June 2005 | Case Studies | I.T. Toolkit

RFID Bears Fruit

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For Ballantine Produce Co., the time is ripe to make a significant move to radio frequency identification (RFID).

As a small company, Ballantine isn't under the mandate Wal-Mart has issued to its largest suppliers to put RFID tags on cases and pallets.

But with that requirement looming in the future, Ballantine's management volunteered to conduct an RFID pilot with Wal-Mart this year.

"The earlier we participate and move into RFID, the earlier we will see a return on investment," says David Silva, director of information systems at Ballantine in Reedley, Calif.

By getting familiar with the technology, and figuring out how best to use data captured from RFID tags now, company officials hope to gain a competitive advantage. At the same time, Ballantine is implementing a new warehouse management system (WMS) to more effectively manage inventory before it's shipped.

Founded in 1943, Ballantine Produce distributes more than 200 varieties of tree fruits and grapes to supermarket chains and produce stores throughout the United States. During the North American growing season, it obtains fruit from growers in central California and processes them for distribution in Reedley. During colder months, it imports produce from abroad, mainly Chile. That fruit is processed overseas and shipped to Philadelphia, where Ballantine rents space in refrigerated warehouses.

When executives at Ballantine decided to implement RFID, they shopped for software to manage the data exchange between RFID readers and the company's Enterprise Resource Planning (ERP) system, from Famous Software of Fresno, Calif. Atlanta-based Manhattan Associates was one of the vendors on Ballantine's short list. Manhattan offers a well-known WMS as well as a turnkey RFID solution called RFID in a Box. Ballantine purchased both.

Today, Ballantine uses the inventory tracking functions within the Famous system—an ERP specifically designed for the agriculture industry—to manage produce in its warehouse. Although it handles inventory data "decently," Famous is not a full WMS. By integrating the ERP with Manhattan's WMS and RFID solutions, Ballantine hopes to gain a more effective view of products moving through the supply chain.

Packaging Materials First

Ballantine is conducting its implementation in stages. Currently, the company uses Manhattan's WMS to receive and track packaging materials, but it still uses Famous to manage fruit inventory. It uses the RFID system to tag and track domestically-grown nectarines that it ships to Wal-Mart.

When packaging material arrives from a supplier, Ballantine workers receive it within the WMS. They generate bar-code labels, affix them to pallets, and put them away. "The WMS gives us visibility into inventory and the costs associated with that inventory," Silva says.

Workers use RF-equipped bar-code scanners to locate and pick the material when it's needed.

In the project's next phase, Ballantine executives plan to establish a web portal to support vendor-managed inventory. "We can set up thresholds and, when particular items fall below these quantities, create purchase orders that the vendors fill," Silva says.

Before Ballantine can manage produce in the WMS, it needs to determine at what point the Famous system should pass data to Manhattan's software. Currently, Famous generates an ID number for each pallet of produce. Its database links each ID number to information such as what kind of fruit is on the pallet, who grew it, and when it was packed.

In the future, Ballantine will transmit that information to the Manhattan system, which will use it to manage the pallet in inventory.

"When an order comes in to ship that pallet, the order will transmit to Manhattan as well. The Manhattan system will ship it and give Famous the date, order number, and pallet numbers that were shipped," explains Silva.

Ballantine expects to start using the Manhattan system to manage pallet inventory at the end of the domestic fruit season this fall. Manhattan's RFID in a Box offers a single point of contact for service, one main reason Ballantine selected the solution. That's an advantage for a small company with limited IT resources, Silva says.

One Throat to Choke

"While I may use a Printronix printer or an Alien Technologies reader, if something breaks, I call Manhattan to fix the problem," he explains.

There is no arguing with hardware and software vendors as they point fingers at each other. "It's one throat to choke if something doesn't work," he says.

Manhattan also works to ensure customers receive components that perform well, says Davison Schopmeyer, senior director, professional services in Manhattan Associates' RFID group. "Our equipment is tested and goes through a lab process that is similar to a real-world RFID environment," he says.

Companies that implement RFID in a Box also get help redesigning their warehouse processes to take full advantage of the new technology, says Mike Argay, manager, professional services in Manhattan's RFID group. Introducing RFID to a warehouse operation doesn't simply mean adding a printer or a reader.

"It impacts the way your warehouse does business day to day," Argay explains.

Ballantine, for example, had to think about the processes nectarines pass through as they're brought into the warehouse, packed into crates, loaded on pallets, and put in the cooler. Then it also had to determine the best point in that process for affixing the tags.

"The fruit tends to be cumbersome, and Ballantine wanted to avoid doing a lot of depalletizing," Argay says.

High-Tech Picking

When the Famous system creates an order of nectarines bound for Wal-Mart, it transmits that order to the Manhattan WMS where it sits in a queue until a worker picks a pallet for that order.

"When workers scan a pick ticket—using a bar-code scanner—it lets them know it is an RFID order," Silva explains. "They bring that pallet to a staging area, and the Manhattan software knows the items on the pallet are RFID-enabled. Workers scan the Famous pallet number, then the item number."

As the last step in the process, the printer creates RFID tags with Electronic Product Codes (EPCs).

Based on a globally recognized standard, the EPC identifies the product, much like a bar code based on the Universal Product Code (UPC) standard. EPCs also contain unique serial numbers, which allow vendors and retailers to track individual cases or pallets as they pass from one RFID reader to the next along the supply chain.

Because Ballantine ships nectarines in returnable plastic containers loaded 55 to a pallet, the printer produces 55 tags for the containers, and a final one for the pallet.

A reader in the warehouse captures data from the tags when Ballantine ships the nectarines. Later, Ballantine employees can see when the pallets move past readers in Wal-Mart's distribution centers and stores.

They access this data by logging onto Retail Link, Wal-Mart's vendor information portal. Ballantine receives this data in a Microsoft Excel spreadsheet and imports it into the WMS, providing a picture of the fruit's progress. It lets Ballantine know exactly what day and time the container was scanned through its portal, when it entered a Wal-Mart distribution center and how long it sat there, and finally, what day and time it went to the store.

The company has yet to determine how best to use this data. One obvious application is to find out when fruit sits in store stockrooms longer than it should. This visibility will let Ballantine work with retailers to correct the problem.

"Getting product to the floor quickly is crucial to our customers' eating experience," Silva says.

Reducing retail stockouts is the ultimate goal of an RFID program, says Manhattan's Schopmeyer. "The national out-of-stock average is approximately 8.2 percent. Everyone loses when product is not sitting on the shelf," he says. "Lowering that number benefits vendors, retailers, and customers."

Ballantine executives are considering which fruits to tag next. Other bulk items, such as peaches or plums, are possibilities, as well as packaged grapes or a group of fruits sold in a plastic clamshell case. Because packaged products carry UPCs, choosing one for the next test would give Ballantine experience in incorporating the UPC into the EPC.

Introducing RFID technology into its import operation is another challenge for Ballantine. If the company can tag goods before loading them onto vessels in Chile, it might use the tags to monitor factors affecting quality, such as how long the fruit was stored, and at what temperature.

To do this, Ballantine would need its growers in Chile to install RFID readers in their facilities. "If there's no opportunity to read those tags overseas, we might have read them domestically, after the product arrives," Silva says.

Bye-Bye Bar Codes?

Eventually, Ballantine might also use RFID to help track assets internally. It may tag the large bins it uses to carry fruit from the fields, for instance, or replace the bar-code labels on inbound packaging materials with tags. Could RFID tags one day replace bar codes at Ballantine entirely?

"That's where we need to be," Silva says. "Right now, we have costs associated with employees manually scanning a bar code. If we can eliminate that, we'll have some serious opportunities for ROI."

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