Item-level tagging has sped up inbound and outbound processing at a German 3PL's distribution center. But issues remain in using RFID for item selection.
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.
Although item-level tagging of goods has long been touted as the future of inventory visibility, a lot of companies are skittish about being pioneers. That's not case with two German concerns. German contract logistics service provider The Fiege Group is helping German fashion retailer Gerry Weber International AG become the industry leader in the deployment of radio-frequency identification (RFID) technology for tracking individual goods.
"Gerry Weber is the only company that has rolled out RFID tags across its stores and supply chain," says Christoph Mangelmans, the Fiege distribution center manager involved in the RFID initiative.
Gerry Weber, which claims that it is now tagging nearly 100 percent of its garments, initially adopted RFID to speed up the goods-in and goods-out processes at its stores and enable it to use electronic article surveillance (EAS) to deter theft. "RFID item-level tagging gives various advantages along the supply chain, starting with easy DC 'goods-in' operations that are 100-percent quality checked," says Gerry Weber's former chief information officer, Christian von Grone. "This has sped up our processes and saves money on EAS and error handling, and gives the chance for higher turnover on replenishable items."
26 MILLION ITEMS TAGGED
Headquartered in Halle, Germany, Gerry Weber sells its clothing line through its own stores as well as through dealers. It launched its RFID tagging program in 2009. On its website, the company claims that since January 2011, it has outfitted more than 26 million of its clothing items with RFID.
Gerry Weber has partnered with Fiege since the inception of the tagging program. Based in Greven, Germany, Fiege provides contract logistics services in Europe for a number of industries, managing such activities as warehousing, transportation, e-commerce fulfillment, order management, and reverse logistics on behalf of its clients. Fiege currently handles the distribution of Gerry Weber's "Edition" and "Taifun" clothing brands. A second contract logistics firm, Meyer & Meyer, handles goods on hangers.
When it comes to affixing the tags, Gerry Weber's suppliers in Eastern Europe, Turkey, and Asia apply the passive RFID tags to garments. Because it oversees its clothing production, von Grone says, Gerry Weber was able to get the suppliers to take part in the program. He added that only licensed products, such as sunglasses, bags, and jewelry, need to be tagged upon arrival at the store.
Avery Dennison furnishes the chips, which are embedded in the clothing-care label attached to the article. Avery Dennison maintains printing centers near the suppliers' factories to produce the tags, each of which has a unique identification number.
The tagged goods arrive in trucks at the Fiege distribution center in Ibbenbüren, Germany, near the Dutch border. The site, which measures more than 1.45 million square feet, is a multitenant facility, with nearly 161,500 square feet assigned to Gerry Weber.
Once the boxes are offloaded from the truck, they're placed into one of three tunnels, which are equipped with antennas to read the tags. To make sure the correct items are in the box, the tag readings are matched against information supplied in the advance shipment notice transmitted by the supplier.
After the boxes' contents are verified as correct, they are placed into storage. Because Gerry Weber brands are coordinated collections of apparel, articles only get shipped to stores when all items in the clothing line are in stock at the warehouse. Since articles in a collection may be made by different suppliers and don't always arrive at the same time, inventory turnaround can take up to six weeks.
Once all items in the collection are available, warehouse workers will select orders for the Gerry Weber stores. Fiege, which uses parcel carriers like DHL, UPS, and DPD to handle the deliveries, makes store replenishment shipments every day except Sunday. The company has set up packaging tables with RFID interrogators to read the tags on outbound goods and confirm the accuracy of store orders before the merchandise leaves the DC.
ORDER SELECTION ISSUES
As for the results to date, the use of RFID has revved up throughput in both inbound and outbound processing in addition to boosting order accuracy. Since the RFID initiative was launched, Mangelmans says, inbound processing of goods is 25 percent quicker than in the past and outbound processing is 15 percent quicker.
Improved visibility and throughput notwithstanding, RFID deployment has not been without issues. In particular, Mangelmans says that when order selectors go to retrieve items, there's a "media break" or disruption in the automatic transfer of information to the DC's computer system. That's because an RFID reader can't distinguish the signal for an individual clothing item from the surrounding signals. So if the worker wants to retrieve a particular size garment from a box, he or she can't use an RFID reader to determine whether the item is on the top, middle, or bottom of the carton.
At present, the worker filling an order must take an additional step to make sure the right item is picked from a mixed carton of goods. After selecting the item from the storage location identified by the warehouse management system (WMS), that worker has to scan the bar code on the hang tag, which contains information on the item's style, size, and color. The scanned information is then relayed back to the WMS for confirmation.
In Mangelmans' view, the solution to that problem would be to use a sorter to remove garments from the box during inbound processing. That way, individual items could be placed into automated storage and retrieved based on the RFID tag.
Despite the current need for manual scanning during picking, Mangelmans believes that the increased throughput afforded by item-level tagging justifies the use of RFID technology. That technology has given us "transparency on the supply chain," he says.
Third-party logistics (3PL) providers’ share of large real estate leases across the U.S. rose significantly through the third quarter of 2024 compared to the same time last year, as more retailers and wholesalers have been outsourcing their warehouse and distribution operations to 3PLs, according to a report from real estate firm CBRE.
Specifically, 3PLs’ share of bulk industrial leasing activity—covering leases of 100,000 square feet or more—rose to 34.1% through Q3 of this year from 30.6% through Q3 last year. By raw numbers, 3PLs have accounted for 498 bulk leases so far this year, up by 9% from the 457 at this time last year.
By category, 3PLs’ share of 34.1% ranked above other occupier types such as: general retail and wholesale (26.6), food and beverage (9.0), automobiles, tires, and parts (7.9), manufacturing (6.2), building materials and construction (5.6), e-commerce only (5.6), medical (2.7), and undisclosed (2.3).
On a quarterly basis, bulk leasing by 3PLs has steadily increased this year, reversing the steadily decreasing trend of 2023. CBRE pointed to three main reasons for that resurgence:
Import Flexibility. Labor disruptions, extreme weather patterns, and geopolitical uncertainty have led many companies to diversify their import locations. Using 3PLs allows for more inventory flexibility, a key component to retailer success in times of uncertainty.
Capital Allocation/Preservation. Warehousing and distribution of goods is expensive, draining capital resources for transportation costs, rent, or labor. But outsourcing to 3PLs provides companies with more flexibility to increase or decrease their inventories without any risk of signing their own lease commitments. And using a 3PL also allows companies to switch supply chain costs from capital to operational expenses.
Focus on Core Competency. Outsourcing their logistics operations to 3PLs allows companies to focus on core business competencies that drive revenue, such as product development, sales, and customer service.
Looking into the future, these same trends will continue to drive 3PL warehouse demand, CBRE said. Economic, geopolitical and supply chain uncertainty will remain prevalent in the coming quarters but will not diminish the need to effectively manage inventory levels.
In a push to automate manufacturing processes, businesses around the world have turned to robots—the latest figures from the Germany-based International Federation of Robotics (IFR) indicate that there are now 4,281,585 robot units operating in factories worldwide, a 10% jump over the previous year. And the pace of robotic adoption isn’t slowing: Annual installations in 2023 exceeded half a million units for the third consecutive year, the IFR said in its “World Robotics 2024 Report.”
As for where those robotic adoptions took place, the IFR says 70% of all newly deployed robots in 2023 were installed in Asia (with China alone accounting for over half of all global installations), 17% in Europe, and 10% in the Americas. Here’s a look at the numbers for several countries profiled in the report (along with the percentage change from 2022).
Sean Webb’s background is in finance, not package engineering, but he sees that as a plus—particularly when it comes to explaining the financial benefits of automated packaging to clients. Webb is currently vice president of national accounts at Sparck Technologies, a company that manufactures automated solutions that produce right-sized packaging, where he is responsible for the sales and operational teams. Prior to joining Sparck, he worked in the financial sector for PEAK6, E*Trade, and ATD, including experience as an equity trader.
Webb holds a bachelor’s degree from Michigan State and an MBA in finance from Western Michigan University.
Q: How would you describe the current state of the packaging industry?
A: The packaging and e-commerce industries are rapidly evolving, driven by shifting consumer preferences, technological advancements, and a heightened focus on sustainability. The packaging sector is increasingly prioritizing eco-friendly materials to reduce waste, while integrating smart technologies and customizable solutions to enhance brand engagement.
The e-commerce industry continues to expand, fueled by the convenience of online shopping and accelerated by the pandemic. Advances in artificial intelligence and augmented reality are enhancing the online shopping experience, while consumer expectations for fast delivery and seamless transactions are reshaping logistics and operations.
In addition, with the growth in environmental and sustainability regulatory initiatives—like Extended Producer Responsibility (EPR) laws and a New Jersey bill that would require retailers to use right-sized shipping boxes—right-sized packaging is playing a crucial role in reducing packaging waste and box volume.
Q: You came from the financial and equity markets. How has that been an advantage in your work as an executive at Sparck?
A: My background has allowed me to effectively communicate the incredible ROI [return on investment] and value that right-size automated packaging provides in a way that financial teams understand. Investment in this technology provides significant labor, transportation, and material savings that typically deliver a positive ROI in six to 18 months.
Q: What are the advantages to using automated right-sized packaging equipment?
A: By automating the packaging process to create right-sized boxes, facilities can boost productivity by streamlining operations and reducing manual handling. This leads to greater operational efficiency as automated systems handle tasks with precision and speed, minimizing downtime.
The use of right-sized packaging also results in substantial labor savings, as less labor is required for packaging tasks. In addition, these systems support scalability, allowing facilities to easily adapt to increased order volumes and evolving needs without compromising performance.
Q: How can automation help ease the labor problems associated with time-consuming pack-out operations?
A: Not only has the cost of labor increased dramatically, but finding a consistent labor force to keep up with the constant fluctuations around peak seasons is very challenging. Typically, one manual laborer can pack at a rate of 20 to 35 packages per hour. Our CVP automated packaging solution can pack up to 1,100 orders per hour utilizing a fully integrated system. This system not only creates a right-sized box, but also accurately weighs it, captures its dimensions, and adds the necessary carrier information.
Q: Beyond material savings, are there other advantages for transportation and warehouse functions in using right-sized packaging?
A: Yes. By creating smaller boxes, right-sizing enables more parcels to fit on a truck, leading to significant shipping and transportation savings. This also results in reduced CO2 emissions, as fewer truckloads are required. In addition, parcels with right-sized packaging are less prone to damage, and automation helps minimize errors.
In a warehouse setting, smaller packages are easier to convey and sort. Using a fully integrated system that combines multiple functions into a smaller footprint can also lead to operational space savings.
Q: Can you share any details on the typical ROI and the savings associated with packaging automation?
A: Three-dimensional right-sized packaging automation boosts productivity significantly, leading to increased overall revenue. Labor savings average 88%, and transportation savings accrue with each right-sized box. In addition, material savings from less wasteful use of corrugated packaging enhance the return on investment for companies. Together, these typically deliver returns in under 18 months, with some projects achieving ROI in as little as six months. These savings can total millions of dollars for businesses.
Q: How can facility managers convince corporate executives that automated packaging technology is a good investment for their operation?
A: We like to take a data-driven approach and utilize the actual data from the customer to understand the right fit. Using those results, we utilize our ROI tool to accurately project the savings, ROI, IRR (internal rate of return), and NPV (net present value) that facility managers can then use to [elicit] the support needed to make a good investment for their operation.
Q: Could you talk a little about the enhancements you’ve recently made to your automated solutions?
A: Sparck has introduced a number of enhancements to its packaging solutions, including fluting corrugate that supports packages of various weights and sizes, allowing the production of ultra-slim boxes with a minimum height of 28mm (1.1 inches). This innovation revolutionizes e-commerce packaging by enabling smaller parcels to fit through most European mailboxes, optimizing space in transit and increasing throughput rates for automated orders.
In addition, Sparck’s new real-time data monitoring tools provide detailed machine performance insights through various software solutions, allowing businesses to manage and optimize their packaging operations. These developments offer significant delivery performance improvements and cost savings globally.
Mid-marketorganizations are confident that adopting AI applications can deliver up to fourfold returns within 12 months, but first they have to get over obstacles like gaps in workforce readiness, data governance, and tech infrastructure, according to a study from Seattle consulting firm Avanade.
The report found that 85% of businesses are expressing concern over losing competitive ground without rapid AI adoption, and 53% of them expect to increase their budgets for gen AI projects by up to 25%. But despite that enthusiasm, nearly half are stuck at business case (48%) or proof of concept (44%) stage.
The results come from “Avanade Trendlines: AI Value Report 2025,” which includes two surveys conducted by the market research firms McGuire Research Services and Vanson Bourne. Conducted in in August and September 2024, they encompass responses from a total of 4,100 IT decision makers and senior business decision makers across Australia, Brazil, France, Germany, Italy, Japan, Netherlands, Spain, UK, and US.
Additional results showed that 76% of respondents state that poor data quality and governance inhibits their AI progress. To overcome that, companies are stepping up investments in that area, with 44% planning to implement new data platforms and 41% setting governance standards. And to support the scaling of AI, budgets will focus on data and analytics (27%), automation (17%), and security and cyber resilience (15%).
"Mid-market leaders are at a defining moment with AI—where investments must not only boost efficiency but ignite future innovation and sustainable growth," Rodrigo Caserta, CEO of Avanade, said in a release. "The tension between cost-cutting and growth ambitions shows the AI value equation is still being worked out. Productivity with AI isn't just about doing things faster; it's about reimagining work itself. People are central to this shift, requiring workforce alignment, clear communication, and new training. Leaders must rethink how they support collaboration, measure productivity, and ultimately, assess the true value AI brings to their organizations."
Editor's note:This article was revised on November 13 to correct the site of Avanade's headquarters; it is located in Seattle.
That result came from the company’s “GEP Global Supply Chain Volatility Index,” an indicator tracking demand conditions, shortages, transportation costs, inventories, and backlogs based on a monthly survey of 27,000 businesses. The October index number was -0.39, which was up only slightly from its level of -0.43 in September.
Researchers found a steep rise in slack across North American supply chains due to declining factory activity in the U.S. In fact, purchasing managers at U.S. manufacturers made their strongest cutbacks to buying volumes in nearly a year and a half, indicating that factories in the world's largest economy are preparing for lower production volumes, GEP said.
Elsewhere, suppliers feeding Asia also reported spare capacity in October, albeit to a lesser degree than seen in Western markets. Europe's industrial plight remained a key feature of the data in October, as vendor capacity was significantly underutilized, reflecting a continuation of subdued demand in key manufacturing hubs across the continent.
"We're in a buyers' market. October is the fourth straight month that suppliers worldwide reported spare capacity, with notable contractions in factory demand across North America and Europe, underscoring the challenging outlook for Western manufacturers," Todd Bremer, vice president, GEP, said in a release. "President-elect Trump inherits U.S. manufacturers with plenty of spare capacity while in contrast, China's modest rebound and strong expansion in India demonstrate greater resilience in Asia."