Shifting Into High Gear

When a 900-pound gorilla walks into your living room, you have two options: Pretend it's not there and hope it goes away, or confront it head-on. Admittedly, confronting a 900-pound gorilla head-on can be a daunting task, but when the alternative is getting trampled and left in the wreckage, wrestling the beast doesn't sound so bad. That's sort of the situation many consumer goods companies are in right now, with Wal-Mart's RFID playing the role of the 900-pound gorilla. And while the gorilla may not quite be in the living room at this point, its footsteps are getting louder, and the time to choose between action and hope is growing short. Pacific Cycle, which markets products under a range of brands including Schwinn, Mongoose, GT, Roadmaster, Pacific, Dyno, Murray and Flexible Flyer, has chosen to meet the mandate head-on with an RFID rollout designed not only to comply with Wal-Mart's mandate, but to improve internal efficiency.

Decision to Deploy
Pacific Cycle's decision to deploy was driven by mandates from two of the company's top customers, Wal-Mart and Target, but according to Edwin Matthews, director IS for Pacific Cycle, "once (the customers) made the commitment to use this technology within the retail environment, it starts to make sense to push this upstream, to benefit internally as well." It works like this: As Pacific Cycle tags product, either at the DC or on the manufacturing line, the company is then able to track each item as it moves through the supply chain. This tracking allows Pacific Cycle to better streamline the supply chain, reduce operating costs, and better serve the end customers by making sure product is on the shelves.

In addition, "by tracking items within the retail store and determining what factors impact sales," Matthews explains, "we hope to learn how to increase sales at retail stores."

The fact that bicycles are "one item, one case" also helps, since it means that case-level tagging, as mandated, is also item-level tagging, allowing Pacific Cycle to track its bikes all the way to the shelves, even directing store associates to product that has reached the store but is not yet on the shelves.

Picking and Choosing
There's a big gap between decision and deployment, however. Pacific Cycle's first step was to choose RFID vendors, then to do a site evaluation and bring in test equipment (chips, readers and antennae). This process led to the selection of Class 1 RFID tags from Alien, Zebra R4M RFID printer/encoders, Printronix RFID printers and SAMSys MP9320 UHF portal readers. Two software pilots were selected, both integrating with Pacific Cycle's SAP backend: Label production linked through SAP to produce EPC GTIN as well as SSCC tags; RFID data collection is through Peak Technologies, building an Access Database that will be moved over to SAP's Business Warehouse "in the near future."

After testing and selection came the installation of printers and readers in the Pacific Cycle DC in southern Illinois. Product staging and tag application areas were studied and refined during this period. Pilot shipments were started and continue, working with read rates as well as greater integration into the SAP backend, because, as Matthews puts it, "we want to be able to utilize this information for more than just slap and ship."

The initial deployment took about two months, and went fairly smoothly, although the youthfulness of RFID technology has brought some obstacles to the process. Pacific Cycle is still trying to achieve 100 percent pallet reads, as well as still defining the new procedures as the company works through in-house pilots to retail pilots to full rollout. RFID costs are still relatively high, so Pacific Cycle is working on customer requirements and internal procedures while waiting for prices to come down.

Benefits Aplenty
Since Pacific Cycle is utilizing essentially item-level tracking, the company expects to know exactly how long products -- even a single, specific bike -- sit in one spot, as well as how many units are on the retail floor. This data should help streamline processes and inventory planning. In a Wal-Mart or Target atmosphere, as RFID costs come down, Pacific Cycle expects to use RFID to increase product visibility and availability -- as well as maintaining shelf space by meeting those companies' mandates.

Matthews also believes that RFID will yield concrete benefits in comparison with POS. "If we can determine that there is inventory at the store and not on the retail floor, and then get someone to act on that, we feel strongly we will increase sales and ensure consumers have access to the good they need."

Pacific Cycle isn't there yet, but with this deployment, the company is well on its way. It's still to early to see quantifiable results, but forecasted profitability from improved inventory management and sell-through at retail exceeds the costs of implementation, for a solid ROI. And if all goes even remotely according to plan, by the time that 900-pound gorilla that is the Wal-Mart RFID mandate actually reaches the living room, Pacific Cycle will have it just about tamed.