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RFID and Logistics: Four Trends You Need to Know

Manufacturing.net has an article about RFID and logistics trends that the author: Tom Singer advises us to be aware about.
So here are the four trends,
Trend One: The High Cost of Fuel

Improving the efficiency and effectiveness of transportation spending is a hot topic for logistics operations. Approximately 80 percent of North American freight expenditures are on motor carriers. Other transportation modes also depend on petroleum-based fuels. Trying to figure out ways to save on transportation, since oil prices have risen to record levels, will become critical.

Transportation spend is on the rise especially when manufacturing has been outsourced or offshored but the effect has been offset by the advantage of lower costs of production elsewhere. So the essential question is how long is the rising oil price as a trend going to last? Tim notes the following as well,

Carriers and enterprises operating private fleets will redouble their efforts on route and scheduling optimization.

And,

In the past few years, major supply chain software vendors have taken a new look at the Transportation Management System (TMS) marketplace. A new, web-based generation of TMS software is available…

Carriers have troubles, such as driver turnover, other than the high cost of fuel which they routinely pass through onto the shipper through the fuel surcharge. Private fleet owners have the option of hedging fuel contracts in the futures market for their operations and that would take care of that issue. The final point about TMS being available more widely than before misses the fact that TMS were in vogue long before oil began trending higher. From my personal experience, I see much about the way that TMS are used that leaves a lot to be desired. Nevertheless, the efficacy of a TMS is highly dependent on processes that precede it, in manufacturing, in scheduling etc. TMSs can only work within the constraints that has been decided long before the pallet becomes ready at the dock door and that is an illustration of local optimization against global optimization.


Trend Two: Developing a Flexible RFID

June marked the third anniversary of Wal-Mart’s announcement that it was going to require its top 100+ suppliers to start applying RFID tags to cases and pallets by January 2005.

Tim first summarizes succintly what has been going on in the RFID standards and pilot phases,

First, it took EPCglobal longer than expected to ratify a new set of ultra-high frequency standards (UHF) that were the basis for most compliance mandates. Equipment and tag manufacturers then also took longer than expected to ship products compatible with this new generation (Gen-2) standard. While Wal-Mart and other initiatives allowed suppliers to use older generation (Gen-1) tags, there wasn’t much enthusiasm for using technology destined for obsolescence. Performance and cost for Gen-1 solutions made it tough to justify RFID outside of pilot testing. Gen-1 UHF tags don’t work well near metal and liquid, and many pilot tests struggled to get production level read rate. While preliminary results with Gen-2 solutions indicate significant improvements, performance still remains an issue in many cases. EPCglobal recently announced that they intend to develop and ratify a new high-frequency (HF) standard to provide an alternative for item level tagging.

Tim’s suggestion is to take a new look at how RFID is going to affect a firm’s operational landscape,

It is now time to adopt a new, more flexible view of RFID in logistics that isn’t based solely on the vision espoused by EPCglobal and other major RFID proponents. This doesn’t mean that this vision is invalid or unattainable. Only that supply chain operations ought to start treating RFID as an application as the bigger picture plays out. Specifically, they need to take a look at whether and how to employ RFID on a case by case basis.

While standards are an important step in cross-industry and inter-firm usage of a technology such as RFID (just as it was barcodes), sometimes, it can begin to get in the way of actual technological progress. It certainly doesn’t help that the technology hasn’t matured quickly as well. So the back and forth when it comes to the appropriate/working/best RFID technology to adopt is not going to go away. However, the needs are still extant – so Tim’s message seems to be for firms to get going selectively but get going in any case.

Trend Three: Disaster Planning
This trend is centered around supply chain risk and the management of that risk especially in a globalized world. Supply Chain professionals have been waking up to the fact that while global supply chains were sold on “obvious” unit cost advantages, there are an increased set of risks that go along with it.

While it was a major wake-up call, Hurricane Katrina is only one driver in the increased interest in contingency planning within the logistics community. The West Coast port slowdown of 2002 was a rude awaking for operations depending on Asian and Pacific Rim ocean freight. If these events weren’t disruptive enough, the potential impact of a major out break of avian flu or a devastating terrorism strike brings home the point how fragile supply chains can be.

So what have firms started to do in this regard,

Most organizations realize that these efforts must be supported by a cross-functional team since the impact of any significant supply chain disruption will go beyond the boundaries of the logistics department. Some are developing sophisticated plans that identify emergency procedures, reserve supply requirements, the availability of alternate carrier and routes, security needs, customer relationship management, and human resource requirements.

Trend Four: Supply Chain Visibility
Tim notes that,

Visibility and collaboration have been pushed as cornerstones of supply chain best practices for years.

However,

The limited functionality of these packages, however, internal priorities, skepticism on payback, and a hesitancy to share information with outsiders kept many operations from implementing a visibility tool.

Couple the lack of supply chain visibility and risk management and, you get the latter which cannot really operate without the former at least not in any effective way. Some solutions from vendors identified below go some distance to providing supply chain visibility:

Over the past few years, visibility and collaboration software has matured into powerful trading partner integration tools. Solutions offered by vendors like i2 Technologies, and Manhattan Associates, provide supplier, carrier, and customer-facing components that provide visibility on order, inventory, and shipment status. But they are much more than visibility tools. They can exchange item, order, advance shipping notices, and invoice data through a work flow-enabled, web-based application. They allow retailers, distributors, and manufactures to automate information flows with trading partners that they could not reach through traditional channels.

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Category: Logistics, RFID, Supply Chain Management

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One Response

  1. Part three about DR planning is interesting due to the amount of class one tags out there that are asking as passive beacons only.

    Kendall Gordan, SE
    http://www.foxfiresoftware.com

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