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
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.
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.
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.