This autumn, many companies will be putting the finishing touches to their plans to introduce radio frequency identification (RFID), the radio equivalent of bar code scanning that has hogged the headlines over the past year.
As debate still swirls around standards, difficulties with the technology and the question of who will make the deadlines issued by major retailers for attaching tags to goods, most observers are adamant that it is a question of when rather than if the technology is introduced.
‘It is coming closer to home,’ says Simon Shorthose vice president for sales and marketing at Catalyst. ‘It’s moving faster than before and companies will need to ramp up early next year. They’ve got to work out their strategy, bearing in mind that RFID may only represent between five and 30 per cent of data capture. It will have to co-exist with other parts of the supply chain.’
On the positive side, European supply chain managers believe that RFID will improve the profitability of their companies over the next ten years, although their current knowledge of the technology and its costs is sketchy. This is the message from a survey of the awareness of RFID carried out for data capture supplier Intermec across six European countries.
Despite all the noise about RFID, the majority of respondents had little idea of the price of tags or the likely cost to their organisation of investing in the technology. They were equally hazy about the muchdiscussed practice of leading retailers issuing mandates to suppliers that they should include tags on goods by a particular date.
Supply chain managers had trouble recalling the names of retailers who are conducting trials in Europe such as Wal-Mart, Metro, Marks & Spencer and Tesco. However, a third was also conducting their own trials or had plans to do so. This left some two thirds with no intention of trialling RFID at the moment.
Critically for the long-term uptake of RFID over 80 per cent of respondents believed the technology would increase their profitability. This view was strongest among managers who worked in the logistics and distribution business compared with those in retail or manufacturing.
Do it now
At AMR Research Nigel Montgomery, director, European research, urges companies to act now: ‘If you are not looking at RFID, then you damned well ought to be.
‘A lot of companies are taking the view that standards will sort themselves out so they are asking how they can build business cases,’ adds Montgomery. ‘The standards are being ironed out and there is a lot of stuff you can do without having agreement on the electronic product code (EPC). You can do things practically and at reasonable cost – for tens of thousands of euros.
‘Up to now there have been a lot of bit players. Now people are asking how we integrate it all. The adoption curve is beginning to move upwards especially in industries such as pharmaceuticals. The UK market is more focussed on growth and profit, while the French and German markets are focused on cost reductions and sales.
‘As a result there is a lot more data capture around delivering services rather than just supply of goods. In many cases in the past I sold a product and often didn’t talk to the customer – it was all down to price. There are two ways of getting around that: one is providing extra in terms of price and expertise, the other is service.’
Montgomery says there is now far more interest in using data capture technology to improve service levels. For example, by fitting a gearbox with sensors and a tag it becomes possible to gather information about the component, alert customers to the need for maintenance and prepare workshops to be ready for the unit before it arrives for work to be carried out.
The power and features available on the latest handheld terminals make it easier to add service to traditional data capture. The most recent models sport colour displays which give better visibility than traditional grey or green screens. Colour, properly used, can make complex data displays easier to understand, reducing user fatigue and cutting down on errors.
Machines are also more powerful thanks to faster hardware such as Intel’s XScale central processor, developed for battery-driven handheld devices. XScale combined with a much greater amount of onboard memory – up to 128 Megabytes in some cases – means that handhelds can cope with increasing amounts of data. Customer databases, product information, instruction manuals, maps, photographs, signatures, voice recognition software and bar code data can all be accommodated by the latest models.
‘Handheld data capture units need more memory because companies are demanding more real-time integration between operations involving handheld computers and business IT systems,’ explains Bob Schrieb, Symbol Technology’s product marketing director.
Microsoft CE and Palm OS operating systems are superseding the DOS operating system which was used to run first-generation devices. Many DOS systems are dumb devices relying on host systems for intelligence, and operating in what is called terminal emulation mode.
However, the Microsoft and Palm operating systems provide the local housekeeping needed to manage the delivery data, customer information and wireless communications now supported by many handhelds.
One of the biggest advances has come in wireless communications. Some terminals support as many as five different types of wireless networking. Bluetooth and infra-red are the favoured technologies for short-range communications at around three metres. The Bluetooth protocol is used to connect scanners with terminals or to print out documents locally.
Connections between Bluetooth devices are usually made automatically.
Wi-Fi networks operate at 100 metres or more and, at 11 Megabits per second, can handle ten times the data of Bluetooth. The networks are used within depots and also to connect handheld units to base stations on board vehicles.
Protect by encryption
The commonest Wi-Fi standard is 802.11b which boasts greater security than previous standards that suffered from eavesdropping problems. Now users can protect their transmissions using encryption.
One drawback with Wi-Fi is that it can interfere with Bluetooth transmissions and for that reason some developers deploy a networking technology called time division multiplexing to ensure that devices on the two networks do not broadcast at the same time when they are near one another.
For longer distance wireless communications, handhelds can be connected to general packet radio system (GPRS) or code division multiple access (CDMA) networks. These systems, developed from mobile phone technology, work at distances of up to a few kilometres, providing connectivity to trucks and other vehicles. GPRS is now available throughout Europe although coverage is not universal and operators must be prepared to wait to receive signals from drivers in reception black spots.
The benefits of wireless systems are often described in terms of their ability to speed up data gathering and to improve organisational response times. In practice the benefits that users get from wireless are often more mundane. Earlier this year UPS explained that the prime reason for switching to wireless connections to scanners used in its depots was the savings it could make on not having to repair broken connector cables.
‘The wireless technology UPS is deploying today is laying the groundwork for the company to develop better operational software applications which will allow us to offer new customised solutions to customers while reducing our operational costs,’ says UPS’ chief information officer Ken Lacey.
Scotch whisky distiller, Whyte and Mackay, uses radio frequency handheld Symbol Technologies PDT 8146 scanners to speed the task of emptying barrels. It is critical that each barrel is checked before being blended with other whiskies to make sure it is the correct stock.
This is because the age of a blend is determined by the age of the youngest whisky in the mixture. By using scanners with radio links Whyte and Mackay saves 15 to 20 minutes on each barrel – the time it would take to return an ordinary scanner to a reading station.
So far as automatic data capture is concerned, bar coding still rules the roost. However, in industries such as automotive more sophisticated solid state imagers are overtaking the traditional one dimensional laser bar code scanner.
Area image engines allow bar codes to be read from any direction, increasing productivity and reducing strain on operators. Their ability to read twodimensional matrix codes, postal codes, and optical character recognition (OCR) fonts, plus their ability to take digital pictures have opened up new data capture applications.
An image engine can transform a handheld terminal into a digital camera that can be used to take pictures of damaged goods or capture signatures. While advanced long-range lasers are still useful for extreme distance reading, image engines are replacing the standard laser because they are more versatile.
One question that many logistics managers are asking is whether RFID will replace bar coding. Datalogic, Europe’s largest manufacturer of handheld scanners is adamant that the bar code is here to stay.
‘I cannot see RFID replacing bar codes,’ says Colin Pike, key account manager in the UK. ‘RFID is used in specific applications; for example when you are scanning items on a pallet going past a fixed point. Where RFID is being specified it is being used in addition to bar codes.’
The question of how best to apply RFID is clearly going to be the big debate among supply chain managers for some time to come. The development and introduction of RFID for a wide variety of applications is gathering pace as prices come down and major organisations commit to the technology.
However, it’s still early days for RFID: the technology and all important standards have not been defined; the costs and benefits of RFID are not well understood and few organisations have introduced tagging in their supply chain.
In order to help businesses make the right decisions about RFID, Logistics Europe will be launching an electronic newsletter this Autumn called RFID Executive Briefing. The monthly publication, supplemented by a weekly update, will keep readers abreast of the very latest developments in this vital area. Watch out for further information at www.logisticse.com
Case study: Carlsberg
Carlsberg rolls out wireless handhelds
Carlsberg is one of a growing band of European companies who see wireless playing an increasingly important part in their efforts to improve supply chain visibility.
The Danish brewer is in the throes of a major overhaul of its enterprise systems, codenamed Northern Lights. The programme involves moving all four Nordic countries – Denmark, Finland, Norway and Sweden – onto the SAP R3 enterprise resource planning system.
The project also involves setting up a network of handheld data entry terminals for the company’s distribution operations, enabling drivers to send and receive data in realtime over GPRS wide area and 802.11b Wi-Fi links, as well as printing print out documents at customer premises.
With 1200 Intermec 760 Color terminals in the process of being installed, Carlsberg is looking for major improvements in the efficiency of its distribution network. ‘With online we can use SAP throughout the day, rather than having to deal with all the uploads all at once at 2pm in the afternoon,’ explains Soren Bentzen, IT consultant on the project.
‘With a common system we can also get better prices and service agreements,’ he adds. ‘Support is not only cheaper, but it is also better quality.’
The new terminals had to be easy for drivers to use and able to display information on screen to meet the various demands of four separate country operations using four languages.
Scandinavian countries tend to be lumped together but there are significant differences in language and business culture. In Sweden for example, customers expect to receive a delivery note rather than an invoice with their supplies of beer and soft drinks.
Markets vary too. In Denmark Carlsberg distributes Coca Cola, while in Sweden and Norway its trucks carry Pepsi.
The handhelds are connected to printers which produce delivery notes and invoices. In Sweden they use the PB40 (4 inch) printer connected via Bluetooth to the terminal. In Denmark they use the PK80 Matrix printer to print A4 sized documents, while in Finland tiny PB20 (2 inch) printers work via a direct connection to the handheld.
In Denmark, Carlsberg drivers have issued invoices to customers for some time. However, the invoices often had to be amended later because the driver might not have detailed information on special customer discounts or up-to-date price lists. ‘The wireless systems means a driver has the right prices, the right order number and can produce the right invoice first time,’ says Bentzen.
With 64MB of memory the Intermec device also gives the brewer the capability of building a sizeable client base on each terminal to ensure it was fully useable, even if it was not possible to connect back to the host application because of bad reception, a special problem in mountainous areas.
‘It’s like having introduced email in the office environment. We take the benefits for granted and just can’t imagine having to go back to the old way of doing things,’ says Mary Irwin, project manager at Carlsberg. ‘In fact, I estimate that in Sweden and Norway we would have to recruit 10-15 new administration staff per country if we had to give up this system.’
As Carlsberg completes full roll-out of the new systems across the Nordic region, it also has plans to expand the use of the technology into other parts of its business including its sales operation. The company is also looking at exporting its new real-time data capture system for use in delivery operations in other countries.