The Cutting Edge of RFID

With all of the hype, confusion and doubt surrounding the future viability of Radio Frequency Identification (RFID) technology, The Gillette Company remains unfazed, staying the course with a razor-sharp strategy that intends to mine the fathomless efficiencies that the electronic product code (EPC) offers. By using RFID as a core enabler, Gillette says it aims to improve on-shelf availability of its popular products, while reducing costs and inventory across the entire organization. As the world's leading maker of shaving supplies, Gillette is best known for its Sensor, Trac II, and premium-priced Mach3 and M3Power razor blades. The company is also a leading producer of batteries with its Duracell brand. Other popular Gillette brands include Braun, Oral-B and Right Guard. Certainly, Gillette's envious product portfolio could be further bolstered at the retail level with a generous helping of RFID capabilities. But how exactly, does the company plan to accomplish such lofty aspirations in the face of surmounting RFID issues like tag accuracy and a tangible return on investment?

If you ask Dick Cantwell, Gillette's vice president, Global Value Chain, EPC & Retail Availability of Auto ID, practice is what will ultimately make RFID perfect. Cantwell firmly believes in a simple, hands-on approach to RFID dubbed "Launch and Learn", a term that is painfully self-explanatory. "It's the best way to get experience, especially as you push the technology down to the operators who are loading the pallets, trucks and shelves," says Cantwell. "That's where you really start to learn the real value of the technology and where you can start to re-engineer your process to make use of it."

First Things First
Even though a tried-and-true RFID playbook does not exist today, Gillette is making sure to follow through on a handful of key primer steps in order to meet its RFID goals. Some of these steps are being designed by visiting traditional models of forecasting and planning, according to Mike Duffy, vice president, North America Value Chain at Gillette. For example, Duffy says it's essential for any organization to understand the data that is currently available first before getting wrapped around any RFID initiative. This includes understanding how to leverage point-of-sale (POS) data in order to migrate towards a consumer driven supply network. "RFID is the next step in the evolution where you get real-time data," says Duffy. "I have challenged my organization to figure out ways to leverage data available today to improve operations while keeping in mind that RFID is going to provide richer and more real-time data in the future."

Duffy says that because RFID technology progressed so quickly, Gillette feels that it is just beginning to catch up to its capabilities now in order to get the best business practices and processes in place. "But at the same time, if you can't figure out how to use data today -- the data that we have -- we'll never be able to fully realize the benefits of RFID."

Data Synch Driver
Another major RFID driver at Gillette is data synchronization. The company is building a global product catalog internally to get all of its data aligned around the world. Duffy reaffirms that Gillette's global product catalog will truly become one source of data for the company, eliminating the need for local product catalogs. Duffy attributes some of the success of its eCommerce initiative to Transora and a handful of retail and data synch partners, including UCCnet. "To actually create a global product catalog is a lot of work," says Duffy. "A lot of people are involved, across almost every function of the company. If you can imagine, everyone has their own attributes that they want included in the catalog, and it amounts to a tremendous amount of work."

The Ultimate Challenge
In order for Gillette to gain a true glimpse into the crystal ball of RFID, and more importantly, what that glimpse of reality means to the company, Duffy posed the ultimate challenge to Cantwell and his team of RFID visionaries:

• CHALLENGE #1 - Asses the material flow from the distribution center (DC). Map out the "as-is" process now and what the "to-be" will look like in an RFID-enabled world. By doing this, Duffy says improvements are discovered that can be applied immediately, independent of technology. Through this procedure, duplications and redundancies surface and these inefficiencies can be eliminated when doing any process mapping. "As you develop the 'to be' you can ask yourself what this new process will look like, for example, within the four walls of the DC," says Duffy.

• CHALLENGE #2 - How do you move towards a consumer driven supply network by leveraging POS data? On the chart of RFID evolution there is "today" and "to be". Duffy says this challenge lies somewhere in between. "If you can't figure this out, there really is no way to figure out how to leverage all of the data that RFID will generate," says Duffy. Instead of pointing out all of RFID's flaws, Duffy says it also makes much more sense spending the time to figure out what has to change from a business process perspective to leverage the technology. "The technology will figure itself out," says Duffy. "What we need to do as a business is figure out what we're going to do to leverage the technology. A lot of people have talked about RetailLink at Wal-Mart and POS data from whoever but they don't know how to use it. If that's already available today and people don't know how to use it we should be figuring out as a business --not just Gillette but other companies -- how do we use data we have available to us today as we look into the future."

What's Happening Now
Tagging cases and pallets is currently the main focus for Gillette on the RFID front. The company has identified efficiencies generated by the elimination of blind spots from the select DCs that are receiving tagged product. There is still a huge amount of money and effort invested in claims/deduction departments at most consumer goods firms and often times the write-offs from these deductions are skimmed off the profit. "RFID helps provide visibility into the leakage where the problems might have occurred," says Duffy.

Gillette ships EPC-tagged cases and pallets of its product weekly to Wal-Mart's Sanger, Texas DC out of its Chicago DC. Between 90 percent and 100 percent of these SKU's have EPC tags. "We're exchanging information based on those shipments," says Cantwell. "The failure rate on tags is very manageable right now. A year ago I don't know if I could have made that same assessment."

Cantwell says Wal-Mart is sharing data about where Gillette's products are, when they've been received, when they've been sorted and shipped out to stores, and when they are received at stores. "We're working closely with Wal-Mart and other leading retailers to look at how that information can be used collaboratively to better pull goods from the back room when shelves need to be restocked, better manage the inventory coming into the store, and keeping track of proof of delivery when shipments are being received at the dock door," says Cantwell. "All of this is helping us both create accurate book stock for the retailer and it provides them with the ability to know where the goods are and when they need them, and the processes to help them to get at those goods quickly and pull them through to the consumers."

Gillette has also established a central data warehouse that collects all raw RFID data, which in turn, Gillette transforms into business intelligence, working internally with its own IT department and external vendors, in order to create meaningful applications. "Right now it's very much experimental and developmental," says Cantwell. "If Mike wants to get a lens into this info, he can. At this point it's not a standard operating practice within the business but it will be in 12 to 18 months, so we're developing that capability and competency right now."

Cantwell also says Gillette's ability to exchange information is increasing every day. Because of this, more of Gillette's customers are thinking about how to re-engineer their processes to take advantage of this information in order to make business transactions easier. "We're very much moving in the right direction and I would say in the next two to five years we will begin to see pallet, case and inner pack applications of EPC technology becoming second nature." Longer term, Cantwell says the final 100 yards will be unit level tagging, but that ultimate RFID pipedream can only become a reality if a firm understanding to harness this technology happens now. "We feel that by tagging pallets, cases and inner packs right now, we can attack the meat of the pork chop in terms of the business opportunities and in terms of making it easier to replenish shelves and keep DCs fully stocked, we'll be ahead of the curve," says Cantwell. "That's really ground zero for us right now."