Sweeping Business Value From RFID

Believing early on that RFID holds the potential to make a major impact on the consumer goods industry, its customers and retail partners, Electrolux Home Care Products -- the floor care and cleaning products division of Electrolux -- was one of 37 companies to voluntarily say "we'll tag" when Wal-Mart's RFID mandate first came down on its Top 100 consumer goods suppliers.

"We saw RFID was an opportunity not only to explore what we consider a critical and strategic technology, but also to improve those relationships...with Wal-Mart, Target and other major retailers," says Ed Delaporte, the IT director at Electrolux responsible for initially selling the RFID project to the company's executive management team.

Today, after meeting the RFID requirements from both Wal-Mart and Target, Electrolux expects the enhanced visibility provided through RFID to strengthen its overall in-stock position with major retailers and help achieve maximum benefits by re-engineering its internal supply chain.

Exploring the Options

The owner of Electrolux and Eureka brands began exploring its RFID options at the start of 2004. The company tapped Xterprise to perform case and pallet testing. Initial analysis and results determined that Electrolux' products were "RFID friendly." A second pass of testing -- conducted by Xterprise -- searched for a common location on all models where an RFID tag could be placed for high-read results.

"For finished goods -- any high-end large box -- we found it was best to place the tag at the top left of the box. In any accessory, it was best placed on top of the box for readability," says Don Fiessinger, IT project leader, Electrolux. "From those results, we committed right away in our tagging reviews with Wal-Mart to 100 percent tagging, which is unheard of when most people were negotiating 25 percent to 30 percent."

A simpler solution

At this point, Electrolux Home Care Products brought in supply chain execution and optimization vendors for evaluation. After considering its options, Electrolux chose to implement Manhattan Associates' RFID in a Box® solution -- a fully integrated, EPC-compliant solution that includes tags, readers and printers.

The solution's Integration Manager platform provides connectivity to Electrolux' existing J.D. Edwards enterprise resource planning (ERP) system, while the solution's EPC Manager component reads tagged items and shares the information for improved product tracking and traceability.

Frank Nestor, Distribution Center (DC) Operations for Electrolux, cited the solution's ease-of-use as a deciding factor.

"Manhattan Associates software looked very simple. I was able to follow and understand during the proposal period and if I could do that, then my people could too," he says.

Operation Clean Sweep

Manhattan Associates offered a three-month project plan that Electrolux Home Care Products undertook in September 2004. Within 90 days Electrolux had a working system to pilot with Wal-Mart before go-live. Electrolux shipped its first RFID compliance order to Wal-Mart in December 2004 on-time and under budget. It then began shipping RFID compliant orders to Target the first week of May 2005.

Delaporte says the project's success is a testament to Frank Nestor's leadership and the quality of people that make up his DC team. "We walked them through what we needed to accomplish...and within an hour they had figured out how to run the line, how to minimize the number of people that were on the line and how to improve the overall process," he says.

Currently, the company -- which is in Phase One of the RFID pilot -- is reading tagged pallets and cases when they arrive at Wal-Mart's DC, then again when product enters the back room of the store, and then again as product is moved onto the sales floor.

"There are cases when we get product to them on time and it doesn't hit the floor in time for a promotion and we are not where we should be," says Delaporte. "This is the kind of information that we'll be able to use to enhance our partnership with Wal-Mart."

RFID at the Source

Given the current limited scope of Wal-Mart's RFID requirements and the high costs of tagging cases, Electrolux Home Care Products is tagging only at its El Paso, Texas, DC for now. The company will pursue Gen 2 tags/labels, readers and printers in the third and fourth quarters of 2005. In the first quarter of 2006, Delaporte and his team hope to meet increased volume with dramatically cheaper labels from Philips or Texas Instruments addressed via printer applications and automatic powered conveyers.

During Phase Three of the company's RFID project, Electrolux Home Care Products will pursue tagging at production lines in Juarez, Mexico, and China for RFID receipt, put away, pick and ship at the DC level. Delaporte believes Manhattan Associates has the experience to help reach that goal.

"As soon as I started talking China, Manhattan seemed to excel," explains Delaporte. "[Manhattan Associates] showed us that they already had a pharmaceutical business live and running...their presence in Asia made me more comfortable selecting them as an RFID partner."