Some companies, when faced with an externally imposed activity or expense -- such as a new regulation or trading partner's request -- will simply find a way to get it over with and move on.
Other companies will look for a way to use these perceived lemons to make lemonade. A good example in the latter category is Conair Corp., the global manufacturer and marketer of health and beauty products, kitchen and electronic appliances. Responding to two customer directives, Conair has managed to not only improve its finances, but invent a new way to secure global shipments and create a subsidiary that could drive new revenues.
One of the 50 largest importers of products into the U.S. and a major supplier to Walmart and Sam's Club, Conair makes products under its own name as well as the Cuisinart, Waring, Rusk, Scnci and Babyliss lines, among others. With its main production facilities in Asia, it is also a participant in the Customs Trade Partnership Against Terrorism (CTPAT) program.
In 2003, Walmart asked its 100 top suppliers, including Conair, to begin applying RFID tags to all cases and pallets of products supplied to its stores. At about the same time, the U.S. Department of Homeland Security (DHS) asked Conair for its insights on improving container and port security, based on the amount of international shipping it conducts.
Realizing the importance of Walmart and secure international shipping to its future, Conair did more than simply respond to these requests: The company took an innovative approach and created an entirely separate entity -- United Security Applications ID (USA ID) -- to focus on the development of supply-chain and security applications that could be used to improve its own processes, as well as meet the needs of Walmart and DHS.
This business strategy would enable Conair to meet customer requirements, and realize supply-chain efficiency gains and the associated cost savings that it had deduced were possible with RFID-enabled processes.
Putting the Plan into Action
Conair began with item-level tagging in the Cuisinart and Waring lines -- even though this was above and beyond Walmart's request to begin tagging at the pallet and case level -- because they could see that item-level tagging with EPC-enabled RFID could generate actionable data.
Because Walmart specified the EPCglobal standard for RFID tagging, Conair and USA ID enlisted EPCglobal US to help. The organization is a subsidiary of GS1 US, the not-for-profit organization that helps companies adopt and implement GS1 supply-chain standards, in which Conair had already invested.
The outcome was an ultra-high-frequency, Generation 2 (Gen2) passive RFID tag, equipped with both a long-range antenna for inventory applications and short-range antenna for point of sale. EPCglobal Gen2 has widespread acceptance, and a worldwide Gen 2 infrastructure is quickly developing. By using Gen2, importers can share the same infrastructure, making applications extremely cost effective.
Both Walmart and Sam's Club tested the USA ID tags and gave approval for Conair to ship products into their warehouses with the tags, which are attached to items at the manufacturing facility in China. Each tag contains complete information about the product, including what is needed by U.S. Customs when the shipments enter the U .S.
Package tags are scanned as products are loaded onto a pallet at a factory, and then pallet tags are scanned as they are loaded into containers for shipment. As tags are scanned, detailed manifests are automatically created, virtually eliminating any errors associated with preparing data for U.S. Customs filings.
The primary benefit is improved visibility of products along the entire supply chain, driving business process improvements such as automated order fulfillment, improved inventory management, reduced shrinkage, and faster reconciliation of shipped versus received product.
At this point, the item-level tags are also giving Conair tremendous time and labor savings. While more data is needed to precisely measure the impact of EPC-enabled RFID, early indications are very positive, and the sales of tagged items going into Sam's Club have increased.
Improving Security and Speed through Customs
When DHS approached Conair and asked if the company had any thoughts about container security, the company responded with EPC-enabled RFID as a possible solution.
Using EPCglobal standards and insights, USA ID developed a bolt container seal equipped with passive Gen2 RFID. It looks much like other bolt container seals, but contains an RFID chip that has the capacity to store and convey information about the entire contents of the container.
The seals are ISO/PAS 17712-compliant and can integrate with GPS solutions, making them not only exceptional security devices, but also ideal for tracking and authenticating cargo. The contents of a container are scanned as they're loaded, automatically generating a manifest and recording valuable information: customer and shipping information, manufacturing dates, lot numbers, and more. When the door is shut and secured with this seal, the entire bill of lading and manifest are all there in the tag.
Customs officials were very excited about the results of tests that were conducted. An official can just scan the tag and see the entire contents of the container. The seals allow products to move much faster and more efficiently through Customs, which means they get to store shelves for sale more quickly and with lower labor costs.
After the container crosses the ocean and is opened at a port, Customs officials stateside can do the same thing, verifying that the units received are in fact the same units loaded.
Before this technology became available, occasionally a cargo container would not leave port because there was missing information on the Customs paperwork. Because all data regarding the shipment, shipper and receiver is provided in the seal, it has the potential to virtually eliminate this type of delay.
The savings associated with time and avoided penalty costs are significant. The penalty for inaccurate Customs 10+2 filings is $5,000 per filing transmission. Any device, process, or automation that eliminates these penalties is not a luxury, but a business necessity. Importantly, this seal enables Conair to expedite shipments and offer a level of security the industry has really never seen before.
In this instance, EPCglobal US experts and the EPCglobal community were instrumental. Through its global network of member organizations, EPCglobal US provided assistance in navigating government regulations in China, and in connecting with prospective customers for the USA ID offering.
Conair is also using the seals to its own advantage. The automated manifest allows Conair to know where a particular shipment is and where it came from, as well as the ability to keep particular lots together -- providing visibility from manufacturing through delivery to their distribution centers.
At this time, Conair is incorporating the automated manifests into the company's SAP system via a flat file. In the future, it plans to use EPC-enabled RFID to include direct integration for even more visibility of individual items from point-of-manufacture to point-of-sale.
Based on its own highly positive experience with the shipping tags, Conair is now in the process of commercializing the technology and offering it to the broad shipping marketplace so other companies can enjoy the cost benefits. Homeland Security officials have a new tool to improve surveillance of shipping containers, which are often cited as a possible vehicle for terrorist attack.
Paul Arguin is Director of Technology and Engineering at Conair/USA ID, a company that provides total security solutions to supply chains, inventory management, and service and support. USA ID was created by Conair, utilizing their expertise in the fields of electronics, software, security, logistics and supply chain management. www.usaidtracking.com
Sue Hutchinson is Director of Industry Adoption for EPCglobal US. She is responsible for helping companies successfully implement Electronic Product Code-enabled radio frequency identification (EPC-RFID) technology. www.epcglobalus.org.
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