Distributors and Dealers Embracing Barcode Scanning

Use of product tracking technology expands with RFID looming for the future
Mike Owens, Woodware Systems
November 1, 2006
FEATURE ARTICLE | Operations

Radio frequency barcode scanning at window, door, and millwork distribution companies is one of the most significant technology growth trends of the last 5 to 10 years. To some extent, almost every segment of the supply chain has embraced the use of RF scanning.

The great gain in operational efficiencies from the use of RF scanning provides a tremendous return on investment for those companies implementing this technology. Whether it is a one-step window dealer using barcode scanners to receive special order windows, or a two-step wholesale distributor running an entire warehouse operation using RF scanners as part of a full-blown warehouse management system, there is no doubt that RF barcode scanning is making incredible improvements throughout the window, door, and millwork industry.

Bar codes on windows and doors are scanned as they are received, as they are staged or moved into inventory, and finally when they’re loaded onto a truck, enabling the system to know exactly where they are all the time.
THE BASICS OF BARCODES

The way it works is that a product label or paperwork has an identifying barcode on it, usually indicating an item number for the product, and sometimes with other information such as a purchase order number, building/bin location number, sales order number, or other relevant data. The scanner is a device that “reads” the barcode by scanning it. This information updates a main computer database.

For instance, in a receiving application, the person unloading a truck is assigned the task of making sure that the product received matches a purchase order for that product, so that it is updated in the computer system’s inventory control system accurately with the correct cost applied to it. Instead of using pen and paper, followed by someone keying the information into a computer, barcode scanning technology eliminates those manual steps, thus greatly improving accuracy, speed and the time it takes to update the business’s system.

Integrated barcoding in the millwork distribution industry began more than 15 years ago. Woodware launched integrated barcoding applications for window, door and millwork distributors in 1990. From that starting point, the technology itself has evolved significantly, and the business solutions have grown with it. Millwork companies use barcode scanning to receive products, “cross-dock” or stage them for shipping, take physical inventories, do cycle counting of inventories, ship products and much more.

RF technology became affordable for more companies around the year 2000, when these applications also began to evolve in significant ways. Before RF use became widespread in the industry, portable hand-held scanners were essentially “PC’s on a stick,” which gathered data through barcode scanning then updating the main business system by porting the data through hard-wired terminal ports. This meant there was a delay from the time the barcode label on the product was scanned until the main business system was updated. The development of wireless technology, however, changed that.

Now handheld devices with an antenna allow for both the barcode label scanning and instantaneous wireless transmission of information to the main computer system. The RF scanning devices are becoming lighter, sturdier, and more reliable as each year goes by.

IS RFID NEXT?
The significant growth of national big box retailers like Home Depot and Lowe’s assures that their influence throughout the window, door, and millwork industry is a huge factor affecting how their suppliers do business. This influence has extended to many technology solutions, including e-commerce capabilities, in-store product catalogs, and yes, barcode scanning technology.

Many window, door and millwork companies got their first taste of barcode use when Home Depot, Lowe’s, 84 Lumber, and other large retailers required them to provide product labels with barcodes on them. While this made it easier to track products (primarily easier for the big boxes), savvy distributors began looking for their own internal uses of this technology. If they were going to be putting labels on products for Home Depot anyway, why not also scan the product as it was loaded onto the truck or removed from inventory or production? 
By enabling employees to enter and access information quickly, productivity at J.B. O’Meara has increased significantly using RF scanning and a warehouse management system.
Many of the barcode scanning capabilities now widely deployed in the window, door, and millwork industry have their birth in some barcode labeling edict from the big boxes. Internal efficiencies for window and door manufacturers, distributors and dealers became a natural outgrowth of the barcode scanning push by the national retailers.
One of the most often asked questions about RF technology in the future concerns the use of RFID, which stands for radio frequency identification. Many industry executives are asking whether, and when, they should invest in this technology.

RFID is a technology that utilizes tiny computer microchips. These chips, or RFID “tags”, act as transponders (transmitters/responders), which are “listening” for radio signals sent by RFID readers. The RFID tag responds by transmitting its own unique ID code back to the RFID reader. So, the product with the RFID tag on it (or in it) is traceable without a person having to scan it and without a barcode label, which might tear or have a smudge over the barcode. The tag can then immediately update the main computer system. The cost of RFID technology has also dropped significantly over the last decade.

Like so many other technologies, the answer to the RFID question in the industry will likely come from the big boxes. It is interesting that Wal-Mart, more than any other retailer, often sets the trends in retail that eventually find their way to Home Depot, Lowe’s and other building products retailers. Then, once Home Depot or Lowe’s requires it, the technology evolution begins in earnest in the window, door, and millwork industry. 

Wal-Mart has already made a push for its top suppliers to fully support RFID for in-store inventory tracking. Will Home Depot or Lowe’s be far behind? Most reports indicate that the major building products retailers will eventually move in this direction. Although most window, door, and millwork suppliers will continue using barcode labels and RF scanning for the next few years, any company that provides products to the biggest of the big box retailers should begin to become more familiar with RFID. 

For internal use, standard barcode labels may continue to be the most cost-effective way to utilize RF technology, but it is highly likely that RFID is “on the radar,” so to speak, for suppliers to the national retail chains already. The widespread use of RFID in the industry will likely gain acceptance once the cost of RFID chips drops even more significantly from their current levels, and once Home Depot or Lowe’s gives the word to their suppliers.

TODAY’S BEST PRACTICES
Until RFID jumps to the forefront, RF scanning continues to provide the best approach to product tracking. Window, door and millwork distribution operations taking the lead with RF technology are now expanding its use throughout their warehouse operations in conjunction with warehouse management systems. 

With WMS software and RF scanners, distributors get real-time updates to their computer system every time a product is “touched” or moved. Such applications as receiving, put-away, item/unit moves, replenishment, production completion, picking, shipping, physical inventory, cycle counts, product location inquiries, damage reporting, prioritizing and assigning worker tasks, and much more are part of the best WMS software systems in use today in the industry.

Two of the companies participating in a panel discussion on WMS at the Association of Millwork Distributors Convention in October were Reeb Millwork Corp. of Bethlehem, PA and J.B. O’Meara Co. of Burnsville, MN. Both companies use Woodware’s WMS software modules with RF barcode scanners throughout their warehouses, and both have experienced significant benefits from using this solution, especially because the system has been designed specifically for millwork operations, including door pre-hanging shops and window assembly.

The positive impact of WMS has been significant for these companies. As they shared with the seminar attendees at the AMD Convention, Reeb’s benefits from using WMS include the following: sales increased almost 16 percent, while their customer order fulfillment rate has improved from 94 to 99 percent, mostly by helping employees easily find the correct items the first time. Operating labor efficiency has improved 17 percent, mostly in receiving and shipping. Office labor efficiency has improved about 11 percent, and Reeb now is able to handle about 25 percent more calls with the same people. Critical operating information is readily available to Reeb staff to help them identify and resolve problems much more quickly. Reeb Millwork currently uses the Woodware WMS software in three of its locations.

J.B. O’Meara shared similar positive results from the use of RF scanning and WMS software. Some specific examples of increased productivity due to availability of more information include: receiving knows where to put inventory away more quickly, cycle counts are much easier to perform by either item or bin, and warehouse employees can locate product more quickly. It also provides the company with real time information on the location of products, as well as providing audit trail information regarding who touched it and when it was touched. 

The benefits to J.B. O’Meara from the use of WMS and RF scanning include: increased productivity, increased customer satisfaction, increased sales, improved order accuracy and fill rate, decreased training time for new employees, easier cycle counting and physical inventory, reduced payroll costs, reduced operating costs, reduction in “lost” orders, and improved accuracy of perpetual inventory.

Numerous other millwork companies receive benefits from RF scanning, even without going to the full-blown WMS approach. A two-step wholesale millwork distributor reported its effect on man-hours to count a $3 million inventory. What once required more than 1,200 man-hours with about 40 counters in the warehouse (about four days’ worth), now takes less than 200 man-hours with about 15 counters (count completed in one day, at a fraction of the expense) through the use of barcode scanners and automated data collection software.

Another door and window distributor reported that inventory accuracy improved to better than 99 percent through the use of barcode scanning applications (with a variance at year-end physical inventory of less than 1 percent). Still another millwork distributor had results of inventory turns increasing from about four turns to about nine turns, while fill rates stay consistently between 98 percent and 99 percent. Other distributors have found that they can reduce the time to unload and handle products by as much as 30 to 50 percent when RF scanning modules are in use.

All of these results come directly from customers that have utilized our barcode scanning and automated data collection technology, thus providing some real-life perspective on the topic of “best practices” in the use of RF scanning technology in the millwork distribution industry. Almost any window, door, and millwork distribution operation can improve the efficiencies of their processes using RF scanning capabilities. The benefits of using this technology can add significantly to the profitability of a distribution operation.

Mike Owens is vice president of sales and marketing for Woodware Systems, based in Memphis, TN. The company specializes in software and related technology for window, door and millwork distribution companies. More information about RF barcode scanning and WMS software is available at www.woodwaresystems.com or by calling the author at 901/763-3999.