This Week in SCDigest:

April 24, 2008 - Supply Chain Digest Newsletter
SupplyChainDigest - Your first stop for supply chain information

Become a Sponsor Click here for information on how to become a Sponsor
Send to a Friend Send this newsletter to a friend. Click here!
Not already subscribed? It's free! Click here.

Archives | Events | Feedback

Featured Report

Sponsored by: Infor

Integrated Transportation Management: How best-in-class companies reduce spend & improve on-time deliveries

Best-in-Class companies understand that effective transportation management doesn’t just reduce freight spend, it also has a broad effect on overall supply chain performance, inventory management efficiency and warehouse productivity. Read the Aberdeen Report to find out why collaboration tools are a key component in reducing freight spend - and how increased internal visibility to transportation data can improve warehouse efficiency and affect inventory policy.

Download the Aberdeen Integrated Transportation Management report now!

First Thoughts by Dan Gilmore, Editor

I, Robot - NAMH 2008 Review

I just came back from a busy week, first at the North American Material Handling Show in Cleveland, and then another excellent time at the Supply Chain Executive Forum, Dr. John Langley’s program at Georgia Tech.

Thousands of you have watched the video reviews SCDigest Materials Handling Editor Cliff Holste and I did the first two days of the material handling show. They can be found here if you would like to take a look, and include some short product videos: NAMH Day 1, NAMH Day 2.

Gilmore Says:

"Several companies are trying to breathe new life into Automated Guided Vehicles, which have just never really taken off here, especially in distribution applications (as opposed to manufacturing). But there is hope."

What do you say?

Send us your comments here

Here, I will offer some additional commentary.

We titled one of our video reviews “The Robots are coming, the Robots are Coming,” and with good reason. Several companies are trying to breathe new life into Automated Guided Vehicles, which have just never really taken off here, especially in distribution applications (as opposed to manufacturing). But there is hope.

A new company called Seegrid announced a new line of what it calls “Industrial Mobile Robots,” which are really a new form of AGV that may find a real place in distribution. What makes the technology different is a new approach to movement control. The machines use vision technology to learn their routes, so no wires on the floor or laser guided system is needed. This makes them very flexible to changing requirements, and we are told the Seegrid robots can learn their routes in just hours or even faster. The machines sell for well less than standard AGVs, and implementation and/or piloting can be done on the cheap due to the ease of “training” on the routes. Definitely worth a look.

On a related note, for the past three years we have been following AGVs capable of auto loading of pallets onto trailers, first released by Jervis B Webb at the 2006 show. Last year, Egemin released similar machines.

The Webb AGVs were first deployed at Anheuser-Busch. Since the initial deployment there, A-B has expanded use of the AGVs into a number of other facilities beyond the initial pilot site, where 25 or so units are said to be operating. However, there have been no other takers as yet, but a Webb manager told me the company has brought a large number of interested companies in to see the Anheuser-Busch deployments, and that there are several potential customers they are confident will sign a deal sometime in 2008. Most potential applications are in manufacturing warehouses. We’ll continue to monitor for developments here.

We were also impressed by a company called Kiva Systems, which manufacturer a truly unique and innovative new order picking solution. The company was founded by Mick Mountz, who as a young engineer worked for WebVan, the now defunct on-line grocer that made a big investment in distribution automation that didn’t work out.

But Mountz was convinced there was a better answer, and spent the next few years developing one. The Kiva System is like a combination of AGV and what I will describe as mobile carrousels. Small robots, about 2 feet high, pick up and deliver storage pods to pickers, eliminating travel time. Complex control software keeps the robots and pods continually on the move, so immediately after a set of picks from one pod is complete (using what is basically a pick-to-light system), that pod moves on to another picker or back to the storage area, and another moves into place. The picks go into another pod with multiple totes or cartons, which in turn is shuttled off to the packing when all the orders it holds are complete.

Going in, Holste and I were envisioning this being used for a subset of picks, with other technologies used for different SKUs. We were, therefore, surprised to see the photo of office products retailer Staples operating an e-fulfillment DC entirely using this system, with hundreds of robots and thousands of storage pods. Walgreens is also a customer. Very different and innovative – the promise is substantial improvements in productivity/order picks per hour.

Some other products that caught our eye:

  • A new pick-to-light system from a company called Wesley International. A few things make it different. The lights can be flexibly mounted on existing storage rack – which means you could outfit some locations with lights (e.g., fast moving SKUs), but use bar code or voice picking for others. Interestingly, the light displays are controlled from the operators’ handheld devices and pick carts through an infrared connection, not a separate computer tied directly to the lights. These wireless terminals can also be used for voice/bar code picking as needed for the non-lighted locations, and also provides some flexibility in how batching of picks and puts are used.
  • ExpressCube launched a dimensional measurement system along the lines of the market-leading Cubiscan product line, but which uses infrared sensors, rather than an ultrasonic approach. The company claims this allows them to manufacture the unit at lower cost.  Regardless, getting better dimensional data is a big opportunity for many distribution operations – few have now.
  •  The most impressive of the many “Green” solutions at the show was a new fork truck battery system from a company called Oorja Protronics. The “Oorja Pac” is analogous to hybrid automobile technology. A “fuel cell” uses methanol fuel to create electric power that is used to charge the battery when it reaches certain power depletion levels. This reduces the need to charge or change out batteries, and there are no greenhouse gas emissions from the pack, versus whatever levels are generated by connecting to “the grid” to charge batteries. A methanol tank will last approximately 12 hours of typical driving, and refueling the cell is easy. You can buy an integrated system, or retrofit an existing truck.
  • HighJump Software announced a new program that promises a Warehouse Management System implementation in 45 days.
  • Lightning Pick had a new version of its Order Picking Dashboard that looked great and illustrated the trend towards real-time analytics. Not how did we do yesterday – how are we doing right now.
  • News to us, a company called Allflat has a grinder that is capable of machining an existing standard DC floor down to the “superflat” surfaces required for Very Narrow Aisle vehicles. Can allow DCs to add or expand VNA systems to new areas of the building – which we didn’t know was possible after the initial concrete pour.

Those are the highlights. It was good to see some genuine and interesting innovation in a few of these new products that stood out in an industry that mostly has had very incremental progress of late.

Did you go to NAMH 2008? What products caught your eye? Any reaction to our show picks? Let us know your thoughts at the Feedback button below.

Let us know your thoughts.

Want a printable version? Go to:


Dan Gilmore


Inventory Optimization Videocast Series

Session 1
of the 3-Part
Videocast Series

April 29, 2008


Featured Megatrend:
Supply Chain Alignment

Watch Gilmore, Tyndall, Collins Discuss and Debate the Issue

View Supply Chain Megatrends Focused Web Page, Download the Executive Brief


Integrated Supply Chain Planning and Execution Processes

 Please take our Brief Survey -  Receive full report copy late May 

Integrated Planning and Execution Research


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

April 24, 2008
Supply Chain Graphic of the Week - The RFID Vision at Airbus

April 24, 2008
Supply Chain by the Numbers: April 24, 2008


The mood on Wall Street last week was upbeat as many gloomy predictions didn’t bear out to be as dismal as feared.  The respite was good news for our Supply Chain and Logistics stock index.

Oracle led the software group with a gain of 9.9%.  In the hardware group, both Intermec and Zebra were up a respectable percentage; however, it was the transportation and logistics group with the truly stellar performance.  Double-digit performers included Norfolk Southern (12.1%), J.B. Hunt (11%), and Ryder (10.7%).         

See stock report.


Each Week:

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

Weekly On-Target Newsletter
April 22, 2008

Discussion Question

"Diversion" Buying Strategy at Costco

Do you think the "diversion" buying strategy at Costco is savvy or a little sketchy? Should they keep doing it? If so, should or can other retailers mimic it?


Q. What year did the level of apparel and textile imports become greater than 50% of the US market?

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.

Or, ask your question


Do use an RSS reader? Do you have a MyYahoo! or personalized Google page? For these and more you can have SCDigest delivered right to your personal pages, all week long.

You can subscribe to our RSS feeds in two ways:
Copy our RSS link into your RSS reader - it's easy!
Click on a button below to quickly add it to your favorite reader.
Add to My Yahoo! Subscribe with BloglinesSubscribe in NewsGator Online

New feature - feedback is also published right on the story page, in near real-time. Take a look! Add your comments!

The Feedback continues to come in at high levels and we're really behind again - bear with us. But keep the letters coming!

Just catching up on a variety of reader letters this week.

We received a few interesting responses to our piece on “Chargebacks Gone Mad,” which described how two consumer goods manufacturers we had talked to were getting fined by some department stores for having both a UPC case code and a serialized shipping identifier on incoming cartons.

Our feedback of the week is from David Schneider, who offers some interesting observations on this issue and retail compliance programs in general.

We also heard from Jon Verb, who we quoted in the article regarding current retailer bar code requirements. He isn’t sure it’s “Chargebacks gone Mad,” however, and we include a friendly point-counterpoint with SCDigest editor Dan Gilmore.

There are also letters on the bankruptcy of biometric payment vendor Pay-by-Touch, our report summarizing 2007 RFID activity, labor costs in China, and one offering some kind words for SCDigest.

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

Feedback of the Week: On Chargebacks Gone Mad

This is not really an issue of “Chargebacks gone mad” but an issue of innovation, communication, and reason.

Working backwards, the “lack” of reason by the department stores is not acceptable. The ITF-14 label has been around for some time, and “good” retailers have known what the code is, and how to use the code. Retailer who skipped over using that code to move directly to a GS1-128 label at the carton level can and should address any confusion by their DC staff through training and education.

Communication by the suppler to the retailer is key. If the retailer is charging, is it because the GS1-128 label is not prominent on the carton?

And the innovative solution is for the supplier to place the UCC-128 label over the ITF-14 label.

More generally, there are two schools of thought on the compliance issue.

There are the old department stores that use the compliance as what has been alleged by many to be a profit center. I think that some were just very bad at communicating what their requirements were/are to their suppliers, and to their buyers. You could argue that the worst offenders did not communicate as part of the plan, so that they could rake in more fines.

The other school of thought was the approach of Gottschalks, Stage Stores, Elder Beerman, Burlington Coat, and Pep Boys, where the goal was to change behavior. The cost recovery paid for the program, but the bigger benefit was the improved flow. I agree that the first generation of stores that did chargebacks were unfair to their suppliers. It is the second generation of stores, working with technology providers such as Compliance Networks, that are much more progressive in their thinking.

I guess that I take a more direct approach to the sortation issue. If I am sorting solid cartons of a product, I would make sure that my conveyor control system was fed the distribution based on item code and quantity. Let the scanners use the ITF to identify the product and let the sorter sort the right quantity of cartons to each lane. No additional cost for the vendor to label, no additional effort on my part to label, or to work as a compliance issue, and the programming effort is simple. Send in the file from host to CCS the product number and the number of cases by store, and forget all of the extra effort to carry the additional vendor 128 data. This scheme also lets me reallocate the quantity AFTER I have cut the PO and the product is inbound to ship. The 128 scheme makes it even harder.

As I said, I would use 128 only if there is a store specific assortment.

David K. Schneider
David K Schneider & Company, LLC

More On Chargebacks Gone Mad

I reviewed your recent article regarding the use of the ITF-14 where I was cited.

I am not aligned with your opinion that:

“This is incredible, really,” said SCDigest editor Dan Gilmore. “What’s mystifying is that it is very easy for a retailer to configure its scanners to not read the ITF-14 bar codes. There is something I am just not getting here. It’s like Chargebacks Gone Mad.”

What about retailers who utilize both ITF-14 bar codes and SSCC-18 bar codes? As I mentioned in my prior email, the ITF-14 is commonly used for casepack orders and SSCC-18 is often used for ‘pick/pack’ orders. For retailers that receive both casepack and pick/pack orders at the same receiving locations, they require their trading partners to properly identify their shipments with the appropriate symbol. Based on my experience, the problem with having both an ITF-14 and an SSCC-18 symbol on the same panel of a carton is that in some automatic scanning applications it causes ‘read conflicts’. This is why a retailer will require the ITF-14 to be blocked out on a pick/pack purchase order.

Could you please let me know of which retailer you believe is issuing chargebacks thatcould be termed as “Chargebacks Gone Mad.” I’m not sure this is an accurate depiction of what is really happening.

Jon Verb
Bar Code Graphics, Inc.

Response from SCDigest Editor Dan Gilmore:

I can't say who, but I still think my contention is right.

First, it is just not right to me that a manufacturer that is, for example, required to put a ITF on cases for some retailers (WMT) or has chosen to use ITF internally should have to bear some heavy costs for putting this industry standard code on the cartons - the cost being the hit in labor and labels in blocking out the code.

I have asked GS1 for a reaction to this, but thus far have not had a response.

My experience is not quite the same as yours. The UCC 128 is often/usually, especially for department stores, used/required for all carton level items, whether piece pick or full case. The 128 number is what is sent on the ASN for each case. In the examples I am talking about, am nearly sure the retailers require case level UCC 128 on all cartons with a supporting ASN. They may I suppose get stuff from offshore that doesn't have this, and may relay on a case code for that.

Even where you are right (use both codes), it is still relatively trivial to address. A scanner programmer could write a routine in about 30 minutes to say, if you see an ITF and 128, use the 128.

So, I compare this small, one-time cost to the retailer with the huge on-going cost to supplier for having a standard bar code promoted by GS1 and required by other retailers on their cartons, and the incessant talk about "collaboration" (meaning, let's lower total supply chain cost") and I still stand that this is Chargebacks gone Mad, since obviously the retailers can't really be interested in lowering total supply chain costs.

Anyways, just a friendly rebuttal.

Dan Gilmore

On Chinese Labor Costs:

The other significant factor is that the average Chinese worker puts in 44 to 55 hours per week at straight time pay. This is 10% to 37.5% more straight time hours than the average U.S. worker. This offers Chinese firms a tremendous capacity advantage over their American competition. To the extent that an American firm works overtime, the compensation gap widens further.

Paul Deal
School Specialty

On SCDigest:

You ROCK! Although I am a seasoned executive, my experience in supply-chain/sourcing is rather limited to the past year. Your articles are an easy read, filled with great analysis and insight, and I look forward to your getting your next email in my inbox.

Pete Iacullo
Director, Sales and Marketing
The Mpower Group, Inc.

On RFID Summary:

I thought Dan Gilmore's summary article "RFID 2007 - Who did what" was extremely useful.  Would be interested in Dan's thoughts on where RFID is going in the coming years.  How far along the adoption curve are we now?

Sylvanus Bent
Bent Systems Inc.
President & CEO

Editor’s Note: We’re working on it.

On Death of Pay by Touch:

I think the contactless payments industry needs to pay attention to this news. Customers like their privacy. They don't want their credit card numbers and expiration date being read by anyone with a reader, even if the card issuers claim they will refund any fraud charges.

Our company Identity Stronghold makes a Secure Sleeve for Payment cards that could be shipped with every new credit card for under a dime if bought in bulk. This sleeve blocks anyone from reading your card while it is in the sleeve. We have sold over 1 million of these sleeves without even a major ad campaign.

There is little or no security that we can tell of on these contactless payment cards. I have a reader that can read my name, number, and expiration date of my Chase Blink card while it is still in my wallet.

Federal and local governments seem to get this as they provide our sleeve with government employee ID cards, the new Passport Card, and the new Washington State Enhanced Driver's License.

If the payment industry doesn't catch on soon, VisaWave, ExpressPay, and PayPass may soon go the way of Pay by Touch.

Walt Augustinowicz
Identity Stronghold


Q. What year did the level of apparel and textile imports become greater than 50% of the US market?

A. 1986

Copyright © SupplyChainDigest™ 2003-2008. All Rights Reserved.
To Unsubscribe: Click Here
PO Box 714
Springboro, Ohio 45066