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Asset Management Solution for Reusable/Returnable Containers in Bakery, Dairy and Beverage Distribution

Industry leaders from the bakery, dairy and beverage industry assembled in Chicago on April 15, 2010 to address a serious problem common to their distribution channels which has been plaguing their industry for decades. In his presentation at this conference, Pat Kennedy, VP of Sales and Marketing for The Kennedy Group, explained how RFID can serve as the bridge to overcoming gaps in reverse logistics and improve asset retention practices within open supply chains.

Many companies in food and beverage logistics have to date been unable to accurately track the shipment and return of reusable containers, and are forced to deal with container losses that cause delayed shipments or require the need to scramble for a temporary alternative. The impact is increased packaging costs, higher labor and time involved in managing such disruptions. Often companies compensate for these situations by carrying safety stocks, which presents risks associated with potential loss, theft, damage, or obsolescence, as well as the necessity for large amounts of storage space, all adversely impacting cycle times and inefficiencies.

Companies with less disciplined retrieval procedures frequently misplace and lose track of the returnable/reusable containers. Some reusables are inadvertently destroyed or stolen. Containers are often lost or not returned from downstream points in the supply chain, and businesses are put in contentious relationships with supply chain partners in holding them accountable and assigning liability for such losses.

The speakers and attendees at the conference in Chicago all recognize the gravity of the issue. Pat Kennedy noted some startling industry statistics, “While losses and shrinkage may be at single digit rates in a closed loop controlled distribution systems, losses of returnable/reusable containers are significantly higher in an open supply chain environment such as in the bakery/dairy/beverage market ranging to as much as 30 percent, costing the industry about $75 million system-wide each year.”

The presentations in Chicago included various ways the industry has attempted to combat these losses, from investigative missions, legislative and prosecution attempts, education and awareness campaigns as well as theft deterrent approaches. Still, despite these efforts the shortcomings were evident with the need for more effective asset management clearly emerging. The ability to prosecute theft of returnable and reusable containers would be strengthened with the tracking intelligence and documentation from an RFID asset management program.

Kennedy continued to enumerate the benefits of an RFID tracking system, “Deploying an RFID-based asset management solution can overcome the loopholes that result in shrinkage. Distribution models where returnable/reusable containers handling products that turn over quickly in an open distribution network with multiple collection points are ideal applications for RFID asset management.

“RFID for asset management can dramatically reduce lost items and improve accountability by easily tracking container movement, shipments and returns. The RFID infrastructure provides accurate inventory information and gives visibility to containers that are available for use, in maintenance, at cleaning stages or other processes. RFID can be an invaluable tool for identifying and determining where problems in the supply chain are occurring or more prevalent and require corrective action. With the product/asset visible through the RFID tracking, a company can establish the appropriate policies to reduce container shrinkage and loss.

“An end-to-end RFID asset management implementation entails tying together software, hardware, integrating gate-portals, readers, antennae, printers and applicators, tags to the company ERP. With read points that can’t be circumvented by humans during the normal course of production and distribution you can eliminate the need to manually enter and execute movement transactions, these steps automatically occur. The company gains control and intelligence through its ability to quickly view accurate inventory information and locate specific assets, track movement of those assets and monitor critical stages in the process. This capability has tremendous potential to deliver industry-wide improvements that can save millions of dollars annually.”

Are you experiencing shrinkage in returnable and reusable containers because you lack visibility of those assets? The time is now to establish your business case for solving this problem and consider the advantages accurate visibility of assets can provide. An RFID system can benefit many organizations by optimizing reusable container utilization, improving turns and cycles, eliminating safety stocks and having the ability to effectively respond to surges in demand.

For information about RFID for asset management, The Kennedy Group has experience with end-to-end RFID deployment and can help guide planning. Visit the The Kennedy Group at www.kennedygrp.com or call 440/951-7660.

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