Kimberly-Clark Believes in the Future of RFID

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Someday in the not-so-distant future, when you buy a box of Kleenex at the local pharmacy, it will trigger a chain reaction of events that will result, ultimately, in a tree being harvested in Canada. Call it the RFID Effect.

While not quite as profound as the Butterfly Effect—the notion that a single flap of a butterfly’s wings can alter the weather on the other side of the world—the potential for RFID (radio-frequency identification) technology to affect global supply chains has been the subject of debate for years.

And though it’s still early, businesses of all shapes and sizes are beginning to experiment in earnest with this promising but temperamental technology, whether they believe it is the start of a retail revolution or nothing more than a glorified bar code.

Among the retailers that have embraced RFID early and often is Kimberly-Clark Corp., the $15 billion consumer goods behemoth that makes Kleenex, along with a host of other well-known brands, such as Huggies and Depend.

The Dallas-based firm was the first U.S. company to ship an item tagged with an EPC (electronic product code) off a commercial line, in April 2004. (A framed picture of that first box, a case of Scott Towels, hangs in a conference room at the company’s RFID lab.)

Six Kimberly-Clark employees have joined EPCGlobal Inc., the international organization establishing the standards for RFID tags. The company is already able to selectively tag more than 144 of the items in its product line.

And in a bold attempt to take RFID beyond the infamous slap-and-ship mandate of Wal-Mart Stores Inc., Kimberly-Clark has even built a 5,000-square-foot warehouse for the sole purpose of testing its use of RFID.

Why such eagerness for an unproven technology? Kimberly-Clark executives say they firmly believe that RFID will give the retail industry the ability to achieve just-in-time efficiencies similar to those of Toyota Motor Corp. and Dell Inc.

“It’s going to get to the point where we can send an alert to Wal-Mart and ask them why a store shelf is empty when we know there’s product in the warehouse,” said Terry Assink, CIO of Kimberly-Clark.

But this just-in-time supply chain is probably still a decade away. Right now, Kimberly-Clark is still figuring out how to incorporate RFID tags into its own operations, let alone those of its suppliers, business partners and customers. Some skeptics say they think RFID technology will never be so inexpensive that putting a tag on something like a box of Kleenex will be feasible.

Currently, developers are still trying to get the cost of an individual tag down to 10 cents (it now stands somewhere around 30 cents). Some say that even if the tags cost only a penny apiece, they would still be too expensive.

Assink steadfastly disagrees. He concedes, however, that RFID has issues: It does need to cost less. It also needs to be more widely used—a process that Assink said could take five or even 10 years, as both retailers and consumer goods makers adopt the technology at varying rates. And RFID does not work well in certain environments (it has trouble transmitting through liquids and metals, for example).

None of this fazes the folks at Kimberly-Clark. Assink said he is even more convinced of RFID’s impact now than he was in 2000, when the company first started examining the technology. His bullishness has been enough to give the company’s RFID efforts its rarified “FOAK” status—Kimberly-Clark-speak for “first of a kind” strategic initiatives that are given wide budgeting berths thanks to their importance, regardless of the time frame needed to achieve the business goal.

“RFID should give us visibility into our whole supply chain,” Assink said. “From our supplier’s supplier all the way to the shelf—not the pantry, mind you, but the store shelf. Think about that.”

Greg Tadych, director of business systems at Kimberly-Clark, is known within the company for dragging around an overstuffed briefcase with him wherever he goes. One day in mid-2000, he and his briefcase popped into the office of Mike O’Shea, then the director of North American logistical alliances. According to O’Shea, the two began chatting, as they had done hundreds of times before. And then O’Shea remembered something.

“Hey, I was at this conference, and they were talking about something called RFID,” O’Shea said, and explained the technology.

“Wow,” Tadych replied, his head swimming. “Do you know what we could do with that?”

“He immediately started rattling off all these things that I hadn’t even thought of,” O’Shea said: stock tracking. Streamlining of shipping. Improvements in receiving and forecasting. Invoicing efficiencies. Tadych could think of ways RFID would improve Kimberly-Clark’s supply chain at almost every point.

Since that day, his group in IT and O’Shea’s logistics group have been joined at the hip. O’Shea is now director of Auto-ID Sensing Technologies, a position that didn’t exist three years ago.

Story Guide:

Kimberly-Clark Believes in the Future of RFID

  • RFID Seen as a No-Brainer
  • Flattening the Learning Curve
  • Preparing for a Rush of Data

    Next page: RFID Seen as a No-Brainer