Microsoft RFID Customer Expects Quick ROI

In its four-phase RFID project with Microsoft and others, Wal-Mart supplier Jack Link's Beef Jerky looks at recouping a $48,000 investment in less than a year.

Microsoft customer Jack Links Beef Jerky, a supplier to Wal-Mart, Target and the U.S. Department of Defense, is moving into the second phase of a four-part RFID project, with expectations of achieving ROI (return on investment) over the year ahead.

First unveiled at the EPCglobal show two weeks ago, the joint project between Jack Links, Microsoft Corp. and four other IT partners is geared to giving the snack maker efficiencies on both the manufacturing and retail sides of the supply chain.

In an interview with, Karl Paepke, vice president of operations at Jack Links, said his company is investing $48,000 in the RFID project.

"Specifically, at the completion of all four phases, were looking at a payback period of less than 12 months," Paepke told

/zimages/6/28571.gifRead more here about the RFID pilot with Jack Links, which is the second Microsoft has announced.

Paepke cited three main reasons behind Jack Links current steps into RFID: conformance with the mandates of three of its customers; better visibility into the manufacturing and retail supply chains; and improved ability to comply with government regulations on meat products.

Now nearly a century old, the Minong, Wis.-based, family-owned food company has been specializing in meat snacks since 1985. Jack Links operates seven manufacturing plants that funnel into a single DC (distribution center).

Wal-Mart is a major customer for Jack Links, but the snack maker is not among the retailers top 100 suppliers. Consequently, Jack Links wont be required to reach Wal-Mart compliance until at least 2006.

"But this is truly David versus Goliath," said Alex Renz, RFID program manager at Microsoft. Renz told that small to midsized product suppliers such as Jack Links live in the same competitive arena as larger suppliers, which tend to have more resources on hand for RFID compliance.

Paepke said that, beyond getting a head start on the mandates, Jack Links foresees advantages in supply-chain decision-making.

The snack-food company has made some use of bar codes so far, but not all that extensively, Paepke said. "We were a manufacturing firm, and we kind of lost sight of [supply chain] technology. Now, well be able to leapfrog some of the [supply chain] applications that are already out there," he said.

"We think were doing everything fine in manufacturing, but this will serve as a litmus test as to whether we can do things more efficiently," Paepke said.

"On the outbound side, well be able to tell which SKUs are moving and which are not, for better demand planning and vendor-managed inventory [VMI]."

/zimages/6/28571.gifWill wireless rewrite the RFID landscape? Click here to read more.

In the first phase of the project, wrapped up prior to the EPCglobal conference, Jack Links spent just under three weeks tagging cases and pallets for certain SKUs headed to a Wal-Mart DC in Texas.

In phase two, the snack company is deploying RFID together with Microsofts Navision technology to track meat products through its closed-loop manufacturing system.

Meanwhile, Microsoft is working on building RFID functionality into Navision 5.0, Axapta 4.0, BizTalk Server and the next major release of Great Plains software, according to Renz.

During the third phase of the Jack Links project, the use of RFID will be expanded to include the automatic tracking of raw-material supplies.

In the final stage, RFID will be used to help automate internal transfers of product stock from Jack Links manufacturing plants to its central DC, Paepke said.

Aside from Microsoft, Jack Links other partners in the RFID project are ABC Computers Inc., SATO America, SAMsys Technologies and Avery Dennison Corp.

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