RFID: Will The Trickle Become A Flood?
In trucking, some private carriers use RFID in support of parent company operations.
John Bendel
Technology Editor
Like most heavily hyped technologies, freight-level RFID (see sidebar) is taking a while to arrive, and its impact on truck fleets has been small so far.
But stay tuned. Technology has a way of sneaking up on you.
Retail powerhouse Wal-Mart made big waves last year when it mandated that a handful of distribution centers would require vendors to use RFID so that arriving goods could be tracked through the Wal-Mart system. Considering the wall-to-wall trade press coverage, you could be excused for thinking the Wal-Mart mandate would change the transportation world overnight.
Of course, that hasn't happened.
In the months since the Wal-Mart pilot program actually began, hype in the trade press has eased. The giant retailer hasn't issued a press release on its initiative this year. But make no mistake; the clock is ticking.
According to RFID system providers Intermec and Symbol Technologies, use of RFID is growing in transportation and logistics operations – for example in tracking airport baggage and air freight containers.
In trucking, some private carriers use RFID in support of parent company operations. But the wireless technology is also being purchased at experimental levels by commercial carriers – mostly LTLs – anticipating that tagged freight will move through their systems eventually. It may be freight tagged by shippers to meet customer demands and need not involve the carrier. Still, the tags will be there.
"Carriers are looking at it from [the standpoint of], can I use this technology? People want to know, if this is going to be in my possession, can I leverage the information on the tag?" said Intermec's Kevin Moore, senior business development manager for transportation and logistics.
"The answer to that is – well – it depends. It depends on what kind of information is on the tag and whether you have the ability to read it," said Moore.
"A lot of companies are doing projects just so they understand it," said Ralph Lieberthal of Symbol Technologies. Virtually all of the larger LTLs have RFID equipment on hand, he said, "learning what it can do, what it can't do."
The need to actually deploy RFID throughout a carrier system is still in the future, he said, but Lieberthal applauded the carriers looking into the technology now.
"I would say it's still a couple of years away, but carriers should stay abreast of what's going on. Understand the technology. Talk to your customers to see what they're looking to do," Lieberthal said.
Fleets should also keep an eye on third-party logistic providers, or 3PLs, that provide outsourced warehousing and transportation. Those 3PLs control much of the freight available for commercial carriers and most are looking seriously at RFID.
"There is lots of lab work; there are many pilots, and it makes sense," Lieberthal said.
RFID at Menlo Worldwide
One such 3PL is Menlo Worldwide, a logistics division of CNF, which also operates the Con-Way family of carriers.
"We've been working on RFID for a little over two years now, from a couple of aspects," said Dave Hushbeck, director of Menlo DirectTech, a technology provider for Con-Way as well as for outside customers.
"Some of our customers need to comply with the Wal-Mart initiative. We're working with them and working independently, putting in processes to meet customer needs," Hushbeck said.
"A couple of years ago, we decided that Menlo needed to be able to supply that service. It was going to be a requirement going forward. We've been developing the knowledge, and the understanding, the processes and the partnerships to be able to do that."
Menlo is using RFID at five warehouse or distribution centers it operates for customers. Four of the five use RFID to meet the Wal-Mart mandate, while the fifth uses RFID for what Hushbeck calls a value-added reason.
"So some of the four compliance sites are slap-and-ship, which basically means tagging something going out the door so when it reaches Wal-Mart – or whoever the customer may be – it's compliant. We go from there to what I'd call on-site lab studies, which basically means we're trying to drive value and learn about RFID," he says.
"For example, at one site we receive products that have been tagged already. We've been able in our receiving process to integrate that into our warehouse management systems and we're able to use that information throughout the warehouse."
According to Hushbeck, Menlo sees two primary elements that determine the value of RFID in logistics operations. One is infrastructure – the equipment needed to read and write to tags – everything from installed read-write transponders to handheld devices integrated into the warehouse management software. The second is the tags themselves and more specifically the price of those tags.
Hushbeck said that infrastructure drives possible savings.
"The more infrastructure I put in place, the more I'll be able to save across the warehouse, the more use you'll make of the tags," he explained. "I can automatically receive them, I can store them. I can inventory them. I can also ship them automatically, so I get four values for having the tags."
Tag cost is what drives your strategy, Hushbeck said. "Right now, it can cost anywhere between 20 to 50 cents for a passive tag (a non-powered, short-range tag that can be written to only once.) It's too expensive, because we really can't afford to tag every product."
As a result, Menlo focuses on those items that must be RFID compliant.
"I have product I ship to Wal-Mart and I ship it to 10 other people. I'm only going to tag the ones going to Wal-Mart because I can't afford to put tags on everything. So we see value in the future with RFID, but we can't get there today because the tag costs are still high."
Still, Menlo has found specific areas where RFID is worth the money. One is management of small, proprietary containers that some manufacturers use to move, say, engine parts to vendors.
"You might have 3,000 containers you're shipping around your supply chain that hold the product or part. Every time they ship those out to the customer, the vendor, I want to make sure I get that back. RFID is a really good way to track that."
While you could do the same thing with barcodes, he notes, RFID is better because a truckload of 20 can be read all at once by the RFID reader.
Menlo also uses RFID with a particular customer with a very expensive product, each unit of which comprises 20 to 25 crates.
"These things were stacked around the warehouse and it took two people about 10 to 12 hours to inventory that warehouse," Hushbeck said. "So we tag that whole facility on inbound freight. Every crate gets tagged. Now we can inventory that warehouse with one person in 45 minutes."
Is the quicker inventory worth the effort and expense of RFID?
"The inventory is the first savings, the productivity savings," Hushbeck said. RFID makes it affordable to inventory the warehouse more frequently, once a week instead of once a month, for example.
"We are also reading the tags when shipping – all 20 crates – to make sure that everything necessary gets on the truck. Not a huge savings, but a huge value for us and the customer."
According to Hushbeck, Con-Way's trucking operations have not been able to justify the cost of RFID where freight is concerned. He said the company understands what it would take to track shipments through the system with RFID and for now, at least, it would cost too much to justify.
Meanwhile, according to Symbol's Lieberthal, fleets should not dismiss RFID, but rather experiment and learn to use it.
"You can sit back and wait, but then your shipper is going to force the issue. Then you'll have to play catch-up. Don't get blind-sided," he said.
RFID continued...
