A Case Study on Reducing Shrinkage and Theft in the Supply Chain with Savi's Asset
Management System and RFID Implementation
Courtesy: Savi Technology
Challenges Facing Woolworths Leads to "The Chipping of Goods Initiative"
Woolworths' success depends on its ability to respond to increasing consumer demands. But like most global retailers, Woolworths experiences problems with product "shrinkage" due to lack of asset visibility in the supply chain. Shrinkage problems are due to: incorrect shipment deliveries, stock losses in the distribution center and theft of goods in transit and from the stores themselves. These problems resulting from lack of asset visibility within the supply chain cause many large High Street retailers to lose tens of millions of pounds per year.
Based on these challenges, Woolworths has looked into various measures to resolve their supply chain visibility issues. One such measure is a project based on the introduction of real-time tracking and tracing of goods using radio frequency identification tags.
The project is part of the Chipping of Goods initiative, sponsored by The Home Office to demonstrate how RFID can reduce shrinkage and theft. The Chipping of Goods Initiative is a program that supports innovative demo projects to reduce theft and loss in the supply chain.
Key Technologies for Woolworths' Asset Visibility
Two key technologies were selected to address the problems Woolworths faced: RFID technology and asset management software provided by Savi Technology.
Savi Technology is the proven leader in providing of supply chain asset management, security and collaboration software that is uniquely integrated with automatic data collection and identification systems to provide real-time logistics solutions.
Scope of Initial Project
The initial project was installed at the Primary Woolworths Distribution Center in Swindon, Wiltshire, England. Various other Woolworths retail outlets that are serviced by the Swindon Distribution Center are also set-up with the RFID technology. A total of 900 retails sites across the United Kingdom have been defined for implementation and so far 90 sites have been enabled for the demo project.
The key goal of the project was the integration of Bar Codes, Active RFID and GPS systems into a single supply chain visibility solution.
The implementation from May 2002 to February 2003 included the following Savi products:
Savi Software Products
Savi Hardware Products
The Savi Series 600 components (Readers, Tags, and Signposts) are built on Savi's innovative EchoPoint technology. Savi's EchoPoint technology is a new, innovative technology that uses two operating frequencies. EchoPoint combines long-range communication (at 433.92 MHz) with precise spot-level locating (at 123 kHz and 132 kHz).
The Solution: How It Works
The RFID supply chain solution developed for Woolworths integrates a comprehensive set of technologies, and provides visibility of conveyances and items throughout the warehouse and retail delivery system. This begins with Savi's Series 600 RFID hardware -Tags, Signposts, and Readers, which communicate through Savi's Site Manager to the Savi SmartChain platform and Savi Asset Management System.
It starts with Savi RFID tags on each dolly, and a real-time integration with Woolworths order picking and packaging systems. With the RFID tag identification, Woolworths can identify the location of goods ordered by a store within the distribution center, and track the deliveries, from the picking area, to the marshalling area, Goods-Out bay, Trailer, and to the actual storecomplete with a Proof-of-Delivery (POD) delivered wirelessly from the remote store at the time of the delivery.
Within the warehouse distribution center, goods are picked to order and collected in a number of totes. The totes are loaded onto tagged dollies. A real-time interface matches the tote barcode and dolly RFID signals. Later the assembled dolly is moved to a marshalling area where it waits to be aggregated on a trailer route. Route plans sent to the customized Savi system allow the system to determine whether dollies are being loaded onto the correct trailer, and if not, an audible and visual LED messaging system indicates the errant dolly immediately. When the trailer is ready to depart, the system downloads the trailer manifest to a new handheld terminal for drivers, which is fitted with the Savi SMR-640 Mobile Reader module.
As the truck with trailer travels along its route, its position can be dynamically displayed on the Transport Management Centre (TMC) system from Microlise. When the driver has completed the delivery, the POD data, along with GPS, and seal status information, is transported from the remote trailer over a wireless wide area network back to the primary distribution center through the TMC.
At the distribution center, the TMC uploads the information to the Savi Site Manager, which then passes the data along to the Savi SmartChain Platform where it is aggregated and processed. At any time during this process, personnel may view the asset, order, or trailer seal status, and asset location, through their Web browser with the Savi Asset Management System.
Unlike bar codes, RFID tags do not require line of site, and the data stored on them can be updated at various points throughout the supply chain. By associating the orders packed within each tote bin to the RFID tag on the dolly on which they are stacked, Woolworths gains complete visibility of stock movement.
From the mobile terminal POD information, or from fixed RFID readers installed at high volume stores, the system is able to determine if the dollies and associated items in totes have been delivered to the correct store. In the case of stores using fixed technology, this is done instantaneously as the goods are delivered. If the dolly is mis-delivered, a real-time alert is sounded. To complete the cycle, Savi's fixed signposts and readers are installed at Woolworths Goods-In and Tipping bays to detect the return of empty dollies.
In larger stores, Savi Series 600 equipment has been installed in the goods inwards loading bays. With this system, no user intervention is necessary. Savi 600 Hardware reads the RFID tags as the dollies are unloaded from the vehicle and checks these dollies off against the expected manifest of goods. The data is transmitted back to the Swindon Distribution Centre in real-time using SmartChain and Savi Asset Management System software on a local computer. Again, if dollies are incorrectly unloaded, the driver is informed by flashing lights and a warning siren.
The implementation described here is the first system of its type anywhere in the world combining Bar Codes, Active RFID and GPS in a single supply chain visibility solution. The combination of these technologies was considered by the judges of the European Retail Solutions Awards to be a key factor in selecting Woolworths' implementation as Supply Chain Solution of the year. Woolworths Plc. was commended for the broad scope of integrating these technologies across the supply chain.
Return on Investment (ROI)
The Chipping of Goods Initiative covers only a small proportion of the goods delivered from the Woolworth's Swindon distribution center to the stores. Even though this is a limited trial, it is envisaged that if the same technology were to be rolled out over the full distribution infrastructure a reduction in the order of 10% would see the system pay for itself in the first year.
The Key Benefits: Complete Supply Chain Visibility & Increased Revenue
Woolworths has benefited on many levels through the Chipping of Goods Initiative and RFID implementation. With the new RFID Supply Chain solution and Savi Asset Management System, Woolworths can now track conveyances and goods throughout the retail distribution system. This will help reduce shrinkage through increased visibility and audit trails. Reduced shrinkage and theft means increased profit margins.
Previously, without accurate knowledge of mis-delivered goods, out-of-stock situations could result in lost sales. Now the increased visibility will help prevent misrouting and mis-deliveries, and will allow store inventory balances to be better managed.
Other benefits to Woolworths include:
In the future, Woolworths expects that RFID systems will play a significant role in the control and tracking of their goodsnationwide.
Savi is the proven leader in global supply chain security and real-time asset management with over 14 years of logistics infrastructure experience. The company's broad customer base includes the U.S. Department of Defense as well as numerous international ports, terminal operators, carriers, asset owners and third-party logistics providers. Founded in 1989, Savi Technology is privately held, with headquarters in Sunnyvale, California and offices in Hong Kong, Johannesburg, London, Singapore, Taipei, and Washington D.C.