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.
Remember the days when consumer goods manufacturers wanted nothing to do with RFID technology? They winced as they spent millions of dollars to comply with RFID mandates from retailers like Wal-Mart, convinced they were getting little, if anything, in return.
They watched with dismay as tests to determine the best place to locate RFID tags on metallic products or packages containing liquids—both trouble spots for the technology—dragged on and on. All the while, they grumbled that the retailers would see all the benefits, while they got stuck with the bill.
That was yesterday. As the technology matures, more manufacturers are jumping on the RFID bandwagon. For evidence, you need look no further than the push by a group of consumer electronics manufacturers to establish a set of international standards for RFID, with the goal of embedding tags into all kinds of electronics—from cell phones and MP3 players to large electronic appliances like refrigerators and dishwashers.
The Star Wars-like future when your refrigerator automatically senses when you're out of milk and reorders it for you is still a long way off. But the day when you can access the RFID tag on your fridge to simplify warranty issues and service calls may be closer than you think.
"The initiative is gaining a lot of momentum," says Ian Robertson, the former RFID guru at Hewlett Packard who left HP in 2005 to join EPC Global, where he now serves as global industry development director and Asia regional director. "We're working with the industry to make sure it has a clear understanding of where it can benefit from EPC Global standards. We're really looking at things from an entire process point of view. It's not just about the manufacturer or the retailer.We can't forget the consumer, because they are the most important part of the chain."
In fact, Robertson is quick to note that manufacturers have specifically requested that EPC Global avoid making the standards manufacturer-centric. They're convinced that if the technology is to truly take off, the retail world and consumers must benefit too.
Laying the groundwork
Meetings have been under way for several months, the most recent of which was held in Seoul, Korea, in December.Much of the research is being headed up by Robertson, who says the ultimate goal of forming an electronics industry action group (IAG) within EPC Global is still in the exploratory stage. Robertson is currently meeting individually with manufacturers and retailers in Europe, and he expects to convene another meeting in Europe in mid-May before an official proposal to form an industry action group is presented to EPC Global.
"This is much more than a track and trace initiative," says Robertson. "If it was track and trace, then we'd have no need to form a group because it is very well covered by existing groups in EPC Global."
A formal set of guidelines in the form of international standards would help manufacturers to better manage products from cradle to grave, and also to improve manufacturing processes. Retailers would gain from better product availability and supply chain visibility. Manufacturers in Europe are aggressively pursuing the idea, since they are required by law to dispose of products when they reach the end of their life cycle. Among other things, RFID would enable manufacturers to determine what parts have been incorporated into each appliance and how to dispose of them properly.
Robertson says it normally takes 12 to 18 months to get to the point where an IAG proposal is ready to be presented to EPC Global. He says that could happen following the May meeting.
Boost for retailers
The adoption of international standards would also help electronics retailers. Best Buy, for example, is on record as saying that RFID has improved everything from the retailer's product forecasting to on-shelf availability (which has soared from the mid-80s to 93 percent).
In fact, Best Buy has begun to move beyond case and pallet tagging to the tagging of individual items like DVDs, CDs and videogames. Best Buy CEO Robert Willett told attendees at the Entertainment Supply Chain Academy's annual conference last summer that it is already testing item-level tagging at its pilot store.
"We are enabling our product shelves to become 'smart shelves,'" said Willett. "There is obviously a cost, but we believe that the reduction in customer disappoint per visit will more than offset any cost over time, and it will also help fight piracy."
Applying RFID tags to individual DVDs, CDs and videogames can boost sales by preventing stock-outs, which is particularly crucial in the days immediately following an item's launch. With DVDs, for example, up to 70 percent of sales are recorded in the first seven days after a film is released on DVD. Preventing stock-outs is also crucial with expensive electronics like plasma TVs that carry high margins for both manufacturers and retailers.
Streamlined manufacturing
Indeed, manufacturers are hoping to benefit as well, in the form of internal process improvements. Computer makers like Dell and HP, for example, are eyeing manufacturing advantages that could transform the industry. Dell is already a big user of RFID to manage its just-in-time supply chain, and, like other computer makers, it's now studying how RFID can streamline production lines.
For example, Robertson points to the process of installing DVD drives into new desktop computers. For every DVD install, production line workers scan the station where the desktop is and then scan the desktop unit so they know which unit the DVD is going into. Next, workers scan the bar code of the actual DVD being installed as well as its serial number.
"During that whole process, you're not doing anything that's value added—you're just identifying things," says Robertson. "So imagine if you're running a kanban production line and you simply reach back and pick up a DVD and immediately start putting it into the unit. All the scanning processes are gone because [RFID] has [identified] the unit you are working on, it has checked that it's going into the right machine, and it's picked up the serial number."
So what began as a major headache for manufacturers— the need to comply with supply chain and retail mandates for tagging finished goods—has led to rising interest in RFID for internal applications that promise a greater return on investment. While numerous pilots designed to evaluate the potential for RFID in manufacturing are currently under way, the number of pilots that actually result in fullblown implementations will be a key determinant of the rate and timing of overall market growth.
According to a new study by ARC Advisory Group, the worldwide market for RFID in manufacturing applications is expected to grow annually at 8.9 percent over the next five years. ARC vice president Chantal Polsonetti says that standardization and technology convergence will drive prices downward and elicit strong growth in unit shipments. ARC's new report says that expenditures for RFID in the manufacturing sector totaled $208.8 million in 2006, and predicts they will reach nearly $320 million in 2011. "Compared to the challenge of generating ROI from mandate-driven RFID implementations," says Polsonetti, "numerous opportunities exist for internal RFID applications to generate ROI for manufacturers."
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
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.
Two European companies are among the most recent firms to put autonomous last-mile delivery to the test with a project in Bern, Switzerland, that debuted this month.
Swiss transportation and logistics company Planzer has teamed up with fellow Swiss firm Loxo, which develops autonomous driving software solutions, for a two-year pilot project in which a Loxo-equipped, Planzer parcel delivery van will handle last-mile logistics in Bern’s city center.
The project coincides with Swiss regulations on autonomous driving that are expected to take effect next spring.
Referred to as “Planzer–Dynamic Micro-Hub w LOXO,” the project aims to address both sustainability issues and traffic congestion in urban areas.
The delivery vehicle, a Volkswagen ID. Buzz battery-electric minivan, will feature Loxo’s Level 4 Digital Driver navigation software, a highly automated solution that allows driverless operation. The van was retrofitted to include space for two swap boxes for parcel storage.
During the two-year pilot phase, Loxo’s Digital Driver will navigate a commercial vehicle several times a day from Planzer’s railway center to various logistics points in Bern's city center. There, the parcels will be reloaded onto small electric vehicles and delivered to end customers by Planzer’s parcel delivery staff.
Following the completion of the pilot phase, Planzer and Loxo will build on the program for rollout in other Swiss cities, the companies said.
The partners said the project addresses the increasing requirements of urban supply chains and aims to ensure the “scalability of their disruptive solution.” With largely emission-free delivery, it contributes to greater levels of sustainability for the city as a living space, they also said.
“The uniqueness of this project lies in the fact that it will have a direct impact on society,” Planzer’s CEO and Chairman Nils Planzer said in a statement announcing the project. “We didn't just want to integrate automated technology into existing systems, we wanted to develop a completely new concept and a new business model.”
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.