P&G's End-to-End RFID PlanBy Evan Schuman | Posted 2006-06-28 Email Print
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Consumer products giant tests benefits of radio tags by tracking shaving products from its manufacturing plants to retailers' back roomsand beyond.
Radio frequency identification (RFID) tagging provides a way for companies to track products through the supply chain, from manufacturing plant to distributor and, ultimately, to a retailer's backroom storage area. Procter & Gamble, one of the world's largest consumer goods companies, has launched two RFID testsone that tracks razors into the back room, and another that kept tabs on shavers all the way to the retailer's store shelf.
The test program for P&G's Fusion five-blade razors, which started with the product's launch at the last Super Bowl, marks the first time that 100% of cases of a major consumer product have been tagged and tracked from manufacture to back room, according to industry observers. Each casenot each itemis tagged and tracked. P&G declines to disclose sales figures for the Fusion line.
An RFID test last year with another P&G shaving product, Gillette's Braun Cruzer electric shaver, provided insights on the value of using radio tags to track merchandise that is ready to be unpacked from cases and placed on store shelves. (P&G acquired Gillette in October 2005 for $57 billion.)
The experiment involved 19 stores of an unnamed retail chain. Gillette looked at how the Braun Cruzer, which sells for $55 to $90, moved during a special promotion accompanied by an advertising campaign; these campaigns typically include a large cardboard cutout in store aisles promoting the product.
By tracking the shavers, Gillette found "a bunch of variability" in the amount of time it took product to move from a retailer's back room to a promotional display on the sales floor, says Jamshed H. Dubash, director of electronic product code (EPC), or product identification, technology for Procter & Gamble. Some product never left the back roomeven after 40 days, when the promotion ended.
Why was this significant? Because of the money Gillette invested in advertising the Cruzer line. "So, it was extremely important for us that these displays got out to the store floor when the ads hit," Dubash says. When promotional displays were set up as planned in the test stores, Gillette saw a 61% increase in sales of Cruzers.
Another problem that the RFID test revealed: displays that were erected and stocked earlier than planned. "You don't want them there much sooner than three to four days before the actual promotion date," Dubash says, "because you could sell out before the promotion hits and now you're going to have an out-of-stock condition."
During the Cruzer trial, Gillette opted to not act or intervene, but instead to watch on the sidelines. "We did not try and interact with the system. We wanted to get a good baseline to understand how things were moving," Dubash adds. "We wanted to see if the store manager would figure it out."
For those products that did not get to the aisles, Gillette concluded that the problem came down to a lack of inventory visibility. "It all boils down to the fact that the store manager doesn't know that they're there," Dubash says.
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