Advantages of RFID in Transportation & Logistics - Motorola Solutions

WHITE PAPERADVANTAGES OF RFIDIN TRANSPORTATIONAND LOGISTICSTODAY’S HIGHLY EFFICIENT CLOSED LOOP SYSTEMS ARE ONLY THEBEGINNING OF THE COMING RFID-DRIVEN TRANSFORMATION OFTRANSPORTATION AND LOGISTICS VISIBILITY AND MANAGEMENT.

WHITE PAPERRFID: DRIVING THE VISIBLE SUPPLY CHAINTHE NEED FOR VISIBILITYOptimized supply chain management is based on gettingmore done in less time and with fewer resources. Many oftoday’s transportation and logistics businesses struggle totame both their asset management and supply chainoperations. Virtually every business or institution with anextensive supply chain finds that optimizing it is a processfinds that supply chain optimization is a process that’stime-intensive, largely based on manual procedures, proneto human error and increasingly costly. In focusing on theseissues, businesses are working to increase asset, inventoryand shipment visibility in every link of the chain. That’s notsurprising. It’s hard to track and manage what you can’tsee. End-to-end visibility facilitates more effective, timelierdecisions; reduces delays through prompt detection,reporting and resolution of operational anomalies; allowsswift rerouting of goods in transit to meet changingbusiness requirements; and provides real-time trackingstatus and traceability.AN RFID REFRESHERFor many organizations, the solution is the automation ofvisibility and management processes. Most transportationand logistics companies have been using barcodingsuccessfully for years now. A growing number are alsoadding Radio Frequency Identification (RFID) solutions. RFIDis essentially a more automated way of knowing what youhave and where it is. There are substantial differencesbetween barcoding and RFID. One of the most significant isthe fact that barcodes need a clear line-of-sight to bar codescanners, making them difficult and slow to work with inmany locations and situations. Another is the high numberof manhours it takes to count shipments, inventory andassets with barcodes. In addition, barcodes are able toidentify only the type or class of goods, rather thanindividual items.RFID, on the other hand, identifies and locates every singleitem you want to track, from trucks to forklifts to returnabletransit items (RTIs) to containers to whatever is beingshipped in them. With RFID there are no line-of-sightrequirements, so you can read a great many tagssimultaneously. RFID lets you read, write and re-write toflexible, low-cost tags that offer greater data capacity,durability in harsh environments and the security of beingdifficult to replicate. And you can read them at distances ofup to 30 feet.An RFID system includes tags, or transponders, that includea small antenna and a chip that can hold a significantamount of data such as product number, manufacturer,location and much more. It also includes three basic typesof RFID readers.• Fixed readers have an external antenna and are oftenlocated at entry points to facilities and yards.• Handheld readers provide on-demand scanning and areused by personnel moving through the space.• Mobile readers can be located on moving equipment,such as trucks and forklifts, for faster, more accurateinventory and process tracking.“WITH A BARCODE SCAN, YOU HAVE A ONE-TO-ONERELATIONSHIP, BUT WITH RFID YOU CAN HAVE AONE-TO-MANY RELATIONSHIP, AND THAT’S WHERE YOUSEE A SIGNIFICANT INCREASE IN EFFICIENCIES. INSTEADOF HAVING TO TOUCH EACH ITEM ONE AT A TIME, RFIDBASICALLY THROWS AN UMBRELLA OF ENERGY AROUNDAN AREA OR A BOX AND DETECTS EVERYTHING IN IT.”– L. ALLEN BENNETT, CEO AND PRESIDENTENTIGRAL SYSTEMS, GREENSBORO, NORTH CAROLINAPAGE 3

WHITE PAPERRFID: DRIVING THE VISIBLE SUPPLY CHAINReaders work by sending an RF signal at a selectedfrequency, energizing tags to send their stored informationto the reader and system server. Depending on your project,you can choose from UHF “passive” tags that use the RFIDreader for power, or “active” tags that cost more but havetheir own batteries and can be used for projects that requirelonger read ranges. UHF passive tags are increasingly beingdeployed because the lower tag costs allow increasedvisibility into broader categories of goods and assets. Nomatter which tags are right for your solution, the benefits ofRFID can be significant. In general, the industry is seeingabout a 10 percent improvement in counting efficiencywith RFID.RFID VISIBILITY BENEFITSEssentially, RFID gives transportation and logisticsoperations increased visibility into equipment, inventory andbusiness processes. It increases your efficiency byshortening processes and and streamlining your datacapture procedures, and increases accuracy by minimizingor eliminating error-prone, time-wasting manual processes.It reduces labor costs with automated processes that utilizealways-on fixed RFID readers and it increases productivitywith mobile and on-demand handheld readers. RFIDprovides real-time data that gives you up-to-dateinformation across your entire supply chain. RFID solutionswill help you lower your operating costs, increasethroughput in your distribution centers, maximize on-timedeliveries and improve customer service and satisfaction.In addition, for most transportation and logistics businesses,the visibility provided by RFID provides benefits well beyondthe supply chain. Forward-looking companies are using RFIDtechnology to increase efficiency in numerous otherapplications such as receiving and put away, deliveryconfirmation, returns processing, inventory and security.RFID HARD AT WORKEven as RFID is poised to transform transparency andefficiency throughout the entire global supply chain, it isalready a hard working transportation and logistics solution.Over the last few years, RFID systems have been helping agrowing number of operations optimize both asset andinventory management, using both internal, or closed loopimplementations, and external, or open loop systems. Intoday’s logistics industry, companies are using RFID forshipment and asset tracking and management, warehouseand distribution management and yard management.Tracking ManagementOne of the biggest business issues in our industry is lack ofvisibility of shipments and goods and the implications thatthis lack of visibility can have on in customer service. Whenyou don’t know where a trailer, container, or pallet is at anygiven time, you don’t know where your products are, andneither do your customers. Efficiency suffers, assetutilization shrinks, labor costs increase, asset productivityand value lessen and payments are delayed. RFID solutionsare currently solving these internal asset management andtracking problems for a growing number of logisticscompanies and departments all over the world.One of Asia’s largest logistics organizations, Toll GlobalLogistics needed to more efficiently track goods andshipments at its Singapore facility. With goals includingreducing manhours by decreasing reliance on manualprocedures and increasing visibility for the company and itscustomers, the organization deployed a system that tagged“INCREASED SUPPLY CHAIN VISIBILITY BASED ONRFID READS COULD GIVE COMPANIES A BETTER VIEWOF WHEN INVENTORY PROBLEMS MIGHT BE ARISING,ALLOWING THEM TO TAKE EARLIER ACTION THATMIGHT RELIEVE THE NEED FOR (AND COST OF)EXPEDITING FREIGHT.”– SUPPLY CHAIN DIGEST ARTICLE, APRIL 2009PAGE 4

WHITE PAPERRFID: DRIVING THE VISIBLE SUPPLY CHAINeach of the location’s 150,000 pallets with UHF passive RFIDtags. When shipments arrive, staff members scan thebarcodes on the boxes, then use a portal to read RFID tagson the pallets these boxes are loaded into (or taken out of).The pallet identification data are then linked and sent viaWiFi to software that stores the data and makes it availableto both internal users and customers. Toll Global Logisticsestimates that the system will save about six minutes ofstaff time per pallet, resulting in more than 600 man-daysper year.Warehouse ManagementIn warehouses and distribution centers, RFID solutions arehelping to deliver process improvements that positivelyimpact customer satisfaction and your bottom line. RFIDautomation helps increase efficiency in receiving, sortation,routing, locationing and shipping, Use of RFID-enabledequipment, such as forklifts and handheld RFID readers,automates information capture, allowing thousands ofitems to be scanned simultaneously and eliminating costly,error-prone pen and pencil recording or time-consuminghandheld barcode scanning. RFID automation increasespicking and putaway efficiency, maximizes order accuracyand minimizes re-deliveries. Your labor productivity isenhanced throughout the facility. Most important, with RFIDstreamlining end-to-end workflow, you assure that the rightgoods reach the right customer at the right time.Southeastern Container manufactures plastic bottlepre-forms in three injection-molding facilities in the easternUnited States. Pre-forms are then shipped to bottlemanufacturing plants in cardboard containers and plasticbins, with empty containers being returned to the moldingfacility to repeat the cycle. But problems in the returnprocess were costing thousands of dollars a year due to lossand damage. The company replaced existing containerswith RTIs, returnable folding plastic bins designed toincrease efficiency and reduce cost. Since these newcontainers cost nearly ten times the cost of a cardboardcontainer, Southeast Container introduced an RFID-drivenend-to-end cycle counting system to track containerlifetimes against the number of cycles guaranteed by themanufacturer. Each container is permanently identified witha passive RFID tag for locating and tracking each unit in realtime, enhancing visibility and extracting maximum businessvalue from each container. The company expects to achievepayback on this project in less than two years.Yard ManagementIn many transportation and logistics organizations, yardmanagement is the last bastion of manual processes. Theprocess is virtually the same—and just as inefficient— theworld over. You have an employee moving through the yardon foot or in a vehicle, counting how many pieces ofequipment, containers and vehicles are in the yard andnoting their location on paper with pen or pencil. It’s atime-intensive and error-prone process that causes anumber of visibility-related problems, including redundanttrailer moves, shipping delays and costly penalties, yard andgate congestion, product shrinkage, excessive use ofrefrigeration, wasted fuel and lost time. To address theseproblems, numerous organizations across the supply chainare turning to RFID systems that automate asset trackingand locationing and reduce or eliminate manual processesin these yard-based environments. RFID is able tosignificantly reduce human intervention by, enablingmachine-to-machine information sharing to greatly enhanceaccuracy.In a large Kimberley-Clark production facility, eight differentdepartments are requesting trailer moves every day. Tryingto manage the yard, the company performs daily four-hourmanual yard checks. Even so, significant time and dollarsare being wasted trying to locate trailers; trailer re-handlingand multiple trailer moves are often required to managestatus and location. Efficiency also suffered from a lack oftools for management of trailer pools and third-partyservices. Kimberley-Clark solved its yard managementproblems with a complete RFID system that included fixedreaders at gates with handheld readers as backup. RFIDtags were attached or detached to trailers entering orleaving the gate. Readers were also installed on yard trucks,along with GPS and Wi-Fi for faster, more accurate, moreautomated yard management that eliminated manualchecks. Results were outstanding, including trailer locationin 10 minutes as opposed to up to three hours, a 19 percentreduction in trailer detention, 31 percent reduction inthird-party service costs, a 23 percent reduction in trailerrental, and an overall 6 percent reduction in total costs.The Future of RFIDThese and many other successful uses of RFID are openinga lot of eyes to the value of its applications in transportationand logistics. Around the world, a great many organizationsare using RFID to increase visibility not just internally butPAGE 5

WHITE PAPERRFID: DRIVING THE VISIBLE SUPPLY CHAINfrom one end of the supply chain to the other. This trend willonly increase as RFID technology continues to evolve,improving performance and lowering price points. Inaddition, RFID technology is increasingly being used in avariety of other transportation and logistics applications.Sensing Food SafetyOne good example of RFID evolution is the increasinginterest in using RFID tags as sensors, for example, tomonitor food safety on refrigerated trailers. “Let’s say afruit supplier is sending pallets of pineapples and bananason the same refrigerated trailer, with each requiring adifferent temperature to ensure safety,” says Mike MarisSenior Director of Transportation & Logistics Solutions at,Motorola Solutions. “RFID tags on each pallet can containsensors that monitor temperatures in various vehicle areas.”When one area starts to warm up beyond spec, the RFIDtags automatically notify master control and the driverthrough an on-board vehicle nerve center. In some cases,the tags can automatically cue the compressor to restorethe correct temperatures. In other cases, the driver can pullover and check the trailer to make certain the entireshipment maintains safe temperatures and the load won’tbe lost. In the event of a food recall, RFID sensors also helpensure all-important traceability.Quality Control and More“Another trend we’re seeing is the use of RFID to ensuresupply chain quality control,” continues Maris. “Similar tothe ‘mystery shopper’ concept, organizations are using RFIDto track certain shipments and monitor quality controlacross the supply chain. You might call them ‘mysteryshippers.’” One organization using RFID for quality control isCorreos, the Spanish National Postal Service, which placesRFID tags in sample letters sent to various areas of thecountry. They then follow the RFID with readers throughoutthe whole process from pickup to delivery, then documentwhere they’ve been successful and where they haven’t.“There are many other ways, besides tracking assets, thatRFID helps instill quality control in transportation andlogistics processes and procedures,” Maris adds. “Forexample, for transportation companies, RFID can helptrucking companies reduce fuel costs with tags placedinside gas tanks automatically recording the amount of fueland charging the transaction to the system. This eliminatesthe need for drivers to carry credit cards or cash, andreduces opportunity for robbery and theft.” Other examplesinclude using RFID to provide “dead reckoning” location ofassets or people within one meter inside a warehouse ordistribution center, and RFID is helping to drive greeninitiatives such as reusable containers and other returnabletransport items (RTIs) and recycling programs.Third-party carrier Deutsche Post DHL is currently using aSmart Truck pilot project in Berlin to test innovative routeplanning to deliver better customer service and lower CO2emissions. RFID tags and readers first ensure that the rightpackages are on the right truck, then dispatch sends anoptimum route based on real-time traffic conditions. Built-inGPS guides the driver to the first delivery, and RFID checksto ensure the right package has been delivered. Turn-by-turn“OVERALL, (RFID) SENSOR DATA HAS MANY USES FORTHE FOOD INDUSTRY. CHEMICAL-BIOLOGICAL ANDTEMPERATURE SENSORS ARE USED TO MONITORFOOD SUPPLY AND FOOD RECALLS —FROM TRACKINGWHETHER A BUILDING THAT HOUSES FOOD HASVIBRATED TO KNOWING EXACTLY WHEN A CONTAINEROF LETTUCES WILL GO BAD.”– RICHARD MACMANUS,EDITOR-IN-CHIEF, READWRITEWEB“SENSOR & RFID APPS FOR THE FUTURE” MAY, 2010PAGE 6

WHITE PAPERRFID: DRIVING THE VISIBLE SUPPLY CHAIN“AS RFID TECHNOLOGY HAS IMPROVED, AND PRICEPOINTS FOR TAGS AND EQUIPMENT DECLINE,THE OPPORTUNITY TO USE RFID PROFITABLY INMANUFACTURING, ASSET TRACKING OR OTHERAPPLICATIONS VERSUS OTHER AUTO ID TECHNOLOGIESINCREASES.”– SUPPLY CHAIN DIGEST ARTICLE, APRIL 2010directions are then sent to guide the truck to its seconddelivery and so on. The enhanced visibility provided by theRFID system confirms the status of each package at anygiven time, and ensures that packages are all deliveredcorrectly, lowering fuel costs and emissions throughoptimized routing and reduction in the number ofre-deliveries.Standards-Driven GrowthKey to global RFID growth is the establishment ofinternational standards. The industry is already workingtowards refining a number of standards across the supplychain. Standards that have been established includingElectronic Data Interchange (EDI) standards, the Global DataSynchronization Network (GDSM), the Produce TraceabilityInitiative, Generation 2 Electronic Product Code (EPC)systems, and GRAI standards for identifying containers.Says Maris, “There are many standards focused towardsbeing able to share information across the global supplychain and to enable product traceability every moment ofthe day.”RFID on a Fast TrackToday, RFID is proven technology providing far-reachingbenefits for transportation and logistics organizations.While many of these businesses are successfully usingsystems for asset management, warehouse and yardmanagement, the future of RFID goes far beyond internalclosed loop solutions. Transportation and logisticscompanies are moving inexorably toward deploying openloop solutions in which every link in the supply chain isable to utilize the same RFID tags. The industry is alreadyworking to fast track the solutions that will get us there,including developing innovative new RFID tagging andreading technologies such as active and semi-active tags,initiatives to enable environmentally friendly green solutionsand solutions to lower supply chain management costs.Equally important, RFID technology costs are steadilydecreasing as adoption continues to grow, thereby allowingfaster return on investment for projects while at the sametime allowing profitable RFID deployments across a widerset of materials and goods..In the not-so-distant future, open loop RFID systemswill play an ever-increasing role in lifting the curtain ofinvisibility from the global supply chain, delivering a broadrange of system management benefits, reducing costs andspurring the global economy to new heights of efficiency,control and ROI.PAGE 7

WHITE PAPERRFID: DRIVING THE VISIBLE SUPPLY CHAINPrinted 12/11. MOTOROLA, MOTO, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings,LLC and are used under license. All other trademarks are the property of their respective owners. ©2011 Motorola Solutions, Inc. All rights reserved.PAGE 8