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6/4/2009
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Coke's RFID-Based Dispensers Redefine Business Intelligence

The Freestyle drink dispensers will give consumers more than 100 beverage choices -- and provide the beverage maker with valuable consumption data.

International Impact

While Coke is limiting the initial rollout of Freestyle to the United States, data from those machines will have a global impact. Information about how U.S. customers are responding to various beverages will be loaded into Coke's Innovation Framework, a system based on software called CA Clarity for New Product Development.

Coke research, product development, and marketing personnel worldwide use that system to share information on successful regional product rollouts and marketing programs, so they can apply them in other regions. Globally, Coke offers about 3,000 beverages, and what works in one place is often tried in another with similar demographics.

Traditional soft-drink dispensers typically offer eight to 12 drinks, dispensing them from five-gallon bags of flavored syrups. Freestyle's 30 cartridges contain highly concentrated flavorings and slide into the machine like a printer's ink cartridge. The flavors are so powerful that only a few drops go into each drink recipe, using a process that Dennis describes as "microdosing."

That means a raspberry cartridge might be used to flavor Coke, tea, or water. Microdosing comes from the medical industry; the term refers to how anesthesia and other medications are delivered in very precise amounts through an IV. "We've reapplied it to pouring a drink," Dennis says.

Freestyle's LCD panel, which offers 18 drink brands, runs on the Windows CE operating system. Customers select a brand, such as Sprite, and are then offered several variations (cherry, grape, etc.).

The dispensers communicate over the wireless network with Microsoft System Center Configuration Manager for Mobile Devices, software running at Coke's headquarters that manages the dispensers. The Verizon network has a dedicated IP range for the Freestyle network infrastructure, and each dispenser contains a Verizon wireless card.

Freestyle sends data through the Microsoft configuration manager and then to SAP's point-of-sale management software, which cleans and structures the data. Data then goes to Tibco Software middleware, which routes consumption information to the SAP Business Warehouse and operational data to the central service organization for identifying any dispenser problems.

Previously, fast-food restaurants ordered new products through Coke's call center or by fax. With the new dispensers, they'll be able to order products directly from Coke through the new portal that links into Coke's SAP CRM system. Coke will provide outlets with recommendations on how many cartridges to order based on a 10-day rolling average of consumption determined by the data that's transmitted every night, cartridge inventories provided by customers on the portal, and cartridge levels on machines based on RFID readings.

Coke's fast-food customers have struggled to keep their inventory stocks balanced "without having a lot of cash on the shelf," says Dennis. "Now they'll know when to order another cherry cartridge, depending on the average consumption at their outlet."

The Payoff

By providing customers with more variety, Freestyle has tremendous implications for Coke in terms of revenue growth, Dennis says. What's more, the machine can help Coke customize its products by region.

Freestyle will let Coke track customer preferences over months and even years. If the company determines that a certain flavor is gaining traction in a specific region--say, Peach Coke in the South--it will know that's more than a short-lived trend and could opt to bottle that flavor through retail outlets in that region with reasonable assurance that the investment will pay off.

One test outlet is already getting interesting results from the system, finding that sales of Caffeine-Free Diet Coke spike during the late afternoon. Customers apparently try to avoid sugar and caffeine late in the day, Dennis says, and the outlet could use the LCD panel on its Freestyle machines to promote low-calorie, caffeine-free beverages during that time of day, driving sales to customers who might otherwise drink water or forgo a beverage.

Water? Peach Coke? Grape Sprite? The choice will soon be yours.

SMART DRINKS
100 choices aren't all Coke's Freestyle dispensers provide
RFID-tagged flavor cartridges let Coke track inventory and distribute beverage formulas over a wireless network
Data on drinks served is uploaded daily to Coke's headquarters
Consumption data helps Coke and fast-food outlets decide what to serve and promote, and when and where to launch new products
Operational data identifies dispensers with problems

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