How Reynolds saved up to £150,000 per year with its RFID tracking project

Food distributor Reynolds has cut costs by tracking a key asset integrating RFID tagged crates with its Infor M3 ERP system

Fresh food distributor Reynolds has saved itself as much as £150,000 per year following the implementation of a project to embed RFID tags into its delivery crates.

Also known as ‘totes', the project enabled the £210 million turnover company to track the crates to customers and demand their return, rather than writing them off or packaging deliveries in disposable plastic or cardboard material.

"We were packing goods into sturdy plastic totes because that's what our customers wanted. That was all very well, but we were finding that we weren't getting them all back," IT director Richard Calder told Computing.

We are talking of savings of between £100,000 and £150,000 a year on crates that were being lost

He continued: "It wasn't as if it was just a small number. People were finding them useful, they weren't returning them… We were losing a significant sum of money each year having to replenish crates that just seemed to disappear out of the system - we know this isn't a unique problem to Reynolds. You only need to walk round any farmers' market."

It got to the stage where even Reynolds' finance director was questioning how much the company was spending on its delivery crates.

"It came at the right time, just as RFID tags were dropping in price and had become more reliable," added Calder.

The system put together by Calder's small IT team wasn't just about tracking the crates. Integrated with the company's Infor M3 enterprise resource planning (ERP) system, it could also be used to help track the goods inside the crates and the deliveries, making sure that the right crates went into the right lorries for delivery.

There will always be some that we lose, but we are now retaining up to about 98 per cent of our crates.

"Effectively it's an asset tag. The crate goes down the conveyor line in the distribution centre. At the bottom of the crate, embedded in it, is the RFID tag. So our guys wrote the software in order to be able to associate particular crates with particular customer orders, and with the unique tag at the bottom of the crate."

As the crate negotiates the various stages in the distribution centre, it passes via various RFID readers before it is loaded onto the van. This helps ensure that the crate is loaded with the different food items ordered by the customer. Vegetables, meat, fish and other foodstuffs are packed in their own separate crates, of course, but the crates can be put together when they are loaded onto the lorry for fast delivery.

Calder's IT team spent a number of months testing the system to ensure that it worked as planned, as well as to iron out any glitches or loopholes.

Most importantly, though, in terms of satisfying the finance director's initial demands, is that the crates can be tracked, checked out and checked back in again when they are returned from customer premises. When they are returned, the tags embedded in the crates can be wiped, checked off in the ERP system, washed and re-used.

We are able to re-use these assets rather than using cardboard boxes that are single-use and then thrown away

"There will always be some that we lose, but we are now retaining up to about 98 per cent of our crates. That is a massive, massive benefit for us because it helps the customer, it reduces their waste disposal costs. It also helps us in that we are able to re-use these assets rather than using cardboard boxes that are single-use and then thrown away.

"Now, there's only one person involved in [managing] the process and we have a bit like a credit-control screen [in our ERP system] where, if a restaurant hasn't returned its crates, credit control can contact their head office. They can see by day which ones haven't come back and, if it goes over four or five days, they can phone the restaurant and ask ‘where are our crates?'

"We are talking of savings of between £100,000 and £150,000 a year on crates that were being lost. We are doing it with a number of large customer groups now, and we'll be doing that more and more in the future," says Calder.

Those savings can be ploughed back into the business to enable the company to be more competitive.

Reynolds can build crate return-rates into the contracts it strikes with restaurants and restaurant chains, for example, with the most diligent customers benefiting from the most competitive pricing arrangements. The system can even generate reports for customers so that head office can chase-up lackadaisical branches on Reynolds' behalf.

And on top of that, it's also attracted the interest of Avery-Dennison, one of the world's biggest suppliers of RFID tags and tagging systems.

"You've got things like crates, cages, all sorts that go around the UK and get lost, misappropriated, and cost a massive amount of money every year. The technology is now at the right price level and reliability - that's the key - it's ready now," Calder told Computing.

Reynolds has grown fast over the past 10 or more years partly due to the rise in popularity of casual dining and restaurant chains that look to strike deals with national food distributors, especially ones that can offer fixed prices and can help cut some of the time-consuming elements of the food-preparation process for chefs.

Today, it employs more than 1,000 staff and enjoys a turnover of around £210 million.

Earlier in the year, Calder told Computing about how customer demands of suppliers' IT systems have changed, with restaurant chains, in particular, wanting to know that their suppliers have the infrastructure to respond quickly to changing demands.