Distributors have their eyes set on expanded use of bar coding and radio frequency technology as key ways to dramatically enhance productivity throughout the supply chain.
But it may take some time to arrive at that promised land where the vast majority of product orders, deliveries, shipments and transportation scheduling are encoded on scannable labels and integrated into computerized systems.
Nevertheless, retailers and wholesalers are forging ahead with aggressive plans in this area, focusing especially on the dry grocery and meat categories. Those distributors making the move envision achieving substantial returns on their investment.
H.E. Butt Grocery Co., San Antonio, for example, is now taking advantage of UCC/EAN-128 expanded code technology at two of its warehouses to encode information about inbound receiving, putaway and order selection.
Use of the bar codes is credited with helping reduce the number of misplaced pallets within the warehouses, as well as cutting labor costs and human error rates associated with its receiving operation, said Steve Habarka, director of distribution planning for H-E-B.
By implementing a bar-coding system, the chain has achieved accuracy rates of less than one error per 1,000 cases slotted. In addition to pallet bar codes, the chain is also using the labels on its warehouse pick slots, which allows forklift operators to scan the code and enhance accuracy and productivity, he said.
H-E-B is also planning to implement bar-code and RF technology in its Houston warehouse within the next year for the grocery and meat categories. By doing so, H-E-B hopes to further cut errors on outbound shipments from about one error per 1,000 cases shipped, to almost zero, an industry source familiar with the situation said.
Another retailer now getting involved in distribution bar coding is Randalls Food Markets, Houston, which plans to have a new system in place in both of its warehouses by June 1997. Randalls' decision to tap into the promise of bar-coding technology was spurred by an expected jump in service levels and ability to fill customer orders much more rapidly and reliably.
The bar-code and RF technology will be implemented in all areas, including perishables, grocery and non-grocery categories, at Randalls' two distribution centers, said Brian Greisemer, director of distribution and transportation at Randalls.
Randalls has considerable expectations for the rollout's impact on distribution productivity. "We anticipate a 20% productivity increase in forklift operators moving products quickly and error-free. We are also looking for higher margins in selector accuracy," Greisemer said.
The retailer is now finalizing plans involving the selection of RF devices, as well as some information systems and technology issues, he said. "For this rollout to be successful, we need a significant amount of training, because this is new for everyone."
A key goal for implementing the system is access to real-time information. "Right now our information is not up-to-the-minute, but through the use of bar codes and RF technology, it will be. That is why we need to pursue this project," he said.
Greisemer said the technology will give Randalls a competitive edge. "We can pass the competition not using the technology by eliminating labor costs and ensuring accurate shipping. If you make a shipping mistake it costs you three times -- the order is wrong, it is sent back to the distribution center, and it has to be put away again."
Kash n' Karry Food Stores, Tampa, Fla., is also planning to roll out a distribution bar-coding program in the next 18 months. The retailer is looking to implement a bar-coding system, with the expectation of cutting costs and enhancing product flow.
"We expect an increase in productivity by reducing receiving operation time by 30%," said Mark Stewart, vice president of warehousing and distribution for Kash n' Karry. "Our shipping and receiving will see much greater gains if we can get product out the doors quickly and more efficiently."
Changing from a manual process to an automated process will enable Kash n' Karry to pursue these goals, while improving its operation and receiving time. The retailer is now researching RF technology and speaking with vendors about software, hardware and equipment, Stewart said.
O.K. Grocery, Pittsburgh, a division of Giant Eagle, also in Pittsburgh, is another company banking on the ability of bar coding to enhance operations even further. It has already been using bar coding at its Pittsburgh warehouses for some time, said Robert Schreck, director of distribution for O.K. Grocery.
The warehouses ship about 1 million units per week, including produce, dairy and grocery, and rely on bar codes for accuracy in identifying precisely where product is to be shipped.
"Through the use of bar codes, our productivity is increasing. It's up 23%," he said, noting that the 23% figure includes receiving functions from scanning of inbound pallets to forklift maneuvers and putaway.
Schreck added that use of bar-code and RF technology for unloading inbound products and putaway has sliced the time required per truck from about four hours to 2.5 hours on average.
O.K. Grocery's warehouses are equipped with devices that scan the pallets from above. Bar-code scanning technology is also employed for inventory control, with operators using a handheld portable scanning unit, rather than an RF terminal, to identify items on pallets and control product counts.
"The portable system is user friendly and aids in tracking inventory and upgrading our supply," he said.
An automatic storage-retrieval system incorporating bar-code technology is also used to reduce excess storage. "We've seen a 10% productivity increase in inbound and outbound accuracy through the system," Schreck said.
O.K. Grocery installed the retrieval system to keep its inventory live, and draw orders immediately, rather than using an outside storage-retrieval system to forward buy products.