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February 14, 2008 - Supply Chain Digest Newsletter
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First Thoughts by Dan Gilmore, Editor

RFID 2007 – Who Did What in the Past Year

Last year was a very interesting one for RFID. There was of course the continuing Wal-Mart saga, which early in the year saw the retail giant rebutting media charges its RFID program was treading water, and ending the year with a “significant change of focus” in that program’s direction.

My sense also is that for the most part, we were/are still largely in “pilot” mode for many companies – and are likely to stay that way for some time. Primarily for the simple reason that change takes time – it was the failure to fully appreciate that, I think, that led to some of the Wal-Mart missteps.

But I wanted to get a better view of what really is happening in RFID. So with the help of SCDigest staffer Connie Venema, we spent some time reviewing any announcement or story we could find relating to RFID system deployments or pilots in 2007. The results, I think, are very interesting.

Gilmore Says:

" Killdeer Mountain Manufacturing's plan - use demand signals from RFID reads in Boeing’s own operations to drive production and replenishment at Killdeer. Network Lean."

What do you say?

Send us your comments here

We compiled a small database, available to SCDigest readers (See RFID Announcements in 2007), of almost every announcement we could find from other media outlets, the business wires, etc. We looked only for companies using RFID-based systems in a pilot or full deployment, not vendor announcements.

We did exclude a few areas. We left off libraries. We also mostly excluded pilots that were driven by academia or associations, unless they had clear end company participation. If the announcement was just about a company meeting Wal-Mart compliance, we left that off too. We focused on news available in North America, though as you’ll find below that still includes many initiatives from around the globe.

Despite all that I am sure we missed a few. In addition, we looked at stories that became public in 2007 – the actual program could and in some cases clearly was started earlier than that. Finally, there are obviously many pilots and deployments going on that companies have not made public.

All told, we cataloged and reviewed about 190 such announcements from 2007. If you are even remotely interested in RFID, I think you will really enjoy the list we have compiled.

Here are my summary observations:

  • Few were served by the over focus of most of the market on Wal-Mart. That includes vendors (who put too much hope/effort there), the press and analysts, and probably even some consumer goods manufacturers, who may have been better off just looking at real internal opportunities first without theWal-Mart overhang. As the list shows, there is so much else going on that should have received more attention.
  • In some respects, it’s fair to say the US is behind the much of the world in RFID deployment. Countries like Germany and the Netherlands clearly stand out – 19 of the announcements we found came out of Germany, for example. Not surprising, as the German government says it has identified RFID as an emerging technology in which the country can play aleading global role, and the government has invested more than $250 million in RFID research since 2006.
  • It is striking how few announcements there were from US retailers or consumer goods manufacturers.
  • Clearly, use of RFID for various forms of asset tracking are becoming almost mainstream. In the hospital area, I think we must already be there – of the 190 announcements, 40 were in this sector, and the majority of those had to do with tracking medical equipment (the rest were either related to patient tracking or pharmaceuticals).
  • RFID is also becoming mainstream in shop floor work-in-process applications.
  • It seems clearly to me from reading these announcements that it is the availability of RFID-enabled commercial software packages – for asset tracking, work-in-process, etc. – winds up being a key force behind RFID systems deployment. It’s just too hard to build your own. And if a new system being purchased or upgraded comes with RFID support, it makes the move to RFID quite natural.
  • It’s good to see a handful of examples of RFID being used in distribution center/WMS applications. In truth, these have been hard to find to date. Most such examples in our 2007 list, however, are from Europe.

I’d love any other observations you come away with from the full report.

A few other quick comments. You will see we positioned a handful of announcements as “market offerings.” This is meant to indicate a company that is not a pure technology firm, but rather a manufacturer or services company that is says it is using RFID to differentiate its products or offer new services.

Example – Jergens, which is embedding RFID tags in its industrial rings, thus enabling its distributors to offer new lifecycle management programs for customers. We have only scratched the surface of this. If you are in supply chain, think about similar opportunities for your company – it could make you a hero.

The scope of some of these programs is ambitious and impressive. Korean automaker Hyundai, for example, is on a stated path to use RFID to drive its entire supply chain, with aggressively plans to use RFID on all cartons and containers moved around the world. Well. Anyone else have that level of RFID program commitment?

I also loved the vision of medium size aerospace supplier Killdeer Mountain Manufacturing, which not only is investing heavily in RFID for its own internal usage, but hard at work integrating its systems with those of customer Boeing. The plan: demand signals from RFID reads in Boeing’s own operations will drive production and replenishment at Killdeer. Network Lean.

I may do a bit more analysis, but think you will get a great feel for the current RFID landscape from this report, and I would welcome any observations you make from the data.

What’s your reaction to Gilmore’s review of the 2007 RFID announcements? Do you think the US is behind much of the rest of the world in RFID? Does it matter? Any observations on the complete list? Let us know your thoughts at the Feedback button below.

Let us know your thoughts.

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Dan Gilmore


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This Week’s Supply Chain News Bites – Only from SCDigest

February 14 , 2008
Supply Chain Graphic of the Week – Steps to Improved Inventory Management

February 14 , 2008
Supply Chain by the Numbers: February 14, 2008


Significant losses dominated the Wall Street landscape last week.

The results for our Supply Chain and Logistics stock index were similarly dismal.  The software group was hit particularly hard (Logility fell 15.7% and Manhattan was down 11.9%). In the hardware group, Intermec finished the week up 9.3%; however, Zebra slid 6.1%.  In the transportation and logistics group, Expeditors’ International was down 7.2%, while Ryder climbed another 5.7%.  

See stock report.

Discussion Question:

Out-of-Stocks Cost Retailers $93 Billion

Why Have Out-of-Stocks Remained Such a Big Issue in Retailing for So Many Years with So Little Apparent Progress? What Has to Happen to Finally Make this a Minor if not a Total Non-Issue?

Sorting it Out

by: Cliff Holste

When is a Sortation System Right for Distribution Operations?

If you handle 10,000 cartons or more per shift, you are a good candidate, Holste says; understanding true "cases per minute"


Each Week:

-Global Supply Chain
-Distribution/Material Handling
-Trends and Issues

Read it Now

Weekly On-Target Newsletter
February 12, 2008


Q. What year did FedEx introduce on-line package tracking?

A. Click to find the answer below


Reader Question: Can Bucket Brigades Work with Mechanized Order Picking?

Reader Question: Is there a True Global RFID Standard?

See our expert answers at the links above. Share your knowledge or perspective.

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We're really behind again - bear with us. But keep the letters coming! In the next few weeks, we'll start adding feedback right on specific story pages, so you can see what others are saying.

More great letters this week. Our Feedback of the Week is from Michael Rummelhoff, Vice President of Operations at Meyer, who reacts to our article on the "Two Paths to DC Automation" and says there is only one real way. David Tompos of Toro was one of a number of readers who briefly thanked us for our 2007 year end review. Friend of SCDigest Adrian Gonzalez of ARC offers some additional perspective on the Carbon Disclosure project, while Greg Nichols adds some thoughts on protecting IP when working with Chinese suppliers.

All are good - take a look.

Give us your thoughts on this week's Supply Chain topics. As always, we’ll keep your name anonymous if required.

Feedbacks of the Week - On Two Paths to DC Automation

There are many reasons for pursuing automation technology, and the individual paths that companies take will be dependent upon their need for a decent return on investment and internal rate of return.  

Ten years ago, we took steps to automate our picking operation, which included zone picking operations with zone printing and manual label application.  After application, the cases would travel to a sort lane by way of a scanner, which validated the UCC 128 label with the item it was assigned by scanning a Code 39 label (internal control item number), providing 100% accuracy for picking.  This led to a significant reduction of charge backs from our customers due to mis-picks and substitutions and resulted in a return on investment in less than one year.  Then came a change in focus by the customer base, the alignment of the label itself on the carton and space from leading edge and from the bottom of the carton.  This was overcome by additional training and use of templates for the novice pickers to use while applying the label.  

Five years ago, we were challenged by 50% of our customers to provide price tickets on the product as part of the Floor Ready Merchandising process, touting earlier arrival of our product by flowing through their (retailer) distribution centers faster.  We were being charged back by the retailers $.25 to $.50 per item and another $250 to $500 per purchase order if we did not comply.  We were able to complete the process and achieved the application of the labels with 99.9% accuracy for approximately $.10 per item.  Then came their change, they required specific logos on the price ticket or the charge backs would be steep.  

Two years ago, when the Department of Transportation changed the rules for drivers, most of the industry knew that there would be a significant impact on the transportation piece of the supply chain.....and it came to fruition through detention charges.  At the same time, the transportation industry, along with every American who drove a gas or diesel powered vehicle, was hit by higher fuel prices.  So our retailers told us we had to load the trucks, floor loaded, within two hours or pay a detention charge (usually about $65 per hour).  Then came the administrative charges to process this detention charge, in some cases upwards of $2,000.  

Although all three of the previous scenarios provide ample return on investment opportunities, they also provided our retailers additional sources of revenue as we completed a transition to meet their demands.   So here is the real challenge; how do you reduce costs while meeting the ever-changing demands of your customer as they continue to create revenues from your mistakes and delays in meeting those changes?  We are taking drastic measures to look forward, into the potential for all charge backs hazards in the supply chain road.  This means that we use automation to pick the product, automate the labeling process to ensure alignment and placement, reduce the handling time for staging picked product, and automate the delivery of picked product to the truck floor for staking while recording the UCC 128 bar code label as it is tendered on the truck.   There may be two paths of automation, but there is only one path of success and better margins........complete automation.

Michael Rummelhoff
Vice President of Operations

On SCDigest's Year in Review:

Thanks for the 2007 “Year in Review”!  I found it a great memory-jogger for the events of 2007, and hope you continue this article in the future years.

David M. Tompos
The Toro Company

On the Carbon Disclosure Project:

Calculating the carbon footprint of a supply chain is a challenging task, especially if you have a multi-tiered global supply chain.  How far back into their supply chains should companies go?  Does Dell or HP, for example, have to track the carbon emissions involved in converting sand into silicon?  And how do you get this data from vendors in places like Vietnam?  Therefore, the work being done by the Carbon Disclosure Project (CDP)and its member companies is an important step towards developing standard green house gases (GHG)measurement and reporting methodologies.  I assume, and hope, the CDP is aligning its efforts with those of the standards community, specifically ISO (International Organization for Standardization), the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), who recently signed a Memorandum of Understanding (MoU) under which they have agreed to jointly promote the ISO 14064 standards and the WRI and WBCSD GHG Protocol standards.

Adrian Gonzalez
Director, Logistics Executive Council
ARC Advisory Group

On Protecting IP in China:

The first thing is to know who is working for you.  I am surprised that is not on the list.  I am always amazed at both the lack of knowledge and the lack of skepticism that many multinationals operations in China display.  In many cases they have upper level manager working for them whose relatives work in similar domestic companies.  I have also seen several instances where multinationals assume that hiring overseas Chinese (i.e. American Born Chinese) management will mitigate this risk.  In fact, I know of several ABC Managers where the pressure to help the “extended” family is even greater than it is for locals as they don’t really understand how to deal with such pressures in an acceptable manner.

Greg Nichols


Q. What year did FedEx introduce on-line package tracking?

A. 1994

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