Data capture technologies are playing a major part in increasing the speed and visibility of the supply chain, making it easier to track goods and to make timely decisions about where and when to store and deliver them.
However, the use of leading edge technology still tends to be confined to large multinational operators. Cost considerations, a lack of clear information on potential return on investment and opposition from some employees have conspired to make many companies think carefully about spending on high tech solutions.
‘In Europe, big integrators are using the technology today, but outside them – at the Tier 2 level – very few are,’ opines Larry Klimcyck managing director of mobile services firm Blackbay. ‘When I get deliveries at my home office half the time I am signing on a piece of paper.’
That may be about to change: as the cost of hardware comes down and logistics operators get a clearer handle on the pros and cons of new technologies, the number of supply chain players using data capture technology is likely to rapidly increase, say industry observers.
According to Klimcyck, wireless technology ca reduce customer service costs by 15 per cent, deliver a 12 per cent improvement in worker productivity and a 20 per cent cut in communications costs. ‘One of the biggest pressures is that fuel costs are going way up,’ he says. ‘Operators need to ask themselves whether they know where there mobile workers are, whether they are communicating with them quickly and whether they are measuring their performance.’
The electronics industry has developed a bewildering array of systems for recording and transmitting information about goods in the supply chain. The stream of gizmos that have appeared in recent years includes RFID, 2D barcodes, digital cameras, global positioning systems, wearable computers, voice recognition, handheld terminals and half-a-dozen different wireless networking technologies.
‘They appear to be feature rich and therefore “musthaves” for supply chain operators,’ says Chris Wright, managing director of Skillweb, a supplier of track and trace and proof of delivery systems. ‘Why then do the figures suggest that their deployment into transport fleets is still only into the early adopters with less than one per cent of all truck drivers using these devices? The answer is unfortunately their price is currently prohibitive and the market place is crying out for the catalyst of an affordable hardware solution.
Mind the gap
‘The good news is that they are on the way and suppliers who don’t respond will lose market share. The gap that needs filling is that between the nonrugged personal digital assistant (PDA) device at circa e500 and the fully featured e1,800 devices. This rugged e1,000 device is the catalyst needed to create market interest.’
Wright believes these lower price PDAs will be here this year and with proven software already on the shelves, businesses should be evaluating their options. One company that has recently done just that is Claires Stores, a fashion retailer selling costume jewellery, cosmetics and accessories through over 600 outlets in Europe.
Products arrive at the firm’s warehouse mostly from the Far East and the company needs to get these processed and delivered to stores in the UK and France as soon as possible. This is particularly important in the time-sensitive fashion business.
The company recently adopted handheld radio frequency data terminals to scan barcodes and collect data about goods. On-screen displays allow operators to confirm products and the number of boxes, cartons and units of each item. This information is transferred directly to a warehouse management system (WMS) which creates a file that is sent to a merchandising system to ensure the delivery ties up with its associated purchase order.
‘Using a RF system to move stock around the warehouse ensures we maintain very high levels of accuracy,’ says Claires’ IT Manager Bob Iles. ‘If there is any time delay between identifying stock for movement and updating the warehouse management system, there is a real potential that the stock levels can change in that time, making all inventory readings inaccurate.’
At UK paint company SigmaKalon, warehouse staff recently put a number of handheld devices through their paces in their quest to find the best one. The company’s national distribution centre handles some 4,500 orders each week. ‘Prior to our current picking system, these orders would be printed out and sent to the warehouse,’ explains Peter Atack, SigmaKalon’s team leader for the project.
‘Pickers would then take the printed order and collect the goods using a scanning device to confirm when the pick was complete. With this method, any stock inaccuracies could only be updated manually when the pick was complete, which was an inefficient use of time and labour.’
The Psion Teklogix 7535 came out on top with the pickers. ‘The screen is big and it is bright, which the pickers really liked,’ explains Atack. ‘It doesn’t suffer from glare even directly under the lights and the background and font colours do not clash, which makes it very easy to read. The keys are big and colour coded. They provide ample space between them foreven the biggest finger we could find.’
Despite the enthusiasm at SigmaKalon, not everyone is pleased with the spread of new data capture technologies, especially when their introduction means big changes in working practices. When pick rates were increased at Wal-Mart’s UK subsidiary Asda earlier this year, following the introduction of radio-based wearable computers, warehouse staff protested.
Fears about the impact of wireless devices have been whipped up by academics who claim that they are being used to spy on workers and that wrist and ring mounted devices may also cause repetitive strain injuries. ‘The use of headsets, voice-recognition and arm-mounted wearable computers in effect makes the humans become an extension of the information systems that drive the supply-chain,’ says Professor Michael Blakemore, professor of Geography at Durham University who has recently published a report for the UK’s GMB union.
However, John Coon, head of EMEA marketing at data capture company Symbol Technology, is quick to pooh-pooh any suggestions of spying or of a danger to health. ‘We provide the technology, but so far as who is logged in and how many parcels can be scanned – that’s up to our customers. Most pay is driven by some kind of performance measurement,’ he says. ‘I believe it is a healthy debate because good companies will always use this kind of technology wisely and in consultation with their staff.’
As to whether wearable computers cause repetitive strain injury, Coon says he is not aware of any cases. ‘The wearable device is only one of many options.Most ways of tracking parcels do involve some sort of repetitive actions. One of the big benefits of an arm mounted device is that you have two hands free and that should be less of a strain.’
The proliferation of data capture devices not only raises questions about how to deploy them but also how best to manage the additional data they make available to back office systems. ‘With RFID, for instance, it’s important to make sure you get relevant data and that you are not swamped by false readings,’ observes Nigel Woodland, industry solutions director, commercial & industrial for software company Oracle.
Filtering unwanted data
The database firm has developed a server that sits close to RFID readers and filters out unwanted data, keeping the amount of traffic on company networks to a reasonable level. ‘The volume of data is not going to be an issue,’ he reassures Logistics Europe. ‘The question is how to translate that data into something that has business value.’
Nelson Smelker, managing director of Symon Communications, agrees: ‘It is not only important to automate the process of gathering… information but to then use that information in a meaningful way from an operational stand point – such as how we are doing against plans, schedules and targets.
‘For example, if there is a set target for product picking in place, RFID will provide the information of the current picking status against the targets. This information can then be displayed in real-time to management and the workforce, providing visibility of information that previously was unavailable.’
Smelker and Woodland are not alone in emphasising backend data processing. A recent study by AMR Research claims that while RFID is on the shopping list of 69 per cent of businesses, these companies are still concerned about the returns they will get from their investments.
‘One of the more certain end results of the use of RFID systems is a massive increase in the amount of data available to the business; this data needs to be both processed and stored,’ says Duncan Allen at InterSystems, a database company. ‘As a result, any organisation implementing RFID solutions will have to review their database strategy. This may result in a switch in database technologies as the incumbent technology may not be sufficiently fast or robust to handle the required volumes of data.’
Integration is going to be the key to making RFID systems work, says Duncan. To enable RFID implementation, back-end databases and processes need to be properly managed and optimised. Sectors such as pharmaceuticals, food, chemicals and aerospace have used the data generated from RFID for very specific tracking purposes where they need to qualify what is happening in their supply chain, due to tight regulations. They have also structured their back end systems to cope with a greater level of data generation.
To utilise RFID data effectively it must be combined with other data available within an organisation and from suppliers and partners. The quality of this data, the costs associated with cleaning it and the cost of keeping it clean will determine how competitive an organisation can be, maintains Allen. In turn, this will impact the ability to overcome the barriers to RFID adoption and how quickly a return on investment will be achieved.
For many adopters, particularly those in the US, the focus for return on investment from RFID has switched from merely satisfying the so-called mandates imposed by industry leaders, such as the Metro and Wal-Mart grocery chains, to gaining improvements to supply chain business processes.
That is the message from a recently published study from Frost & Sullivan called Analysis of RFID Adoption and Workforce Issues in North America. The research firm found that most organisations that had opted for RFID had done so to gain process improvements. The study also found that end users have a low level of expertise in RFID technology, with around two thirds of respondents saying they are still learning about the technology and only two per cent claiming any kind of expertise.
Before widespread adoption of RFID becomes a reality there is a need to develop technological standards and a concerted approach to data management and verification. ‘Establishing synchronisation of data is critical to the success of RFID initiatives as the quality of the data provides the foundations for effective RFID,’ says Spencer Marlowe retail specialist at services firm Sterling Commerce.
Retailers involved in pilot programmes have had mixed results. Woolworth, for example, recently canned a long running RFID project introduced to cut shrinkage in high value product lines. Electrical components supplier RS Components has also experimented with RFID, but found that an advanced bar coding system fulfilled its needs well enough. It has even replaced an RFID system in one of its warehouses with barcodes, which contrasts with the current view that RFID is the future of materials handling.
‘There is a common misconception that RFID is the future and barcodes are the past. But these two solutions are not mutually exclusive,’ claims Ross Hall, chief executive of BT Auto-ID Services. ‘Some vendors are incentivised to tell you there isn’t a business case (for RFID). And some are incentivised to say the opposite. Stand back and look at the situation objectively. RFID isn’t always the best solution. It should be thought of as a useful item to be kept in your supply chain toolkit.’
Consultancy PA believes retailers need to take a fundamentally different look – only investing in RFID trials that can be fully rolled out to deliver payback within 18 months. In PA’s view very few meet this criteria. RFID technology needs to add value within an existing supply chain and store environment, rather than in isolation, says the firm.Until RFID is used comprehensively or integrated effectively with existing technology, retailers will be required to run parallel systems.
This not only increases the costs associated with hardware and software investment, but also the costs associated with training employees to use the new technology. In distribution centres, where RFID tags may be added to pallets, cases or individual products, staff will need to be equipped with both barcode and RFID readers, and will need to know which technology to use depending on the items being handled.
Spurred on by much improved technology, falling prices for devices and the prospect of improvements in supply chain efficiency, many more firms are now considering automated data capture technology. However, because most systems still rely on a person to pick something up and scan it, the human aspect ofdata collection is still the key to introducing new technology. Managers need to understand how their companies operate and in particular what their employees are willing to accept in terms of technology.