Hold the chips!
Think RFID chips are the obvious solution for tracking two million items without labor-intensive scanning? Think again.
When Wal-Mart first issued its now famous RFID mandate, no one dreamed it would reverberate around the globe to a tiny town just south of Rotterdam in the Netherlands. Yet some 4,635 miles away from Bentonville, executives in the hamlet of H.I. Ambacht followed the developing story with avid interest. As word spread of the technology's dazzling capabilities, they became more and more convinced they had stumbled onto the asset-tracking solution they'd been seeking.
The executives in question work for Florensis, one of the world's largest suppliers of flower seedlings: everything from phlox, zinnias, and petunias to coreopsis, dahlias and verbena. But the assets they wanted to track weren't rare and exotic hybrid plants; they were ordinary-looking blue plastic florists' trays.
At the time, the company was about to invest several million dollars in high-end nesting seedling trays, which would replace the cheap reusable foam trays it had been using to ship seedlings to customers. The new trays, which hold up to 594 seedlings apiece, would be sturdier units produced from polypropylene in the company's signature lilac blue. Unlike the foam trays, which tend to disintegrate after about 10 trips, the new trays are designed to last up to eight years.
The problem was, customers had grown lax about returning trays—more than 20 percent ended up in dumpsters. Florensis couldn't afford those kinds of losses once it switched to the new trays. To protect its investment, it needed a way to track the trays as they moved through its facilities and out to customers. (The company's customers are growers that raise the young plants to maturity and then ship them to retailers.)
In the past, Florensis had tried bar codes for tracking, with mediocre results. The dirt, water, mold, algae and humidity present in nurseries rendered many of the codes unreadable.
RFID, however, wouldn't have that drawback. RFID chips don't require a line of sight to be read (the radio waves fan out to find them), which means the tags would remain readable despite any dirt or mold that might accumulate on them. RFID promised other advantages as well. While paper bar-code labels are easily destroyed by water, plastic RFID tags can take plenty of abuse. And because the information encoded into the tags is captured automatically, no workers are needed to hand scan each incoming and outgoing tray.
But as Florensis's technical people looked further into RFID technology, their enthusiasm waned. For one thing, there was the cost. To track its nearly two million trays, Florensis would have to spend about $1 million on RFID tags alone. Plus it would need to buy software and high-end enhanced readers that could withstand the humidity in the company's nurseries (which are located in the Netherlands, Germany, Kenya and Ethiopia).
For another, they had concerns about interference from metal. Radio waves cannot penetrate metallic objects. And there was plenty of metal to be found in Florensis's nurseries, including the metal frames used in the buildings. There were also worries about interference from the automated window openers and the automated guided vehicles (AGVs) that move pallets of seedlings.
2-D or not 2-D?
The story might have ended there if the company's systems integrator, CaptureTech, hadn't suggested an alternative. On CaptureTech's advice, Florensis agreed to test another powerful, but less well-known tracking technology.
That solution, the Visidot system from Israel-based ImageID Ltd., uses two-dimensional (2-D) DataMatrix bar codes that can be read hundreds at a time via imaging technology. Like RFID, it's fast. The system captures the 2-D bar codes in a single digital image that can be decoded in seconds and stored in the company's database. But unlike RFID, it's relatively inexpensive. Although the imaging cameras cost nearly as much as RFID scanners, the label costs are negligible.
It's also accurate. DataMatrix bar codes include robust error correction capabilities so that codes can be read even when a tag is dirty or damaged. During pilot tests last year, the system consistently read 99.7 percent of the 2-D bar codes, even those obscured by dust or dirt.
But there was one drawback: 2-D bar codes still require a line of sight to be read. Florensis and CaptureTech solved that problem by installing one of the fixed imagers at the end of the pallet-loading area. Trays are now stacked on a pallet all facing in one direction, so that their codes can be captured simultaneously. After a loaded pallet has been transferred to an AGV, the vehicle is stopped for a few seconds so the device can capture an image of that pallet. As the AGV continues on its way, software scans the captured image and checks the codes. If it detects an errant tray of petunias or primroses, an error message pops up on a computer screen at the next checkpoint. That message indicates right on screen exactly which tray was misplaced.
Growing on them
With the Visidot system in place, every tray is linked to a customer order and the customer's information. This link is maintained until the tray is returned. That's made tracking infinitely easier than in the past. Though Florensis had no problem keeping tabs on trays in the nursery, it tended to lose track of them once they were loaded into trucks for delivery. The company knew how many and what kind of trays had been sent to each customer, says Peter de Graaf, the company's director, but it had no way to track individual trays. "[I]t was a big job to administer this in the right way and to approach the customers about returning the trays," he notes.
With the new system, the company has much better accountability. "Now, we know exactly which customer has unreturned trays so we can invoice them for the cost of a new one," says de Graaf. That threat alone will make customers more likely to return the trays, he predicts. In fact, de Graaf says he expects the returns rate to jump to 90 percent or better.
De Graaf hopes that will happen for a couple of reasons. For one thing, a shortage of trays could snarl operations—particularly during peak spring shipping season, when Florensis ships 140,000-plus reusable trays a week. For another, those trays represent a significant investment. "Our business case calls for re-using these trays for eight years," he says, "so it's imperative that we get them back."
Everything's coming up roses
The Visidot system has also brought benefits that go beyond tracking. For example, Florensis will see a drastic reduction in labor costs. Now that the data collection process has been automated (gateways with imagers are installed at the production site, in the DC's stacking area, at the order collection point, and in the shipping area), Florensis no longer has to hire people to scan each inbound and outbound shipment. De Graaf expects to reduce his temporary workforce from 60,000 man-hours to 40,000. "One-third of our labor costs will disappear," he says. "That's quite [important], because our margins are also decreasing, which means we need to have savings internally."
Even Florensis's customers, the growers, have embraced the change. True, they're feeling more pressure to return trays now. But they also recognize that the system helps keep their own costs down. Another plus for customers is that Florensis now can group the plants in their orders by color or variety, something it was unable to do before.
So while RFID continues to gain momentum worldwide, Florensis is nurturing another blossoming technology. To date, it has invested $7.5 million euros (approximately $9.2 million U.S.) in the project—a figure that includes the cost of the new trays. And it plans to go forward with Visidot. The company has been using the system at its two nurseries in the Netherlands since January; it is currently installing imagers at a site in Germany.
Might the company someday switch to RFID? The likelihood seems pretty remote. "We know that RFID tags will come down in price, but probably not to where we need them to be," says de Graaf. "That's why we decided to go with this system for our entire operation." Sounds like Visidot's growing on him.
About the Author
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.
More articles by John R. Johnson
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