When you get right down to the basics, trucking has always been about speed in one way or another, about compressing time. Over the years, the industry has implemented countless new technologies to speed up every process, capture every precious wasted minute and push multi-tasking to super-human extremes. Blame this obsession with speed on shippers or consignees, on competitive pressures or the tyranny of tight operating margins, but there it is, and RFID is just the latest in the long series of velocity-enhancing tools. You may think RFID is an acronym for Radio Frequency Identification, but it actually stands for Real Fast Information & Data.
“Think about what bar coding has done to change business, to reduce labor and improve efficiency, and then take away the bar code scanner-that's RFID,” observes Randall Burrell, senior vice president of Maddocks Systems, Inc. (www.maddockssystems.com). “We can already electronically store, read and communicate all the same data that RFID handles via a number of other means without implementing that technology. RFID, however, makes it possible to do those things remotely and virtually automatically.”
RFID FOR SHIPPERS
RFID's unique contribution to the speed of commerce derives from its radio-enabled ability to locate and identify things remotely and all at once. Imagine taking retail inventory an entire shelf at a time, or knowing when a product needs restocking and exactly where the new shipment is — in your own backroom on a truck en route, or automatically sensing when an expensive retail item disappears out of the range of its monitoring reader and you begin to sense the benefits retailers like Wal-Mart see in RFID.
RFID is the most significant, game-changing technology that we have seen in several years,” notes Chris Kohne, manager solutions consulting for Manugistics Group, Inc. (www.manugistics.com), a provider of demand and supply chain management solutions, including RFID-enabled systems. “In most industries, specifically consumer goods, companies are either selling to or competing against an enterprise that has extensive plans to leverage RFID technology.
“Right now, these companies are focusing on the pure track and trace function of RFID, on improving real-time visibility to inventory, orders and shipments throughout the supply chain,” he continues. “If shippers can attach an RFID tag to every line item and associate those line items with purchase orders, shipments and bookings, they have the ability to do a much better job managing their supply chains, including inventory levels, pricing, handling product recalls or adapting to unexpected events.
“Let me give you some examples. Through RFID, you can have inventory data you really trust,” says Kohne. “This data quality permits you to reduce safety stock buffers, for instance, and that can mean reducing your need for physical warehouse space and all its associated expenses.
“Product recalls are another area where RFID can make a big impact. Today if there is a product recall, most companies have to handle them by region because there is no good way to pinpoint which shipments might be effected. RFID can enable them to replace these (sometimes huge) recalls with targeted recalls that address the problem without so much waste. The visibility RFID affords can also enable shippers to do a better job of adaptive planning,” he adds.
RFID FOR FLEETS
While RFID obviously has the potential to deliver substantial benefits to retailers and their suppliers, the impact on carriers is less clear. Many industry observers, however, are convinced that there will also be opportunities for fleets to leverage RFID to enhance the efficiency of their own operations and bring additional value to their customers.
“Carriers could begin to use the same RFID tags their shippers use to manage their own freight,” offers Mike Dempsey, company strategy leader at RedPrairie Corp. (www.RedPrairie.com), a provider of supply chain technology solutions, including a suite of RFID-enabled solutions.
“For instance, a carrier could scan the passive RFID tags on pallets or containers as a trailer is being loaded and then write that information to an electronic manifest and to an active RFID tag that goes on the outside of the loaded and secured trailer. The shipper, consignee or carrier could then tell exactly what is in the trailer just by “reading” the active trailer tag. Carriers could even make use of existing GPS technology to pass this information, combined with location data, to their customers to enable them to make adaptive decisions about the shipment en route.”
“We have customers who are already working with their carriers to develop systems for using active RFID tagging on trailers,” adds Chris Kohne. “In the future, we expect to see carriers using the readers at toll booths, ports and other places along freight lanes to take RFID readings and provide valuable in-transit information to their customers.”
Fleets with their own break-bulk or cross-docking facilities could also make use of RFID to create dockside efficiencies, notes Dempsey. “As a truck enters a cross-docking facility, a reader at the gate could pull load information from an active tag on the trailer, match it to shipping manifests and automatically direct the driver to the appropriate dock,” he says.
RFID technology could also result in faster payment for fleets in several ways. “Through RFID technology, carriers can create load status updates as a feed to the shippers' freight payment systems, including a ‘freight delivered’ notice,” suggests Kohne. “Because the invoice the shipper is paying against is fed with live data, it is much easier to reconcile damages, shortages and other claims. It is also easier to capture exactly when a particular load arrived at a customer's yard, enabling carriers to charge for documented wait time, if appropriate.”
The compliance clock is ticking for shippers. The deadline for putting RFID tags on pallets and containers is January 1, 2005 for Wal-Mart's top 100 suppliers as well as for all vendors and suppliers shipping materials to U.S. Department of Defense facilities. So, what should carriers be doing now?
“RFID will be rolled out in stages. It won't impact the trucking industry overnight,” says Tom Weisz, president and CEO of TMW Systems, Inc. (www.tmwsystems.com). “It will take most suppliers and warehousing companies time to get their own RFID systems deployed before they can begin to look for ways to incorporate in-transit data from trucks. Realistically, RFID will probably begin to hit the trucking industry in 2006-2007.”
“Before fleets invest in RFID readers, they should go out and talk with their customers,” advises Chris Kohne. “Carriers have to understand the needs of their shippers before they can look for ways to provide additional value.”
Once fleets understand what their customers' RFID implementation plans are, Mike Dempsey recommends getting involved with RFID via a small project at first in order to gain some valuable experience with the technology. “Go do it,” he says. “Talk with RFID suppliers and learn about the technology. Then get experience with RFID. Find out what works.
“For example, what is the optimal read distance and tag size, and how many antennas are required for a consistent read? Don't just sit on the sidelines until the opportunity to gain a competitive advantage is gone,” he adds. “The market will just not permit you to stay static.”
“RFID is constantly evolving, constantly morphing,” observes Kohne. “It will really change the world and the way we work. Today, we are only beginning to see the potential.
Consistent standards have long been considered a necessity if RFID technology is to achieve its full potential. Two versions of a Generation 1 RFID air-interface standard already exist: Class 0 (for pre-programmed, read-only tags) and class 1 (for tags that are writable once and can be read many times). Both are in use, but they are not compatible.
Now, an international, ultra-high frequency (UHF) Electronic Product Code (EPC) standard called “Generation 2,” (or “Gen 2”) developed to reconcile all standards into a single protocol, is expected to be released shortly. It is the product of work by EPCglobal (www.epcglobalinc.org), a joint venture involving the Uniform Code Council and EAN International. It will include not only technical operating parameters, but also non-binding privacy guidelines for the use of RFID.
According to Bear, Stearns & Co. (www.bearstearns.com), EPCglobal's Hardware Action Group successfully combined elements from competing proposals in late June to create the new standard, “which will be formally ratified in early October 2004. Our discussions with industry participants have confirmed our belief that the new hardware should begin to become available for testing in early 2005 with production runs following in late 2005 or early 2006.”
It would at least seem that, with the development of a single international standard, one obstacle to the use of RFID will disappear, enabling fleets and others to proceed with more confidence as they implement their own plans for utilizing (or dealing with) RFID. Still, some complicating factors have emerged.
For starters, Washington-based Intermec Technologies, a division of UNOVA, Inc., recently announced its claim to ownership of the proposed air-interface protocol of Gen 2 and an intention to charge royalties for its use, according to a July 7 press release from ABI Research (www.abiresearch.com). It also filed a patent infringement lawsuit against another tag maker.
“Intermec filed a spate of lawsuits against rival tag maker, Matrics, Inc., claiming not only ‘reasonable royalties’ but also treble damages for Matrics alleged ‘willful infringement’ of its patents,” noted ABI. “Other players in the RFID space are surprised and concerned at the prospect of Intermec putting their intellectual property into the most basic part of the proposed standard… in the general opinion, what the industry needs instead is open access to the base technology, allowing multiple suppliers and low prices to meet escalating market demand.”
“While Intermec has only filed suit against Matrics,” said Erik Michielsen, principal analyst for ABI, “that does not mean it won't file against other tag makers in the future. All this definitely clouds the UHF Generation 2 standards discussions and is fueling considerable animosity in the industry.”
Not all industry observers share ABI's level of concern. “I don't see this having a huge impact on the market,” notes Mark Roberti, editor of RFID Journal (www.rfidjournal.com). “Intermec has been involved in developing Gen 2 and believes part of its intellectual property is involved in Gen 2, but that is disputed,” he says. “It could be resolved through negotiations or through a lawsuit. In the end, owning a patent doesn't guarantee anything. It is basically a claim and a claim can be disputed. It is really up to the courts to decide. This is a process that just has to work itself out.
“I know Intermec does not want to limit the growth of the RFID market; it wants to be a supplier to that market,” Roberti adds. “End-users want low-cost technology, so the idea that Intermec would ‘tax’ RFID does not seem likely. As far as I can see, both Intermec and Matrics are being very reasonable about all this.”
By the time this issue of Fleet Owner mails, some of these issues will probably have been addressed. Watch for updates on our website: www.fleetowner.com.
RFID at work
While it took the combined muscle of Wal-Mart and the U.S. Department of Defense to pull RFID into the North American freight-tracking mainstream, the technology has been hard at work elsewhere for some time. Truckers are already very familiar with the use of RFID technology at highway toll booths, secured port and border crossings and in the PrePass automated clearance system for weigh stations to name just a few applications.
RFID tags are also turning up on everything from retail merchandise to pets, project folders and even school children. To get a glimpse of the potential of these tiny tags to create significant change wherever they are attached, take a quick look at some of their newest applications:
Tires: In January of 2003, Michelin (www.michelin.com) announced that it had begun fleet testing of an RFID transponder embedded in its tires to enable them to be tracked electronically. The chip, designed to be read from a distance of up to 24 inches, stores the tire's unique ID number, which can be associated with the chassis's VIN.
Project folders: Merrimac Industries, Inc., a maker of RF microwave components, assemblies and micro-multifunction modules, is using the ActiveTag system from Axcess International, Inc. (www.axsi.com) to track folders containing customer quotes, engineering documents, drawings and project notes throughout their 50,000 square-foot facility, according to Axcess. Merrimac implemented the RFID system to help decrease the time required to complete customer quotes.
“We were looking for a way to track quotes throughout the process and located bottlenecks,” noted Jayson Hahn, vice president of information technology and chief information officer for Merrimac. “As a result of attaching the tags to the files and monitoring the folder's movement between departments, the time it takes to complete the quoting process has decreased. Which has translated into both cost and time savings for Merrimac.”
Vehicle security: C-Chip Technologies Corp. (www.c-chip.com) recently announced that it would be distributing its RFID-based, vehicle anti-theft system (under the brand name “TheftStopper”) through Northland Auto Enterprises' distribution network of new and used car dealers. According to the company, the system features three-point, wireless cut-off units that are controlled through a passive transponder carried by the driver.
Schoolchildren: According to a recent story by CNETAsia (http://asia.cnet.com), school authorities in Osaka, Japan, have decided to tag elementary pupils at one school to keep track of their whereabouts. The RFID tags will be attached to each child's schoolbag, nametag or clothing. Tag readers will be installed at the school gate and other locations.
RFID, GPS AND SUPPLY CHAIN MANAGEMENT:
The security package
National requirements for end-to-end cargo security and accountability are adding a new sense of urgency to the ongoing efforts to enhance supply chain visibility. So, faster than you can say synchronization, solution providers from various disciplines have begun working to combine the capabilities of RFID, GPS and supply chain management to deliver a package of security benefits that is greater than the sum of its parts. It is clearly a trend to watch.
TransCore (www.transcore.com), a global manufacturer of transportation-based RFID products deployed in applications such as electronic toll collection and SMART border crossings, for example, announced in March the purchase of satellite tracking, monitoring and global positioning system (GPS) technology assets from Ottawa-based Vistar Telecommunications, a wholly owned subsidiary of NSI Global Inc. The acquisition enables TransCore to offer both wireless monitoring technologies in a comprehensive suite of homeland security, fleet management and supply chain products.
At Wisconsin-based RedPrairie Corporation (www.RedPrairie.com), a provider of end-to-end global logistics solutions, a new strategic partnership was recently formed to also create a complete cargo security system offering. “Along with our new strategic partner, RF Code (www.rfcode.com), we are working on a full security system utilizing a powerful combination of RFID (radio frequency ID) technology, data collection tools, and real-time supply chain management systems,” says Mike Dempsey, industry strategy leader for RedPrairie.
General Electric Company (GE) (www.ge.com) and SAIC, Science Applications International Corporation (www.saic.com) likewise recently announced the signing of an agreement aimed at developing and testing an integrated system to protect shipping containers. The new system will be designed around the U.S. Custom's guidelines for expedited clearance and the business requirements of the global shipping industry.