HDT that the initial phases of what Wal-Mart calls its EPC (Electronic Product Code) program won't have any impact on the retail giant's own private fleet, never mind commercial carriers.
But revolutions - even technology revolutions - are infamous for unforeseen consequences. This one may not affect trucking right now, but it is playing out in the world of logistics where trucking lives. It's something all serious fleets need to keep a careful eye on.
RFID: More Than 60 Years Old
So what's going on here? What's the Wal-Mart fuss all about?
First some basics. RFID was first used in World War II to help British anti-aircraft gunners tell friendly aircraft from attackers. It's the technology behind remote car door and trunk openers, not to mention E-ZPass and weigh station bypass programs. It helps keep Alzheimer's patients from wandering from health care facilities.
In our own industry, fleets like Old Dominion use RFID tags on trucks and trailers to identify vehicles wirelessly upon arrival or departure from terminals.
RFID consists of an electronic reader that emits radio waves in a specific spectrum. When those waves meet an RFID tag, the tag responds by transmitting its identification information. For example, at an E-ZPass tollbooth, a reader receives information from the tag mounted on a vehicle windshield. The system recognizes the vehicle that has passed through the toll booth and charges the appropriate account for the toll.
Wal-Mart hopes its RFID will control inventory even more efficiently than barcodes. RFID does not require someone to point a reader directly at printed code. An RFID tag need only pass near a reader to be read. (In Wal-Mart's case, near means within 15 feet.) RFID readers can scan items passing by very quickly, a major potential time saver in itself. But that's just the beginning.
Active Tags Gather Information
Wal-Mart is working with an "active" tag technology, using smart tags that can accept new data as they move along the supply chain. The tags Wal-Mart expects suppliers to put on pallets, cases and certain large items can be written to more than once.
A tag will have certain information built in, so to speak - the manufacturer ID, stock number, etc. But it will also be able to accept and store more information, which it can then provide to readers further down the line. So Wal-Mart's tag readers will also be tag writers. Wal-Mart will be able to read a tag on arrival at a distribution center, then write to that tag, which can provide the next reader in the chain all the original information plus when it was received and any noted exceptions.
Active tags can be read and written to all along the supply chain, so merchandise will carry its movement history along with its identity. That history can include critical information like, say, temperature in the case of frozen foods.
The potential for all that data is both dazzling and daunting.
Wal-Mart calls its project the EPC system, where EPC stands for electronic product code. If that sounds like UPC, or universal product code, it should. Universal product code - what we call bar code - was created some 30 years ago to speed supermarket checkouts. It has since worked its way into applications never dreamed of at the time. For example, many commercial carriers put bar codes on bills of lading and corresponding pallets of freight. Maintenance departments place barcodes on trucks to quickly identify each and call up histories. Parts departments use barcodes much like the supermarkets do, to track inventory and log items coming in and going out.
UPC is maintained by a world-wide organization with affiliated groups in major countries. In the U.S., it's UCC- Uniform Code Council of Lawrenceville, N.J. Member companies that use barcodes are issued prefix numbers to identify them at the start of barcodes they create, giving each and every barcode its own, unique identity worldwide. The emerging electronic product codes will work the same way and will be administered by the same or closely related nonprofit organizations.
So why don't we already see RFID tags like barcodes, on everything we buy?
Because while barcodes can be printed for next to nothing, advanced RFID tags cost a lot of money, anywhere from $5 to $20 apiece. That's where the Wal-Mart initiative will have a tremendous impact.
Big Players Join Wal-Mart Initiative
According to Wal-Mart, six major shippers were involved in the initial RFID phase: Gillette, Hewlett-Packard, Johnson & Johnson, Kimberly-Clark, Kraft Foods, Nestle Purina, Proctor & Gamble and Unilever. An additional 37 suppliers Wal-Mart does not identify voluntarily joined the project, which kicked off in April. More recently, Wal-Mart advised its top 100 suppliers they would have to meet a January 2005 deadline for tags on pallets and cases shipped to three Wal-Mart distribution centers in the Dallas/Ft. Worth area.
The aggregation of these companies immediately creates a huge market for tags, which will quickly force prices way down. As the project expands, smaller suppliers can join together in tag-buying cooperatives. At least that's the assumption. Optimists claim Wal-Mart-style active tags will cost as little as 4 cents apiece before long. Others dismiss that as wishful thinking. Either way, many tag suppliers have jumped into the market in what resembles an old-fashioned gold rush.
Wal-Mart requires participating suppliers to tag merchandise two different ways, by the pallet and by the case. That way, freight handlers can quickly identify pallets coming off trailers and cases on conveyor lines. There are no imminent plans for tags on single items - or SKUs for stock keeping units - except for large single units, appliances for example.
Bottom Line - For Now
How will all this affect fleets that serve Wal-Mart and cooperating suppliers?
As was noted earlier, it won't - at least not initially. However, those fleets will begin to see tagged freight passing through their systems - or in the case of truckload carriers, on their trailers. Since tags will meet universal standards (expected to be finalized in October), fleets will have the option of reading those tags if they wish. It remains to be seen how that might benefit fleets, but according to RFID boosters, benefits will surely become apparent. Smart fleets, they say, should at least experiment with those tags and readers on their own.
Then there are skeptics like engineer Marc Mitchell of Enterprise Information Solutions Inc., technology consultants and providers of wireless logistics systems for LTL operations.
"I think RFID for trucking companies is really not much of an issue," Mitchell said. "A trucking company as an independent business does not have a lot to gain from deploying RFID.
"Think about a classic, commercial LTL carrier. They're picking up freight from a million places. What are they going to do, slap an RFID tag on every piece of freight to track it while it's in their control?
"Barcodes work great. I can print a piece of paper, a bill of lading, with a barcode on it. I can't do that with RFID. Putting an RFID tag on a trailer to know when it arrives and departs makes sense. But not for freight."
Sidebars
RFID Beyond Wal-mart
IT Briefs
