In the pharma sector at least, the great RFID debate isn't about payback on the technology. It's about the merits of high-frequency vs. ultra-high-frequency tags.
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.
There's a great debate brewing in the RFID technology sector, and for once it doesn't involve consumer goods manufacturers and their prospects for payback on RFID investments. This time, the debate involves the pharmaceutical industry and the frequency of the RFID tags used to identify, track, and trace drugs (particularly individual bottles of drugs) from manufacture to delivery.
On one side of the divide are those who back high-frequency (HF) tags; on the other, supporters of ultra-high-frequency (UHF) technology. Backers of HF tags claim they offer more accurate read rates than their UHF counterparts and are less susceptible to interference from metal and water. They also like to point out that the HF tags' smaller, tighter read ranges cut down on the risk of unwanted reads from tags on nearby objects.
Proponents of UHF tags counter that interference problems from water and metal have been largely resolved. They also point out that UHF tags, which offer faster reads than their HF counterparts and can operate over longer distances, are already in widespread use in case- and pallet-tagging applications. Companies that have UHF readers and hardware in place might be reluctant to invest in HF readers as well.
All these arguments have merit, which will make it difficult, if not impossible, for the industry to settle on a standard. But that leaves pharmaceutical manufacturers with a difficult choice: wait for the dust to settle or forge ahead on their own.
Complicating matters is growing regulatory pressure on drug makers to provide drug "pedigrees" to help track their products. Considered the most effective weapon against theft and counterfeiting, drug pedigrees document a drug's chain of custody as it moves through the supply chain—something many believe is best done via RFID. Right now, 15 states have drug pedigree requirements, and another 12 have legislation pending or are likely to introduce measures this year. Though some states will accept paper pedigrees, at least one, California, will require electronic documentation, known as an "e-pedigree," beginning in January 2009. The Food and Drug Administration (FDA), too, would like to see the industry move to full-scale adoption of RFID-based e-pedigrees, though it has not mandated the technology's use.
Given the regulatory climate, it's no surprise that several large pharmaceutical companies have decided they can't afford to wait. As the battle over frequencies rages, they're moving forward with their RFID programs in preparation for becoming compliant with impending pedigree requirements. They're expanding their tagging programs to include more product lines. They're rolling out the technology to additional production facilities. And, perhaps most significantly, they're refining their procedures for harvesting tracking data from the tags.
Safe and secure
One drug maker that's pressing ahead with its RFID tagging program is Purdue Pharma, which produces the wellknown— and often counterfeited—pain killer OxyContin. Purdue announced earlier this year that it will integrate Impinj's Gen 2 UHF RFID tags into its high-speed pharmaceutical packaging lines. Purdue recently concluded a low-volume pilot and was scheduled to have the technology ready for productionlevel deployment as early as this month.
Purdue is already something of a veteran where RFID is concerned. The manufacturer has been using UHF RFID tags to track OxyContin and another potent painkiller, Palladone, for more than two years now. However, the company did not achieve the results it had hoped for with the earlier generation of the technology (EPC Class 0 chips). It's making the switch to the new Gen 2 tags with the expectation of boosting throughput rates, read rates, and programming reliability.
Up until now, Purdue's tagging capacity has been limited to small batches. But as it moves forward with its plans, Purdue will expand its tagging operations to include two entire packaging lines for four different types of bottles for OxyContin. It will also expand its program beyond itemlevel tagging to include the case level.
Purdue's latest RFID effort is part of a push to boost supply chain efficiency and security. "We are working to implement innovative solutions that will enhance security within the supply chain," says Aaron Graham, a former law enforcement agent who serves as vice president of corporate security and chief security officer at Purdue Pharma. "The Impinj RFID technology has been selected as an integral part of our packaging line improvements to help the company establish an e-pedigree process that will significantly improve the delivery of products from the factory to the pharmacy counter."
Getting ahead of the game
Another drug manufacturer that's not waiting around for the HF/UHF debate to be resolved is Wyeth Pharmaceuticals. Wyeth is in the midst of retrofitting a high-speed bottling line at a plant in Puerto Rico so it can start applying RFID tags to a strategic product SKU.
Tom Pizzuto, Wyeth's director of RFID technologies, says the company may eventually apply as many as 750,000 HF RFID tags to individual bottles of the new drug. In the meantime, Wyeth will continue to use UHF tags at both the case and the pallet level. Later this year, Wyeth plans to outfit one of its U.S. distribution centers to take inbound and outbound RFID reads.
Like Purdue Pharma, Wyeth is already a seasoned RFID user. A supplier to Wal-Mart,Wyeth got its introduction to RIFD when Wal-Mart handed down its now-famous RFID mandate. It has been shipping tagged cases of painkiller Advil to the mega-retailer's DCs for some time now.
Though its first foray into RFID was driven by a customer's mandate,Wyeth says things are different this time. The current tagging initiative reflects the company's strategic decision to begin preparing for what it sees as the inevitable tightening of drug tracking requirements. "This is a case of Wyeth looking at [drug pedigree laws] in California and Florida, and also the FDA's interest in this, and internalizing all that to realize we need to start down this path," says Pizzuto. "That's why we initiated this pilot."
The more, the merrier
In the meantime, Pfizer is also stepping up its commitment to RFID. The giant pharmaceutical concern, which has been tagging all bottles of Viagra since the end of 2005, has extended RFID to a second product line. It will be tagging over-the-counter pain reliever Celebrex at both the case and pallet levels by the end of 2007. Although the company doesn't have immediate plans to tag individual bottles of Celebrex, it says it may re-evaluate that decision at a later date.
Pfizer uses HF tags on individual bottles of Viagra, but like many manufacturers, it uses UHF tags to identify cases and pallets. It will do the same with Celebrex, using UHF Gen 2 tags to track cases and pallets of the arthritis remedy. But tagging cases of Celebrex will be a much more complicated process than tagging Viagra, which is produced on a single production line in France. Celebrex will be produced on four high-speed lines at Pfizer's manufacturing facility in Puerto Rico. The company expects the first RFIDenabled cases and pallets to roll off the manufacturing line by the fourth quarter. Tagged product could work its way to wholesalers and pharmacies by the end of the year or early in 2008.
"We wanted to roll out the technology being applied to Viagra somewhere else, and Celebrex far outsells Viagra," Byron Bond, director of trade operations and customer service for Pfizer, told attendees at the RFID Healthcare Industry Adoption Summit in November. "Within the next four to six years, we expect to have something close to a universal track and trace [e-pedigree system], so we realize we need to spread our RFID capabilities into other areas."
Bond didn't say how many RFID tags the Celebrex line will consume, but the number will be significantly higher than the number Pfizer uses for Viagra, given Celebrex's extremely high volume. Although Bond says prices for tags have dropped 20 percent since it started tagging Viagra, he says it is still too costly to tag the millions of individual bottles of Celebrex.
Bond also announced that Pfizer is in the midst of initiating an e-pedigree pilot with trade partners using Viagra, and will also change the tag placement on its cases from the top of the case to the side. In addition, Pfizer now plans to rigorously pursue the operational efficiencies to be gained from RFID relative to shipping and receiving, both internally and externally. The company has also had discussions with the U.S. government about using RFID to improve the customs process for Viagra that enters the country from France.
Cardinal's numbers
Like Purdue, Wyeth, and Pfizer, Cardinal Health has decided to get a jump on the e-pedigree development process. But it's taking a slightly different route. While many pharmaceutical companies have taken a hybrid approach to tagging (using HF tags for items and UHF tags for cases and pallets), Cardinal Health is concentrating its efforts solely on UHF technology.
Late last year, Cardinal announced the results of a pilot program to test the feasibility of using UHF RFID technology for tracking and tracing at the unit, case, and pallet levels. As part of the program, it also looked at ways to use the tags to collect data needed for e-pedigrees.
Cardinal placed RFID tags on the labels of brand-name solid-dose prescription drugs, and then encoded the EPC standard data on those tags during the packaging process. The products were shipped to a Cardinal Health DC in Findlay, Ohio, where the data were collected and authenticated as workers handled products under typical operating conditions. From Findlay, the tagged product was sent to a pharmacy, where further tests of read rates and data flow were conducted.
Data from the pilot indicate that it is indeed feasible for RFID tags to be inlaid into existing FDA-approved pharmaceutical label stock, and that tags can be applied and encoded on packaging lines at normal operating speeds. Online encoding yields were 95 percent to 97 percent, and fine tuning of the process is expected to produce yields that approach 100 percent.
Cardinal Health executives note that although the overall test results were positive, there are some hurdles to overcome before the UHF RFID tracking technology can be adopted industry-wide. The challenges include achieving case-level reads in excess of 99 percent at all case-reading stations and achieving unit-level read rates in excess of 99 percent when reading from tote containers at DC and pharmacy locations.
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.
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.
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!