This week we discovered another RFID use case that has resulted in savings of more than $1 million. Life sciences company Promega has saved more than $1.7 million by deploying RFID-enabled refrigerators and freezer solutions into its daily operations.
Promega offers more than 2,000 products for use in a broad array of applications including basic research, drug discovery, forensics and paternity testing, and hospital and clinic-based diagnostics to a customer base of world-class research institutions exploring gene, protein and cellular interactions.
Prior to deploying RFID freezers and storage cabinets from Terso Solutions (which is owned by Promega), the firm was losing approximately 15-18 percent of its on-site inventory to shrinkage, equal to $1.2 million per year. The use of an RFID storage system for on-site stocking has virtually eliminated shrinkage in the field.
In addition, Promega was forced to write off $400,000 of expired products each year because the company had no visibility into expiration dates on-site. This expense has been virtually eliminated through the use of the RFID storage system for on-site stocking.
Lastly, most of the products that Promega offers to its customers need to be frozen. Prior to deploying RFID freezers, Promega had no control over how products were stored, and had no ability to monitor temperature. By deploying RFID-enabled freezer units, Promega has avoided $100,000 in write-offs each year due to product spoilage.
All together, Promega has leveraged RFID-enabled freezers and storage cabinets to save more than 1.7 million. While the Terso RFID-enabled freezer solution clearly benefits Promega’s customers for many of the same reasons, the technology has generated a new competitive advantage for Promega.
“The real advantage to Promega is the information it captures,” says Todd Clermont, Business Development Director for Promega. “Now we really know who our end customer is at the individual level. Now we have the intelligence about their preferences and buying habits and usage patterns to proactively tailor our delivery practices to their specific needs. And as part of improving our customer service, we find we have more opportunities to introduce new products, more merchandising opportunities, and the ability to add incremental business through more efficient supply processes.”
Clermont notes that RFID-enabled freezers and refrigerators help Promega to cut costs. “We didn’t look at this as a cost-saving program initially, but the elimination of shrinkage, the ability to do more targeted, 1:1 marketing, and improvements in our own inventory processes have definitely helped reduce our costs of doing business,” he said. “We can show the CFO hard-dollar savings and high ROI very quickly, and it simplifies life for both researchers and staff. It’s a true win/win solution for Promega and our customers—and that’s the way business is supposed to work.”