEs and the company background.
Part Three will discuss the expected benefits and lessons learned.
Phase I Pilot RFID
Once the equipment was in place, Phase I lasted three weeks at a cost of $48K (USD). With a very limited scope, this phase concentrated on one of the twelve production lines and a single product being shipped to Wal-Mart.
The electronic product code (EPC) number assignment is done in the ERP software. For a quick refresher on EPC, check out the TEC article, Electronic Product Code (EPC): A Key to RFID. The EPC essentially acts as a license plate in which the real intelligence of the code is maintained in the ERP software. The EPC numbers are communicated down to the RFID label printer using a prototype RFID middleware. The printer then encodes the EPC number in a smart label (combined RFID tag and bar code label). In so doing the printer is also able to verify that the tag actually works during the printing process. Dysfunctional tags can, therefore, be eliminated at the source before being affixed to a carton or pallet.
Labels are applied to the cartons/cases as they move down a conveyor system to the palletizing area. A transceiver/reader installed underneath the conveyor system reads every case and communicates the results to the RFID middleware. At the end of the conveyor system, the cases are consolidated onto a pallet and shrink-wrapped.
The RFID middleware filters and processes the case reads and communicates back to the ERP software. After ninety cases are "seen," which represents a pallet load, a pallet label is printed. The resulting information is used to update data repository maintained in the ERP software.
As part of the shrink-wrapping process, the pallet is rotated as antennas, located at the side and on the top, read the cases contained on the pallet. Because of inner cases and current state of the technology, it is impossible to read all of the cases on the pallet. To date, the read rate has been around 80 percent, on which improvements are expected.
The inability to reliably read all cases contained on a pallet is a problem that all companies working with RFID are facing. Because the RFID middleware maintains "in memory" the cases read as part of the conveyor system, the software infers which other cases should be present on the pallet. After the shrink-wrapping process is complete, the pallet label is applied and the product is ready for shipment. Eventually, readers will be in place to record pallets arriving and departing the distribution center, thereby completing the cycle.
As previously mentioned, this initial phase served as a learning phase and was aimed at achieving trading partner compliance. The following phases, however, were aimed at driving internal business benefits for Jack Link's Beef Jerky by using RFID technology.
Phase II Establish Manufacturing Foundation
A core element of Phase II was the implementation of the manufacturing component of the ERP software. Prior to RFID, Jack Link's Beef Jerky felt that it would have been impractical to manually capture all of the information needed to provide visibility into the manufacturing processes. RFID, however, provides the automated data capture technology that will help Jack Link's Beef Jerky collect granular data economically. This data, after being massaged by the RFID middleware and integrated into the ERP software, provides the foundation on which sound and supportable business decisions can be made.
Phase III Gain Manufacturing Visibility and Lot Tracking
Complying with US Department of Agriculture (USDA) regulations has been a tedious and largely manual process to date for Jack Link's Beef Jerky. The As Is process is a paper-based system with the information being recorded in a separate, external system. Raw material is put into totes with a handwritten piece of paper attached to allow for lot tracking. The process becomes more complex with every production step as a generic lot of raw meat is increasingly differentiated (different cuts, different spices added, different smoking processes etc.) At the end of each operation, the work-in-process (WIP) is placed in another tote and more paper is introduced. At the end of the process, all of the pieces of paper are recorded in a separate system that is not integrated with the ERP software.
Fortunately, the company never had a recall in its history. However, to be prepared for such as crisis, the company conducts frequent mock recalls, which are tedious and time-consuming.
Additionally, the company has been unable to gain the type of operational visibility and control required to understand where yield losses occur. Furthermore, the lack of visibility into WIP inventory and unavailability of accurate data makes the development of a basis for better product costing extremely difficult.
In the To Be process raw materials are received in large totes and then deconsolidated into smaller totes that hold the raw material throughout the different manufacturing processes. As part of the receiving process the raw material lot information is captured from vendor-supplied paper documents using handheld devices and is recorded into the ERP software. As the items are deconsolidated into the smaller totes, the unique ID of the permanent RFID tag attached to the totes is continually associated with the lot information.
Raw material lots, which are ingredients into the different production steps, are automatically recorded for lot tracking purposes. The ability now exists to track WIP by the location of the tote. As a result, the company can better leverage the capacity and capabilities of its domestic manufacturing sites by performing various production processes at different plants and cross-shipping product.
Additionally, the company will be using scales to weigh the contents of a tote before and after being consumed in a production step. By correlating this weight with the unique ID of the tote, yield variances will become immediately apparent and, hopefully, easier to explain and resolve. If Jack Link's Beef Jerky's use of RFID can deliver a 1 percent increase in yield, the entire cost of the project would be recouped. Finally, automating existing manual processes in a real-time and targeted manner will allow for the immediate enforcement of rules such as alerting an operator if a recalled case is about to be shipped.
Whereas Phase II concerns establishing a manufacturing foundation, Phase III addresses inbound material supplies and lot tracking. The two phases cannot really be separated as the recording of lot information is part of the receiving process and also is a prerequisite for automating the manufacturing lot tracking. However, the foundation must be laid first before the recording and tracking structure could be built.
Essentially, in Phase III the manual recording processes will be automated through the deployment of RFID technology.
Phase IV Redesign Logistic and Distribution Processes
Phase I only concentrated on a Wal-Mart specific SKU bound for its Texas (US) distribution center (DC). In Phase IV RFID/EPC-compliant tags will be applied to all cases. Furthermore, Jack Link's Beef Jerky will be able to leverage the Phase III results by associating the lot information with the individual cases and use the case level tags to largely redesign the distribution and logistics processes.
Specifically, while traveling down the conveyor at the packaging line, cases will be read to report finished goods production as well as packaging material consumption into the ERP software. Currently, these tasks are performed manually. When the manufacturing plants ship pallets to the central DC, their physical movement will trigger a stock transfer. As a result, visibility to inventory in transit is now available until physical receipt at the central distribution center (DC). The receipt of goods at the DC will be automated, thereby streamlining current manual processes and opening up new opportunities for cross-docking.
As previously mentioned, real-time messaging can alert operators about to load a recalled case or the wrong pallet onto a truck. Jack Link's Beef Jerky believes that the opportunities in this area are almost limitless based on a flexible and extensible framework to configure filters, rules, and alerts.
In general, Phase IV will result in the automatic triggering of virtual inventory movements resulting from the read of RFID labels. Due to the fact that only one production line was needed to be RFID-enabled to comply with the Wal-Mart mandate, the automatic triggering was not deemed to be a high priority in Phase I. Obviously, with the inclusion of all products, the automatic triggering of inventory movements is now a possibility.
The estimated time for the return on investment (ROI) for all four phases is twelve months.
This concludes Part Two of a three-part note.
Part One presented the RFID Philosophy for SME's and company background.
Part Three will discuss the expected benefits and lessons learned.
About the Author
Joseph J. Strub has extensive experience as a manager and senior consultant in planning and executing ERP projects for manufacturing and distribution systems for large to medium-size companies in the retail, food and beverage, chemical, and CPG process industries. Additionally, Strub was a consultant and Information Systems Auditor with PricewaterhouseCoopers and an applications development and support manager for Fortune 100 companies.
He can be reached at JoeStrub@writecompanyplus.com.