Manufacturers Save Money When RFID Manages Consignment Stock

February 28, 2013 Joey McFarland

Manufacturers Save Money When RFID Manages Consignment Stock

A recent AP article explored examples of wireless connected devices and machine-to-machine (M2M) innovations such as a coffeepot controlled by a tablet and wirelessly managed street lights.  The article concluded that while many M2M use cases seem cool and flashy, in reality, connected devices will be created to increase efficiencies and save companies money, such as “ensuring that the vending-machine guy only goes to the vending machine when it’s empty.”  Money-saving applications like this are already in play today, powered by RFID technology.

Many different types of manufacturers and suppliers have consignment stock—merchandise owned and managed by the manufacturer until a sale is made—at third party locations. Managing the inventory can be an inefficient and error-prone process.  RFID is the ideal technology to enable ‘smart’ vending machines, storage racks or refrigerators that monitor inventory at all times and wirelessly communicate that information to the manufacturer. Companies today are already succeeding with these solutions.

Smart Storage Racks Monitor Inventory and Provide Business Insights

A major U.S. automotive battery supplier consigns its stock at auto part stores, repair shops and other retail locations. The company had little visibility into the products on their racks at the third party locations and delivery drivers needed to visit every location to check inventory levels and deliver new products. This was extremely inefficient because some locations didn’t need replenishments.  Recently, the company invested in RFID-enabled storage racks from Seeonic. Installed at retail locations, the racks enable the company to remotely monitor products and gain visibility into merchandise sold at each location.

RFID Freezers Reduce Shrinkage and Expired Product Write Offs

Many medical device and biotechnology manufacturers also place their products at customer sites on a consignment basis.  Their customers often manually record products as used, an error-prone process that causes the manufacturer to lose out on unrecorded sales.  Promega has reduced shrinkage from 35% to less than 1% since installing RFID-enabled freezers from Terso Solutions at customer sites.  The smart freezers have also reduced Promega’s expired product write offs from $20,000 to $30,000 per month down to nearly zero.

High Tech Soda Machines Enable Efficient Recalls and Prevent Counterfeit Cartridges

Coca-Cola Freestyle machines are high-tech soda fountains offering over 100 drink choices. By integrating RFID into the Freestyle, Coca-Cola ensures only authentic drink cartridges are used and that they are installed properly at hundreds of locations across the country.  Through both cellular and Ethernet capabilities, the Freestyle machines can communicate to Coca-Cola’s data management system in Atlanta. The company gains business analytics such as which beverages are being consumed, and when and where they were consumed. Coca-Cola can also more efficiently recall products and prevent recalled cartridges from being used.

Each of these success stories shows that manufacturers and suppliers with consignment stock have a lot to gain from smartly managing inventory, and should consider investing in RFID to have more efficient restocking, reduced shrinkage, improved product recalls, increased business insights and more.

Contact Impinj if you are interested in speaking to one of our experts about your application.

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