Imagine you are donning the mantle of the distributor of frozen foods—ice cream. You order 100 one liter bricks of Vanilla ice cream and in return you get chocolate ice cream from the manufacturer, which has a higher Stock Keeping Unit (SKU). Won’t you press the panic button? Definitely! The same scenario played up with Varun Beverages.
Varun Beverages is the flagship company of the group RJ Corporation, manufacturing ice cream, Creambell, with manufacturing plants in Uttar Pradesh, Goa and Himachal Pradesh. The company was founded in 1985 and is based in Noida, Uttar Pradesh.
“On many occasions, wrong SKUs were being dispatched to distributors, and if the price of dispatched SKU was less than the price of ordered one we used to get a complaint and thus had to give the credit note for the difference,” says Kamal Karnatak, Senior Vice President and Group CIO, RJ Corporation.
Karnatak added that the MRP of some SKUs differ than that of other flavors of the similar pack size. While loading the ice-cream on to the refrigerated truck the loader has approximately one minute to check the SKU and load on to the truck.
In their warehouse—the cold room—ice-creams are kept at very low temperature (up to -16 degree centigrade) and it is humanly impossible to remain there for more than 3-4 minutes. They take the physical stock of the cold room only once or twice in a year during season time when the cold room inventory is the lowest. Consequently, during such stock taking there used to be a huge disparity between book stock and physical stock.
With this thorny issue in mind, Karnatak and his IT team got to the bottom of the problem to find a solution. Theirs was a eureka moment! An RFID based solution could thaw their problems.
RFID Automated Solution to the Rescue
This RFID based automation solution works at the production shop floor, in the cold room and at the time of dispatch. At the moment, RFID-based solution has been implemented only in Uttar Pradesh.
In a bubbly mood, he says, “We have implemented an in-house developed .net based solution which is integrated with SAP on real time basis to shop floor control system. It has changed various existing processes.” Karnatak highlights that they took the help of a local service provider for developing .net based software.
With a lot of excitement, he says that as per the new process RFID tags are associated for the different production runs. “For example - if we need to produce 1000 crates of 50 ml cups of vanilla ice cream, we would attach 1000 RFID tags on the empty crates. As soon as the crate is filled with boxes after production, it would move to the cold room and the clerk reads the RFID tag, through a handheld reader, which would tell him everything about the product,” explains Karnatak.
Once the material is received at the cold room, the cold room inventory is automatically updated in local software at the plant and later on through a Business Application Programming Interface in SAP located at the corporate office. Then, crates would come through the conveyer for dispatch. After which, one static RFID reader is placed which will read the RFID tag and compare it with the order which was given by the customer. “If there is a mismatch a red light would flash and the loader would remove that crate from the incoming conveyer to the return conveyer to finally go back to the cold room. Once the material is passed through the reader, loader would remove the RFID tag before loading the crate into the truck,” he says.
With a good amount of pride, he says, the project was conceived by him and the IT team played an important role in integrating the software with SAP. They began working on this project last year and did their first pilot project this year in February. However, there were few hurdles: high cost of RFID tags, sustainability of RFID tags in extreme temperature, and integration of the software with SAP. “To overcome this obstacle, we spoke to the supplier and asked for low temperature plastic tags,” chimes in Karnatak.
We have gained tremendously with this project. “The amount of credit note generated due to wrong dispatch in a period came down to 48 lacs in six months,” he says.
And that’s not all.
There is a substantial saving due to reduction in mismatched inventory, reduction in warehouse management cost and faster loading time, which thus leads to more truck dispatches in a day.