20-05-2006 - Challenges: Poor Accuracy Rate
PACIFIC CYCLE
North America’s Largest Bicycle Supplier Works with SAP to Create Integrated Distribution Infrastructure and Meet the RFID Challenge
In 2004, when Wal-Mart Stores issued the now famous letter requiring its top 100 suppliers to put radio frequency identification (RFID) tags on shipping crates and pallets by January 1, 2005, the lives of a lot of IT managers changed. Watching this development, Ed Matthews, director of IS at Pacific Cycle Inc. – a Dorel Industries Inc. company and one of Wal-Mart’s top 100 suppliers – saw an opportunity. Here was a chance not only to meet the Wal-Mart requirements but also to adopt an emerging technology early in the game, drive positive change in the way Pacific Cycle did business, and position his company’s IT infrastructure well for the future. Matthews and his team at Pacific Cycle embraced the Wal-Mart RFID initiative.
“Not only is Pacific Cycle a Wal-Mart supplier but it is also one of the fastest growing branded consumer product companies in the United States,” he says. “We realized that complying with the Wal-Mart mandate was an opportunity to create an infrastructure that could bring major business benefits to the company. The mandate also brought the shortcomings of our existing distribution system into sharp focus,” he adds.
Pacific Cycle, headquartered in Madison, Wis., designs, markets, and distributes famous-brand bicycles such as Schwinn, Mongoose, and GT, as well as other recreational products. Only four years ago the company built all of its bikes in the United States. Various high-quality Asian factories now provide manufacturing, and Pacific Cycle has shifted its emphasis to optimizing its supply chain, distribution, and customer service.
Challenges: Poor Accuracy Rate, Unleveraged Data
Prior to the SAP® RFID implementation, Pacific Cycle was already piloting RFID in “slap and ship” mode. RFID labels were printed and attached to the merchandise. There were some problems, however. “Our accuracy was about 60%, which was pretty terrible,” recalls Matthews. “Plus, we weren’t doing anything with the data we did get – the information went into a database and just sat there.” According to Matthews, there was no feedback to the company’s existing SAP R/3® software and, as a result, no analysis of the data Pacific Cycle could use to improve its supply chain operations. (SAP R/3 functionality is now available in the mySAP™ ERP solution.)
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