May 1, 2005
equipment & applications | RFID in Material Handling

Money can't buy me … efficiency

money can't buy me ⦠efficiency

Need to get RFID-ready in a hurry? Hiring someone to set up a "slap and ship" operation may sound like a good idea. But it's probably not good business.

By John R. Johnson

Chris Shult shudders when customers approach him looking for a quick money's-no-object fix for their radio-frequency technology needs. Though he's sometimes tempted to take the easy money, Shult, who is president of Babush Material Handling Systems, says he can't do that in good conscience. He knows that's not in his customers' best interests. They may not want to hear it, he says, but what customers need to do is step back to assess their long-term RFID and material handling needs before they decide on a solution.

"We're seeing people starting to realize that they can't just slap and ship," says Shult, referring to the practice of applying RFID tags to goods just prior to shipping (as opposed to integrating them into an earlier stage of the order fulfillment process). "It's just not a good long-term solution. You'll regret it down the road."

The reason Shult can even make that statement today is that the worlds of everyday material handling and RFID technology are already beginning to converge. In an effort to integrate RFID deeper into their distribution center operations, manufacturers are starting to outfit conveyors, sortation equipment, printers and even forklift trucks with RFID scanners and antennae. The idea is that instead of simply slapping tags on outbound shipments to meet a retailer's mandate, shippers can use the data harvested by the systems to streamline their own operations.

"At the case level what you'll see in 2005 is companies starting to incorporate higher levels of automation in applying RFID tags," says Matt Ream, senior manager of RFID Systems at Zebra Technologies. "In the long term I fully believe that RFID as an enabling technology will impact the way distribution centers operate and how things move through the supply chain. We'll start to see higher levels of automation, with more use of equipment like automatic storage and retrieval solutions. You'll never extract all the value out of RFID without fundamental process changes."

Ream reports that he's starting to see Zebra's customers move beyond slap and ship as they shift to automated print and apply solutions. Automated print and apply solutions allow shippers to meet mandates from Wal-Mart and other retailers without the added labor that manual slap and ship operations require.

Pimp my ride!
In the end, however, it may be the humble lift truck that provides the long-awaited RFID breakthrough, offering users a way to achieve that legendarily elusive return on their RFID investments. That's because the hottest ride on the DC floor these days isn't a forklift tricked out with a shiny new shock impact monitor—it's the truck outfitted with its own RFID tag reader. If that sounds like science fiction, it's not. These trucks are already in use in pilot programs; and they're already saving their users money.

Genco Supply Chain Solutions, for example, has been using RFID-enabled lift trucks as part of a pilot program for some months now. In a partnership with Sears and Intermec, Genco has shipped more than 35,000 pallets with near-perfect read rates. Buoyed by the pilot's success, Genco, which provides third-party logistics services, is preparing for a full rollout of the technology at its 208,000-square-foot distribution center in McDonough, Ga., later this year.

"We've totally abandoned portals," says Pete Rector, senior vice president of strategic initiatives for Genco, referring to dock door stations equipped with scanners that read RFID tags as outbound shipments pass through. "We'll only put in a portal if we have to." Rector says the mobile RFID system has the advantage over the traditional portal in several ways. For one thing, it promotes accuracy—RFID-enabled forklifts alert their drivers if they attempt to load an item onto the wrong truck. For another, it's cheaper— Genco believes that outfitting a one-million-square-foot facility with mobile RFID equipment will cost some $250,000 less than setting up portals. With portals, Genco estimates, it would pay about $6,000 per door to RFID-enable 160 dock doors. By contrast, outfitting approximately 60 lift trucks will only cost it about $8,000 per truck. Furthermore, Rector believes Genco will need fewer forklift trucks at each DC.

Given the potential savings, it's no surprise that mobile RFID has caught Wal-Mart's eye. At its test lab in Bentonville, Ark., the mega-retailer is currently testing an RFID-enabled forklift that would read tags on pallets and transmit data through a wireless network to a warehouse management system, which sends data on inventory to other business applications.

Others are likely to follow suit. Several top 100 Wal-Mart suppliers are said to be considering dismantling their dock door portals in favor of mobile solutions. And Dick Sorenson, director of product management for LXE, reports that his customers are starting to ask for forklift based solutions. LXE has partnered with Intel and Sirit to produce forklift-mounted RFID data collection solutions for use in warehousing and distribution. The company expects to begin marketing these solutions during the fourth quarter.

"A lot of these companies are starting to look beyond slap and ship for a way to take advantage of RFID in their internal operations," says Sorenson. "Not surprisingly, as soon as you push back from the dock door, most everything gets moved on forklifts, so we've had lots of interest from our customers in finding a forklift solution. The real goal is to get the operator out of the business of data collection. The real potential of RFID ... is to automate the data collection process and [free up] the forklift driver to [concentrate on moving] products."

Going mobile
The folks at International Paper certainly hope the RFID-enabled forklift trend catches on. The company has developed and rolled out what it says is the first commercially available radio-frequency identification forklift through its Smart Packaging business unit. "We now offer the forklift as a product line extension for use with palletized products. The forklift reads electronic product code (EPC) pallet tags and tracks every warehouse product movement," says Scott Andersen, technical director for International Paper's Smart Packaging business. "Our forklift solution combines the use of RFID to identify the pallet's contents with the use of RFID and other proprietary technologies to monitor and report the location and condition of the forklift in real time."

The company says the solution will work for any customer and offers a cheaper alternative to warehouse RFID deployments. The mobile forklift solutions, it says, will help customers increase their inventory accuracy, reduce lost shipments and improve their overall supply chain operations. Mobile RFID will also eliminate the need for RFID portals at every dock door, saving thousands of dollars. The solution is able to identify and track products on board the forklift from loading to unloading. With an automated shipping and receiving process, forklift operators can focus on driving the trucks instead of manually scanning bar codes. And despite early doubts about the accuracy of RFID read rates, that apparently hasn't been a problem here. IP reports that its RFID lift-truck solution has successfully captured 5 million EPC reads in its nearly two-year commercial existence. Will RFID-equipped forklifts someday become mainstream? LXE's Sorenson believes they will, assuming companies can be weaned from slap and ship. "As companies move beyond pure compliance operations," he says, "it becomes evident that a robust, reliable implementation for forklift-based operations is required."

About the Author

John R. Johnson
John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.

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