July 2011 | Case Studies | DC Solutions

The Secret Ingredient For Inventory Accuracy 

Tags: Inventory Management, Bar-coding Systems

Implementing a bar-code labeling system to track case codes helped eliminate the transcription errors that had plagued Red Gold's manual data recording system.

Taking a can-do approach, tomato canner Red Gold achieves 99-percent inventory accuracy with bar-coding and wireless data collection.

Manual data collection can bog down inventory management or production processes, and introduce inaccuracies and inefficiencies throughout a company's operations. Red Gold, one of the nation's largest full-line tomato product manufacturers, raised its inventory accuracy to 99 percent and improved production tracking by replacing its manual system with a bar code-based data collection solution.

In business since 1942, Orestes, Ind.-based Red Gold is one of the largest tomato canners in the United States, and produces the brands Red Gold, Redpack, Tuttorosso, and Sacramento, along with a number of private label store brands.

Until a few years ago, the company used a manual, paper-based process to track inventory and finished goods production. As cans of tomato products were loaded into cases and palletized, machine, lift truck, and palletizer operators hand-wrote multiple pieces of information in order to record production.

Manufacturing and shipping operators also had to record a variable-length case code that was stenciled onto each shipping tray or case. These eight- to 14-character codes, which included both alpha and numeric characters, were unstructured and not always printed in the same place on the trays or cases.

Too Much Room for Error

Although the case codes were a key part of the company's product traceability system, manual data collection created multiple opportunities for transcription errors. Red Gold's primary distribution center may have 50,000 to 60,000 pallets in storage on any given day, and 100 to 200 trucks move in and out of the facility daily. With this high volume of product moves, the manual recording process created a constant struggle to achieve accuracy.

"Operators recorded the case code in several places, including on a pallet placard, and reported it to Quality Assurance for its records," says Trevor Kaye, senior project manager, supply chain, Red Gold. "They had to note the number of cases on a pallet, and the number of pallets they had produced."

Red Gold needed to improve its data collection operations, while also enhancing its ability to track inventory. "We didn't want just a data collection system," says Debra Ivey, application development manager, Red Gold. "We were trying to streamline the pallet-tracking process."

Data timeliness was also an issue, because the pallet data was only entered in the company's Infor ERP LX enterprise resource planning (ERP) system once each day.

"Clerks entered production area data, which might be more than one day old, into the computer system," Kaye says. "Not only could the operator write down the wrong number, but the clerk could key it incorrectly. Nobody knew what our actual inventory accuracy was prior to automated data collection, but we knew it had to improve."

While Red Gold had clear goals for its data collection solution, deploying such a system was no easy task. First, the company needed buy-in from the staff who would have to use it each day, and the new system had to be installed with minimal modifications to the existing ERP system.

Integration With Existing Processes

After some research, Ivey identified the QuikTrac data collection solution from Integrated Barcoding Systems of Adrian, Mich. QuikTrac integrates directly with the IBM System i computer, which Red Gold uses to run the ERP LX software. This was a key selling point for Red Gold.

"Our mandate is that we will not modify our systems unless absolutely necessary," says Randy Merle, director of IT, Red Gold. "Any provider we partner with understands that from the beginning."

Red Gold installed a wireless LAN, along with bar-code scanning and printing equipment, to work with the QuikTrac solution. Operationally, the only process that changed on the shop floor was data collection.

"There was no change to the physical process," Kaye says. "We had a lot of work to do to demonstrate the planned changes, but in most cases we were making work easier for operators."

Today, operators on the palletizing line receive production information, including the case codes for the product, on client terminals connected to Red Gold's computer system. As each pallet is completed, the operator creates a bar-code label, using label software and a printer. The label is attached to the pallet for inventory recording purposes; data is transmitted via a wireless LAN.

Lift truck operators then use vehicle-mount computers and scanners to record that the pallet has been produced. The lift truck moves the pallet to a storage location in the warehouse, and the operator scans a bar-coded placard at the location to record the putaway data.

Pallets may also be loaded into a truck for shipment to the distribution center (DC). Workers scan pallets before loading them at the manufacturing facilities, and again when they are received at the DC.

When product is pulled for shipment to a customer, operators know exactly where to go to find the correct pallets. The labels are scanned again during picking and shipping.

"We've configured QuikTrac so that operators can input the customer order they want to pick, which triggers the system to reach into the LX databases to gather all the information about that order, including items and quantities," Ivey says.

"QuikTrac has automated recording inventory transfers within LX," Ivey continues. "As we pick orders, the system validates that items and quantities are accurate according to the order within LX, while creating an order allocation."

While most orders are for full pallets, the QuikTrac solution also allows operators to build mixed pallets within the system, and generate new pallet labels that reflect these case moves.

The QuikTrac solution also helps manage the storage and retrieval of cans of tomato product that have been stacked on pallets, but don't yet have product labels. The data collection system helps manage moving those items from storage to a depalletizer and through the labeling line, then to the case pack and palletizing process.

Near-Perfect Inventory Accuracy

QuikTrac was deployed in phases between 2002 and 2007 at Red Gold's three manufacturing facilities in Orestes, Elwood, and Geneva, Ind.; three manufacturing support warehouses; and its one-million-square-foot DC, where QuikTrac now works in conjunction with the warehouse management solution (WMS).

The new solution's biggest benefit to Red Gold has been a tremendous lift in inventory accuracy. "Our accuracy is now more than 99 percent," Kaye says. "We have never been able to do a full physical inventory in the DC, but we instituted disciplined cycle counting when we implemented the data collection project, including a weekly inventory accuracy report."

The company has also been able to reduce the number of clerical staff and lift truck operators in its DC because of the inventory accuracy improvement, the automated data collection solution's speed, and the subsequent WMS implementation. Staff that had been focused on data entry can now spend more time validating and analyzing the data generated by the automated solution.

"Because of the data collection solution, we realized labor savings at multiple points throughout the process, and we've been able to increase volume significantly without adding clerical staff," Ivey says.

Red Gold also has a database of pallet-level information that is much more granular and detailed than it had been in the past. "Because of the robust database, we can do a much faster job of identifying when we made a product, what's on each pallet, and where it was shipped," Kaye says.

Equipped to Track and Trace

That data has been increasingly important because, as a food producer, Red Gold is subject to stringent Food and Drug Administration traceability requirements, as well as customer traceability requirements established by the Safe Quality Food Institute's standard.

"Prior to automated data collection, shipment tracking was measured in days and weeks because of the time required to gather the manual records, summarize the data, and validate its accuracy," Kaye says. "Now we can have accurate data within two or three hours. Customer and regulatory time requirements for product traceability are now much shorter, and it would not be possible to meet these changed requirements without automated data collection."

Another benefit has been that all Red Gold facilities have standardized their case codes in order to improve the solution's performance.

"Those codes were very difficult to record originally," Kaye says. "As Quality Assurance realized there would be a significant advantage to using data collection for product traceability, they standardized those case codes. Without the bar-code system, we didn't have a prayer of getting that kind of standardization."