This is the vision statement Savi Technology presented to me yesterday afternoon, and it’s what will guide their strategy and product development efforts moving forward. Savi is not the only company with this vision. The folks at IBM, for example, believe that “the smarter supply chain of the future” will be instrumented-i.e., “information that was previously created by people will increasingly be machine-generated, flowing out of sensors, RFID tags, meters, actuators, GPS and more. Inventory will count itself. Containers will detect their contents. Pallets will report in if they end up in the wrong place.”
I also believe in this vision, although the timeframe is debatable. In my opinion, it’ll probably take 15-20 years for “wireless tracking of everything” to reach critical mass (just look at the wide gap between the hype of RFID and what’s actually been accomplished to date).
But what needs to happen today, and in the years ahead, for this vision to become a reality? There’s a whole list of things, but here are my three critical items, which basically reflect some of what Savi presented to me yesterday.
- The development of hybrid Automatic Identification and Data Capture (AIDC) devices that integrate a combination of technologies, including barcodes, passive and active RFID, satellite communication, GPS, cellular, and sensors. These devices will need to have different configurations, form factors, and price points depending on the application and business case.
- Before hybrid AIDC devices can gain traction, standards must be developed and/or harmonized for these various AIDC technologies to play nicely together. Achieving “interoperability” is often a long and difficult process due to the various stakeholders and competing interests involved. But work has already begun in this area. For example, Michelin, the Department of Energy, Savi Technology, Texas Instruments, STMicroelectronics, Analog Devices and other technology users and providers recently formed the DASH7 Alliance. According to the press release, “The DASH7 Alliance will work to ensure cross-vendor interoperability as well as to promote greater use of the ISO 18000-7 wireless data standard, which is more cost effective, more reliable, and operates at lower power levels than ZigBee and similar wireless data technologies. The DASH7 Alliance will also foster new wireless data innovations based on the standard, including advanced sensor networking, electronic seals, mobile phone integration, and other advances enabled through upcoming DASH7 developer resources.” We’ll have to wait a year or two to see how much progress is actually made.
- New business models are required to drive “wireless tracking of everything” in supply chain management. In my opinion, the fastest and least expensive way for companies to wireless-enable their supply chains is to outsource (at a minimum) the infrastructure (software, hardware, etc.). In other words, wireless enablement of supply chains should be a utility service like energy and telecommunications. This utility concept is an extension of what’s already happening in the software-as-a-service market, where companies are taking a network-centric approach to connectivity instead of building and maintaining one-to-one links with countless trading partners (see “More Questions About Software-as-a-Service“). The same philosophy applies here: Why spend the time, money, and resources to build and maintain your own network when tapping into an existing, shared network would achieve the same results? This business model already exists within Savi (see Savi Networks), but it’s still a work in progress. The value proposition increases even more when you include managed services or consider taking a Performance Based Outsourcing approach.
Well, those are my thoughts. What do you think? Will everything be tracked wirelessly in 10 years? What are the biggest obstacles to realizing this vision? Is the utility service model the best approach? Post a comment and let me know.
The best thing about selling RFID solutions is that you can use your 10 year-old slides that say “everything will be tracked wirelessly in 10 years”. While I say that with a healthy dose of sarcasm, I think many of us in the Logistics business just haven’t seen it happening. The 10 year timeline sounds reasonable, but what happens if we never actually take the first step?
The business case remains the chief hurdle, and the incremental performance and visibility improvements provided by RFID still aren’t enough to make the leap for most applications. Compounded by today’s appetite for capital investment – approaching zero, especially for discretionary projects – I struggle to see how we will build any momentum.
All of this being said, there is a related area of the Logistics business where we see an incredible amount of momentum building, and that is the concept of Positive Train Control (PTC) being pursued by the North American railroads. This doesn’t exactly meet Savi’s description of the future, as the application is industry-specific, but it absolutely involves the application of interoperable instrumentation and signals, telemetry, actuators, real-time location and velocity information from GPS/ radio tags, robust wireless and network capabilities, ultimately leading to machine-generated instructions and cross-country freight trains running on autopilot… it’s coming close. However, the case is driven by safety and regulatory requirements, where the business case is secondary to the public interest.
While the Railroads are moving towards this future state, we are actively investing in this area, and specifically focused on finding business value. Our intent is to piggy-back on expected PTC infrastructure investments, and go after new areas of business value that become possible due to the increase in visibility data.
So if a Train can be considered “everything”, then we do expect to get there, and in less than 10 years.
While tracking everything wirelessly in 10 years appears unlikely, many-many things are being tracked already.
Some examples: Within-4-Walls (W4W) hospitals track patients, nurses and equipment. And Outside-the-4-Walls (O4W) the military tracks war fighters, food and munitions. We now also have seamless wireless tracking of global multi-modal shipments.
One of the challenges to tracking all things is that a single device couldn’t do it. It would require many different form factors, requiring separate markets to develop around each thing being tracked, in order to have viable products.
The other challenge, as Adrian pointed out is the lack of global standards in inter-device communications and telecommunications. But that has not stopped solution providers from stepping up to the plate.
Inter-device communications remain a challenge (largely to vendors needing large markets) but there are signs of progress. Some companies are trying to support standard technology stacks from multiple providers, while others are trying to foster a common ecosystem for the device agnostic, while initiatives like Dash7 are emerging to promote collaboration standards amongst major stake-holders.
However for telecommunications: companies have currently bridged this gap in two ways. For premium tracking solutions (covering remote, hard-to-reach places in Iraq, Afghanistan, or Pakistan), satellite telecommunications based solutions are available. For more general use, one can leverage solutions that use the mobile cellular infrastructure. Most of the populated world is covered by that, and (barring Japan & Korea which have unique protocols) you can now wirelessly track containers in and out of most places in the world with any decent sized population.
Of course wireless tracking is not just about locating things in real time. Apart from that, there are new and interesting possibilities like (A) monitoring the environmental conditions affecting your product, (B) assuring customers and regulators that you are maintaining control over your product, and (C) being able to prove exactly where the product originated, and where it is being delivered.
This has many security, brand and insurance implications. So much so that a major insurance company is planning to offer significant discounts for insuring supply chain risks when customers adopt real time tracking technologies. That’s a sign of the inherent value in wireless tracking.
The number of companies offering wireless tracking is diversifying from just device companies and some large integrators to include many resellers, consultants, Forwarders and Logistics Service Providers. Will there be a utilities model? There certainly will be. The large size and business plans of some of the companies involved in creating these new services practically guarantee that.
But with the advent of a wireless tracking solution come new questions: What would you do with this capability? Would that change your carrier mix? Would this really mean e2e visibility for you? Could you pre-allocate shipments, and maybe even bypass your DC? How lean could you get with visual controls over your transportation flows? Would you be able to divert more products, or improve your channel allocations on the fly?
Does always-available-data mean my month-end close is instantaneous? What KPIs would I track if they could always be up-to-date? Does this affect my warehouse costs and throughput? Do I need as much safety stock? All very interesting bottom-line type questions…but maybe just the assurance that I can tell where something is (wirelessly of course), is worth something too. But that’s just me… what do you think?!
Having worked on a large number of ROI cases in logistics, and lately for visibility solutions, I can empathize with others on this. But let me share these insights in the hope that it will get at least one of you over the hump to a Yes.
There is a common pitfall that many of these studies fall into which doom them to failure, which has nothing to do with the value, but everything to do with the budgeting process. If the savings (e.g safety stock reduction) falls under one department, while the spend (transportation visibility) falls in another department that is usually the end of it.
Sometimes you can find allies. If the asset management group wants to track trailers or rail cars then you can have visibility over both, and add up the savings of both departments.
In some cases you can expand the project scope. The ability to improve transportation optimization with wireless tracking data to get more continuous moves, and match-backs may help pay the way also.
It also helps if there is a long term plan for creating value and efficiency, and this comes as a part of that; that makes it easier to pass muster.
Another department that can be of assistance is the risk management group. If you can bring value to their function, and help mitigate some of the disaster recover / product recall kind of risks, you have just got yourself a friend. This can even lead to savings in insurance premiums or a shift to self-insurance in some aread.
Claims Management, Customer Service, Merchandizing, Materials Planners, COrporate Governance? You name it. Visibility touches everything. It is possible that you are the expert on transportation, (and that’s great) but if these other folks can see some value, it is worth putting in the time. You will get to pool some resources, and get ALL your value and administrative efficiencies for LESS money from your budget. Now is that not a neat trick?!
And who says there is no value in visibility?
With wireless visibility some problem events that were untouchable (leading to detention, demurrage and expedites etc) can now be ‘seen’ and acted upon in real time. Isn’t innovation great!?