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.
These days, it seems there's no tracking problem that RFID can't solve. Need to protect vintage Jimi Hendrix rock 'n roll memorabilia (think the guitar strap immOréalized at the 1969 Newport Pop Festival) from theft or counterfeiting? There's an RFID solution for that. Want to keep close tabs on critical airplane parts to shorten service calls and reduce travel delays? There's an RFID solution for that. Looking to track supplies being shipped out to troops in Iraq? There's an RFID solution for that too.
Though it may have gotten off to a bumpy start, the RFID revolution is clearly upon us. In just a few short years, RFID has grown into a multibillion dollar industry. ABI Research projects that spending on RFID software and services alone will hit $3.1 billion this year. But perhaps more astonishing than the growth itself is who's profiting from the boom. It's not always the big, well-established companies that are raking in the RFID revenues. In many cases, it's small venture-funded companies barely out of the startup phase.
In the brash young RFID technology market, it seems the old rules no longer apply. It used to be that when a company opened discussions with a potential new supplier, one of the first questions it asked was how long the vendor had been in business longevity generally being equated with reliability and fiscal soundness. Nowadays, it doesn't appear to matter. Up-and-coming players some of which were running their businesses out of a garage just a few years ago are landing big contracts with the likes of Boeing and the U.S. government.
You don't have to look far for examples of small and nimble RFID startups that have edged out their larger rivals. Last May, Dulles, Va.-based ODIN technologies beat out a roster of veteran players including IBM for a $14 million contract to outfit 69 Defense Logistics Agency facilities with RFID readers. A month earlier, in April 2006, San Jose, Calif.-based newcomer Intelleflex inked a multimillion dollar deal with Boeing to supply RFID tags for parts for its 787 Dreamliner jets when they go into production this year. Boeing, which is paying approximately $20 per tag, expects to use more than a million tags annually once production begins.
What sealed the deal in this case was Intelleflex's product the industry's first fully integrated multi-protocol EPC-compliant RFID single chip IC. In the passive operating mode, tags made with this battery-powered chip offer a read range of more than 300 feet and a full 64 kilobytes of user read/write memory. Though Boeing invited all of the major RFID players to bid on its smart label contract, the Intelleflex tag was the only one able to meet the aircraft maker's memory requirements.
"That shows the value of innovation," says ODIN's president and CEO, Patrick Sweeney, referring to the Intelleflex RFID chip. "Those guys built a better mousetrap."
For Boeing, the chip's technological advantages evidently outweighed Intelleflex's lack of experience the company received its first venture funding in 2004 and is just ramping up production of its first product. "Boeing is more innovative and venturesome than most big companies," says Bob Pavey, an investor with venture firm Morgenthaler and a recent appointee to the Intelleflex board. "Boeing recognizes more than most companies that much of the technology they will need in the future will not come from the large suppliers."
Magnet for talent
Better mousetraps aside, another factor that sometimes works to the startups' advantage is their willingness to take on the smaller contracts that large corporations might not consider worth their while. That gives them a foot in the door, not to mention a big in with the customer later on if that pilot progresses to a rollout.
"Some of the smaller integrators aren't so averse to take a $200,000 contract when an IBM might be looking for more lucrative, longer-term deals," says Michael Liard, principal analyst for the RFID practice at ABI Research. "But guess what? Those smaller guys taking those little deals have gained a host of experience around RFID deployment, and have gained a competitive advantage in the process."
That's no small consideration. In an industry where expertise is in short supply, experience with RFID deployment can translate directly into more business. Sweeney, for example, credits his company's experience with deployments for its roaring 400-percent annual growth rate. "We're having much better success than I ever thought we would," he says. "I think that's because of the lack of expertise with this technology."
At the moment, the smaller companies have what amounts to a monopoly on RFID talent and expertise, says Daniel Engels, former research director for the Massachusetts Institute of Technology's Auto-ID Center. "All of the innovative work that has come out lately has come from small companies moving into the space," says Engels, who is now an associate professor in the University of Texas's electrical engineering department. Though that's not uncommon in the tech sector, he adds, "I would say the trend is probably extra pronounced for RFID. RFID is unique in that the real expertise exists in all the small companies right now."
Part of the explanation lies in the simple fact that the smaller companies are the ones with the jobs. From the large corporations' point of view, the RFID market is still too small to justify devoting a lot of bodies to it.
And even when large corporations like Texas Instruments do venture into RFID development, there's no guarantee that they'll be able to sustain the momentum once the development process concludes. "When TI was developing its SpeedPass solution, their head count was up," says Engels. "But most of their technical people left after that, during the period when they were not innovating, and went to companies like Matrics [which has since been acquired by Symbol] and other smaller companies that were doing more innovative RFID work."
Brain drain
It's not just technical people who have fled to the smaller companies. Top executives have joined the exodus as well. Take Rich Bravman, the former CEO of Symbol Technologies, who defected to Intelleflex in September 2005. Bravman, who is now CEO of Intelleflex, was Symbol's fifth employee when he joined the firm as a software developer back in 1978, shortly before the company landed a $5 million contract with the Defense Department.
For Bravman, the opportunity to try to repeat that success at Intelleflex proved irresistible. "It was a very comparable situation," he says of his early days at Symbol. "We were a new company at the time and the hand-held laser scanner was a brand new concept and a new technology. The competition included mega companies like NCR and IBM, but we emerged the winners based on having a technology that nobody had figured out how to do. By the time I left, we were a $3.5 billion company. I very much hope we have the same success trajectory here."
Symbol isn't the only company whose management ranks have suffered casualties. In June 2005, RFID hardware specialist Sirit hired Norbert Dawalibi away from Psion Teklogix, where he had been president and CEO, to be its new CEO. In October, Sirit recruited former Texas Instruments RFID guru Tony Sabetti to be vice president of RF solutions.
ODIN, too, has succeeded in luring some top talent away from the competition. Diana Hage, who headed up IBM's RFID and wireless division, defected to ODIN this fall after the company beat out IBM for the government business. "That's been a spectacular hire," says Sweeney. "It has given us a lot more insight into how the bigger companies are addressing the market."
Deal or no deal?
Now that they've been lapped by the competition, can the larger companies ever expect to catch up? Some say the only way for the big guys to make up the lost ground is to acquire those smaller firms that have been landing the fat contracts. Sweeney says he receives buyout overtures frequently.
The market has already seen some mergers and buyouts like Sirit's purchase of TradeWind Technologies and SAMSys last year, and Symbol's acquisition of Matrics in 2004 (before Symbol itself was bought by Motorola last September). But Sweeney thinks the real action will begin when the market matures, most likely in 2008.
"I think one thing you'll see is a company like Texas Instruments asking 'How is this [startup] company beating us on these deals?'" says Sweeney. "Their mentality will be, 'We'd better buy them before they beat us again.'"
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!
Toyota Material Handling and its nationwide network of dealers showcased their commitment to improving their local communities during the company’s annual “Lift the Community Day.” Since 2021, Toyota associates have participated in an annual day-long philanthropic event held near Toyota’s Columbus, Indiana, headquarters. This year, the initiative expanded to include participation from Toyota’s dealers, increasing the impact on communities throughout the U.S. A total of 324 Toyota associates completed 2,300 hours of community service during this year’s event.
The PMMI Foundation, the charitable arm of PMMI, The Association for Packaging and Processing Technologies, awarded nearly $200,000 in scholarships to students pursuing careers in the packaging and processing industry. Each year, the PMMI Foundation provides academic scholarships to students studying packaging, food processing, and engineering to underscore its commitment to the future of the packaging and processing industry.
Truck leasing and fleet management services provider Fleet Advantage hosted its “Kids Around the Corner Foundation” back-to-school backpack drive in July. During the event, company associates assembled 200 backpacks filled with essential school supplies for high school-age students. The backpacks were then delivered to Henderson Behavioral Health’s Youth & Family Services location in Tamarac, Florida.
For the past seven years, third-party logistics service specialist ODW Logistics has provided logistics support for the Pelotonia Ride Weekend, a campaign to raise funds for cancer research at The Ohio State University’s Comprehensive Cancer Center–Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. As in the past, ODW provided inventory management services and transportation for the riders’ bicycles at this year’s event. In all, some 7,000 riders and 3,000 volunteers participated in the ride weekend.