Issue #14 | February 3, 2005

It's no secret - everyone wants to achieve ROI. And judging from e-mail responses to my recent columns on the topic, it appears you're hungry for more. Let me start by talking about an expensive - but critical - piece of equipment that can serve as the starting point to achieving ROI: the "palletizer".A palletizer is a device that takes individual cases of products and stacks them in a uniform fashion. The stacked cases are shrink-wrapped and placed on a pallet. Most manufacturing and distribution centers have one or more of these units.

Because palletizers are expensive, they typically serve multiple product lines. This means that cases of product feed into the palletizer from multiple conveyors. Conveyor A feeds product A, conveyor B feeds product B, and so on. Sometimes, one or more cases of the wrong product are placed on a pallet.

Now imagine a "finished" pallet with a lot of cases. You can only see the cases on the edges of the pallet. You can't see the cases stacked in the center. So there's no way to know - with bar code technology ? if a wrong case snuck in there. Complete visual verification of all the cases on a pallet is not possible unless a person stands there all day and watches every case feed into the palletizer.

Enter RFID. By reading the RFID tags on a pallet, it is possible to verify the contents using software. If a case is missing, or the wrong case is on the pallet, the software can trigger a flashing light to alert operations personnel that there is a problem that requires correction.

We'll get to ROI, but before we do, let's address accuracy for a minute.

I know there are people out there reading this and thinking, "But Lou, I've heard that case verification on pallets with RFID is as low as 66% accuracy!" The key to improving accuracy is: tag selection and placement, antenna selection and placement, and the interrogator settings.

The nice thing about palletizers is the products tend to move very slowly and may even rotate in a circular motion when being shrink-wrapped. This gives RFID plenty of opportunity to find all the tags. That being said, with the wrong tag, antenna, or reader settings I have seen read rates as low as 55%.

My team has found that canopy-mounted, linear polarized antennas provided the highest level of accuracy. Using only two linear polarized antennas achieved an average of 18-21 reads per tag with 80 cases traveling through the read field. (Note: Side-mounted, circular polarized antennas provide more flexibility with tag orientation but did not obtain as high an average read-per-tag and sometimes missed tags.)

When the tweaking was complete, we achieved 99.87% accuracy. The only reason we did not achieve 100% is because tags failed between the time they were applied and the time the product reached the palletizer (i.e., they broke while in transit on the conveyor). Nonetheless, the system still alerted operations personnel to the fact that there was a problem before the pallet was shipped to the customer. So it saved them from later problems.

ROI reveled: When a pallet with one or more incorrect cases is sent to the retailer, the manufacturer is charged for the mistake. And the retailer expects the missing product to be shipped immediately in an expedited order to prevent out-of-stocks. The manufacturer not only pays the fee and ships more products, but they lose money for the case(s) sent by mistake. It is rare that products shipped by mistake are returned. If you think this is not a big problem, it costs one of my clients approximately $3 million per year from mistakes like this.

Comparatively, the cost for the RFID equipment, mounting structure, flashing light, installation, maintenance, and 1 year of support is approximately $15,000 per palletizer. My client's distribution centers have an average of five palletizers per facility. That's a $75,000 investment. Don't forget that the equipment is typically depreciated over four years. If you think the customer would be better off with new palletizers, they cost about $100,000 each plus installation.

Do the math - it will satisfy that hunger and make you smile.

Written by Louis Sirico
Copyright ? 2005 Louis Sirico