Supply Chain and Logistics Technology: Wireless
While wireless technology has come a long way in the past 35 years, adoption has been slow with some shippers still relying on paper-based communications to get the day's orders processed and shipped. Here are a few points to consider if you're ready to cut the wires and work smarter in an era when every penny counts.
By Bridget McCrea, Contributing Editor -- Logistics Management, 6/1/2009
"It was pretty primitive," recalls John Hill, vice president at transportation consultancy TranSystems, "but it worked." By the mid-80s, companies like LXE, Intermec, and Symbol Technologies entered the fray with alternative methods of providing communication links between those same lift truck drivers, who then began using handheld devices to track inventory in the warehouse. Some of the technology was clunky at best, and most of it was proprietary in nature—and as such, unable to integrate with other pieces of equipment.
Fast-forward to 2009 and the phrase "you've come a long way baby" can certainly be applied to the wireless technology as it applies to logistics and supply chain operations. Today, shippers are now using rugged mobile devices, 2-way communication devices, RFID, and GPS to "snip" the wires and create supply chains that can go anywhere. Used in the warehouse, DC, yard, and on the road (for private fleet/truck management), wireless technology is helping companies work faster and smarter during an era when every penny counts. In this article, we look at the top wireless applications being used in the supply chain and examine the potential of a "no wires" supply chain in the near future.
Wireless in Action
According to VDC Research Group's 2008 Enterprise Mobility Report, which was conducted smack in the middle of a significant market correction/contraction, the overall market for rugged mobile computers shrank last year to $1,041.8 million, and is expected to further contract to $814.2 million in 2009.
The research firm is projecting a gradual return to growth by 2010, and expects the overall market to grow by an average of 2.7 percent annually for the 2008–2013 period. This market includes rugged mobile devices such as handheld/PDA computers and forklift-mounted computers that are sold to retailers, manufacturers, and transportation organizations that incorporate a warehouse/DC into their supply chain process.
Wireless implementations span a wide range of companies and uses. Last year, for example, the Polish Ministry of Defense deployed an RFID-based solution from Savi to automate tracking and management of military supplies. Domestically, Wal-Mart Stores Inc. last year announced that it would deploy its first Vehicle Management System (VMSs monitor and manage a fleet of vehicles, including vehicle movements, histories, and routing) from I.D. Systems in a single facility as a pilot program in order to improve distribution facility safety for its workers. When the evaluation period expired, Wal-Mart expanded the wireless technology across multiple distribution facilities.
Also in 2008, Rompetrol Group, a multinational oil company operating in 13 countries, installed a wireless fuel distribution monitoring solution from Hi-G-Tek. The system monitors and communicates real-time information regarding the fuel in the company's secondary distribution chain, from depot to pump, in both Romania and Bulgaria. The data captured via RFID is then processed and transmitted to Rompetrol's enterprise software system that receives and records the information that the oil company then uses it to track and monitor inventory, deliveries, and asset levels in real-time.
And the list of wireless supply chain implementations goes on, and is catching the attention of shippers looking to cut time and costs out of the supply chain through the use of advanced technology. According to Brad Wyland, senior research analyst at Aberdeen Group, 39 percent of shippers recently surveyed by the company have a need to increase sales without increasing staff or storage space, and 36 percent were looking to implement warehouse automation tools like speech recognition, RFID, and ruggedized mobile computers to get there. From those solutions, 71 percent expect instant communications, 61 percent expect ease of use, 49 percent expect low cost, 35 percent expect no recurring fees, and 32 percent expect large coverage areas.
Wyland says today's logistics manager can choose from simple 2-way communication devices, to the more complex voice technology and RFID devices that can "extend beyond the warehouse and out into the field" to encompass fleet operations. Wyland adds that the adoption of wireless has been slow-but-sure, with some shippers still relying on paper-based communications and a "full office of workers" to get the day's orders processed and shipped. "There are definitely opportunities for growth when it comes to the wireless supply chain," he says. "While the best-in-class companies are taking advantage of it, a huge gap still exists."
Benefits on the Road
Shippers may still be using paper-based systems to manage inventory, equipment, and workers in their DCs, but they've definitely embraced the wireless movement on the road, where field mobility devices and GPS has gained in popularity over the last few years.
Telemetric applications (those that use automatic transmission and measurement of data from remote sources by wire or radio) that support compliance with regulatory rules (such as fuel tank and DOT driver lock requirements) are particularly popular now, according to David Krebs, director for the mobile and wireless practice at VDC Research Group.
"We're starting to see those installed," says Krebs. "Wireless solutions expand in terms of their functionality to support a broader range of fleet management solutions that not only address management of the driver and his or her performance but that also extend into the actual fleet assets, such as spare parts management for a field service fleet."
Krebs says he's also seeing a tighter integration of onboard computing functionality and the extension of those capabilities. Rather than simply reporting data relating to truck diagnostics such as fuel economy, for example, the onboard, wireless computers are helping to maximize cargo space and driver productivity. Krebs points out that GPS solutions are especially popular, with the higher fuel costs creating a need for more efficient routing and scheduling of deliveries.
Demand for cellular wireless solutions is also ramping up among shippers that are operating in large environments, such as port facilities, says Krebs, as is demand for integrated Bluetooth for short-range peripheral connectivity (bar code scanners, RFID interrogators and printers, for example). Together, these various wireless technologies come together to create an untethered supply chain that operates seamlessly in today's business environment.
Within the Four Walls
As J.C. Penney proved 35 years ago, wireless technology can be extremely useful in the warehouse. These days, the availability of "open wireless" solutions (rather than proprietary options that operate independently) permits for a wide range of data capture and usage within the DC and in surrounding areas. John Hill says that bar coding continues to work in that environment, with voice data entry and RFID both gaining ground as wireless warehouse management options.
"RFID still has a way to go, but is being used effectively right now for pallet identification and for the identification of high-value items where you can afford to put a tag on the box that will handle the rigors of the environment and still perform," says Hill.
According to VDC, the warehouse/DC and port segment represents one of the more mature market segments for rugged mobile computer solutions and enterprise mobility applications. "This segment is being hit especially hard by the current global recession as end- users look to extend the lifecycle of their existing solutions and postpone planned upgrades," says Krebs.
With the use of iPhones and BlackBerrys being all the rage right now, Hill says vendors are also developing programs that wirelessly connect WMS systems with those handheld devices.
"A number of WMS providers are offering that functionality, which allows users to tap into the system from a remote location in order to get status updates and monitor performance while offsite. This is something that was talked about 15 years ago, and now it's being done," says Hill.
A Perfect World
Ask Adrian Gonzalez, director of ARC Advisory Group's Logistics Executive Council, where he sees wireless fitting into the entire supply chain, and he'll tell you that 15 years to 20 years from now everything will be tracked wirelessly. He points to advancements being made by Savi Technology and IBM. He believes that the smart supply chain of the future will use sensors, RFID tags, meters, and GPS to function.
But there are at least three hurdles to jump through before that can happen, says Gonzalez. For starters, he feels that vendors must develop hybrid Automatic Identification and Data Capture (AIDC) devices that integrate a combination of technologies, including barcodes, passive and active RFID, satellite communication, GPS, cellular, and sensors.
And before hybrid AIDC devices can gain traction, standards must be developed and/or harmonized for these various AIDC technologies to play nicely together. Lastly, Gonzalez says companies need new business models that drive "wireless tracking of everything" in supply chain management, and suggests the outsourcing of the infrastructure (software, hardware, etc.), much like major utilities do, as the best way to get there.
Krebs also sees a completely wireless supply chain in the future, and notes that the solutions already available in today's market will provide a solid backbone for that movement. "Based on the coverage maps that are available, and the ability to combine and leverage the best available connectivity whether it is Wi-Fi, 3G, or even satellite," says Krebs, "we should be able to fill the gaps and create a comprehensive network."
With wireless solutions already integrating with WMS, Transportation Management Systems (TMS), and Enterprise Resource Planning (ERP) applications, it won't be long before cutting-edge shippers are able to tie together all ends of their supply chains with wireless technology.
"Whereas in the past there were wireless solutions for the warehouse, solutions for the telemetric, and solutions for the delivery truck driver," says Krebs, "we're now seeing a more 'umbrella' approach being used to get to the next level and extend the enterprise, functionality, and integration and weave those once-disparate systems together in a much tighter fashion."
| Best-in-Class | Industry Average | Laggards | |
| The characteristics identified above serve as a guideline for best practices, and correlate directly with Best-in-Class performance across the key metrics. Source: Aberdeen Group |
|||
| Process | Confirms transactions with automatic data capture (barcoding, speech, RFID) | ||
| 65% | 55% | 53% | |
| Direct order picking with mobile devices | |||
| 60% | 50% | 31% | |
| Ability to send electronic Advance Ship Notices (ASNs) | |||
| 70% | 45% | 44% | |
| Advanced pick methodologies like batch, zone, or cluster picking | |||
| 65% | 53% | 28% | |
| Organizing | Only employees who have our application loaded onto their PC can login and view driver and vehicle status data in real time | ||
| 35% | 23% | 25% | |
| Technology | Technology enablers to support fleet management | ||
| • 70% Ruggedized Mobile Computers (Forklift or Handheld) | • 48% Ruggedized Mobile Computers (Forklift or Handheld) | •; 31% Ruggedized Mobile Computers (Forklift or Handheld) | |
| • 50% Automated Shipping Sortation | • 21% Automated Shipping Sortation | • 12% Automated Shipping Sortation | |
| • 40% Conveyor Based Picking Systems | • 27% Conveyor Based Picking Systems | • 12% Conveyor Based Picking Systems | |
| • 25% Automatic Palletizing Systems | • 9% Automatic Palletizing Systems | • 6% Automatic Palletizing Systems | |
| Performance | Measure and update fleet performance daily or in real time | ||
| 55% | 37% | 22% | |
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