Sophisticated technology makes it possible to track a product's exact whereabouts through the entire supply process and beyond. But the story it reveals might be more than you want to or ought to know.
The ability to track cargo in a continuous sweep and in exquisite detail is an idea only slightly less attractive to the average logistics manager than the teleportation of goods. But it has the advantage over teleportation in that the technology that can make it happen is right here right now.Whether they use the bar codes that appear on everything from ketchup bottles to circuit boards, or radio-frequency identification (RFID) tags with tiny digital memory chips, companies can track the whereabouts of their goods from the warehouse bin to the retailer's shelf and at every step in between.
Historically, the tracking technology of choice has been the bar code. It's cheap, it's time tested and it's easy to use. But bar codes also have limitations: They are restricted in the amount of data they hold, their scanning requires a clear line of sight and once data are programmed in, there's no way to change or update the information.
RFID tags have no such limitations: They can accommodate enormous amounts of data, they transmit data via radio waves (eliminating the need for a clear line of sight) and in their most sophisticated incarnation—read-write tags—they even allow users to update or modify their contents. You pay for all these capabilities, of course. RFID tags cost much more than bar codes do. But they come in different varieties—passive, active, read-only and read-write models—that are priced according to their capabilities.
The market has responded favorably. In June, retailing giant Wal-Mart announced that it would require its top 100 suppliers to insert radio-frequency identification (RFID) tags on pallets and cases by January 2005, a mandate that will extend to all of its suppliers by 2006.Wal-Mart believes this move will drive down excess inventory and stockouts,which currently cost it tens of millions of dollars. "With all that data coming in we'll see things we've perhaps not seen before in terms of spikes and inventory management," says Tom Williams, spokesman forWal-Mart. "We do that now with bar codes and scanners but that's a bit of a step-by-step process, whereas RFID gathers that all at once as long as you have readers close by. That's where we're going and we're going there fast."
Though Wal-Mart's announcement essentially introduces the heavy artillery into the battle, the RFID revolution has been under way for sometime. Research conducted by ARC Advisory Group back in May 2002 found that 60 percent of 95 logistics executives from 1,000 global companies planned to begin RFID testing by 2006, and nearly 24 percent said they would do so in the next 12 months. What's spurred their interest in tracking? Some believe the technology will help them comply with regulatory requirements designed to counter terrorism, which require earlier and more detailed information about cargo entering the United States. Others want to detect and stop theft.
Troubles dog tags
Though no one disputes RFID's superior data-collection abilities,Wal-Mart's mandate has also raised some hackles. Some suppliers grumble that it's yet another example of a large retailer's pushing supply chain costs back onto the suppliers, who have for years had to bear inventory carrying costs. Though RFID tags are getting cheaper all the time, they still cost from 10 to 50 cents apiece at a minimum, with necessary antennae and readers driving the cost up further.
Others have questioned the aggressive schedule, arguing that it may not give them enough time to implement the systems for attaching and programming tags, along with scanners and software to keep track of them all. "The question is … whether it's possible to do what Wal-Mart wants in the time Wal-Mart wants to do it," says Jack Gold, vice president for mobile and pervasive computing at analyst Meta Group in Westborough, Mass."… I think it's going to be hard for suppliers.2005 is not that far away and there's a lot of stuff that needs to be done: getting the tags, figuring out how to make the tags work, even changing packaging."
Still others charge that RFID is not yet ready for prime time."RFID is undoubtedly a part of our future, but people have got to understand that the technology has not been refined," says Paul Richardson, business director for retail for Exel, a third-party logistics service provider based in London. Exel has been conducting trials for 10 unnamed retailers in the UK, as well as a manufacturer in China. "During trials, we found readers that don't read when they're supposed to. "Metal, for example, interferes with the radio signal bouncing between tags and readers, Richardson says, making the technology virtually useless for items like aluminum-lined cartons."… [T]he technology still has to prove itself. Until that happens we have to be very cautious about saying it eliminates the need for bar codes," Richardson continues. "I think bar codes will be around for many years."
The secret life of cargo
Beyond the mundane concerns of price and radio-waveproof containers, however, there's an intriguing political issue raised by giving someone the ability to quietly track a product's movements at all times. Sometimes, learning more about where your assets are—or have been—raises problems of its own.
For example, consider the political sensitivity of learning too much about the secret life of beer kegs. Simon Ranner is all too familiar with the problems caused by tags that know too much. Ranner is director of logistics for Punch Taverns plc, based in Burton-on-Trent, which owns 4,500 pubs in the UK. Punch Tavern's pubs are under agreement to buy beer exclusively from the parent company, which itsel f buys beer from 40 different brewers. Although brewers of ten extend discounts to pub owners, those savings are not always fully passed onto the pub managers, giving them an incentive to circumvent their buying agreement with the owners.
For this and other reasons, kegs of beer delivered and collected weekly from the pubs had a habit of going missing. That upset the brewers and distributors that owned the kegs, which are worth $80 to $90 apiece. But more of a concern to Punch was that the kegs often turned up in places they weren't meant to be, indicating that publicans had either accepted discounted beer from another source or even that the kegs had been refilled with off-label beer and resold. This ate into Punch's profit margins and raised concerns about quality control among the brewers.
It's not as though the brewers, pub-owning companies and distributors didn't try to keep tabs on their kegs; they've long used bar-code labels to trace the containers' whereabouts. But bar coding wasn't entirely effective for the simple reason that the labels can be removed or forged. On one occasion, the same bar code turned up on 27 kegs of beer in London alone, according to Graham Miller, former head of logistics development for Scottish Courage, one of the UK's largest brewers.
That kind of stunt isn't so easy to pull with RFID tags, however. And new technology from Englewood, Colo.-based TrenStar Inc. promises to tighten up the tracking process for good. By inserting RFID tags that can't be removed or tampered with into the kegs, brewers, pub owners and distributors alike can use handheld scanners to read the tags and tell exactly which pub received which keg and when. By down loading the delivery and pickup information to a computer, they then can track where kegs were picked up and any discrepancy can be questioned. Given that Scottish Courage alone was losing some 50,000 of its 2.2 million kegs a year, this solution promises to revolutionize the industry.
But not everybody likes the idea. The draymen who deliver the beer see it as a threat to their pay structure. Draymen get paid according to an estimate of how long each delivery will take. If a driver completes in six hours a delivery that's been budgeted for 11 hours, he still gets paid for 11 hours and may even be able to deliver another load in the time left over. Small wonder that many are hostile toward an RFID scanning system that keeps a split-second record of when deliveries were made.
Then there's the problem of knowing things you'd prefer not to know. Being able to bust a publican every time he makes the kind of under-the-counter deals he's been making for years doesn't necessarily do anything to enhance the business relationship between him and the pub owner. Nor does information revealed via the keg-tracking process strengthen the pub owners' relationship with the brewers. Ranner notes that tracing kegs back to their origin sometimes reveals a brewer is supplying a pub direct, instead of through the exclusive distributor. "There is some commercial sensitivity there," Ranner says. "This was previously a sleeping dog."
Clash with consumers
But beyond the tempest in the beer keg, a much larger political battle looms as tracking and tracing technology approaches the point where logistics meets the consumer. Ironically, the more adept companies become at gathering data, the more problems arise regarding the way they use it.
A highly politicized rejection of RFID tagging came when the clothing retailer Benetton recently stepped down from a trial with RFID tags in individual items of clothing in response to pressure from consumer groups such as Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN) concerned about privacy issues.
CASPIAN also reacted strongly to recent news that Gillette and Wal-Mart would begin testing "smart shelving" in Wal-Mart stores. Smart shelves interact with RFID tags affixed to individual items—like toothbrushes or razors—to record what has been removed and when. Wal-Mart recently announced that it would abandon that test, but the idea remains troublesome to some consumer advocates.
This is the most advanced end of tracking and tracing … and the most controversial. Retailers and manufacturers have competed with each other for years to gather as much information about consumers as possible. Knowing and predicting buying patterns, tailoring discounts to particular buyers and watching inventory move at the item level could drive enormous efficiencies in the supply chain. But critics fear that the technology would allow retailers to look deep into the personal habits of their customers.
At this point, there's no resolution in sight. But one thing is clear: As the tracking issue heats up, fueled by the differing interests of manufacturers, retailers and consumers, logistics managers are sure to get caught in the crossfire.
catch the wave
The bar code may not be as smart as its RFID cousin—it can't encrypt as much information and it lacks a mechanism for updating its contents—but at less than a penny a pop, it's certainly cheaper. Still, those anxious to catch the RFID wave shouldn't dismiss the idea purely for budgetary reasons. The typical supply chain can accommodate both systems, says Vikram Verma, chief executive officer at Savi Technology, a cargo tracking technology company in Sunnyvale, Calif. Verma recommends using cheaper bar-code technology on small or lowvalue items, passive RFID tags on high-value cargo or at the pallet level, active tags for larger or more valuable shipments, and then GPS tracking for whole containers or important items (see table for descriptions). All of the information gathered by these methods can be fed into a single supply chain management software system, he says, offering the most supply chain management efficiency for the least financial layout.
Technology
Explanation
Advantages
Disadvantages
Bar coding
Relatively simple black & white pattern printed on a label
Cheap, easy to produce at remote locations such as factories
Easy to forge, needs line of sight to read
Passive RFID tags
Small tags that carry an electronic code that identifies them
Scanners within a few yards can read without line of sight
Needs infrastructure of scanners and antennae
Active RFID tags
Tags with own batteries that constantly transmit information to be read
Tag can alert reader to problem, such as milk left out too long in the sun, container tampered with
Expensive
Read-only RFID
Tags are loaded with fixed information at manufacturer's or distributor's site
Cheap
No mechanism for adding or updating info as product moves through supply chain
Read-write RFID
Tags can be programmed over time, adding information about journey conditions
Good for security, quality and theft monitoring
Expensive
GPS systems
Global positioning tags and readers that use satellites to pinpoint the location of an item anywhere on the earth's surface, at any time
Sometimes, all you need is the right partner to solve your logistics problems.
In 2021, global paint supplier Sherwin Williams faced driver and hazardous material (hazmat) capacity constraints: There simply weren’t enough hazmat drivers available in its fleet to maintain the company’s 90% fleet utilization rate expectations for key partner store deliveries while also meeting growing demand for service. Those challenges threatened to become even more acute in the future, as a competing paint supply company began to scale back its operations in the Pacific Northwest, leaving Sherwin Williams with an opportunity to fill the gap.
The paint supplier needed a logistics partner that could help it overcome the shortage of hazmat drivers while also helping to manage its West Coast trailer pools, out-of-region runs, and ad-hoc freight. It also needed a solution that would meet quarterly and annual fleet budgets.
SCALING UP
Enter ITS Logistics, a third-party logistics service provider (3PL) that offers supply chain solutions for drayage, network transportation, distribution, and fulfillment across North America. ITS proposed a combined owned-asset and asset-light approach that would provide Sherwin Williams with the equivalent of 21 additional drivers. The 3PL would leverage its carrier network to overcome the shortage of hazmat capacity while also certifying its own drivers via a three-month process. Further, ITS would help manage Sherwin Williams’ trailer pools and coordinate carriers, providing the paint company with a single point of contact for transportation.
The project would address cost concerns as well: “ITS Logistics aligned its solution with Sherwin Williams’ budgetary cadence and offered a quarterly business review to align on price structure, adding a level of transparency and trust to the relationship,” according to a case study the partners released earlier this year.
The companies soon sealed the deal and launched the program.
Not long after that, Sherwin Williams began to feel the effects of the anticipated challenges in the Pacific Northwest—but the company was prepared. When the competing paint supply company shuttered its operations, causing demand for Sherwin Williams’ products to spike, ITS injected a blend of owned trailers and carrier power to alleviate equipment challenges, cover all locations and regions, and help the paint supplier scale to meet volume.
CLOSING THE GAPS
The project has helped Sherwin Williams rapidly scale its capacity, meet fleet utilization requirements, manage trailer pools, coordinate carriers, and flex to meet spikes in regional demand.
And the results speak for themselves.
“ITS integrating themselves into our fleet was instrumental in helping increase our outbound volume by 18.4 million pounds [year over year] in the last seven months of 2023,” said Ted Taxon, regional transportation manager at Sherwin Williams, in the case study. “This equated to approximately 460 truckloads of extra freight, a large portion of which ITS [handled] on an ad-hoc basis with no operational constraints or quality issues.”
The partnership also helped Sherwin Williams maintain a 90% fleet utilization rate with big box retailers—an increase from less than 70% prior to the partnership’s launch.
Robots are revolutionizing factories, warehouses, and distribution centers (DCs) around the world, thanks largely to heavy investments in the technology between 2019 and 2021. And although investment has slowed since then, the long-term outlook calls for steady growth over the next four years. According to data from research and consulting firm Interact Analysis, revenues from shipments of industrial robots are forecast to grow nearly 4% per year, on average, between 2024 and 2028 (see Exhibit 1).
EXHIBIT 1: Market forecast for industrial robots - revenuesInteract Analysis
Material handling is among the top applications for all those robots, accounting for one-third of overall robot market revenues in 2023, according to the research. That puts warehouses and DCs on the cutting edge of robotic innovation, with projects that are helping companies reduce costs, optimize labor, and improve productivity throughout their facilities. Here’s a look at two recent projects that demonstrate the kinds of gains companies have achieved by investing in robotic equipment.
FASTER, MORE ACCURATE CYCLE COUNTS
When leaders at MSI Surfaces wanted to get a better handle on their vast inventory of flooring, countertops, tile, and hardscape materials, they turned to warehouse inventory drone provider Corvus Robotics. The seven-year-old company offers a warehouse drone system, called Corvus One, that can be installed and deployed quickly—in what MSI leaders describe as a “plug and play” process. Corvus Robotics’ drones are fully autonomous—they require no external infrastructure, such as beacons or stickers for positioning and navigation, and no human operators. Essentially, all you need is the drone and a landing pad, and you’re in business.
The drones use computer vision and generative AI (artificial intelligence) to “understand” their environment, flying autonomously in both very narrow aisles—passageways as narrow as 50 inches—and in very wide aisles. The Corvus One system relies on obstacle detection to operate safely in warehouses and uses barcode scanning technology to count inventory; the advanced system can read any barcode symbol in any orientation placed anywhere on the front of a carton or pallet.
The system was the perfect answer to the inventory challenges MSI was facing. Its annual physical inventory counts required two to four dedicated warehouse associates, who would manually scan inventory to determine the amount of stock on hand. The process was both time-consuming and error-prone, and often led to inaccuracies. And it created a chain reaction of issues and problems. Fulfillment speed is one example: Lost or misplaced inventory would delay customer deliveries, resulting in dissatisfaction, returns, and unmet expectations. Productivity was also an issue: Workers were often pulled from fulfillment tasks to locate material, slowing overall operations.
MSI Surfaces began using the Corvus One system in 2021, deploying a small number of drones for daily inventory counts at its 300,000-square-foot distribution center (DC) in Orange, California. It quickly scaled up, adding more drones in Orange and expanding the system to three other DCs: in Houston; Savannah, Georgia; and Edison, New Jersey. The company plans to add more drones to the existing sites and expand the system to some of its smaller DCs as well, according to Corvus Robotics spokesperson Andrew Burer.
Those expansion plans are based on solid results: MSI’s inventory accuracy was about 80% prior to the drone implementation, but it quickly jumped to the high 90s—ultimately reaching 99%—after the company initiated the daily drone counts, according to Burer.
“We actually had an incident early on where one of the forklift drivers ran into the landing pad, rendering it inoperable for about a week while the Corvus team fixed it,” Burer recalls. “When we restarted the system, we noticed MSI’s inventory accuracy had dropped down to the 80s. But after flights resumed, accuracy quickly improved back to near perfect.” He adds that such collisions are rare as Corvus mounts landing pads high off the floor to avoid impacts but that accidents can still happen.
Overall, the system has helped speed warehouse operations in two key ways: First, the accuracy improvement means that associates no longer waste time searching for missing material in the warehouse. And second, the associates who used to conduct the physical inventory counts have been reallocated to picking and replenishment—creating a more efficient, and optimized, workforce.
A SAFER, MORE EFFICIENT WAREHOUSE
Robot maker Boston Dynamics is well-known for its Stretch and Spot industrial robots, both of which are at work in warehouses and DCs around the world. Earlier this year, Stretch made its debut in Europe, teaming up with Spot at a fulfillment center run by German retail company Otto Group. The deployment marks the first time Stretch and Spot are being used together—in a partnership designed to improve Otto Group’s warehousing operations by increasing efficiency and making warehouse work safer and more attractive to workers.
The partnership is part of a two-year project in which Boston Dynamics will deploy dozens of its warehouse robots in Otto Group’s European DCs. The first location is a fulfillment site operated by Hermes, the company’s parcel delivery subsidiary, in Haldensleben, Germany—a facility that handles as many as 40,000 cartons of goods on peak days.
At the site, Stretch—which is a mobile case-handling robot—autonomously unloads ocean containers and trailers, using its advanced perception system to pick and place boxes onto a telescoping conveyor inside the container or trailer. Spot—a quadruped robot—helps with predictive maintenance by collecting thermal data and performing acoustic and visual detection tasks throughout the facility to reduce unplanned downtime and energy costs. One of Spot’s jobs is to detect air leaks in the facility’s warehouse automation systems; future duties may include conveyor vibration detection, according to leaders at Otto Group.
Both Stretch and Spot will help the Haldensleben facility run more efficiently, especially during fall peak season when volume increases and work intensifies. The addition of Stretch addresses safety and comfort issues as well: Trailer unloading—a process that entails repeatedly lifting and moving heavy boxes inside a trailer, which can be dark, dirty, cold, and/or hot, depending on the weather—tends to be unappealing to workers. Along with reducing the amount of labor required, automating these tasks will have the added benefit for European facilities of helping them comply with EU (European Union) regulations limiting the amount of time workers can spend in those conditions.
Essentially, the robots are making life easier on the warehouse floor and for the company at large.
“Stretch is going to have a ton of benefits for customers here in the EU,” Andrew Brueckner, of Boston Dynamics, said in a recent case study on the project.
The trucking industry faces a range of challenges these days, particularly when it comes to load planning—a resource-intensive task that often results in suboptimal decisions, unnecessary empty miles, late deliveries, and inefficient asset utilization. What’s more, delays in decision-making due to a lack of real-time insights can hinder operational efficiency, making cost management a constant struggle.
Truckload carrier Paper Transport Inc. (PTI) experienced this firsthand when the company sought to expand its over the-road (OTR), intermodal, and brokerage offerings to include dedicated fleet services for high-volume shippers—adding a layer of complexity to the business. The additional personnel required for such a move would be extremely costly, leading PTI to investigate technology solutions that could help close the gap.
Enter Freight Science and its intelligent decision-recommendation and automation platform.
PTI implemented Freight Science’s artificial intelligence (AI)-driven load planning optimization solution earlier this year, giving the carrier a high-tech advantage as it launched the new service.
“As PTI tried to diversify … we found that we needed a technological solution that would allow us to process [information] faster,” explains Jared Stedl, chief commercial officer for PTI, emphasizing the high volume of outbound shipments and unique freight characteristics of its targeted dedicated-fleet customers.
The Freight Science platform allowed PTI to apply its signature high-quality service to those needs, all while handling the daily challenges of managing drivers and navigating route disruptions.
STREAMLINING PROCESSES
Dedicated fleets face challenges that evolve from day to day and minute to minute, including truck breakdowns, drivers calling in sick, and rescheduled appointment times. PTI needed a tool that allowed for a real-time view of the fleet, ultimately enabling its team to adjust truck and driver allocation to meet those challenges.
The Freight Science solution filled the bill. The platform uses advanced analytics and algorithms to give carriers better visibility into operations while automating the decision-making process. By combining streaming data, a carrier’s transportation management system (TMS), machine learning, and decision science, the solution allows carriers to deploy their fleets more efficiently while accurately forecasting future needs, according to Freight Science.
In PTI’s case, Freight Science’s software integrates with the carrier’s TMS, real-time electronic logging device (ELD) data, and other external data, feeding an AI model that generates an optimized load plan for the planner.
“We’re an integrated data analytics company for trucking companies,” explains Matt Foster, Freight Science’s president and CEO. “We’re talking about AI.”
The benefits of the real-time data are difficult to overstate.
“We’ve been able to execute in the toughest of situations because we’ve got real, live data on how long each event is actually going to take and a system to aid and even automate the decision-making process,” says Chad Borley, PTI’s operations manager. “From what traffic patterns we are battling in the morning and evening with rush hour and things like that, to the impact of additional miles to a route, or even location-specific dwell times, it’s been a huge differentiator for us.”
REALIZING RESULTS
A case in point: the collapse of Baltimore’s Francis Scott Key Bridge in March. PTI was scheduled to go live with a new dedicated account in the area just days after the collapse, which would mean rerouting and the potential for longer transit times. Instead of recalculating based on assumptions or latent data, PTI was able to reroute freight based on real-time information and analytics to give the customer timely updates.
“With the bridge going out, that changed our ability to make as many turns a day as the customer would expect,” Stedl explains. “But one of the things Freight Science could do [was to] quickly [assess] how much of an impact that traffic would have [and] what the turns [would] be based on what’s happening on the ground.
“So we were able to go back to the customer and readjust expectations in a real way that made sense, using data. Now expectations can be reset¾we’re not asking for forgiveness when there’s no reason for it.”
The system’s advanced algorithms make load planning more cost-effective and scalable as well. The platform allows PTI to monitor trucks, trailers, and driver hours in real time, recommending additional loads with remaining driver hours that would otherwise be wasted.
And they’re doing it all with much less. Stedl says tasks that used to require five people and hours of work can now be accomplished by one person in mere minutes, improving productivity and profitability while reducing labor and operational costs.
Terms of the deal were not disclosed, but Aptean said the move will add new capabilities to its warehouse management and supply chain management offerings for manufacturers, wholesalers, distributors, retailers, and 3PLs. Aptean currently provides enterprise resource planning (ERP), transportation management systems (TMS), and product lifecycle management (PLM) platforms.
Founded in 1980 and headquartered in Durham, U.K., Indigo Software provides software designed for mid-market organizations, giving users real-time visibility and management from the initial receipt of stock all the way through to final dispatch of the finished product. That enables organizations to optimize an array of warehouse operations including receiving, storage, picking, packing, and shipping, the firm says.
Specific sectors served by Indigo Software include the food and beverage, fashion and apparel, fast moving consumer goods, automotive, manufacturing, 3PL, chemicals, and wholesale / distribution verticals.
Schneider says its FreightPower platform now offers owner-operators significantly more access to Schneider’s range of freight options. That can help drivers to generate revenue and strengthen their business through: increased access to freight, high drop and hook rates of over 95% of loads, and a trip planning feature that calculates road miles.
“Collaborating with owner-operators is an important component in the success of our business and the reliable service we can provide customers, which is why the network has grown tremendously in the last 25 years,” Schneider Senior Vice President and General Manager of Truckload and Mexico John Bozec said in a release. "We want to invest in tools that support owner-operators in running and growing their businesses. With Schneider FreightPower, they gain access to better load management, increasing their productivity and revenue potential.”