Nancy's Foods Streamlines Inventory Management with Intermec RFID

Every August Nancy’s Specialty Foods begins to go quiche crazy. Production in the company’s Newark, Calif., plant ramps up five-fold over normal to prepare for the holidays. Soon there is little freezer space to spare in the 86,000-square-foot facility.

No matter what else goes on at Nancy’s, one thing will continue. “You can’t stop an oven,” said David Siegfried, Nancy’s information technology manager. Because if ovens were to cool, an assembly line to stall, Nancy’s would begin leaching money.

“At times we’ve had from 15 to 45 people standing there in excess of an hour,” Siegfried said. “Multiply that times their pay rate, and now they’re behind. Now you’ve got to pay them overtime.”

Falling behind risks losing sales. When the holiday season’s last truck leaves Nancy’s and product isn’t ready, the truck goes with whatever is loaded. “When we sell one time a year, if it doesn’t make it there on time, the stores say, ‘We’re not going to be able to sell it through. Cancel the order.’”

That risk, among other factors, prompted Nancy’s to launch a pilot project exploring how radio frequency identification (RFID) could improve its inventory management. Siegfried and his crew brought in RFID readers, mobile computers and tags from Intermec. Stratum Global provided its Tag- Net suite of middleware modules.

Nancy’s could have made a standard upgrade to its existing system, but Siegfried and his colleagues saw how leaping a generation of technology could solve more than just inventory management problems.

Multi-Packs and Half-Millions 

Workers using the old tracking system sometimes had trouble finding inventory. The barcode system’s manual batch-transfer methodology put inventory records a production day behind. 

Tracking equipment was finicky about working in the freezers where baked goods were stored. The minus10 degrees Fahrenheit killed tracking equipment. Units would lose all the cached data. When product was needed for work in process, those who shunted pallets, occasionally had to locate them by memory.

Some of the company’s most popular offerings are multi-packs. They’re differently flavored quiches baked on different days. They all must enter and exit inventory efficiently so that an assembly line does not stop. This is where Nancy’s ran into its biggest opportunity for RFID.

According to Siegfried, Nancy’s anticipated an annual revenue loss of $300,000 to $500,000 – in large part because workers couldn’t locate work-in-process components to fill orders.

With RFID, “the whole concept that you’re capturing the data and product location automatically with every movement, is a huge step for us,” Siegfried said.

Cold, Cruel World 

Forklifts don’t always play well with hightech electronics. But, Siegfried was asking the RFID system to deal with the double whammy of forklifts operating inside freezers. Some of the RFID equipment would be on the steel prongs of the forklift. 

Intermec’s 915 MHz IF4 reader with Bluetooth™ serial adapter and up to four antennae make up the fork-mounted RFID hardware. Heavy-duty enclosures protect the electronics. Inside the forklift cab, a vehicle-mounted computer receives RFID tag data from the IF4 and relays information to the host system.

When the first flavored quiche is baked on day one of a three-pack production run, workers in Nancy’s packaging area record how much of it was made and which bin holds it. They use Intermec 700 series mobile computers with IP3 portable RFID readers to capture data from an Intermec RFID Intellitag® attached to each bin. In addition, Bartender Labeling software is used in conjunction with a RFID printer to commission tags.

Stratum Global’s TagMap application resides on the Intermec 700. It helps direct workers in a task called tag commissioning. With each new batch of quiche, workers record production details such as amount, date, batch number, production line, and bin number. The system then removes from available inventory all the ingredients used to make the batch, records labor at standard and adds the finished quiche to the inventory database.

For putaway, bin or pallet tag information captured via the IF4 travels by Bluetooth radio to the forklift-mounted computer. The host system assigns a freezer location for each batch of quiche.

Once all three quiche types are baked and ready, workers can easily find and deliver them to the packaging area for final assembly.

An RFID portal validates inventory recording. Workers move product through the portal, which is lined with Intermec antennas and IF5 readers. If the portal detects that any bin tag was not commissioned that day, it alerts the worker, who must then update inventory before the door from production to the freezer warehouse will open.

Return on Investment First 

While it’s too soon for concrete numbers on cost savings, Siegfried expects Nancy’s to slash its revenue losses and bank $100,000 within one year and $300,000 over the next several years. The money saved will offset a looming expense that his and many other businesses soon will have to shoulder: Wal- Mart’s 2006 compliance mandate. 

“The first goal is always to eliminate problematic situations that have their own ROI, then deal with the mandate,” Siegfried said. “If you’re so concerned about your customer leaving, then I think you’re running the business wrong. Eliminating problems and removing labor should be your priority. By focusing on this you will increase your customer service levels and shore up any potential trading partner from going to your competition.”

RFID, even in pilot stage, has brought good changes to Nancy’s. It goes beyond streamlining inventory management. The new system has changed the way workers in different departments interact. Business processes have shifted. No longer is inventory recording the main province of the shipping department. Now people in packaging are doing it. Forklift operators are doing it.

“When we brought everyone together they finally realized that problems they didn’t even know existed were big problems from someone else’s standpoint,” Siegfried said.

Nancy’s plan was to take its RFID system live at the end of July, so that by August, the holiday rush will have begun with their new system in place to prevent inventory problems. With Intermec and Stratum Global, Nancy’s was ready for another batch of quiche madness.