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.
Remember the days when consumer goods manufacturers wanted nothing to do with RFID technology? They winced as they spent millions of dollars to comply with RFID mandates from retailers like Wal-Mart, convinced they were getting little, if anything, in return.
They watched with dismay as tests to determine the best place to locate RFID tags on metallic products or packages containing liquids—both trouble spots for the technology—dragged on and on. All the while, they grumbled that the retailers would see all the benefits, while they got stuck with the bill.
That was yesterday. As the technology matures, more manufacturers are jumping on the RFID bandwagon. For evidence, you need look no further than the push by a group of consumer electronics manufacturers to establish a set of international standards for RFID, with the goal of embedding tags into all kinds of electronics—from cell phones and MP3 players to large electronic appliances like refrigerators and dishwashers.
The Star Wars-like future when your refrigerator automatically senses when you're out of milk and reorders it for you is still a long way off. But the day when you can access the RFID tag on your fridge to simplify warranty issues and service calls may be closer than you think.
"The initiative is gaining a lot of momentum," says Ian Robertson, the former RFID guru at Hewlett Packard who left HP in 2005 to join EPC Global, where he now serves as global industry development director and Asia regional director. "We're working with the industry to make sure it has a clear understanding of where it can benefit from EPC Global standards. We're really looking at things from an entire process point of view. It's not just about the manufacturer or the retailer.We can't forget the consumer, because they are the most important part of the chain."
In fact, Robertson is quick to note that manufacturers have specifically requested that EPC Global avoid making the standards manufacturer-centric. They're convinced that if the technology is to truly take off, the retail world and consumers must benefit too.
Laying the groundwork
Meetings have been under way for several months, the most recent of which was held in Seoul, Korea, in December.Much of the research is being headed up by Robertson, who says the ultimate goal of forming an electronics industry action group (IAG) within EPC Global is still in the exploratory stage. Robertson is currently meeting individually with manufacturers and retailers in Europe, and he expects to convene another meeting in Europe in mid-May before an official proposal to form an industry action group is presented to EPC Global.
"This is much more than a track and trace initiative," says Robertson. "If it was track and trace, then we'd have no need to form a group because it is very well covered by existing groups in EPC Global."
A formal set of guidelines in the form of international standards would help manufacturers to better manage products from cradle to grave, and also to improve manufacturing processes. Retailers would gain from better product availability and supply chain visibility. Manufacturers in Europe are aggressively pursuing the idea, since they are required by law to dispose of products when they reach the end of their life cycle. Among other things, RFID would enable manufacturers to determine what parts have been incorporated into each appliance and how to dispose of them properly.
Robertson says it normally takes 12 to 18 months to get to the point where an IAG proposal is ready to be presented to EPC Global. He says that could happen following the May meeting.
Boost for retailers
The adoption of international standards would also help electronics retailers. Best Buy, for example, is on record as saying that RFID has improved everything from the retailer's product forecasting to on-shelf availability (which has soared from the mid-80s to 93 percent).
In fact, Best Buy has begun to move beyond case and pallet tagging to the tagging of individual items like DVDs, CDs and videogames. Best Buy CEO Robert Willett told attendees at the Entertainment Supply Chain Academy's annual conference last summer that it is already testing item-level tagging at its pilot store.
"We are enabling our product shelves to become 'smart shelves,'" said Willett. "There is obviously a cost, but we believe that the reduction in customer disappoint per visit will more than offset any cost over time, and it will also help fight piracy."
Applying RFID tags to individual DVDs, CDs and videogames can boost sales by preventing stock-outs, which is particularly crucial in the days immediately following an item's launch. With DVDs, for example, up to 70 percent of sales are recorded in the first seven days after a film is released on DVD. Preventing stock-outs is also crucial with expensive electronics like plasma TVs that carry high margins for both manufacturers and retailers.
Streamlined manufacturing
Indeed, manufacturers are hoping to benefit as well, in the form of internal process improvements. Computer makers like Dell and HP, for example, are eyeing manufacturing advantages that could transform the industry. Dell is already a big user of RFID to manage its just-in-time supply chain, and, like other computer makers, it's now studying how RFID can streamline production lines.
For example, Robertson points to the process of installing DVD drives into new desktop computers. For every DVD install, production line workers scan the station where the desktop is and then scan the desktop unit so they know which unit the DVD is going into. Next, workers scan the bar code of the actual DVD being installed as well as its serial number.
"During that whole process, you're not doing anything that's value added—you're just identifying things," says Robertson. "So imagine if you're running a kanban production line and you simply reach back and pick up a DVD and immediately start putting it into the unit. All the scanning processes are gone because [RFID] has [identified] the unit you are working on, it has checked that it's going into the right machine, and it's picked up the serial number."
So what began as a major headache for manufacturers— the need to comply with supply chain and retail mandates for tagging finished goods—has led to rising interest in RFID for internal applications that promise a greater return on investment. While numerous pilots designed to evaluate the potential for RFID in manufacturing are currently under way, the number of pilots that actually result in fullblown implementations will be a key determinant of the rate and timing of overall market growth.
According to a new study by ARC Advisory Group, the worldwide market for RFID in manufacturing applications is expected to grow annually at 8.9 percent over the next five years. ARC vice president Chantal Polsonetti says that standardization and technology convergence will drive prices downward and elicit strong growth in unit shipments. ARC's new report says that expenditures for RFID in the manufacturing sector totaled $208.8 million in 2006, and predicts they will reach nearly $320 million in 2011. "Compared to the challenge of generating ROI from mandate-driven RFID implementations," says Polsonetti, "numerous opportunities exist for internal RFID applications to generate ROI for manufacturers."
Penske said today that its facility in Channahon, Illinois, is now fully operational, and is predominantly powered by an onsite photovoltaic (PV) solar system, expected to generate roughly 80% of the building's energy needs at 200 KW capacity. Next, a Grand Rapids, Michigan, location will be also active in the coming months, and Penske's Linden, New Jersey, location is expected to go online in 2025.
And over the coming year, the Pennsylvania-based company will add seven more sites under its power purchase agreement with Sunrock Distributed Generation, retrofitting them with new PV solar systems which are expected to yield a total of roughly 600 KW of renewable energy. Those additional sites are all in California: Fresno, Hayward, La Mirada, National City, Riverside, San Diego, and San Leandro.
On average, four solar panel-powered Penske Truck Leasing facilities will generate an estimated 1-million-kilowatt hours (kWh) of renewable energy annually and will result in an emissions avoidance of 442 metric tons (MT) CO2e, which is equal to powering nearly 90 homes for one year.
"The initiative to install solar systems at our locations is a part of our company's LEED-certified facilities process," Ivet Taneva, Penske’s vice president of environmental affairs, said in a release. "Investing in solar has considerable economic impacts for our operations as well as the environmental benefits of further reducing emissions related to electricity use."
Overall, Penske Truck Leasing operates and maintains more than 437,000 vehicles and serves its customers from nearly 1,000 maintenance facilities and more than 2,500 truck rental locations across North America.
That challenge is one of the reasons that fewer shoppers overall are satisfied with their shopping experiences lately, Lincolnshire, Illinois-based Zebra said in its “17th Annual Global Shopper Study.”th Annual Global Shopper Study.” While 85% of shoppers last year were satisfied with both the in-store and online experiences, only 81% in 2024 are satisfied with the in-store experience and just 79% with online shopping.
In response, most retailers (78%) say they are investing in technology tools that can help both frontline workers and those watching operations from behind the scenes to minimize theft and loss, Zebra said.
Just 38% of retailers currently use AI-based prescriptive analytics for loss prevention, but a much larger 50% say they plan to use it in the next 1-3 years. That was followed by self-checkout cameras and sensors (45%), computer vision (46%), and RFID tags and readers (42%) that are planned for use within the next three years, specifically for loss prevention.
Those strategies could help improve the brick and mortar shopping experience, since 78% of shoppers say it’s annoying when products are locked up or secured within cases. Adding to that frustration is that it’s hard to find an associate while shopping in stores these days, according to 70% of consumers. In response, some just walk out; one in five shoppers has left a store without getting what they needed because a retail associate wasn’t available to help, an increase over the past two years.
The survey also identified additional frustrations faced by retailers and associates:
challenges with offering easy options for click-and-collect or returns, despite high shopper demand for them
the struggle to confirm current inventory and pricing
lingering labor shortages and increasing loss incidents, even as shoppers return to stores
“Many retailers are laying the groundwork to build a modern store experience,” Matt Guiste, Global Retail Technology Strategist, Zebra Technologies, said in a release. “They are investing in mobile and intelligent automation technologies to help inform operational decisions and enable associates to do the things that keep shoppers happy.”
The survey was administered online by Azure Knowledge Corporation and included 4,200 adult shoppers (age 18+), decision-makers, and associates, who replied to questions about the topics of shopper experience, device and technology usage, and delivery and fulfillment in store and online.
Supply chains are poised for accelerated adoption of mobile robots and drones as those technologies mature and companies focus on implementing artificial intelligence (AI) and automation across their logistics operations.
That’s according to data from Gartner’s Hype Cycle for Mobile Robots and Drones, released this week. The report shows that several mobile robotics technologies will mature over the next two to five years, and also identifies breakthrough and rising technologies set to have an impact further out.
Gartner’s Hype Cycle is a graphical depiction of a common pattern that arises with each new technology or innovation through five phases of maturity and adoption. Chief supply chain officers can use the research to find robotic solutions that meet their needs, according to Gartner.
Gartner, Inc.
The mobile robotic technologies set to mature over the next two to five years are: collaborative in-aisle picking robots, light-cargo delivery robots, autonomous mobile robots (AMRs) for transport, mobile robotic goods-to-person systems, and robotic cube storage systems.
“As organizations look to further improve logistic operations, support automation and augment humans in various jobs, supply chain leaders have turned to mobile robots to support their strategy,” Dwight Klappich, VP analyst and Gartner fellow with the Gartner Supply Chain practice, said in a statement announcing the findings. “Mobile robots are continuing to evolve, becoming more powerful and practical, thus paving the way for continued technology innovation.”
Technologies that are on the rise include autonomous data collection and inspection technologies, which are expected to deliver benefits over the next five to 10 years. These include solutions like indoor-flying drones, which utilize AI-enabled vision or RFID to help with time-consuming inventory management, inspection, and surveillance tasks. The technology can also alleviate safety concerns that arise in warehouses, such as workers counting inventory in hard-to-reach places.
“Automating labor-intensive tasks can provide notable benefits,” Klappich said. “With AI capabilities increasingly embedded in mobile robots and drones, the potential to function unaided and adapt to environments will make it possible to support a growing number of use cases.”
Humanoid robots—which resemble the human body in shape—are among the technologies in the breakthrough stage, meaning that they are expected to have a transformational effect on supply chains, but their mainstream adoption could take 10 years or more.
“For supply chains with high-volume and predictable processes, humanoid robots have the potential to enhance or supplement the supply chain workforce,” Klappich also said. “However, while the pace of innovation is encouraging, the industry is years away from general-purpose humanoid robots being used in more complex retail and industrial environments.”
An eight-year veteran of the Georgia company, Hakala will begin his new role on January 1, when the current CEO, Tero Peltomäki, will retire after a long and noteworthy career, continuing as a member of the board of directors, Cimcorp said.
According to Hakala, automation is an inevitable course in Cimcorp’s core sectors, and the company’s end-to-end capabilities will be crucial for clients’ success. In the past, both the tire and grocery retail industries have automated individual machines and parts of their operations. In recent years, automation has spread throughout the facilities, as companies want to be able to see their entire operation with one look, utilize analytics, optimize processes, and lead with data.
“Cimcorp has always grown by starting small in the new business segments. We’ve created one solution first, and as we’ve gained more knowledge of our clients’ challenges, we have been able to expand,” Hakala said in a release. “In every phase, we aim to bring our experience to the table and even challenge the client’s initial perspective. We are interested in what our client does and how it could be done better and more efficiently.”
Although many shoppers will
return to physical stores this holiday season, online shopping remains a driving force behind peak-season shipping challenges, especially when it comes to the last mile. Consumers still want fast, free shipping if they can get it—without any delays or disruptions to their holiday deliveries.
One disruptor that gets a lot of headlines this time of year is package theft—committed by so-called “porch pirates.” These are thieves who snatch parcels from front stairs, side porches, and driveways in neighborhoods across the country. The problem adds up to billions of dollars in stolen merchandise each year—not to mention headaches for shippers, parcel delivery companies, and, of course, consumers.
Given the scope of the problem, it’s no wonder online shoppers are worried about it—especially during holiday season. In its annual report on package theft trends, released in October, the
security-focused research and product review firm Security.org found that:
17% of Americans had a package stolen in the past three months, with the typical stolen parcel worth about $50. Some 44% said they’d had a package taken at some point in their life.
Package thieves poached more than $8 billion in merchandise over the past year.
18% of adults said they’d had a package stolen that contained a gift for someone else.
Ahead of the holiday season, 88% of adults said they were worried about theft of online purchases, with more than a quarter saying they were “extremely” or “very” concerned.
But it doesn’t have to be that way. There are some low-tech steps consumers can take to help guard against porch piracy along with some high-tech logistics-focused innovations in the pipeline that can protect deliveries in the last mile. First, some common-sense advice on avoiding package theft from the Security.org research:
Install a doorbell camera, which is a relatively low-cost deterrent.
Bring packages inside promptly or arrange to have them delivered to a secure location if no one will be at home.
Consider using click-and-collect options when possible.
If the retailer allows you to specify delivery-time windows, consider doing so to avoid having packages sit outside for extended periods.
These steps may sound basic, but they are by no means a given: Fewer than half of Americans consider the timing of deliveries, less than a third have a doorbell camera, and nearly one-fifth take no precautions to prevent package theft, according to the research.
Tech vendors are stepping up to help. One example is
Arrive AI, which develops smart mailboxes for last-mile delivery and pickup. The company says its Mailbox-as-a-Service (MaaS) platform will revolutionize the last mile by building a network of parcel-storage boxes that can be accessed by people, drones, or robots. In a nutshell: Packages are placed into a weatherproof box via drone, robot, driverless carrier, or traditional delivery method—and no one other than the rightful owner can access it.
Although the platform is still in development, the company already offers solutions for business clients looking to secure high-value deliveries and sensitive shipments. The health-care industry is one example: Arrive AI offers secure drone delivery of medical supplies, prescriptions, lab samples, and the like to hospitals and other health-care facilities. The platform provides real-time tracking, chain-of-custody controls, and theft-prevention features. Arrive is conducting short-term deployments between logistics companies and health-care partners now, according to a company spokesperson.
The MaaS solution has a pretty high cool factor. And the common-sense best practices just seem like solid advice. Maybe combining both is the key to a more secure last mile—during peak shipping season and throughout the year as well.