Snack maker sees Wal-Mart's RFID requirements as way to update neglected supply-chain processes
Jack Link's Beef Jerky last week shipped RFID-tagged cases filled with 1-pound beef-jerky packs to Wal-Mart Stores Inc. For many companies scrambling to meet Wal-Mart's January deadline, radio-frequency identification's use may end there. But at Jack Link's, things are just getting started.
The 2,000-employee maker of snacks such as jerky and beefsteaks is kicking off the next phase of its RFID project, first by using the technology to track its products as they move through manufacturing lines. Next, the company, whose formal name is Link Snacks Inc., will tag raw materials—particularly meat—as soon as they arrive from suppliers. Finally, Jack Link's expects to collect all the data produced by those tags and turn it into useful information that can be shared with retailers.
When Wal-Mart and others issued mandates last year requiring suppliers to affix RFID tags to shipments, it caught Jack Link's executives off guard. The company was planning to set up a system to track lot numbers that identify which meat came from which suppliers, as required by the U.S. Department of Agriculture. And, with low-carb diets putting meat snacks back in style, the 100-year-old, privately held company was busy just trying to keep up production at its seven factories to meet a booming business.
But the mandates couldn't be ignored. Rather than meet them with a slap-and-ship process that attaches RFID tags as shipments are sent out, Jack Link's saw an opportunity to replace tedious, paper-laden manual processes across its business. "Once the product enters the door, we can assign the meat a lot number and attach it to a reusable [RFID] tag on the bins that go through the manufacturing process," says Karl Paepke, VP of operations. That way, the company can track ingredients from receipt through processing as they're turned into products. It plans to have those capabilities by year's end.
The technology might even help the company comply with those USDA guidelines and, if necessary, with tracking recalled meat. The RFID system eventually could tie into various USDA-supported national databases that monitor livestock. Jack Link's has never had a meat recall, but during mock recalls, it took 12 to 16 hours to track down specific product lots using manual methods. "I'm shooting from the hip, but I bet with RFID we can get this process [accomplished] in under a half an hour," Paepke says.
The first of Jack Link's four RFID phases—which culminated when RFID-tagged jerky shipments from its factory in Minong, Wis., arrived in Wal-Mart's Dallas-area distribution centers—cost just $48,000 and required 21 days' work to implement the hardware and software. Paepke wouldn't discuss the project's total cost but did say that, while it's "significant," payback is expected in less than a year.
It's unclear how many companies can expect the kind of results Jack Link's is anticipating. Campbell Soup Co. is sticking with the slap-and-ship method of tagging its products while it experiments with the technology. Campbell started testing RFID in December, and it's reading cases successfully 96% of the time, overcoming the tendency of metals and liquids to cause interference.
"We prefer to call it 'tag at ship,' not 'slap and ship,' because it has proven to be a very successful process," Mark Engle, Campbell's senior director of IT, said last week at the EPCglobal U.S. Conference in Baltimore. It's unclear what Campbell's return on investment will be after RFID implementation, Engle said, and he worries about tag costs, which still run 19 cents to 60 cents each. Campbell plans to send tagged shipments to Wal-Mart as a test in November.
Still, most agree the greatest benefits from RFID will be realized if the technology infiltrates the entire supply chain, as Jack Link's plans to do.
By the end of the year, the company expects to track all inventory and finished goods using RFID and generate a record of what materials went into each product batch. The first step is to test tags on bins and racks where ingredients and finished products are stored, including plastic totes of materials on conveyor lines. RFID readers will collect data from those tags, such as ingredients and lot numbers, so the company can monitor inventory and production. The data will be managed by Microsoft Business Solutions' Navision enterprise-resource-planning system. The next step will be affixing tags to raw materials so they can be scanned to record lot information when they're received and as they go through production.
Next year, Jack Link's expects to start using the RFID data to send customers advance shipping notices, among other things, as the company puts RFID tags on all cases coming off the production line.
Today, everything from purchase-order numbers to receipt of raw materials is handwritten on paper and hand-carried through the manufacturing process. "If you can imagine a very wet, cold, extremely harsh environment, sometimes that paper doesn't make it all the way through," Paepke says.
If Jack Link's RFID-enabled supply chain works, the collection and sharing of vital business data is less likely to get lost in that cold, hard shuffle.
The Business of Going DigitalDigital business isn't about changing code; it's about changing what legacy sales, distribution, customer service, and product groups do in the new digital age. It's about bringing big data analytics, mobile, social, marketing automation, cloud computing, and the app economy together to launch new products and services. We're seeing new titles in this digital revolution, new responsibilities, new business models, and major shifts in technology spending.