While every entry for this year's Best Practices in Logistics Management Awards demonstrated effectiveness and achieved measurable improvements in efficiency, there was little doubt as to who would take the Gold. International Paper's (IP) warehouse tracking system won the top prize for successfully intertwining the old-fashioned forklift, cutting-edge radio frequency identification (RFID) technology, and proprietary software to achieve real-time visibility around the clock, 365 days a year.

The home-grown system—up and running for about a year at IP's Texarkana, Texas, bleach-board mill—centers around wireless transmission of production-to-warehouse-to-shipping dock instructions that track the stocking and storage of thousands of rolls of paper each day. Since implementing the system, the Texarkana mill has increased inventory turns by 5 percent, improved on-time delivery performance, and leveraged the system's preplanning and tracking capabilities to ship 70,000 tons of paper in March 2004, a new record.

"The bottom line to all this is that we turned warehousing into a function that actually helps increase production," says Scott Andersen, RFID product manager for IP's Smart Packaging business unit and lead on the Texarkana implementation.

To understand what's produced and stored in the Texarkana mill is to understand why IP picked that location for the implementation of its first RFID solution.

The mill converts raw timber into massive rolls of bleach board used in making milk and juice boxes. "Think of huge spools of thread stacked on top of each other, row after row," says Andersen.

Forklift trucks outfitted with padded "hands" grip and lift the rolls, which weigh between two and seven tons each. The forklift operators place the rolls on end and stack them three to eight high, depending on their weights. Says Andersen: "That's what made this a unique storage and tracking situation, because all you can see is a sea of white paper."

With the warehouse having to make an average of more than 5,000 moves a day—the majority to get one roll out of the way of another—product tracking and placement was becoming costly and ineffective. "That's where every other attempted solution, including painted lines and three generations of bar coding, was failing in terms of inventory accuracy," says Troy Ashmore, Texarkana's production, scheduling, and distribution manager.

Dissatisfied with the results of those efforts, Andersen and the team decided to test RFID applications that IP had developed in-house under the guidance of Steve Van Fleet, director of the Smart Packaging business unit.

Van Fleet had been involved in early Electronic Product Code (EPC) work at the Massachusetts Institute of Technology's Auto-ID Center. According to Andersen, Van Fleet "had an epiphany" in November '99 when he witnessed Motorola using conductive inks to print computer-readable information on its products and realized that IP could use the same process to apply RFID tracking technology to its packaging. Van Fleet presented a business plan to IP's chairman and was awarded funding to develop new RFID-based products.

Now that the stage had been set, it was up to the Texarkana team to begin charting a solution for the mill's unique visibility issue. Their vision: A tracking system that would use an RFID tag incorporating EPC standards to give each roll a unique identifier while providing visibility into how it is processed, where and how it's stored, and how it's shipped.

The IP team was capable of establishing the project's performance specifications, but the technology development required partnering agreements with hardware, software, and systems-integration vendors already active in RFID system design.

IP decided to run with Matrics, of Rockville, Md., for its 900MHz tag as well as its RFID reader, which is mounted on the padded forklift "hands" that pick up and move the rolls. For systems integration and consulting, IP went with Toledo, Ohio-based ESYNC, while Apriso of Long Beach, Calif., was chosen to provide "middleware" that maps out locations and directs forklift drivers via truck-mounted computer screens.

The project was not without its challenges. First, the development team struggled to find the proper frequencies for transmitting information inside the mill. The second big challenge was designing brand-new technology that could withstand the harsh surroundings. "We needed to make sure that we had technology that could read through a 75-inch diameter roll and survive in a mill environment," recalls Ashmore. To make that possible, IP and its vendors developed rugged, gripper-mounted readers and placed the tags inside the cores of the paper rolls, a move that significantly reduced the chance of damage to the tags.

A walk through the Texarkana operation shows that it's the EPC tag that resides at the figurative—and literal—heart of the system.

When an order first comes in, all of the specs for each roll—the customer's name, date needed, grade, width, and mode of transportation—are entered into the mill's information system. That data is linked to a tag, which receives a unique identifying number and is applied to the roll's core. The core identification number then is married to a unique identifier for each "unit," or bundle of rolls destined for a particular customer. This linking of core identifier and unit identifier sets the foundation for the tracking system.

Once a roll comes out of production, it's picked up by a forklift using grippers equipped with tag readers. As soon as the tag has been read, the driver sees detailed information about that roll, including the next set of instructions, on a forklift-mounted screen. "Let's say a roll needs to move onto a conveyance (an internal conveyor system) to be shipped out by truck that day," says Ashmore. "The screen displays which conveyance it needs to be on, and whether it's going by truck or rail—and we've only touched the product one time."

If a roll needs to be stored, drivers are directed to a preplanned storage location. "A large volume of our product ranges from 60 inches to 75 inches in diameter, so we can 'grid out' for each specific spot, and we can get as granular as we want," Andersen explains. Location accuracy is "plus or minus a foot," he adds.

The Texarkana team contends that there isn't a process or a procedure that hasn't been revolutionized by the implementation of IP's RFID system.

One of the biggest changes is that the mill is now capable of tracking a constantly shifting population of rolls inside the warehouse—that's 5,300 to 5,400 individual moves each day for product already in storage, plus additional moves for the 1,600 new rolls that come out of production daily. "We now track every roll, every move, and we know where any roll is at any time," says Ashmore. "That alone has offered an amazing advantage."

Because each tag includes very detailed information, the mill can better plan its operations. "I can now take that information and preplan the production on that order," Ashmore says. "I know how we need to make that roll, which machine to use, when it needs to be produced. I can also go ahead and preplan if I need to put it into the warehouse or if I need to put it on a conveyance and ship it to a customer at a particular time."

The system is also helping the mill to manage its transportation costs. "We know up front whether or not a roll needs to be shipped by truck or rail," says Ashmore. "And since each mode has a related cost and we can plan shipments far in advance, we can now ship at the lowest cost available."

To maintain efficiency and engage employees in the project, the Texarkana team developed a program that is loosely based on the National Football League's Quarterback Rating (QBR). The NFL's QBR rates passers against a fixed performance standard, based on the percentage of completions per attempt, average yards gained per attempt, percentage of successful touchdown passes per attempt, and percentage of interceptions per attempt. Texarkana's version of QBR rates forklift operators on the number of valid, invalid, and efficient moves, as well as average moves per day. An invalid move into the wrong conveyance, for example, would be equivalent to an interception; the successful loading of 30 or 40 rolls into the correct conveyance, leading to a complete and on-time shipment, would be a touchdown.

If a driver has taken a roll to the wrong conveyance or truck door, the system immediately issues an alert and the move is noted on the driver's score. A correct move improves the driver's rating. But the program does more than simply motivate employees, Ashmore notes. "This is a real-time, high-level application that gives me a record of everything a driver has done for that particular day," he says.

By every measure, the Texarkana RFID project has been a notable success. But Texarkana won't be alone in that success for long: IP's Smart Packaging business unit is currently rolling out its warehouse tracking system at several other warehouses and mills. What's more, IP is now looking outside the paper industry for potential customers for its unique system.

Andersen stresses that IP's RFID system is achieving its promise not because of what it is, but because of what it can do. "This isn't just a chip on a box or a chip on a product," he says. "The value comes in the information, how you aggregate that information, and how you use it to figure out what it means to your operation. The true test is to ensure that an RFID solution can evolve and be a real solution."