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.
Not too long ago, item-level RFID tagging was categorized as one of those futuristic notions—like hydrogen-powered cars, desaliniza- tion plants, and sending humans to Mars.
But while most of those concepts are still some years away, item-level tagging has already arrived, albeit for special applications that carry a strong value proposition. You likely won't find an RFID tag on individual cereal boxes at the grocery store (not yet, anyway). But you will find the technology on the sneakers you buy from New Balance, jeans and other apparel purchased at upscale retailers, and on books at European book stores.
Driven by falling costs for the technology as well as the arrival of long-awaited standards for item-level tagging, the practice of applying RFID tags to individual items is exploding. That fact was only accentuated early this year when Wal-Mart, owner of the Sam's Club warehouse stores, announced that Sam's Club suppliers must attach RFID tags to all products entering its distribution centers by 2010 (see RFIDWatch on page 51).
And Wal-Mart is not alone. Last summer, Levis rolled out a program for tagging individual pairs of jeans at 40 of its stores in Mexico.
Good reads
It's not hard to understand why retailers would be eager to embrace the technology. To begin with, they stand to benefit from fewer out-of-stocks (which leads to increased sales), labor productivity gains, and better inventory visibility and control. On top of that, there's the potential for improved security and less shrinkage.
All of those were motivating factors behind Portuguese bookseller Byblos' decision to build item-level RFID into the infrastructure at its first retail location in Lisbon, Portugal. The company is using RFID to help track more than 200,000 items across the 35,000-squarefoot retail outlet, which opened in December. Every item sold at the new store—with the exception of daily newspapers and magazines—is equipped with a UHF RFID tag in order to increase onshelf product availability, as well as to provide a better customer experience.
Byblos' new system also includes a series of 40 customer information kiosks located throughout the store. Customers can use the kiosks, which are embedded with RFID readers that help monitor the store's 2,000 zones, to browse products, see what's in stock, and obtain directions to the proper stock locations. "Our goal is to combine the most sophisticated means and the maximum attention to detail to provide a superior experience to the customer," said Byblos COO Rui Gaspar in a statement announcing the program's launch. "Based on what we have seen in other trials of item-level RFID, we are confident that our investment in RFID will provide the best shopping experience available and ensure that customers can always find the products they need."
In addition to the tags and kiosks, the bookseller has installed 14 RFID-enabled check-out stations that move customers quickly through the purchase process, and pOréal readers that monitor doorways and sound an alarm if they detect an unpaid-for tagged item leaving the store. Byblos also has 10 handheld RFID readers that employees use for cycle counting and inventory management.
All this high-tech equipment has come with a price, of course. Byblos spent about $350,000 (U.S.) to outfit the store with RFID technology—a figure that doesn't include the associated infrastructure and IT costs. The company, whose books carry an average price of $30, is currently sourcing its tags for 13 cents apiece. Yet Byblos is confident that it will see a significant payback on the project. It points to a previously deployed item-level project at Dutch bookseller BGN that resulted in sales increases of 10 to 15 percent. In addition, Byblos executives note that their project is scalable, meaning it will cost less to bring additional stores online. The company plans to roll out the technology in three more stores this year, which will bring the total number of items tagged to almost a million by the end of 2008.
A running start in the U.S.
Although interest in item-level tagging has generally been higher in Europe than in the United States, item-level tagging is starting to make a splash here as well. Running shoe and sports apparel retailer New Balance, for example, recently completed a rollout of RFID to help it track its topselling men's running shoes from the distribution center to the retail floor at its outlet store in Lawrence, Mass.
This spring, the company expects to start tagging every pair of men's sneakers sold at the store, which will increase tagging from the current 750 pairs of sneakers to about 22,000. The move is expected to give New Balance even greater inventory visibility, and, because the women's models will not carry RFID tags, the company will have a system for benchmarking the usefulness of RFID.
The big challenge for New Balance was finding a reader solution to handle the 22,000 items. For the first phase of the project, employees used handheld readers to perform cycle counting, which took about 20 minutes. However, handhelds would be too cumbersome to cycle count larger inventory, so Motorola has put together a mobile cart reader that should allow cycle counting to be completed in 20 minutes.
By using Vue Technology's TrueVUE Platform, combined with RFID tags from Avery Dennison and handheld and fixed RFID readers and antennas from Motorola's Enterprise Mobility business, New Balance has achieved far greater inventory visibility and improved accuracy at the item level, with read rates greater than 99.5 percent. As New Balance begins to tag more products, company execs expect this visibility to enable reductions in receiving and replenishment labor costs, reductions in inventory levels, and reduced stockroom retrievals. Frank Cornelius, director of information technology at New Balance, also expects that the data captured from RFID reads will allow the company to document sales trends and have the proper number of shoes in each size on the store shelf. The killer application for New Balance would be using item-level tagging to do away with the problem of mismatched pairs of shoes on the sales floor. That would require tagging each individual shoe, however, something New Balance execs say is probably still two years away.
Zero to sixty
At the moment, Vue Technology and other vendors, including Seattle-based Impinj, are working on a number of itemlevel applications for the retail, apparel, and pharmaceutical businesses. Gordon Adams, Vue Technology's senior vice president of sales, says that the rapid pace at which retailers are pursuing item-level tagging shows that its value is finally being recognized, especially within the apparel sector.
"We have a customer that went from simply having an interest in doing this to a deployed pilot in 60 days," says Adams. "Sixty days after that, they told us to prepare for a full enterprise deployment rollout.
"Everyone used to be afraid that the costs were too high, but we've been able to show people that the cost to deploy all this is now at the point where the … investment makes sense. There are a number of companies doing production deployments now, and if you are not on board, the train is passing you by."
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
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.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.