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Supply Chain by the Numbers for June 4, 2010: Sainsbury's Visible Inventory; P&G's Green Scorecard; GNC is all about Piece Picking; Chinese Workers Flex their new Found Muscles


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Another trivia this week from the recently release WERC DC metrics report: what was the median response for DC employee turnover in 2009?

Click to find the answer below
RFID - Who did What in 2009

Two years ago, we took a look at a profile of RFID deployment activities in 2007, with favorable reader response. (See RFID News: RFID 2007 – Who Did What in the Past Year.)


After taking a year off, we’re back with an analysis for 2009. We’ve actually had this work done for some time, but the schedule just didn’t allow room for this column until now.


As previously, we went through RFID announcements from a variety of web sites and communication sources looking for news of actual RFID system deployments. We did not bother with the specialty area of library systems, and with one minor exception also ignored toll road payment applications.


Importantly, we did not look at announcements about new products, capabilities, etc. from RFID hardware or solution providers themselves, of which there were probably thousands of such news releases. The news had to be about a pilot, deployment or system expansion from a using company, organization or government entity, or be what we called a “market offering” from a non-RFID-based company using RFID to improve what it brings to market. For example, Finnish dental supplies company Plandent brought to market a system that makes it easy for its customers to reorder their supplies using RFID.


Those filters left us with 157 separate announcements, or about 3 per week for 2009. Clearly, this was not all RFID deployments in the year – maybe far from it. In some cases, the systems described were actually deployed prior to 2009, but the news just came out last year, but since that’s all we can go by it is what we used. Nonetheless, we think it likely accurately reflects the real RFID activity.

Gilmore Says:

"From a US-centric perspective, should we be concerned that we appear to be creating an “RFID gap” versus Europe, Asia and even to some extent other parts of the world?."

What do you say?

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your Feedback here

We have put all those announcements, which include the company, the country, the industry, the primary and secondary applications, and a brief description of each in a complimentary, downloadable spreadsheet (RFID – Who did What in 2009). In doing that, we had to make some calls, and you may think that something we called inventory tracking is really work-in-process tracking or whatever, but think we did well enough. The spreadsheet has two tabs – one sorted by industry (e.g., retail healthcare) the other by main application. You can sort the data any way you want.


It really is interesting to scan through the announcements, which range from hard core supply chain applications to electronic payments with cell phones.


My observations from working with the research and data are as follows: 

  • Versus 2007, we had much fewer “pilot” announcements. This doesn’t mean there aren’t still pilots, but rather, I think, that the need to publish news about pilots is diminished as there are more actual deployments to write about today.
  • There is clearly a lot more going on with RFID outside of real supply chain applications than most of us may know – and that is fueling overall growth in the industry. As just one example, during the research we found this announcement: “Alanco Technologies, which provides RFID-based inmate tracking systems, announced sales increased 42 percent to $19 million for the fiscal year ended June 30, 2009.” Who knew?

  • Investors are still bullish on RFID. Even during the miserable economic year that was 2009, when venture capital investing came almost to a halt, there were a number of RFID-related investments announced: Kovio, developer of printable RFID chip technology, raised $20 million in a fifth round of funding, bringing total funding in the company to $80 million; SMARTRAC Group, a Dutch company that manufacturers RFID inlays used in passports, announced it closed a €65 million credit facility with several European financial institutions;  AeroScout, a real-time location system provider, raised $13 million from VCs, on top of $10 million received earlier; RFID middleware vendor GlobeRanger received an additional $8.3 million.

  • Clearly, there is a lot more going on, especially in supply chain, outside the US than in the US. Overall, as just one example, China’s roughly $1 billion in RFID spend in 2009 might have been some 20% of the world total, mostly related to massive transportation and ID system projects. But the vast majority of the most interesting supply chain announcement came outside the US, from such companies as Volkswagen, Sergio Blanco (apparel), G&P Net (retail) and others.

While 75 of the 157 announcements were for US based deployments, strip out the healthcare related ones (see below) and the number becomes much smaller. As our source material was largely US-based, it undoubtedly misses many announcements that were reported locally outside the US but not here.

It is interesting that many US-based RFID technology companies, from Alien to IBM and more, are often involved in these international deployments. From a US-centric perspective, should we be concerned that we appear to be creating an “RFID gap” versus Europe, Asia and even to some extent other parts of the world? It is noticeable as well that many international projects have a strong level of government financial and research support to them.

  • Healthcare is the deal in the US. Just over 30 of the 75-US based announcements were healthcare related, usually for asset-tracking, which seems to now be totally mainstream or even a mature area of the business.
  •  For better or worse, “people tracking” with RFID is coming. We already noted the growth in inmate tracking above, but we were surprised by the number of “people tracking” applications we saw this year in other areas. Hospitals are a big focus area for this, where administrators want to know where patients and staff are in real-time. One South American agriculture company is doing the same for temporary workers. The Iditarod is now tracking its racers with RFID and GPS. Louisiana State University has a new system to monitor how people move through museum exhibits.

All these and more make logical sense. Still, it seems to me to be there a bit of a start of a slippery slope that will end with all of us being tracked all the time at some point, in the name of business efficiency, safety, etc., and that to me frankly is a bit creepy.

  • There clearly is real supply chain action, especially abroad, in item-level retail apparel tracking. Expect more news here in the US soon. The basic ROI seems very strong, and RFID can have other benefits, such as being used to track the pedigree of where “gray market” channel products may have come from and/or combat counterfeits. 
  • As with 2007, the lack of news of RFID action in the core consumer packaged goods to retail segment that started the EPC movement was stunning. The only real news there in 2009, which we didn’t include in this spreadsheet, was the collapse of the Sam’s Club program and Procter & Gamble calling it quits with its “successful” test of  tracking promotional display execution with WalMart, apparently after WalMart wouldn’t act on the data. 
  • Walgreen’s, however, did announce a national roll out of a promotional display execution system, which supplier Revlon said was providing big benefits. 
  • There were some but limited action in using RFID for distribution center management. We only list “DC Operations” as the primary applications in three of the 157 items, and a couple more as secondary applications. There were a bit more deployments that were focused on Shipping automation, but which did not reach further back into the DC.

My final thoughts: RFID hardware is being increasingly commoditized and routine, though tags and readers selection in industrial and oddball applications still need a lot of work to perfect; perhaps obviously, for any new auto-ID related project, you would be silly not to look at RFID as strong candidate; for regular asset and logistics assets (re-usable containers, etc.), these will all be tracked before long using RFID – you might want to take a look right now; that said, it has been hard to find the RFID ROI for well-running bar-code based manufacturing and distribution systems; however, that may be because companies aren’t digging deep enough into the real costs from missed scans and other glitches, as my friend Toby Rush from Rush Tracking System has well pointed out on these pages; I think that RFID in non-supply chain specific applications will become so  prevalent soon that it will naturally migrate from there to the supply chain

Would love your thoughts.

Any reaction to our analysis of RFID deployments in 2009? Is the US in danger of being on the wrong side of an “RFID gap?” Do you think RFID use in other areas will pave the way for more supply chain apps in the end? Let us know your thoughts at the Feedback button below.

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We received a few nice letters on our piece Supply Chain Q1 2010, which summarized what SCDigest editor Dan Gilmore was hearing from supply chain and logistics executives and managers as he talked to them for SCDigest and at various events.

That includes our Feedback of the Week from Patrick Byrne of Australia's Best Result Ltd, who offers some excellent complementary thoughts. You will find his letter and several others below.

Feedback of the Week - On Supply Chain Q1 2010:


On reading your article, it becomes clear that business networks must find new ways of creating, supplying, transforming, exchanging, distributing and consuming value. This will require alignment, transparency, trust and collaboration among supply chain network participants to achieve new sources of value and simultaneous waste elimination. Technology must play a major role in delivering this new SCM environment.


The great challenge now for enterprises within any industry is; how to align, integrate, coordinate and maintain the context and integrity of dynamic end-to-end business processes and transactions that execute across heterogeneous vertical market networks comprising many different organizations, at many different levels, with many different functions and applications, on many different technology platforms of different scale and vintage, operating in many different languages.

Alignment, integration and coordination of demand / supply network participant business processes and transactions become extremely difficult when this level of complexity exists; especially when the different legacy systems applications of the various participants have been written by different people, at different times for different purposes.

This network complexity is further compounded by current enterprise technology, which mandates that dynamic business network relationships, rules, roles, and data formats be fixed.

All these issues present business limitations for enterprises trying to adapt their legacy systems to the dynamic collaboration needs of their business environment.

Enterprise legacy systems have created too much complexity, too much time and money is spent (up to 70% of an enterprise’s IT budget) keeping the lights on and maintaining the status quo; and not enough resources and budgets remain for collaboration and innovation.

New information technology (IT) is not sufficient if it cannot diminish business complexities such as those outlined above; and of no value if dynamic business rules cannot be applied, interchanged and varied to reflect real world market dynamics.

The current service oriented architecture (SOA) approach is being touted as a solution to these complex problems. However, SOA in its present form introduces a new level of complexity (while retaining many of the existing fixed business rule that constrain an enterprise’s ability to adapt to new market dynamics).

Industry pundits promoting this line do not draw attention to the fact that each and every enterprise application to be involved must be SOA enabled.

The question to be asked is; if the objective is to enable synchronized end-to-end network transparency, process automation and execution, then why is it that we make individual enterprise applications the centerpiece, rather than the end-to-end network process itself.

These issues can be solved by adopting the real world end-to-end common network processes that exist in every industry as the heart of collaboration and automation. Cloud based solutions can then be made simultaneously available on a shared Integrated Resource Platform (IRP®) to all vertical network customers, suppliers and competitors, big and small; on a real time many to many basis.

This not only simplifies the complexity of integrating heterogeneous networks of different systems and applications, but also enables flexible and adaptive solutions to be formed around the most complex value network collaboration, cooperation and competitive issues, that are facing organizations today.

Patrick Byrne


Best Results (Aust) Pty Ltd

More on Supply Chain Q1 2010:



There have been so many conflicting news reports concerning an economic rebound and although things appear to be somewhat better, you’re article is a pretty accurate description of the current environment. Despite the fact that companies have focused so much on cost reduction the last few years, your readers would be shocked to know that there are still significant opportunities to further reduce expenses by focusing on the following areas: IT, wired and wireless telecommunications, utility costs, payroll processing, credit card processing and office supplies. For a specific example, a  NJ-based 3PL recently learned they could provide better service to their customers and save over $100K annually by converting their point-to-point T1 circuits to MPLS.

Many supply chain companies today are struggling to manage IT and Purchasing internally and the simple truth is they can get better results faster and cheaper by outsourcing some responsibility to trusted industry experts.


Sandy Vosk
President & CEO

ATS, Inc.

Is there any surprise that the hurdle rates for investments are 30% or so given the lack of credit availability for non investment grade companies. Its basic economics, when capital is scarce, return thresholds increase.

David Gustin
Global Business Intelligence


I agree with the thesis that supply chain people are being asked to do more and more.  It does over time have a draining effect on managers and professionals.  But, I do see a positive trend among mid - size companies who are now looking to add back some staff and/or improve the skills of those already on the job.   I do not know if this is a trend yet, but at least some companies are looking to their future.  Upgrading the capabilities of the people in your supply chain will produce returns over the new hurdle rate of 30%.      

Herb Shields
HCS Consulting



Another trivia this week from the recently release WERC DC metrics report: what was the median response for DC employee turnover in 2009?


6.8% - "Best in class" was under 1%; these numbers strike us as low, but maybe 2009 was an aberation driven by the economy