26 Oct Pacific Cycle rides full speed into RFID
Pacific Cycle built a significant presence in the bicycle industry by buying some of the most traditional, old-line brands on the market. But the Madison, Wis.-based company has jumped full speed into the future with the integration of radio frequency identification (RFID) technology into its systems.
The company, which owns such traditional brands as Schwinn, Murray and Roadmaster along with newer names such as GT and Mongoose, finds itself on the leading edge of technology with its adoption of RFID for inventory control.
Pacific Cycle’s director of information technology, Ed Matthews, chuckles about being SAP’s first site to fully integrate RFID inventory tags into its systems. “Usually, we like to take a fast-follower stance with technology, but in this case it just made sense to jump in,” Matthews said.
Wal-Mart’s insistence on RFID capabilities started the discussion at Pacific Cycle. As Matthews and the Pacific Cycle team looked at the capabilities and requirements for RFID, they saw a bigger payoff for Pacific Cycle than just keeping one customer – a really big customer — happy.
Pacific Cycle has made its way in the difficult world of bicycle companies by shifting down the supply chain a bit from manufacturing bicycles with just enough marketing and design to sell the product, to being a distribution, product design and marketing company that leaves the actual manufacturing to others. In that kind of operation, efficiencies in managing the flow of product have a huge impact on business performance.
RFID makes a lot of sense for a whole lot of reasons beyond one customer’s demands.
Realizing all that RFID promised required Matthews and his staff to exercise all their skills in keeping technology aligned with real business needs. For example, because the company got in early with widely varying RFID capabilities at their manufacturers, Pacific Cycle had to take on the task of actually tagging incoming inventory to make it RFID visible. That led to all kinds of interesting discussions about where to actually locate the tags.
Actually putting the tags on the bikes seemed to make sense, as that’s what’s actually being tracked, but Pacific Cycle wanted to be sensitive to potential consumer privacy concerns.
After some experimentation, the company tried putting the tags in the plastic bags that held the owner’s manual for each bike. With that method, the consumer could easily separate the tag from the bike, but some privacy concerns lingered, as well as some questions about the reliability of the connection between the plastic bags and the actual bike.
The company ended up putting the tags on the boxes the bikes are shipped in. Those boxes rarely make it all the way home to the consumer and are usually discarded when they do, so no privacy concerns remain. With the box tagging, a better connection to the actual bike is established for the distribution and retail channels that really use the tagged information.
That close link to business drivers has shown up in other ways in the RFID project. Matthews had to sell the idea of this large, innovative implementation to Pacific Cycle executives. Unlike some of the most common pitches for RFID, Matthews didn’t start down the “quick ROI from increased automation” path. He did have to show an ROI, but upfront costs meant that term of return was longer than might usually be compelling.
A big part of the pitch for doing all of distribution and not just the slice that served Wal-Mart was the way RFID would support company growth targets. In the last four or five years with the acquisitions of Schwinn, Mongoose, and GT, Pacific Cycle has had to look for economies of scale and efficiency in all of its operations. RFID is just one example of that approach.
With healthy efforts in business intelligence and EDI as well as some XML in support of RFID, Matthews has a variety of technologies running for Pacific Cycle, but he’s not a tech-head by trade. He started out his professional career in supply chain forecasting and got pulled into IT along the way. If all the IT work dried up, he’d happily get back into the operations and supply chain work. That’s probably not going to happen anytime soon though, as Pacific Cycle continues to grow and respond to the ever changing and developing recreational bicycle market.