The Kennedy Group

Tracking Reusable Containers: Selecting the appropriate solution –Barcodes

or RFIDBy: Kevin Marrie

CONFIDENTIAL

The Kennedy GroupGlobal Solutions that Brand, Promote, Identify and Track

Products throughout their Life Cycle

Founded 1974: Celebrating our 40th anniversary Family-owned and operated

WHO WE ARE

The Kennedy Group Business Units• Label & Packaging Products

Provide decorative labeling, durable and nondurable identifications systems and promotional products.

• Promotional Response ProductsProvider of advertising solutions for newspaper, direct mail, and inserts.

• RFID SolutionsProvider of RFID solutions.

• Material Handling & Identification ProductsIdentification systems for reusable containers, racks, pallets and other reusable packaging.

Our Customers

Why track returnables?• Economics

– Fleet shrinkage• 15-30% is the typical annual loss in the returnable industry. Do the math. A typical large

regional baker has approximately 1 million bakery baskets in their fleet. 15-30% = 150,000 to 300,000 baskets lost annually multiplied by the cost of each asset approximately $5.00. Your annual loss for replacement cost = $750,000 to $1,500,000

– Corrugated replacements• A recent industrial account has looked at tracking returnables because their corrugated

costs exceed $500,000 annually. With a complete returnable system in place that cost should really be zero

– Labor costs• Alleviate disruptions in operations• Alleviate order fulfillment shortages• Gives visibility to your returnable assets in the supply chain• Contributes positively to Lean efforts in manufacturing

How to track returnables Barcode vs. RFID?

What are the fundamental differences between RFID & barcode?1. A barcode requires a line of sight to record the

scan and RFID requires only proximity to the reader.

a. There are 200 fold down RPCs on this pallet. A barcode would require 200 scans by hand. If RFID is utilized, the pallet could be driven through a portal scanner at a dock door or some choke point and read all tags instantaneously. RF eliminates labor costs and the human element- lowers costs, increases accuracy.

2. RFID tags can be programmed and re-programmed. Barcode info cannot be changed.

3. Barcodes nameplates are less expensive than RFID nameplates.

Barcodes• Number cannot change• Durable barcode nameplates

range from .05 -.10/ea. in volume

RFID

• Can be reprogrammed• Durable RFID nameplates range

from .20 -.30/ea. in volume

So what system makes most sense for you? It all depends on your particular application.

Here are some typical items to consider…

What to consider when looking at tracking returnables Barcode vs. RFID:

• Current flow:– Review the current flow of the returnable in the supply chain

from start to finish to start again– Can there be conveyor reads– How do the returnables get palletized– Do the pallets get shrink wrapped– Can a hand scan be accomplished in the current work flow

• # of transactions processed daily - high/low? • Do you want to take the human element out of the

equation• ROI / Economics

CASE STUDY 1: GLOBAL PRODUCE

Global Produce utilizes barcodes to track their Buckhorn knockdown containers

• Global Produce in Lake Wales, FL is one of largest grower/suppliers of watermelons in the US. They ship to 7 DCs total, however, a majority of their shipments go to 2 DCs

• Lee Wroten, Vice President at Global Produce, turned to Buckhorn for returnable knockdown bins because of the economics provided by the returnable containers

Global Produce

• Previously utilized non-returnable containers you see these in the grocery store

Global Produce• Global Produce purchased 11,000

Buckhorn plastic returnable knockdown bins

• Once in the system, Mr. Wroten was experiencing something very typical – the returnables were not making their way back

‾ Typical turn times ranged from several weeks to not getting them back at all

‾ Purchasing additional bins and procuring corrugated expendables as a stop gap was destroying his ROI

• Chuck Acton from Buckhorn suggested tracking the bins and suggested working with The Kennedy Group

Global Produce• Mr. Wroten decided on barcodes for

a few reasons:– Not highly transactional

Maximum he would ever ship out in a day would be 500 bins

– Fit perfectly in his current production flow

– Attractive cost• The ROI was compelling:

‾ Shortly after implementing the tracking program, the turn time was averaging 7-10 business days

‾ In addition, it led to discovering the “lost” bins in the system

A closer look at the Barcode Nameplate

Global Produce Process• Watermelons are:

‾ Taken off the truck and placed on a conveyor

‾ Washed, quick dried and then labeled

‾ Sized and packed into the returnables

‾ Heads down the conveyor slowly

‾ About 100 feet down the conveyor, the returnable filled with watermelons is weighed, the Barcode Nameplate is scanned and an inventory tag/shipping tag is generated

Global Produce Process• The inventory/shipping tag

contains information about what is in that bin, where it came from and the day it was packed

• The shipping tag is tied to that particular bin

• These bins go into a cooler storage staging area

• When the end customers place their orders, the shipping tags are scanned as a load of watermelons is leaving the facility

• This tells Global Produce when a particular bin left and where it went

Global Produce Process

• When an order gets placed, the perforated shipping tags get torn in half and taken into the office to generate the bill of lading

This is a screen shot of the inventory control interface.

Global Produce Process

• When the bins return, the barcode nameplate gets scanned and returnable bins is logged back into Global Produce inventory

• They can then determine:‾ How long each bin was gone‾ The average time of returns‾ Which customer/DC was tardy

in returning the bins‾ Which customer/DC returned

the most damaged bins‾ Or any other measurable data

CASE STUDY 2: MAJOR NORTH AMERICAN RETAILER

Implementing RFID to track plastic hand-held containers, pallets and merchandise

• Why this retailer turned to RFID?– Number of transactions: up to 60,000 daily– Eliminate human element/labor savings– Read what was inside the container(no line of

sight)– Beyond barcode capabilities

3 Parties at Play Here & 100’s of Locations

Retail’s DC/cross-dock facility

Manufacturer/vendor(2,500 total; 300

participating to date)100 Retail Stores

Pallet & Tote RFID Nameplates

Item Level RFID Labels• Paper RFID labels

(SmartTherms) are sent to the manufacturer for tagging item level products and corrugated boxes that do not get shipped in returnable containers

The Supplier/Manufacturer

This tunnel is at a more advanced vendor . The empty tote gets read and the RFID tag gets associated with the ASN and items that will be packed inside the tote.

The Supplier/Manufacturer

The full tote gets read again as it leaves the vendor and heads to the DC/Cross-Dock. For less advanced vendors this is achieved with barcode or manually.

DC/Cross-Dock

As the tote arrives at the DC/Cross-Dock, it is read in an RFID conveyor tunnel. It reads the master tote RFID tag (associated with the ASN and contents of the tote), it also reads the RFID tags that are applied to the items in the tote. If all are in accordance it moves on to the next step. If not, it gets sent to be manually checked.

DC/Cross-Dock

• After the tunnel read the containers get automatically routed to a lane dedicated to the exact store.

DC/Cross-Dock• The boxes are then palletized, read

again to verify all boxes belong to the specified store. The store and shipment get associated to that pallet RFID nameplate. They are then shipped to the store.

• The process at the store is all manual. But they verify the tote and the merchandise inside is received and report that back to the DC/Cross-Dock.

• The plan next year is to use handhelds and in two years a tunnel in every store for receiving.

Results to date

• Reduced error rate tenfold - .6% to .06%• Savings conservatively calculated to be

$7,500,000 annually

The Kennedy Group

Booth # 6826

38601 Kennedy Parkway

Willoughby, Ohio 44094

440.951.7660

kennedygroup1@kennedygrp.com

www.kennedygrp.com

Thank You