Even after setting up a sophisticated supplier communication portal, Ingersoll Rand experienced delays obtaining inventory visibility. An RFID system changed all that.
James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP?s Supply Chain Quarterly and a staff writer for DC Velocity.
As anyone who has tried kanban will tell you, just-in-time production demands up-to-the-minute information on the whereabouts of inbound parts and materials. Because the manufacturer keeps very little inventory on hand in the plant, there's virtually no room for error. Operations managers require assurances that the material needed to keep the factory up and running will be delivered on schedule. And that means full visibility into incoming shipments.
A case in point is Ingersoll Rand, which uses kanban scheduling at a plant operated by its Trane air conditioning and heating systems division in Tyler, Texas. To obtain the necessary visibility, the company three years ago set up an online pOréal to provide a central communication platform with suppliers. Through that digital pOréal, Ingersoll Rand was able to obtain real-time visibility into the inventory on hand at suppliers throughout the world.
But there were still some hiccups in the information flow. For instance, the company had no quick way of determining whether the right materials had been delivered when a truck arrived at the facility. Under the process it had in place, workers had to record the receipt of incoming goods by scanning bar-code labels. It could take as long as 30 minutes to scan all the items in the back of a truck.
Thirty minutes might not seem like a long time, but in a kanban operation, that's a fairly serious delay. The manufacturer began searching for a swifter solution—which it eventually found in radio-frequency identification (RFID).
Better visibility through RFID
A business of Ingersoll Rand Co., Trane makes residential air conditioner and heat pump condensers at the Tyler plant. As part of its operation, it brings in materials such as compressors, electrical components, packaging, plastics, refrigeration units, and raw components from more than 100 suppliers. More than half of those suppliers are based in the United States, while another third are located across the border in Mexico and a small fraction in Asia.
The establishment of the online pOréal in 2008 was an attempt to streamline communications with those suppliers. "Prior to setting that up, we had multiple systems for [exchanging] information with suppliers," says Michael Smith, the multi-site material and supply chain leader for Ingersoll Rand's Tyler operations. "We had spreadsheets, e-mail messages, and EDI [electronic data interchange] systems. We wanted a common communication system."
While setting up the pOréal was a step in the right direction, the company expects its new RFID program to take performance to the next level. In June, Ingersoll Rand began working with some key suppliers to place tags on inbound shipments. The tags in this case are passive devices made by Alien Technology of Morgan Hill, Calif.
Now, when a trailer arrives at the Tyler plant, it passes by an antenna that reads the RFID tag. Information encoded in the tag is then uploaded to the electronic pOréal and made available for immediate viewing.
The time savings have been downright impressive. Smith says instead of taking half an hour, it now takes about five minutes to record the arrival of inventory and update the inventory status on the pOréal.
Tag teams
Currently, about 25 of Ingersoll Rand's 110 suppliers are tagging their shipments. These include several local Texas and Mexican suppliers as well as vendors who feed products through a consignment warehouse in Tyler operated by a third-party logistics company (3PL). Under this arrangement, vendors send trailer loads of product to the consignment warehouse, which, in turn, sends smaller lots of parts and components to the factory upon request. Typically, it applies the RFID tags to items just prior to shipping.
Not all of the shipments from these vendors are suitable for tagging, however. Some items—like shipments of metals or components that arrive in metal tubs—aren't being tagged because metal can interfere with the signal transmission. "The tag itself is an antenna, and when you touch metal, you can short out the antenna," Smith explains.
Shipments that aren't suitable for tagging are recorded the traditional way—by scanning a bar code. All incoming materials—including those with RFID labels—carry a bar code because Ingersoll Rand requires them for auditing purposes.
As for the project's cost, Ingersoll Rand got off lightly. The company already had antennas on hand that it had purchased for another project but never used. As a result, Smith says, setting up the receiving dock to read RFID tags only cost it $20,000.
The suppliers bear the cost of the tags, which Smith says run to about a dime apiece. So far, none of the suppliers have balked at the requirement, he says. That's because the suppliers have an incentive—prompt payment for their materials. Once the information from the tag gets sent to the pOréal and is reconciled with the invoice, the supplier gets approved for payment. "If the suppliers do the job right with RFID, they get paid on time," Smith says.
Ingersoll Rand is reaping savings as well. For one thing, the automatic recording process has enabled it to reassign two receiving workers to other tasks. Overall, Smith estimates that the RFID implementation will save the company something on the order of $120,000 a year.
More RFID in the future
Next year, Ingersoll Rand plans to extend the use of RFID to all members of its supply base as well as to additional manufacturing plants. It also wants to begin tagging individual items—as opposed to boxes or entire trailerloads—to achieve unit-level visibility. "We want to be able to see each and every component and manage all those components," Smith says.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.