CINCINNATI - As part of its launch of Gillette Fusion razor products last month, Procter & Gamble here used RFID technology to track case shipments to 500 stores, resulting in 92% of the stores having product on shelves or in floor displays within three days.
That level of in-stock inventory for a new-product launch is "unheard of," said Paul Fox, director of global external relations for P&G, adding that it typically takes 14 days to reach 92% of store penetration. "So we got 11 extra days of selling," he said.
The stores involved in the RFID-tracked product launch were operated "primarily" by Wal-Mart Stores, Bentonville, Ark., Fox said. (Wal-Mart declined to comment.)
Wal-Mart has been engaged in a year-long test of RFID technology, expanding from 130 Texas stores and three distribution centers to 500 stores and five DCs late last year. About 130 top suppliers have been shipping RFID-tagged pallets and cases to the DCs, and Wal-Mart began bringing its next top-200 suppliers into the program in January.
Wal-Mart's RFID-equipped stores use readers at the shipping dock, back room and cardboard compactor to read RFID tags on cases and pallets. P&G was able to track the movement of RFID-tagged cases from its DC to Wal-Mart's DC, and then to stores and their compactors. The RFID tags contain digital ID markers called electronic product codes (EPCs).
When empty tagged cases of Fusion razor products were read at the compactor, this served as confirmation that the product was either on shelves or in displays, Fox said. If the expected number of cases was not read at the compactors, Fox said, remedial action could be taken. "We could immediately send alerts to the store and say, 'You have it and it's not on the floor.'" Alternatively, if a store received too many cases, "we could call and ensure that the pallet was reshipped to where it was supposed to go," he said.
P&G has conducted similar tests of RFID technology on promoted products, but never before on a product launch, Fox said.
The Fusion program represents the largest new-product introduction tracked via EPC-based RFID, according to Pete Abell, senior partner, ePC Group, Boston. "I think the 92% result is excellent for three days but is as much a result of the effort and observation and willingness to involve the retailers and sales force/brokers who may have been involved as the use of RFID," he said.
In a related move, P&G and Vue Technology, Lake Forest, Calif., announced last week that P&G is showcasing Vue's technology at a facility to demonstrate how products can be tracked at the item level through the supply chain to store shelves.
Last year, Fox said, P&G used RFID to track the store-level execution of a Braun electric razor Father's Day promotion at 18 Wal-Mart stores. In this case, no remedial action was taken when products were not put on the sales floor. P&G found that one-third of the stores got product onto the floor within three days; a third did so sometime during the three-week promotion period; and a third left the product in the back room. For those stores that executed within three days, sales lift was 61%.
Without visibility into promotion execution, Fox noted, retailers may take bad sales results from the previous year as the basis for future orders, though the problem was really execution, not sales.
By enhancing the effectiveness of promotions and product launches, RFID can demonstrate the return on investment that many critics argue has been missing from manufacturers' use of the technology, Fox observed.
The RFID-supported Fusion launch was part of a new strategy called "EPC Advantaged." Products will fall into three categories, Fox explained: "advantaged," which will include promotions, product launches and items prone to shrink; "testable," or high-value items that may be advantaged but require further testing with the technology; and "challenged," or products that pose technical problems or have negligible shrink.