John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.
If you were caught off guard by the news that some companies are already sticking RFID tags on individual items (as opposed to cases or pallets), you're in good company. Even the tag-makers were taken by surprise.
"If you had asked me six months ago if a move to item-level tracking would be big in 2007, I'd have said that was possible, but in fact it seems to be happening much earlier than that," says Bill Colleran, president and CEO of tag-maker Impinj. "There are a few applications that have a near-term ROI."
Up until recently, the conventional wisdom held that RFID made sense only for the tagging of cases and pallets (and sometimes, not even then). RFID tags, as everybody knew, were nowhere near affordable enough to use to track individual products. But all of a sudden, item-level tagging, as it's known, has emerged as a practice that is not only viable but promises a relatively quick payback. Word is that item-level tagging has seen a surge of interest in the past few months, particularly among certain types of manufacturers.
Contrary to what you might expect, the manufacturers most likely to be tagging their products today are not the makers of extremely high-value merchandise—say, plasma TVs or couture fashions. Right now, you're far more likely to find tags on your CDs and DVDs, your meds or your new pair of jeans.
Most likely to be tagged
In the past, most analysts assumed that outside of tracking, RFID tags' biggest potential lay in deterring theft—and thus, their primary appeal would be to makers of high-value goods. They were partly right. Businesses ranging from jewelers to electronics manufacturers to ski-rental companies are reportedly experimenting with ways to use tags to cut down on theft.
What the analysts missed was the tags' potential for solving other, more industry-specific business problems. But the possibilities did not escape apparel manufacturers, the pharmaceutical industry, or companies in the entertainment sector.
Companies that produce CDs and DVDs, for example, quickly recognized the tags' potential as a means of boosting sales. With DVDs, sales are heaviest in the first seven days after a film's release on DVD. Nearly 70 percent of sales are recorded during that week, which means manufacturers want—indeed, crave—assurances that copies of "Capote" or "Memoirs of a Geisha" are out on the shelves, not lost in a backroom, during that critical period. RFID tags can provide those assurances.
The pharmaceutical sector likewise sees RFID as more than a means to combat theft. Using RFID technology, drug companies can create a virtual "pedigree" for each bottle or package as it moves from the plant to the wholesaler and finally, to the pharmacy. The ability to document a drug's movements through the supply chain helps manufacturers weed out counterfeits and trace stolen shipments. One drug maker, Purdue Pharma, has been shipping RFID-tagged items for 18 months now. It started by shipping tagged bottles of OxyContin to Wal-Mart and drug wholesaler H.D. Smith. Last year, it introduced RFID technology at a second manufacturing plant in order to tag its newest product—another potent painkiller called Palladone.
Clothing manufacturers, by contrast, aren't so much interested in where a garment has been as in how to locate it quickly. Apparel is notoriously difficult to keep track of. Not only does each item come in an array of sizes and colors, but consumers often return items to the wrong rack after trying them on. Clothiers are gambling that sticking a 15- or 20-cent tag on a $95 pair of jeans will cut the risk that they'll lose a sale because a customer can't find an item in a particular size or color.
So far, it appears to be working. AMR Research reports that in pilot projects, RFID tagging improved stock availability by more than 50 percent. And that wasn't the only benefit. AMR also claims that the labor needed to manage inventory and handle replenishment dropped by 15 to 20 percent.
Limited availability
Although the interest in item-level tagging has picked up, universal tagging is still a ways in the future. No one expects the day when every pack of gum and jug of spring water carries a tag to arrive anytime soon.
Even the folks at Metro Group, the German retailer known for its pioneering work with RFID, believe we're still a decade away from that. "When it comes to item-level tagging on a daily basis where all of our products will carry tags, we think it will take another 10 or 15 years to reach that goal," says Albrecht von Truchsess, a spokesman for Metro Group.
Part of the problem is cost. It makes no sense to put a 20-cent tag on, say, a $1.95 greeting card. The other part has to do with technical difficulties that still need to be worked out. "[T]o use this on a daily basis, you need a 100-percent read rate every time, every day," says von Truchsess. "You need to be able to read that one tube of toothpaste that might be wedged between 10 cans of soup. It's a very complex issue to deal with."
Nonetheless, Metro is pressing forward with its RFID experiments. At its Future Store in Rheinberg, Germany, which is best described as a combination RFID test lab/supermarket of tomorrow, it's currently collaborating with Gillette, Procter & Gamble and Kraft to tag and track individual items.
Though all of the pilots involve item-level tagging, each manufacturer is interested in something different. Gillette, for example, wants to see if tags help reduce theft of its razor blades. Kraft is looking to see how well the tags work in tracking expiration dates on packages of cream cheese and monitoring the temperatures to which the packages are exposed.
P&G is tagging items for yet another purpose: marketing. When a customer removes a bottle of shampoo from the Future Store's shelf, its RFID tag—coupled with smart shelf technology—triggers a short movie to begin playing on a small video screen above the shelf. The movie's subject? The shampoo, of course.
For all their novelty, von Truchsess seems less enthusiastic about these futuristic store-level trials than about Metro's experience using RFID in more traditional applications. "Today," he says, "the more interesting aspect is what's going on in the distribution centers before goods arrive at the store."
Whether it's more interesting is debatable, but no one denies that Metro's experience using RFID in its DCs has been a success. About 40 suppliers are now shipping RFID-tagged pallets to Metro's DCs in western Germany, von Truchsess reports, and Metro has already saved more than $10 million (U.S.) as a result. Not only has RFID sent labor costs plummeting, he says, but it has also cut the time required to check in pallets by more than one-third.
Von Truchsess has no doubt that this is only the beginning. "These results are from limited operations," he points out. "You can imagine what will happen when the technology improves and we roll this out at many locations."
what's the frequency?
Which technology performs better in item-level tagging high frequency (HF) or ultra high frequency (UHF)? That's the question facing EPCglobal, the international organization that must decide which technology to adopt as its formal standard.
It won't be an easy decision. Right now, even EPCglobal's own members are divided on the question.
In one corner are those who consider HF technology superior to UHF because of its versatility. They argue that unlike UHF, HF works with any kind of material, including liquids. They also contend that HF is less orientation- sensitive than UHF, and that because it reads in the near field only, it's easier to control.
One of HF's advocates is Bret Kinsella, chief operating officer of ODIN technologies, an RFID consultant that has just completed an independent study of HF vs. UHF technology. He considers HF to be the superior technology because it can stand up to a broad array of demanding applications. "From a technology standpoint," he says, "HF is less material dependent [and] therefore less sensitive than UHF technology."
In the other corner are those who argue that recent technological advances have made UHF the technology of choice. UHF's backers dismiss charges that the technology is unreliable around liquids and metals, claiming that the interference problems have been resolved.
"A lot of claims have been made about the unsuitability of UHF for item-level tagging," says Chris Diorio, founder of Impinj, a company that makes UHF RFID tags and readers. "But the physics of RFID propagation make UHF ideally suited for item-level [applications]." In a video on the Impinj Web site, Diorio claims that UHF technology has proved to be quick, reliable and effective in applications involving liquids, metals and pharmaceuticals. Diorio and others also contend that UHF's ability to leverage the Gen 2 protocol makes it the better choice.
To see how the technologies stood up to various challenges, EPCglobal sponsored a series of demonstrations in late March. Nearly two dozen vendors showed off their technologies' capabilities in a variety of applications, including reading tags attached to garments on a moving metal rack, tags affixed to goods sitting on a shelf, and tags on drug vials and bottles packed in a plastic tote. EPCglobal representatives are now examining the demonstrations' results. The organization could announce its decision as early as the end of the year.
A move by federal regulators to reinforce requirements for broker transparency in freight transactions is stirring debate among transportation groups, after the Federal Motor Carrier Safety Administration (FMCSA) published a “notice of proposed rulemaking” this week.
According to FMCSA, its draft rule would strive to make broker transparency more common, requiring greater sharing of the material information necessary for transportation industry parties to make informed business decisions and to support the efficient resolution of disputes.
The proposed rule titled “Transparency in Property Broker Transactions” would address what FMCSA calls the lack of access to information among shippers and motor carriers that can impact the fairness and efficiency of the transportation system, and would reframe broker transparency as a regulatory duty imposed on brokers, with the goal of deterring non-compliance. Specifically, the move would require brokers to keep electronic records, and require brokers to provide transaction records to motor carriers and shippers upon request and within 48 hours of that request.
Under federal regulatory processes, public comments on the move are due by January 21, 2025. However, transportation groups are not waiting on the sidelines to voice their opinions.
According to the Transportation Intermediaries Association (TIA), an industry group representing the third-party logistics (3PL) industry, the potential rule is “misguided overreach” that fails to address the more pressing issue of freight fraud. In TIA’s view, broker transparency regulation is “obsolete and un-American,” and has no place in today’s “highly transparent” marketplace. “This proposal represents a misguided focus on outdated and unnecessary regulations rather than tackling issues that genuinely threaten the safety and efficiency of our nation’s supply chains,” TIA said.
But trucker trade group the Owner-Operator Independent Drivers Association (OOIDA) welcomed the proposed rule, which it said would ensure that brokers finally play by the rules. “We appreciate that FMCSA incorporated input from our petition, including a requirement to make records available electronically and emphasizing that brokers have a duty to comply with regulations. As FMCSA noted, broker transparency is necessary for a fair, efficient transportation system, and is especially important to help carriers defend themselves against alleged claims on a shipment,” OOIDA President Todd Spencer said in a statement.
Additional pushback came from the Small Business in Transportation Coalition (SBTC), a network of transportation professionals in small business, which said the potential rule didn’t go far enough. “This is too little too late and is disappointing. It preserves the status quo, which caters to Big Broker & TIA. There is no question now that FMCSA has been captured by Big Broker. Truckers and carriers must now come out in droves and file comments in full force against this starting tomorrow,” SBTC executive director James Lamb said in a LinkedIn post.
Bloomington, Indiana-based FTR said its Trucking Conditions Index declined in September to -2.47 from -1.39 in August as weakness in the principal freight dynamics – freight rates, utilization, and volume – offset lower fuel costs and slightly less unfavorable financing costs.
Those negative numbers are nothing new—the TCI has been positive only twice – in May and June of this year – since April 2022, but the group’s current forecast still envisions consistently positive readings through at least a two-year forecast horizon.
“Aside from a near-term boost mostly related to falling diesel prices, we have not changed our Trucking Conditions Index forecast significantly in the wake of the election,” Avery Vise, FTR’s vice president of trucking, said in a release. “The outlook continues to be more favorable for carriers than what they have experienced for well over two years. Our analysis indicates gradual but steadily rising capacity utilization leading to stronger freight rates in 2025.”
But FTR said its forecast remains unchanged. “Just like everyone else, we’ll be watching closely to see exactly what trade and other economic policies are implemented and over what time frame. Some freight disruptions are likely due to tariffs and other factors, but it is not yet clear that those actions will do more than shift the timing of activity,” Vise said.
The TCI tracks the changes representing five major conditions in the U.S. truck market: freight volumes, freight rates, fleet capacity, fuel prices, and financing costs. Combined into a single index indicating the industry’s overall health, a positive score represents good, optimistic conditions while a negative score shows the inverse.
Specifically, the new global average robot density has reached a record 162 units per 10,000 employees in 2023, which is more than double the mark of 74 units measured seven years ago.
Broken into geographical regions, the European Union has a robot density of 219 units per 10,000 employees, an increase of 5.2%, with Germany, Sweden, Denmark and Slovenia in the global top ten. Next, North America’s robot density is 197 units per 10,000 employees – up 4.2%. And Asia has a robot density of 182 units per 10,000 persons employed in manufacturing - an increase of 7.6%. The economies of Korea, Singapore, mainland China and Japan are among the top ten most automated countries.
Broken into individual countries, the U.S. ranked in 10th place in 2023, with a robot density of 295 units. Higher up on the list, the top five are:
The Republic of Korea, with 1,012 robot units, showing a 5% increase on average each year since 2018 thanks to its strong electronics and automotive industries.
Singapore had 770 robot units, in part because it is a small country with a very low number of employees in the manufacturing industry, so it can reach a high robot density with a relatively small operational stock.
China took third place in 2023, surpassing Germany and Japan with a mark of 470 robot units as the nation has managed to double its robot density within four years.
Germany ranks fourth with 429 robot units for a 5% CAGR since 2018.
Japan is in fifth place with 419 robot units, showing growth of 7% on average each year from 2018 to 2023.
Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.
Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.
Gartner defined the new functions as follows:
Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyze complex scenarios and make informed decisions with greater accuracy and speed.
Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images, and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyze diverse information sources, leading to more comprehensive insights and better-informed strategies.
AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases.
As CPOs look to maximize the value of GenAI in procurement, the study recommended three starting points: double down on data governance, develop and incorporate privacy standards into contracts, and increase procurement thresholds.
“These advancements will usher procurement into an era where the distance between ideas, insights, and actions will shorten rapidly,” Ryan Polk, senior director analyst in Gartner’s Supply Chain practice, said in a release. "Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology."
Businesses are cautiously optimistic as peak holiday shipping season draws near, with many anticipating year-over-year sales increases as they continue to battle challenging supply chain conditions.
That’s according to the DHL 2024 Peak Season Shipping Survey, released today by express shipping service provider DHL Express U.S. The company surveyed small and medium-sized enterprises (SMEs) to gauge their holiday business outlook compared to last year and found that a mix of optimism and “strategic caution” prevail ahead of this year’s peak.
Nearly half (48%) of the SMEs surveyed said they expect higher holiday sales compared to 2023, while 44% said they expect sales to remain on par with last year, and just 8% said they foresee a decline. Respondents said the main challenges to hitting those goals are supply chain problems (35%), inflation and fluctuating consumer demand (34%), staffing (16%), and inventory challenges (14%).
But respondents said they have strategies in place to tackle those issues. Many said they began preparing for holiday season earlier this year—with 45% saying they started planning in Q2 or earlier, up from 39% last year. Other strategies include expanding into international markets (35%) and leveraging holiday discounts (32%).
Sixty percent of respondents said they will prioritize personalized customer service as a way to enhance customer interactions and loyalty this year. Still others said they will invest in enhanced web and mobile experiences (23%) and eco-friendly practices (13%) to draw customers this holiday season.