David Picton is a man who knows about logistics. As a Royal Air Force officer in the first Gulf War he supervised the movement of men and materials in an immensely complex global operation. During his 15 years of service with the RAF, Mr Picton directed supply chains that stretched the capabilities of the available technology. One lesson of his experience has always remained clear, he says: “I saw the need for track and trace systems rising to the top of the agenda.”
Mr Picton left the military to work for Symbol Technologies, a US business that was bought by Motorola for $4bn in January. Today he is a director at Motorola’s Enterprise Mobility arm.
Motorola bought Symbol for its expertise in a technology that has existed for decades but has finally come of age: Radio Frequency Identification (RFID). The principle behind RFID is simple. A small transmitter is attached to each product that sends a signal identifying the object and its location. The implications for supply chain management are obvious: the ability to track a product across a supply chain with lower costs and chance for human error.
The Spanish postal service Correos offers an example of how Motorola is using RFID to help a customer understand and gain control over its own logistics chain. Correos tags and monitors mail as it passes through its distribution centres allowing the company to assess the performance and quality of its service.
As the amount of information that can be held in a tag grows, potential uses are expanding, too. Motorola, for example, provides devices that can decode the signals from a tag and flash this information back along the supply chain. The tags contain a wafer-thin silicon inlay that acts as a radio antenna and transmits or captures information to or from the chip.
RFID allows businesses to implement data capture and analysis in ways that were previously impractical or prohibitively expensive. “This has shaken up every one’s views on what can be tracked and traced,” says Mr Picton, “and businesses are thinking about new ways to take manual processes out of the supply chain.”
The key trigger to the rocketing population of data tags was what the logistics world refers to as the “Wal-Mart Mandate”. This was an edict issued by the world’s largest retailer in August 2003 that required cases and pallets of goods from all of its suppliers to be RFID tagged by the end of 2006. The supermarket giant had already stipulated RFID compliance for its top suppliers, but by extending the stipulation to all suppliers it effectively forced the entire retail sector to embrace stock-keeping via RFID.
Jeff Gant, a product manager at logistics software house Manhattan Associates, says the demands of big retailers like Wal-Mart are working their way “back up the evolution cycle to product designers where more and more functions are being incorporated.”
Another issue for RFID is the way in which it lends a high-tech veneer to previously mundane objects like shipping containers. US company Intermec, manufactures a range of rugged computers that can read data from RFID tags. Chris Kelley, the director of RFID, describes the company as offering “logistics plumbing”. One of its latest ventures is being tested out at a warehouse in Washington. In effect, the company’s technology has transformed a forklift truck into a mobile data centre by using an Intermec computer connected via radio to warehouse management software. The forklift is fitted with an Intermec computer in the dashboard, as opposed to the traditional bolted-on systems.
The US Navy is an avid user of Intermec’s equipment. Every time one of its flying squadrons deploys on an aircraft carrier the supporting parts and tools that keep sophisticated aircraft operational have to leave a home base. At a Naval Air Station (NAS) in Virginia, the Navy packs some 500-600 parts into sub-divided cartons and the whole collection of spares is known as a Pack-Up Kit (PUK). Checking off these items manually took three sailors 24 hours and finding a specific part within a PUK was a challenge. Intermec applied RFID tags to each part and supplied its readers to the Navy. The time taken to put a PUK together was slashed to just 30 minutes and when a part is removed for use, the home Navy station is automatically notified and a replacement is issued. By exercising better control of its inventory the Navy should need less expensive parts in the supply chain at any given time, leading to a predicted $2.2m saving as the system is rolled out across 10 other NAS’s.
Intermec’s Mr Kelley thinks that the little tags with their clever chips have a bright future. “For as long as capitalism exists,” he says, “we will want to find a competitive advantage via improved information about how a business is running.”
