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Intelligent Distribution and Transport Visibility pilot run using RFID, GPS and ROI Model, Dinet -

LG

Luis Miguel Maldonado, Dinet

GS1 Global Forum 2010 - From vision to action, GS1 united for new opportunities

MAIN ACTORS IN THIS PILOT RUN


Why visibility?

• New regulations.

• New challenges with new and integrated responses by all the supply chain actors.

• Increasing concern in consumer safety and the need to reduce risks in processes within and out the distribution centres.

• Consumer demand for product reliability.

• Real time and reliable information needs.

Nowadays, visibility is a need that is being addressed by implementing internal solutions, without any standards; these solutions are

non automatic and limited.


Current Process Dinet – LG

1. Automatic Data Capture with RF.

2. Control with WMS (locations, turnover, series, picking).

3. Load distribution with TMS.

1. Unit load.2. Truck tracking with

GPS / Wisetrack.3. Document tracking and

electronic dispatch Wisetrack.

1. Production Batch.2. Serial numbers. 3. Standard Bar Code

Product Traceability and Control

Control

Challenge: Tracking, Tracing and Control through final destination


Results on Processes Optimization

Picking Picking Quality Control

ManualRF

Serial Numbers Capture

RF

Load Verification by Carriers

Manual

Truck load in

Manual

Transport

GPS-Wisetrack

UnloadDispatch

GPS-Wisetrack

Quantity Control in Destination

Manual

Current Process

Rejection due toErrors in serial

numbers

Manual

Load of order rejected

Manual

Transport ofOrder rejected

GPS-Wisetrack

UnloadOrder rejected

Manual

Quantity Control at Destination

Manual


numbers

Manual


Manual GPS-Wisetrack



numbers

Manual


Manual GPS-Wisetrack Manual



numbers

Manual



UnloadRejected Order

ManualManual

Transport ofRejected Order


numbers

Manual

Reload of rejected order



Current Process

Picking Quality ControlPicking Quality Control Serial Numbers CaptureSerial Numbers Capture

Load Verification Load Verification by the Carrierby the Carrier


Visibility Pilot Run Dinet – LG

Main Objectives:• Achieve product track and trace from Dinet’s

warehouse to destination (end customer). • Optimize processes and achieve savings.• Improve customer service level

Secondary Objectives:• Proof of integration among different information

tools: WMS, RFID/EPC and Wisetrack/GPS in a local process.

• Identify indirect and potential benefits.


RF

IDB

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SD

RIV

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SR

FID

IMP

AC

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ROI RFID Model Diagram

Automaticscanning

Real timeInformation

access

Real timelocationsvisibility

UniqueSerial Numbers

Manual operationsreduction andautomation

Lead timesreduction

Standards based

Materialsflow

enhancement

Detaileddistribution

routes

Inventory level andlocation in real time

Automatic and real timeScanning andConciliations

Distributioninformation

GlobalStandards

OperationalEfficiency

Track &Trace

LowCosts

Service LevelQuality


PHASE 1Conceptual Model / Proof of software and scan equipment / Single delivery test

Retailer warehouseProduction

Products and Information Dispatch Flow

Quantity and ID Control with RFID entering the unit

load.

Quantity and ID Control with RFID entering the unit

load. Product Identification

Product IdentificationTag

placementTag

placement

Products dispatch and data base update. Electronic Proof of purchase including serial numbers of each product in the unit load dispatched by

the 3PL

Products dispatch and data base update. Electronic Proof of purchase including serial numbers of each product in the unit load dispatched by

the 3PL

Point of SaleClient DCLogistics ProviderManufacturer

Dispatch notificationEAN

128

EAN128

EAN128

EAN128

PickingPicking1

2

3

4

5

ConsolidationConsolidationProducts

without tagsProducts

without tags


PHASE 2Infrastructure Implemented

• For the pilot run:• Distribution Center – DINET.• Point of Sales – LG (EFE and Tiendas Peruanas (Oeschle).• Dinet’s transportation unit equipped with GPS of Wisetrack.• Wisetrack Track & Trace system.• 5,000 RFID Tags (UPM).• 1 RFID reader/antennas (Impinj – at dispatch)• 1 RFID mobile reader (Motorola – at destination).


Results of Processes Optimization

Picking Picking Quality Control

ManualRF

Serial Numbers Capture

RF


Manual

Truck load in

Manual

Transport

GPS-Wisetrack

UnloadDespatch

GPS-Wisetrack


Manual

Proposed Process


numbers

Manual


Manual


GPS-Wisetrack

UnloadOrder rejected

Manual


Manual


Savings Estimate Methodology

1. Identification of processes to be optimized or eliminated.

2. Processes activities definition


3. Timing of activities and measurement of resources used.

4. Value estimation of activities and resources used

Savings estimate Methodology


5. Savings.

6. Financial and Economical Evaluation.

Savings estimate Methodology


ROI

• Investment for this Test Run:• $ 22,500 Initial (on RFID equipment)

• Calculated Savings:• Aprox. $ 9,800 per month.

• Recovery Period:• 3 months.

• IRR:• 43%.


Qualitative Benefits

- Visibility and traceability of items (by serial number) for each Shipping Notice on route

- Load goods confirmation on line

- Reduce time cycles for Distribution and payment documents.- Control of transport units- Document visibility on real time, at each delivery point- Unload confirmation on line

- Proof of Delivery online between systems

- Increased quality on preparation of dispatch goods.

- Eliminate Serial Number capture mistakes.

Transport


Picking Quality Control

Serial Number Capture



Quantitative Benefits

- Return transport elimination due to customer rejects for serial number mistakes

- Credit notes elimination due to customer rejects for serial number mistakes

- Manipulation time elimination due to return logistics for serial number mistakes

- Lost sales elimination due to customer rejects for serial number mistakes

- Eliminate the need for space due to customer rejects for serial number capture.

- Reduce time on serial number capture- Eliminate the need for warehouse space for serial number capture.


- Elimination of this activity.

Transport - Better transportation units disponibility on field


- Product verification reduces times at destination

Picking Quality Control

Serial Number Capture


Quantitative Benefits in LG terms

- 100% recovery of lost sales due to serialnumber and product identification errors

- Savings in administrative expenses for issuings of credit notes.

- Increase of products preparation capacity

by 25%

- The client will receive its products in less time from the time the order is approved. Reduction of order cycle time.

On Time Delivery - Reduction of late deliveries.

Case Fill Rate

Lead Time of Sale Order


Conclusions

• Project is 100% feasible in economic and qualitative terms.

• We achieved the expected benefits of using RFID and GPS technology.

• Simplicity and visibility of the operations along the supply chain using track & trace, GPS and standard RFID/EPC tools.

Contact Details

GS1 Global Office

Avenue Louise 326, bte 10

B-1050 Brussels, Belgium

T + 32 2 788 78 00

W www.gs1.org

Business

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