Dec 09, 2008

RiteCare Says RFID Helps Cure Its Warehouse Woes
Source: Mary Catherine O'Connor, Senior Editor RFID Journal

Dec. 9, 2008-RiteCare Pharmacy, a chain of 10 drugstores based in Hyderabad, India, has turned to an RFID-based inventory-tracking system to help the retailer improve its inventory visibility and speed its warehousing processes, in order to improve its overall business operations.

These sound like prudent goals for any retailer, but they are particularly important to RiteCare, because the company plans to grow its chain aggressively in the coming years. The firm wants to achieve this store growth without expanding its current 2,550-square-foot warehouse in Hyderabad, however, and without increasing the size of its staff at that location. Limiting costs in those areas, RiteCare hopes, will offer the pharmacy chain a competitive advantage.

RiteCare partnered with S3Edge, a solution provider that utilizes RFID technology to help companies improve inventory visibility, work-in-process visibility, and asset tracking and product recall operations. The companies worked together on a pilot test to determine whether employees could follow an S3 Edge-designed workflow software module, using a handheld computer, to guide them through order picking and shipment operations. The system would leverage RFID for one of the business processes, as well.

For the pilot, which commenced in summer of 2008, a beta version of Microsoft's BizTalk RFID Mobile middleware, designed to run on mobile RFID interrogators, was installed on Unitech RH767 handheld computers with built-in RFID interrogators.

BizTalk RFID Mobile works on handheld computers that run Windows Mobile and Windows CE operating systems. It employs the EPCglobal standard low-level reader protocol (LLRP) to communicate with a handheld reader, and supports the same device management and tag read event functions as the RFID BizTalk Server software. In addition, BizTalk RFID Mobile offers users the ability to operate in an offline function when they work in an area without wireless connectivity to the server. With this feature, a handheld can collect RFID tag reads in the field, store them locally in BizTalk RFID Mobile and upload them to an enterprise server once the device is reconnected to the network.

On Monday, Microsoft announced that this software, BizTalk Mobile, is now commercially available. BizTalk RFID Mobile is available free to companies that are already using BizTalk Server 2006, and that have a regular maintenance program agreement through Microsoft's Software Assurance program.

Paul Sanford, Microsoft's senior product manager for application platforms, says mobile applications of RFID technology represent a strong enabler of business processes. "Microsoft didn't want to put RFID in a silo," he says, so the company made BizTalk RFID Mobile a standard part of the BizTalk server product offering.

"Since S3Edge was founded by ex-principals of the Microsoft RFID team," Seshu Guddanti, RiteCare's managing director, told RFID Journal in an e-mail, "their familiarly and expertise with the product-especially the mobile platform-ensured that we were able to deploy our scenario in six to eight weeks, and start seeing immediate results that mapped to our business goals of reducing operational expenditure by automating the receiving and shelving processes in the warehouse, and reducing errors in shipments and order fulfillment."

RiteCare Pharmacy's store managers send orders to the company's central warehouse daily. The warehouse's purchase manager consolidates these orders and dispatches employees to prepare them. Before RFID was introduced at the warehouse, workers manually searched for each product on the facility's shelves, where they were stored in totes placed in alphabetical order, according to product name. This was a slow process, the company says, both because workers had to carefully read each product name to ensure they pulled the correct items, and also because when there was too much product already on the shelves under a particular letter, the excess was stored in an inventory overflow area. Thus, if the desired product was not found at the primary storage location, it took extra time to track it down.

"The picking and shelving process [was] laborious and error-prone," Guddanti says. What's more, mistakes sometimes occurred even though shipments were double-checked prior to leaving the warehouse.

Once products were pulled from warehouse inventory, the purchase manager placed orders with the company's suppliers for products requested by stores that were not found in stock. Once these items arrived (usually the next day), the orders were shipped out to the retail sites.

The order-fulfillment process is now different, thanks to EPC Gen 2 RFID tags attached to both the totes and the shelves. Instead of merely storing inventory goods in alphabetical order, RiteCare now employs radio frequency identification to track the location of each tote and the items placed within it.

The warehouse has 20 shelves and 1,000 totes. Each shelf contains 10 racks that can accommodate a total of up to 200 totes. Shelf tags were affixed 1 foot apart, one tag per rack. To fill an order, a worker uses the handheld device to select the items he needs. The device then downloads the location information from a server, directs the worker to the proper shelf and rack and confirms that he has found the item by scanning the tote's tag. Workers can find an item that has been mis-shelved by using the handheld's RFID interrogator to scan the entire warehouse; when the device reads the tag of that item's tote, the device will display the tote's location.

After the warehouse receives its daily orders from the stores, workers access an S3Edge workflow software module, which indicates the quantity and location of the items required to fill those orders. If the purchase manager discovers an insufficient amount of the necessary items in inventory to complete those orders, he immediately orders any missing items from RiteCare's own suppliers.

When these goods arrive from the suppliers, the items needed to fulfill each order are cross-docked-that is, moved to a staging area. Cross-docking necessitates little or no storage of the merchandise, thereby reducing the amount of warehouse space required, as well as the amount of inventory held in storage. It also reduces the amount of time necessary to process inbound and outbound orders, and means products make it to store shelves-or, in RiteCare's case, pharmacy shelves-in less time than warehoused goods.

Any items found to be in excess of what is needed to fill orders are put into inventory in the warehouse. RiteCare workers place those items into totes for storage on the appropriate shelf location, using S3Edge software running on their handheld to select the product description and quantity of that product being placed into that particular tote. They then utilize the handheld's RFID interrogator to read the tote's RFID tag. In the S3Edge software, the type and quantity of the product placed in the tote is associated with the unique ID encoded to the tote tag. The shelf tags are also interrogated, using the handheld readers, and the S3Edge software employs a special application to associate the bin tag with the shelf tag, along with the items stored in that bin. This same application is later used to locate the tote when workers need to retrieve the items placed within it.

Because the S3Edge software is linked to RiteCare's enterprise resource planning software, it can access order information and direct workers, via the workflow software, regarding which steps to take for cross-docking products, placing items into inventory, and later retrieving them from inventory to fulfill an order.

Beginning in July, RiteCare rolled out the new order and warehouse-management system company-wide, and RFID-tagged all of its storage bins. RiteCare has since reduced its warehouse inventory by 50 percent, the company says, and decreased the number of errors associated with the orders. The firm attributes the reduced inventory to its new practice of cross-docking inbound orders to fulfill store product requests, rather than first placing all inbound orders into inventory, then pulling order requests from stock. RiteCare credits its use of the S3Edge workflow software with its improved order accuracy.

"The mobile RFID-based solution eliminates most shelving operations, while improving the picking process," Guddanti says. "The new process increases the productivity, while reducing the error rates." Since deploying the RFID system, he notes, RiteCare has identified a number of other potential applications for the technology within its store and transportation operations. Due to the capital expenditures these would require, however, such applications will remain on the drawing board for now. "The cost of the readers creates a high threshold for ROI," he states.