Sophisticated Supply

Radio-frequency ID tags offer new efficiency in supply-chain management

InformationWeek Staff, Contributor

December 10, 2001

7 Min Read

The U.S. military and commercial businesses have a common challenge: the need to skillfully manage supply-chain logistics. Be it the assembly of cars or the maintenance of attack helicopters, the timely coordination of parts and supplies is key to success. A new class of radio-frequency ID systems is being brought to bear in both arenas, bringing unprecedented efficiency and control to the shipment of everything from canned peas to Humvees.

The military is using RFID in conjunction with the satellite-based global positioning system to track virtually every shipment destined for the war in Afghanistan. RFID smart tags can be affixed to boxes, pallets, and industrial shipping containers to transmit the location and status of goods en route. "That kind of in-transit visibility of equipment and supplies is an extreme improvement over what we were able to do previously," says Thomas F. Young, civilian chief of the Army's Automatic Identification Technologies Branch of the Logistics Automation Division in Europe. Young works at the Friedrichsfeld Service Center near Mannheim, Germany, a U.S. Army base that serves as the primary supply hub for U.S. forces in Afghanistan.

The Army is using Savi Technology's RFID system; other vendors in the market include Identec Solutions, ITT Industries Advanced Engineering Science Group, and WhereNet. Savi's device is attached to a shipping container so its location can be determined at preset intervals along the container's route, with data transmitted to Savi's supply-chain management and asset-management applications. Once the cargo reaches its destination, the tags broadcast their location up to 300 feet, making it easy for personnel with RFID readers to locate the container and know what's inside.

The Army began experimenting with Savi's technology in the early 1990s after Operation Desert Storm in Kuwait. Retired four-star general Walt Cross, who headed the Army's logistics operation during that war, says thousands of containers of supplies were shipped to Kuwait but lost in "iron mountains" in the desert-stacks of 40-foot steel shipping containers that remained unopened because nobody knew what was inside them. An inventory of the containers after the war revealed that many orders had been shipped multiple times or lost because of inefficient inventory management. Cross, now president of Flight Explorer, a Fairfax, Va., maker of flight-tracking systems, implemented Savi's system for the Army after Desert Storm to help make it easier to determine container contents.

RFID is also being used in a Navy test to track hazardous materials such as Freon and halon. Systems integrator and contract software developer CACI International Inc. and partners Cytec Corp., a systems integrator, and Time Domain Corp., which develops ultra-wideband microwave technology, recently won a $5.7 million Navy contract to develop a radio system that will notify the Navy if gas-bearing containers leak.

The Army says parts tracking is so important that by the end of the year it will deploy RF-based technology in a combat helicopter repair depot in Corpus Christi, Texas. The Army's $6 million contract with Savi calls for hardware and software that will let the Army monitor the location of all helicopter parts as they are disassembled and overhauled for maintenance. The project is necessary because the Army typically loses enough parts in a year to equal an entire multimillion-dollar aircraft, says Savi's CEO, Vic Verma.

RFID is catching on in the commercial world, with applications ranging from electronic payments to retail inventory management (see "Taking Tech To Lunch," April 30, p. 23; information, and "The Fast Track," June 18, p. 22; information Companies such as Ford Motor Co. and Volkswagen AG use RFID tags to track the movement of supplies and finished products.

The appeal is that RFID systems, especially when combined with far-reaching wireless communications, can provide real-time information on supply-chain inventory so businesses are able to plan accordingly and, in emergencies, react quickly, says AMR Research analyst Michael Bittner. "Only when we marry mobile asset-tracking technology with supply-chain and logistics event-management tools do we really begin to talk supply-chain visibility," Bittner says.

Basic RFID tags, such as the passive read-only type widely used in retail, have been around for more than 10 years, and their prices have dropped to as little as 25 cents each. Newer tags, called active tags, contain memory chips that can be programmed to include information about what's in a pallet or box (see story, p. 24). They can cost as little as $3 in large quantities. Savi's combination device that includes active RFID, GPS, and wireless communications can cost $500 each in quantities of 50,000. Throw in the cost of additional software and infrastructure upgrades, and a complete system can range from $150,000 to several million dollars.

Kevin Ashton, executive director at the Massachusetts Institute of Technology's Auto-ID Center, which is researching new uses for RFID technology with sponsors such as Coca-Cola, Johnson & Johnson, and Wal-Mart, says the lack of software to manage the data these smart tags emit is a barrier to adoption (see "RFID Chips Put To The Test," July 2, p. 55; .htm). Monitoring a tractor-trailer-sized shipping container as it moves across the country, with a device signaling its location every minute or two, generates a great deal of data. Multiply that by thousands or millions of shipments and the data-management challenge becomes daunting. "We're on the verge of a hardware revolution-the software will follow," Ashton says.

Savi's SmartChain software is designed to handle the large amounts of data generated by real-time tracking, but mainstream supply-chain management software typically can't do the job. Most RFID vendors say their software uses XML and open APIs to make integration easier with existing supply-chain apps.

Associated Food Stores Inc., a grocery distributor in Salt Lake City, is using long-range RFID technology from WhereNet, a 4-year-old vendor, to locate, track, and manage trucks and shipping containers in real time at its 600-acre distribution center. Tim Van de Merwe, Associated Food Stores' logistics manager, says the company has been able to cut the number of drivers from 100 to 62 and reduce the number of leased trailers from 40 to five by getting a better handle on goods and their location.

Such savings are just the tip of the iceberg, Van de Merwe says. The WhereNet Real-Time Locating System went live in April when the company moved its warehouse operations from Salt Lake City to Farr West, Utah. A network of antennae and location processors at the site feeds information on the location of every truck to the WhereNet software, which provides data to dispatchers about each trailer, its location, and whether it's being loaded, unloaded, or is empty.

That information is critical because dispatchers can use it to get a trailer redeployed for the next shipment. "When a truck comes through the gate, I can know by the time the driver is finished refueling whether I need to hurry and send it back out," Van de Merwe says.

Volkswagen is using new technology, dubbed Intelligent Long Range RFID from Identec Solutions to check the location of finished and near-finished autos at plants in Germany. A single device that combines GPS and RFID capabilities is placed on the windshield of every car on large lots. A security guard making rounds takes inventory of cars every hour by driving around the lot on a golf cart equipped with an RFID reader connected to a notebook computer, which links via wireless LAN to Volkswagen's inventory-management software.

The RFID tag stores information on the current condition of the car-whether accessories still need to be installed or whether it needs to be washed and waxed before shipping-and that information is relayed in real time to the inventory-management system.

AMR's Bittner says global supply-chain tracking is close to reality as RFID and related technologies become cheaper and easier to deploy. "Pretty soon," he says, "this kind of technology is what everyone will mean when they say supply-chain visibility." -with Antone Gonsalves

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