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Pacific Cycle rides faster with RFID

Pacific Cycle, which designs and markets more bicycles than anyone else in North America, owns the most recognized brands around, including Schwinn, GT Bicycles, Mongoose, Murray, Roadmaster and many others. The bikes are made in Asia and are shipped to the U.S. to Pacific Cycle's two main U.S. distribution centers in Olney, IL, and Vacaville, CA, and then to retailers, sporting goods outlets and independent bicycle dealers across the country. The Madison, WI, company also distributes the bikes worldwide to some 60 different countries through more than 50 international distributors, says Rick Castle, vp of planning and operation systems. All of this makes for a great deal of logistics handling. Tracking the bikes and knowing where they're going is a key aspect of Pacific Cycle's business, so it has invested considerably in precise product tracking.

A division of Dorel Industries Inc., a global consumer products company engaged in designing, manufacturing and marketing a wide range of juvenile, home furnishings and recreational/leisure brands, Pacific Cycle was a pioneer in meeting Wal-Mart's 2005 radio-frequency identification mandate program ahead of time. Wal-Mart's Top 100 Suppliers, of which Pacific Cycle is one, were required to tag all cases and pallet loads shipped to three of Wal-Mart's major distribution centers in Texas by Jan. 1, 2005, in order to facilitate receiving, processing and inventorying of its inbound merchandise. Winning accolades from Wal-Mart as its Co-Managed Supplier of the Year in 2003 for inventory replenishment performance, Pacific Cycle implemented an RFID tagging program in September 2004 and is continuing its involvement with RFID in a big way.

Able to meet the basic guidelines and strategy requirements three months ahead of Wal-Mart's basic deadline (Wal-Mart later stated that all shipments from all of its suppliers must be RFID-enabled by the end of this year), Pacific Cycle had other goals for RFID. The January 2005 deadline was only a spoke in the wheel of the company's successful strategy to effectively use RFID technology on a broader basis. To get a handle on the project, the company says it wanted a scalable, RFID-based system that it could eventually use overall within its business environment to improve on how to deliver products to customers. RFID could also provide more visibility of tagged inventory in customers' supply chains, which would lead to reduced inventories and possibly cost savings.

RFID gives Pacific Cycle additional tracking abilities, lower deductions from retailers and the ability to know exactly where products are in the supply chain, according to Ed Matthews, Pacific Cycle's director of information systems and the company's RFID project leader at the time of the startup. No doubt, there are hitches and glitches along the way in implementing the technology, Matthews has said, but getting a headstart on "meeting the mandate" allowed Pacific Cycle to gain valuable experience and knowledge.

"If you don't get into this now, you're going to be behind," he told attendees during a presentation at a University of Wisconsin Business Consortium RFID Conference last year.

But developing an infrastructure that can handle and interpret scanned RFID data, track products without human intervention and know exactly where products are in the supply chain and how long they've been there has been no small task, but it's now happening. Pacific Cycle is beginning to enjoy improved inventory turnaround and gains in solid knowledge of what's on the retail floor. "Sales increase because you know where the product exists," Matthews says. "Product cannot be sold if it's in the back room."

Pacific Cycle says that's why it's so enthused about RFID. "By tagging products and pallets and reading the RFID information as the product leaves, Pacific knows what has been shipped," Matthews adds. The bikes shipped to Wal-Mart and a few other retailers each have their own RFID tag along with other identification. The tags can be read at multiple points in retailer distribution centers and in stores. The information can be sent back to Pacific Cycle, so that it can track the products.

The bike marketer focused on several processes to achieve its RFID goals. The first goal had to do with reorganizing the picking and shipment process. Explains Matthews, "RFID is used to post goods, issue the products and track what is going out the door. We also had to change the information process so that we understood what was shipped and could get the additional tracking points from our retail partners on when products arrived, as well as to track a specific bike through distribution and out to the sales floor. With that information, Pacific can track products to see if they are received, as well as where they went through the supply chain and if their tags are 'read.'"

In April of 2004, when it began an internal pilot test of manually tagging bike products and "learning the physics," Pacific Cycle sent some limited shipments to Wal-Mart, Matthews remembers. "To distinguish between shipments heading to Wal-Mart with RFID tags and those that were not, we manually tagged products based on a ship-to number as well as a product number. We wrote a custom program that looked at the shipment and determined if labels needed to be printed, and then printed the [RFID] tags with an RFID printer that could encode the tag with the information we put in."

Pacific Cycle then engaged partners to provide expertise in system design, label placement and encoding, software integration and technology selection and began working with several vendors. Some of the vendors include Zebra Technologies (www.rfid.zebra.com) , which provided R4M and R110Xi Series RFID tag and label printer/reader

/encoders to begin producing the labels with tags, as well as RFID tags and more. Symbol Technologies (www.symbol.com) also supplied an RFID system of record management, including hand-held and fixed readers, RFID chips, tags, tag inlays and other systems that Pacific Cycle hooked into its Enterprise Resource Planning (ERP) system. SAP (www.sap.com) furnished its Auto-ID Infrastructure, which allows RFID-based supply-chain management and execution processes across the enterprise and Peak Technologies (www.peaktech.com) provided systems integration and device controllers and drivers. Peak is an end-to-end integrator of automatic identification and mobility solutions for SAP.

Zebra was already a supplier to Pacific Cycle, so it stayed in touch to discuss RFID tagging compliance and what it entailed, recalls Matt Ream, senior manager of RFID systems at Zebra. "When they were ready to move forward with pilot testing the technology to comply with Wal-Mart's mandate, we put them in touch with Peak Technologies, a Zebra integration partner," notes Ream.

"We provided about ten XML-based, R110Xi printer/encoders and UHF Class 0 and 0+ smart tags," he says. "These were particularly well-suited to Pacific Cycle's needs."

The company also tested a variety of tag types and tag positions on shipping cases. Each bike got one RFID tag embedded into a shipping-identification label, printed with product-specific information and bar coding. But metal and water can be a problem with RFID setups, and bikes are mostly made of metal, admits Matthews. "There can be some interference dealing with radio waves," he notes. "It took a significant amount of time to figure out the exact reader placement and how to mount the readers plant-to-plant. It was more complicated than we first thought." RFID positioning has a unique setup at each of the DCs, and comprehensive testing helped Pacific Cycle overcome the positioning challenges. Both Peak and Zebra collaborated with their customer in these pilot efforts. Also, each DC has individual needs.

The tagging program went live in the Olney and Vacaville DCs in September 2004, when Pacific Cycle began shipping four products that incorporated RFID labels to Wal-Mart's DCs. "At that time, we chose four very hot products to track how long it took to get them through the supply chain and onto the retail floor," Matthews tells PD. Since it doesn't ship mixed pallet loads or mixed cases, Pacific Cycle didn't have to deal with tagging split-case shipments.

Ultimately, Pacific Cycle chose Symbol's UHF Class 0 tags with what's called a dual, dipole (antenna) design that eliminates the problem of read-orientation sensitivity to metal and other substances. An RFID chip is incorporated on the hang-tags added to each bike's handles and is manually applied to each bike's shipping container as well as to the pallets that hold the 15 to 20 units (shipping containers).

Peak's Automation Controller software, an internally developed RFID device controller solution for SAP users, was built in SAP's native programming language and handles RFID tag-printing and label-format maintenance.

"One goal was to tie all of the RFID data back to the SAP software so that we could use the information to improve our shipping and receiving operations in relation to our retail customers," Matthews notes. "The Peak Automation Controller was a critical component to the success of our rollout, as it allowed us to leverage our existing SAP infrastructure while seamlessly connecting RFID printers and readers to our application environment. The Automation Controller is also scalable and has the flexibility to adapt to the constant changes in RFID technology."

The printer/encoder software processes the RFID command and validates the tag. It programs the data and then—before printing the label—verifies the data to ensure that the chip is properly encoded with electronic product code (EPC) numbers and only then does it print the bar-code and human-readable information onto the label. The labels identify objects and capture data using radio waves transmitted from the chips within. If a bad tag is detected, it's not verified, but instead is marked "VOID," and the printer issues a new tag.

The DCs were also outfitted with RFID label/tag readers on a couple of dock openings and sent loads of bikes through portal readers. When the cased products are moved by forklift through the shipping doors onto trucks, the tags on the pallets and shipping cases are identified by the readers supported by RFID antennas in the labels. The RFID pallet labels are encoded with delivery numbers and data that assign the pallets to a particular portal reader.

Most of the tags were placed on the leading edge of the cases, which has proven so far to "give the best reads," and this is currently done at the time of shipment, says Castle. "Where appropriate, the bikes are unitized and shipped on corrugated slipsheets," he says. "The quantity can vary by model and/or by customer. There's little or no automation involved."

The portal readers capture the information on the RFID labels as the loads are forklifted through a dock door and onto an outbound truck. The hand-held readers run a program into which warehouse staff members can input delivery information for products that would be going through a specific RFID portal. They can also scan the RFID-tagged products with the hand-held readers to gather information or perform unit-handling consolidations or other functions. As product passes the RFID portals, data is recorded and the information is sent to the SAP AII Infrastructure system, which determines a number of ways to handle the information.

Matthews says as of early 2006, the tag read rates were about 95 percent. "Each product has its own characteristics and must be tested both as it stands alone as well as in a pallet configuration to get the best read rates," he points out.

Shipments arrive at the DCs daily and are then shipped to customers as previously agreed to or when ordered, says Castle. At this stage, he points out, "not all materials are using RFID tags."

The shipments that are tagged can be scanned and the tags can be read by location in the supply chain. A report can be provided about RFID tags not being received by retailers. The data can be transmitted to computer software, which facilitates tracking the product to retailer DCs and, ultimately, to a store's display floor. Data feeds can be sent to Pacific Cycle from retailers (like Wal-Mart) on where the products' RFID tags have been read.

Integrating RFID technology automated several outbound delivery processes. "Pacific can use the information obtained to increase point-of-sale, gauge read-rate accuracy, determine how many tags are not received by retailers and use the technology in the goods-receipt process," says Matthews.

A payback may come as the RFID tags' accumulated identification information provides insight into inventory turnaround. Matthews says he thinks tag pricing is also improving. "For mass quantities of tags, the prices are nearly ten cents apiece, depending on antenna configuration and the label size. Pacific was great at looking in the future and understanding what RFID can do," he points out. "Inventory is a large part of the working capital and lowering it and achieving better product availability to customers is a priority. Generation Two and other performance enhancements look promising for increasing read rates. So branch out as you learn. It's like buying a PC: There will be better and cheaper ones, but you gain nothing if you don't get started."


More information is available:
Peak Technologies, 888/275-7325. www.peaktech.com.
SAP, 888/727-1993. www.sap.com.
Symbol Technologies, 866/416-8545. www.symbol.com.
Zebra Technologies Corp., 847/793-2600. www.rfid.zebra.com.
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