September 19, 2008
Walgreens’ DC Deploys RFID Without a Safety Net
Walgreens has fully integrated radio frequency identification (RFID) technology into its warehouse operations at the company’s distribution facility in Anderson, S.C., according to RFID Update. The system tracks products in and out of the facility with RFID readers at its 45 dock doors. Readers track more than 170,000 totes and other reusable shipping assets that have passive UHF RFID tags attached.
“The significant thing is that Walgreens is using RFID in the core of its systems and they vitally depend on it. There is no backup system,” John Beans, vice president of marketing at Blue Vector, told RFID Update. “If the system isn’t running, they’re not shipping.”
Walgreens has been running the system since last year but only recently went public with the news.
“Walgreens has a long tradition of pioneering break-through technologies in the industry,” said Randy Lewis, Walgreens’ senior vice president of distribution and logistics. “Today, we’re leading the charge to revolutionize our distribution center systems and processes to drive significantly higher efficiency, accuracy, and ultimately higher margins.”
Interestingly, the Anderson distribution center has received a lot of national attention for Walgreens as 40 percent of the employees in the facility suffer from either a physical or cognitive disability.
The drugstore chain implemented the technology with the expectation it would make it easier for workers to do their jobs. In the end, Blue Vector’s Beans said, “What they discovered is that the best system for their employees with disabilities is actually the best system for everyone.”
Walgreens is currently installing an RFID system to support the same processes at its distribution center in Windsor, Conn., according to Mr. Beans. That facility, according to the Walgreens’ website, will also seek to hire a large percentage of employees with disabilities. That facility is currently under construction and is scheduled to open next year.
Discussion Question: Does Walgreens’ experience in Anderson, S.C. make the case for large-scale deployment of radio frequency identification (RFID) technology in distribution centers? What, if any, concerns would you have running a facility that relies completely on an RFID system?
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Walgreens has implemented an RFID application that suits their current needs with longer term benefits. Reusable tags and totes allow confident tracking of shipments. This creates opportunities for their systems to grow in several ways–easy to adopt other locations, and important employment opportunities.
New systems that reduce the amount of resources needed, benefit the community and promote continuing profitability create a triple bottom line for Walgreens. A corporate initiative that helps people with social benefits, reduces the resources taken from the planet and keeps a company in profit is the essence of Sustainable practice–good for everyone.
As others have noted, the technology discussed in this story is really unremarkable. By confining RFID tags to the reusable containers, Walgreens avoids a lot of the technical issues related to producing inexpensive RFID tags that are used only once. What I find really interesting is that forty percent of the workforce is comprised of people with autism or physical disabilities. By using RFID to reduce the necessary skills required, Walgreens is able to offer meaningful employment to people who might not otherwise be employable.
I don’t know what all the economics are and whether the support costs may exceed any hourly wage cost savings, but the social and charitable aspects of reducing the skill sets required in order to make previously unemployable people able to work is certainly laudable. I offer kudos to Walgreens for recognizing a benefit of RFID which I completely missed.
Let’s be really clear here. European companies and Dell in the US have been running their DCs with re-usable RFID tags on totes for a long time. This is not the “pallet and case” RFID example. It’s a tried and true usage of the technology.
From an operations standpoint, I’m not 100 percent confident with deploying RFID. If Walgreens has been using it for a year now, I would love to see their shrink numbers as a comparison. I would also like to know what is happening at store level. Is the DC’s shrink similar to the store’s? RFID raises more questions for me than it answers.
RFID return on investment concern is the real reason it has not been deployed in other distribution centers. When all you need is container ID and contents, barcode can give you that functionality. High speed sorting systems read the barcode. It has been hard for the technology to be justified in most facilities.
My concern about running a large facility completely on RFID is the read rates. If you can only get an 80% read rate, it gets scary. Notice that this article is tracking totes and pallets, not items or cases. And, RFID is still problematic with liquid, and aluminum foil.
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Walgreens has implemented an RFID application that suits their current needs with longer term benefits. Reusable tags and totes allow confident tracking of shipments. This creates opportunities for their systems to grow in several ways–easy to adopt other locations, and important employment opportunities.
New systems that reduce the amount of resources needed, benefit the community and promote continuing profitability create a triple bottom line for Walgreens. A corporate initiative that helps people with social benefits, reduces the resources taken from the planet and keeps a company in profit is the essence of Sustainable practice–good for everyone.
As others have noted, the technology discussed in this story is really unremarkable. By confining RFID tags to the reusable containers, Walgreens avoids a lot of the technical issues related to producing inexpensive RFID tags that are used only once. What I find really interesting is that forty percent of the workforce is comprised of people with autism or physical disabilities. By using RFID to reduce the necessary skills required, Walgreens is able to offer meaningful employment to people who might not otherwise be employable.
I don’t know what all the economics are and whether the support costs may exceed any hourly wage cost savings, but the social and charitable aspects of reducing the skill sets required in order to make previously unemployable people able to work is certainly laudable. I offer kudos to Walgreens for recognizing a benefit of RFID which I completely missed.
Let’s be really clear here. European companies and Dell in the US have been running their DCs with re-usable RFID tags on totes for a long time. This is not the “pallet and case” RFID example. It’s a tried and true usage of the technology.
From an operations standpoint, I’m not 100 percent confident with deploying RFID. If Walgreens has been using it for a year now, I would love to see their shrink numbers as a comparison. I would also like to know what is happening at store level. Is the DC’s shrink similar to the store’s? RFID raises more questions for me than it answers.
RFID return on investment concern is the real reason it has not been deployed in other distribution centers. When all you need is container ID and contents, barcode can give you that functionality. High speed sorting systems read the barcode. It has been hard for the technology to be justified in most facilities.
My concern about running a large facility completely on RFID is the read rates. If you can only get an 80% read rate, it gets scary. Notice that this article is tracking totes and pallets, not items or cases. And, RFID is still problematic with liquid, and aluminum foil.