RFID in the snack supply chain

- Last updated on GMT

Related tags: Rfid, Supply chain management

Supply chain management is becoming increasingly important in
efficient food production. A pilot project developed by Microsoft
Business Solutions and KiMs, a Danish snack manufacturer, is a good
example of how technology, especially the adoption of RFID, is
transforming the way in which the industry operates.

This pilot project involved automating the company's supply chain and upgrading KiMs' existing software in the areas of demand planning, event management and hands-free warehouse management. Radio Frequency Identification (RFID) technology, which combines silicon chip and radio frequency technology, has also been introduced.

"Putting technologies of the future to the test is important to KiMs, and we are very pleased to have been involved in this pilot project with Microsoft Business Solutions,"​ said Jørn Tolstrup Rohde, chief executive of KiMs. "The prospect that RFID can help us dramatically increase our ability to read and anticipate our inventory flow is compelling, and we are thrilled to be at the forefront of supply chain management innovation with the help of Microsoft Business Solutions."

KiMs implemented Microsoft Axapta software in June 2003 for manufacturing, raw materials procurement, sales order management and warehouse management, but wanted greater visibility into its supply chain, from suppliers through distributors. The firm wanted to monitor pallets of finished goods as they moved out of production and into a third-party warehouse and greater knowledge of the exact location of products at various points in the supply chain, to increase product availability.

Microsoft Business Solutions therefore added RFID capabilities to its Microsoft Axapta Warehouse Management solution at KiMs. One of the partners involved in the project, SAMSys Technologies, had an engineering team on site to evaluate KiMs' production cycle and barcode system, then designed and supervised the hardware installation of a UHF RFID pallet tracking system within the finished goods area of the KiMs factory. The data from the SAMSys reader feeds directly into Microsoft Axapta at KiMs.

KiMs produces crispy snacks that are bagged, cartoned and loaded on pallets, which are then moved to a staging area to be picked up by trucks for delivery to a distribution centre. The company ships approximately 100,000 pallets of snacks per year. A unique identifier is written to the RFID tag on each pallet, thereby associating the pallet with comprehensive production data.

"We recognised that in real implementations our customers may need to utilise the capabilities of writeable tags,"​ said Satya Nadella, corporate vice president of development for Microsoft Business Solutions. "Many companies today settle for easier, read-only tags during the pilot phase. It was an important inclusion in our pilot that we tested real-life usage requirements."

Another innovative element of the RFID pilot project is its use of the metal foil of the chips' packaging as an element of the tag design. Typically, metal objects have been an impediment to the use of RFID. By treating the packaging as part of the RFID system, the tag could be made fairly simply, thereby keeping the cost down.

The tags are monitored at storage, loading and shipment, and the data is fed back into Microsoft Axapta. "We expect this solution will offer users near-real-time visibility into the location of products in the supply chain,"​ Nadella said.

The RFID tags are used for tracking the movement of pallets during shipment, providing KiMs with greater visibility into its supply chain. Another anticipated benefit of the RFID tags is the trimming of inventory levels at the distribution centre due to increased data accuracy.

Following the success of this pilot programme, Microsoft Business Solutions, a division of Microsoft, is planning to RFID-enable upcoming releases of Microsoft Axapta and Navision software. In fiscal year 2006, the firm plans to release a version of Microsoft Retail Management System that is also RFID-enabled.

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