When Mission Foods deployed RFID at its Texas distribution facilities in 2010, the company saved $700,000 on packaging costs by switching from corrugated boxes to reusable plastic boxes with embedded RFID tags.
Last year Mission Foods rolled out the program to its West Coast DCs, resulting in an additional savings of $1 million. When the company finishes deploying 13 additional portals at its East coast facilities next month, it anticipates another $500,000 in savings from better visibility into its inventory of returnable plastic boxes and containers. But that’s just the beginning of the potential savings.
Mission Foods has tagged 1.9 million trays to date. The maker of tortillas, chips, salsa and taco shells is rolling out RFID to its 45 North America distribution centers to provide better inventory accuracy and increased efficiencies when it comes to tracking returnable plastic containers (RPC) that it uses to ship product.
The RFID effort at Mission Foods is two-pronged. First, the company replaced the corrugated boxes that it uses to ship its Tortilla Chips and Tostadas products with re-usable plastic boxes embedded with RFID. Mission Foods prints RFID labels at its facilities and ships them to its box supplier, Technology Container Corp., where they are applied to the returnable boxes.
Next, the company affixed RFID tags to the smaller plastic trays that it uses to transport its tortillas and other products into retail outlets.
Eduardo Valdes, vice president of IT at Mission Foods, says that the company hopes to boost its bottom line even further by charging distributors who take too long to return the plastic trays that it uses to transport products to retail outlets. Since the RFID system went into place, it has helped Mission Foods to identify which distributors take the longest time to return the individual trays, which cost between $8 and $13 apiece.
For example, by analyzing data gleaned from RFID, Valdes has identified that 40 percent of containers are taking more than 30 days to be returned at DCs in Houston, Dallas, and parts of southern California.
Before RFID, Mission Foods spent nearly $3.5 million a year to replace the returnable plastic trays. Last year, the company shaved $1 million from that total, and Valdes expects that number to keep dropping.
“We believe we can probably save another $1 million by not buying more plastic trays,” he says. “And since we announced that we will begin to charge for the trays, we’ve seen more trays being returned quicker.”
With the new system, the company now budgets a 20 percent replacement rate for damaged or unreturned boxes – and while still a drastically lower number than the 100 percent replacement rate some DCs were experiencing before, the company now has closer to a four percent replacement rate as a result of the RFID technology.
“Our goal was to have about an 80 percent improvement on our container replacement rate,” says Valdes. “We figured that by the time the containers reached seven turns, or were returned seven times, we would break even. We are now averaging more than three times that number, with containers reaching 25 turns on average. The huge savings are there, and they are very accountable.”
In addition, the company is using RFID to monitor some of its crucial in-store merchandising displays, such as the units it sets up for events like the Super Bowl and Cinco de Mayo. By doing so, Mission Foods can receive confirmation that the display units have been moved from the back room to the retail floor and are actively being displayed.
Mission Foods is also using RFID for other asset tracking purposes. The company recently began to roll out fresh pre-made tortilla products to retail outlets, and is using RFID to keep track of the expensive food warmers that the products are stored in, proving yet another opportunity for enhanced ROI.
Valdes says that Mission Foods first began to pursue RFID to gain better results during the recent recession that gripped the U.S.
“We went live in Texas in 2010,” says Valdes, “and in 2011 we expedited the installation on the West Coast because the company was looking for additional savings due to [decreased] sales from the poor economy at the time.”
With the RFID system, the packaged products are picked and loaded onto the RPCs, which are labeled with RFID labels. The RPCs are then loaded onto pallets and the RFID label is encoded by the Intermec PM4i Smart Printer, where it is then applied to the pallet wrap. The Intermec IF61 readers record these pallets and associated RPCs as a forklift drives though an outbound portal prior to the loading dock. When the delivery trucks return, the RPCs are again processed through an inbound portal, offering an easy, immediate reconcile of inventory.
“We had nearly 20,000 containers going out each day from each of our warehouse facilities in Texas, yet we really had no way to control their return in an easy way,” said Eduardo Valdes, Mission Foods Vice President of Management Information Systems (MIS).” Containers would go out, but with all of the independent distributors returning them at different times to various locations, the return process was complex and often we’d never see them back.”
This new process offered Mission Foods a streamlined, easy-to-implement solution that tracked where items were returned and was also quickly adopted by staff.
“The RFID technology increased not only efficiency for staff, but also our profitability,” said Valdes. “Once the containers are labeled and scanned by the outbound portal, we can automatically track where all of our containers are and have a direct course of action if they aren’t returned.”