Want to see the future of RFID-enabled business processes? Check out what's going on at Kimberly-Clark Corp., a $15 billion maker of paper-based consumer products. While the industry hashes out standards and experiments with tags and other RFID building blocks, Kimberly-Clark (Irving, TX) and partner SAP AG (Walldorf, Germany) are pushing the technology to the next level, leveraging the data collected by the budding RFID (radio frequency identification) infrastructure to inject greater visibility and zero latency into a new set of business processes.

The partners plan to go live this quarter with the first deliverable in their RFID collaboration: Electronic Proof of Delivery (E-POD), which aims to address the longstanding and widespread problem of invoice reconciliation between consumer products manufacturers and retailers. After that, the partners will turn their attention to additional pilots to enable new RFID business processes around promotion management, retail distribution support, out-of-stock reduction, and a handful of other areas, according to officials at both companies.

Kimberly-Clark has long been an RFID pioneer among consumer product goods (CPG) manufacturers. The company was among the first to respond to mandates put forth by retail mega giants like Wal-Mart Stores Inc. to tag merchandise so it can be monitored throughout the supply chain. In April 2004, Kimberly-Clark became the first U.S. company to ship an item with an electronic product code (EPC) tag. Additionally, it plays an active role in EPCglobal Inc., the international organization promoting RFID standards, and has constructed a 5,000-square-foot warehouse for the sole purpose of testing all of its RFID-related efforts.

The SAP partnership around RFID, which began in 2005, was a natural, since many of Kimberly-Clark's key back-end business systems -- including those for production and inventory management -- are built on SAP software. For the last few years, Kimberly-Clark and others have been focused on working out the "physics" of RFID tagging and reading. While that was an important first step, the real benefits of this technology will be delivered through new business processes that will drive collective value for retailers, manufacturers, and the end users of products, explains Greg Tadych, director of business systems at Kimberly-Clark, in Neenah, WI.

"Having the data captured is interesting, but what you do with it once it's captured is what's really important," Tadych says. "It's the first time you have the opportunity to look at product movement information after it leaves your doors and before it hits the cash registers. That visibility is one of the exciting things we had to capitalize on."

Manufacturers will certainly benefit from RFID partnerships such as the SAP/Kimberly-Clark pact, since such efforts explore what is still uncharted terrain. Leveraging RFID to enable new business processes is a costly proposition -- one that's out of range for most mid-size manufacturers. Much of the work coming out of the SAP/Kimberly-Clark partnership will eventually be productized and offered up by SAP to other manufacturing customers, company officials say.

"It takes these explorers to look out over the horizon and invest the money and manpower to try to find the solutions," says Michael Mahler, research director at Gartner Inc. (Stamford, CT). Being something of a technology laggard, he says, makes a lot of sense for the average company. "Let the big guys experiment, but have a clear understanding of what they're doing."

Bridging the Disconnect

E-POD and the partnership with SAP are part of a five-year strategy intended to allow Kimberly-Clark to leverage data collected from the RFID infrastructure and enable new business processes, Tadych says.

He notes that E-POD, which aims to optimize shipping and receiving between manufacturers and retailers, was the starting point because proof of delivery is something all trading partners must do and because there were many manual processes in place that were inconsistent. E-POD aims to address the longstanding problem of invoice reconciliation -- the process undertaken when there are discrepancies between what the manufacturer ships and what is received by the retailer.