Archive for RFID & AIDC

Traditionally, we said that warehouses were operated in either a manual, semi-automated, or highly automated fashion. In a manual warehouse, pickers used carts, forklifts and other “dumb” forms of carriage to go to picking locations, gather the inventory, and deliver those goods to the shipping dock. However, forklifts are becoming intelligent. With the right kind of control system, a warehouse using forklifts becomes semi-automated.

Modern intelligent forklifts include diagnostics that allow the equipment to signal when it needs to be serviced, speed controls, anti-slip technology that monitors wheel spin and improve traction on slick floors, collision detection, fork speed optimization, and more.

Intelligent forklifts promote new process flows in the warehouse.  When integrated to a WMS, the forklift’s fork and be raised or lowered much quicker. The WMS directs a forklift to a pick location. Once at the location, the forklift knows whether the pallet to be picked is being stored at a height of three feet, six feet, or whatever. The operator pushes a button on the console and the forks move at the maximum safe speed, a speed considerably faster than the operator would be apt to move them.

Speed controls can be used to help ensure safety. For example, RFID tags placed in the floor can signal the forklift that this is a busy section of a warehouse traversed by humans. The forklift automatically knows it cannot exceed a set speed, for example two miles per hour, and the governor automatically limits the top speed to two mph in those sections of the warehouse.

In mixed case picking, forklifts can integrate with pickers wearing voice systems, follow them up an aisle, lift the pallet to the correct ergonomic height for picking based upon the location of the inventory in the warehouse racking, and then, when ordered to do so, autonomously (without a human driver) make the trip to a shipping dock for unloading.

The most intelligent forklifts today are built with real-time location systems that allow drivers to proceed to a specified location and pick up (or put down) a load without the need for the driver to scan the location to prove that they have picked up (or delivered) the right load. This solution is designed for full pallet moves in either a warehouse with racks or a bulk warehouse in which pallets are stacked on top of each other.

The term “Internet of Things” is being increasing bandied about. In one definition of the term “Internet of Things,” almost all objects have sensors, connectivity to a broader environment, and intelligence. Sometimes the object just has a sliver of intelligence; but it can be much more substantial. Objects can be products, equipment, containers, or forms of material handling equipment including fork lifts.

The following diagram shows how warehouse management systems (WMS) WMS and warehouse control systems (WCS) have traditionally been visualized. The WMS contains the ORDER, INVENTORY and LOCA-TION logic. The WCS had the MOVE logic. The WMS knew that this many units of this SKU needed to be picked and where that inventory was located.

TradWCS

Traditional View of the WMS/WCS Architectural Stack

When inventory was inducted into the automated material handling sys-tem, it was the job of the WCS to MOVE those items. The WCS did not need to know what INVENTORY was being moved, or how that inventory fulfilled customer ORDERs.

Actually, in practice, it has often been more complicated than this.  But this is still the way many in our field think about WMS vs. WCS.

Warehouse control in the age of the Internet of Things, requires a new conceptualization of WCS. A forklift that integrates through a control layer to some of the logic in a WMS to move its forks faster and more efficiently is engaged in a MOVE activity. That means intelligent forklifts need to be part of a larger warehouse control solution.

NewWCS

The New WMS/WCS Stack

In an era of distributed intelligence, a robotic revolution, and an environment in which new forms of “goods-to-man” automation are arising, it is inevitable that we will see value migrate from certain types of solution providers to others. Value is beginning to migrate toward more mobile (non-bolted down) forms of material handling used in goods-to-man processes.

WMS and material handling suppliers that can provide WCS solutions that can treat a forklift as an advanced form of automation, allow companies to add new forms of automation while protecting the WMS upgrade path, and provide logic that helps optimize throughput (even in warehouses where bottlenecks may shift over time between manual and material handling system choke points), will be the winners in this brave new world.

 

 

 

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Large chemical and oil and gas companies are, in general, far more advanced in their supply chain risk management practices than companies in other industries. But my coverage of this area convinces me that Dow Chemical, in particular, is one of the most advanced companies in the world in supply chain risk management.

Dow Chemical has revenues of $57 billion and employs 54,000 people around the world. It makes and ships agricultural, plastics and chemical products to customers in 160 countries.

This article is based on a speech Craig Casto, Global Leader of the RFID, GPS, AutoID, and the Telemetry Expertise Center at Dow Chemical, gave at the ARC Forum in February.

Dow makes approximately 7,000 shipments per day globally and it has the largest privately-owned railcar fleet in North America. Ninety percent of the company’s shipments involve non-hazardous chemicals. All North American railcars have two RFID tags, which allow Class 1 rail carriers to provide multiple updates per day on the location of each car. For non-hazardous shipments, this degree of visibility is sufficient. But for the 10 percent of Dow’s shipments that are classified as hazardous, a high degree of real time visibility is required.

Business requirements drive whether barcode, RFID or GPS is the appropriate form of Automatic Identification (AutoID). Cylinders are tracked with barcodes; transportation assets are tracked with RFID, cellular GPS, or satellite GPS. Transportation assets conveying hazardous chemicals require more extensive forms of tracking. For North American rail shipments of hazardous materials, cellular GPS is used to transmit location and sensor data multiple times throughout the day. Frequency of transmissions can be modified over the air based on the Department of Homeland Security’s threat level conditions. The GPS technology on the cars can create a wireless connection to various sensors monitoring car security, environmental conditions (temperature, pressure, shock, etc.) as well as the health of the mechanics of the car.

Dow_Sensor_Alert

Sensor Alert

Dow also leverages cellular GPS technology for intermodal container shipments with sensors that measure temperature, humidity, shock and light. For example, a light sensor would register a container door opening as well as the location where the door was opened.

Cellular networks only extend about three miles from the coast, so the technology has the capability to register GPS locations while in transit and download all information at the next opportunity that the vessel and container are within cellular range. Dow has also used tracking devices on sea containers that combine cellular with satellite transmissions while at sea, for constant tracking when placed on the deck of large vessels.

Event management software is critical in assuring that Dow personnel or supply chain partners are not overwhelmed with data. This is necessary partly because of the large number of different things that can generate alerts.

The event management software allows Dow to establish rules that when violated, generate email or text message alerts that drive a response. The rules are used to determine whether a response is necessary and who should respond. This is driven by the parameters used to generate a sensor alert — e.g., the humidity alert goes off if a sensor detects humidity outside of defined parameters.

The Dow Visibility Solution for Rail

The Dow Visibility Solution for Rail

The size of the ruleset is also driven by context; the same event can generate an alert in one situation but not in another. Context is often driven by GPS geofencing. If a railcar hatch opens, but the railcar is in the geo-fenced part of a manufacturing plant where chemicals are loaded, or at a maintenance shop, that would not be an alert situation. In the US, the Transportation Security Administration (TSA) has designated high threat urban areas, and thus geofencing and alerting must be designed to support the TSA’s initiative.

Finally, nesting logic is an important feature for a visibility solution. If a humidity alert goes off, it is perhaps because a wave has gone over the bow of a ship and water has seeped into the container, so every drum in that container potentially needs to be checked for quality.

Liquid Level Monitoring and Container Location

Liquid Level Monitoring and Container Location

Dow’s visibility platform allows it to provide more robust estimated time of arrival data to customers. Dow can also set alerts that tell it when inventory has been sitting in a particular location for more than a defined number of days. Thus, in conclusion, once you have the ability to track inventory, even if the purpose was initially to improve risk management, that capability can be leveraged to improve the supply chain.

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On Tuesday morning I checked the reporting dashboard for Logistics Viewpoints. The screenshot below shows the search terms that were driving people to the blog that morning. The second item caught me by surprise; I thought only people interested in supply chain and logistics visited Logistics Viewpoints, but it seems like we attract a much broader and intellectually curious audience.

BlogSearchTerms

In other news this week…

Globe Tracker International (GTI) introduced its Smart Autonomous Asset Solution that combines the company’s Trade Data Exchange Network (TDEN) and Smart Autonomous Asset Network (SAAN) with its Globe Tracker Communications Unit to enable “end-to-end tracking, monitoring, and trade data sharing for the global shipping industry.” Here are some details from the press release:

GTI’s Trade Data Exchange Network uniquely allows supply chain partners to securely and selectively share supply chain data from their own private databases, behind their own security firewalls. No one gives up control of their private data. Anyone of the partners can request the latest data for a particular asset, a parcel being shipped from China to Canada for example, through a secure web portal.

 

GTI’s Smart Autonomous Asset Network tracks and monitors assets for the purpose of improving the assets efficient utilization and as a by-product provide the asset owner with valuable real-time data that can be shared with its supply chain partners.

 

The centerpiece of GTI’s SAAN is the Globe Tracker Communications Unit (GTI Comm Unit) which is permanently installed on the asset. It will track and monitor for the life of the asset, truck trailers, dry bulk and reefer cargo containers, and railway cars for example.

I’ve never been briefed by Globe Tracker International, so I don’t know much about the company and its solutions. But I’m generally a proponent of network-based solutions for supply chain and logistics processes, assuming they are architected correctly. On the other hand, these types of asset-tracking networks have had mixed success in the past (see the shutdown of Savi Networks). Ultimately it comes down to this: Does the value of the asset and the data you’re collecting (and the benefits you can achieve by leveraging that data) justify the cost of the tracking hardware and service? Historically, the math worked out only for a handful of industries and use cases, but as the cost of the hardware continues to decrease, the market opportunities are arguably better today.

The Freight Transportation Services Index (TSI) increased 1.2 percent in January from December, rising for the third consecutive month. According to the press release:

The TSI increase in January likely resulted from inventory growth. Wholesale inventories grew 1.2 percent during the month, according to the U.S. Census Bureau’s Monthly Wholesale Trade report. The restocking followed the drawdown of inventories in the fourth quarter of 2012.

 

Freight shipments measured by the index were up 1.2 percent in January compared to the end of 2012. In comparison, the index declined 3.6 percent during the same period a year earlier in 2012.

In related news, according to the Cass Truckload Linehaul Index…

Truckload linehaul rates stayed steady from January to February, but have risen 4.3% since February of last year. From a trend perspective, truckload linehaul rates have risen or stayed flat almost every month since they bottomed out in 2010. Rates today are at their highest point in the most recent eight years (the dates included in our index). Despite that the steeper-than-normal cost increases in late 2012 were at least partially the result of increased demand in the Northeast post Superstorm Sandy, the higher rates are likely to hold in 2013, as supply and demand seem to be relatively balanced.

Somewhat contradicting these stats is the findings from the American Trucking Associations’ (ATA) Trucking Activity Report that “the turnover rate for drivers in the truckload sector took a surprising dip in the fourth quarter… the likely result of a weakened economy and overall freight volumes.” Here are some additional details from the press release:

Turnover at large truckload carriers dropped from an annualized rate of 104% in the third quarter to 90%, its lowest point since the first quarter of the year. For all of 2012, turnover averaged 98%, the highest since 2007 when the churn rate averaged 117%.

 

“As freight volumes slid a bit at the end of 2012, we saw turnover follow suit,” ATA Chief Economist Bob Costello said. “However, this is just a respite from the long-term trend and driver shortage storm that’s coming when the freight economy accelerates; and even then, these relaxed levels are still quite high relative to recent years.”

My overall takeaway is that trucking activity is a bit stronger today than a year ago, with the scales tilted slightly toward stronger growth in the weeks and months ahead depending on what happens with the economy.

Finally, UPS is following in the footsteps of Walmart, Con-way Truckload, and others in making a commitment to hire 25,000 veterans over the next five years. For related commentary, see “The Greatest Talent Pool Available – America’s Veterans.”

Have a great weekend!

Song of the Week: “Grey Cell Green” by Ned’s Atomic Dustbin

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Last week Macy’s, the department chain retailer, announced its fourth quarter results. The company has done well in a tepid economic environment. Macy’s has been beating estimates for same-store sales for several months, posting year-over-year comparable store sales growth of 3.7 percent. In its peer group, Macy’s is one of the industry’s star performers.

As Chief Financial Officer Karen Hoguet made clear in her call with financial analysts, Macy’s omni-channel strategy is one of three key strategies driving its success. According to a Wall Street Journal article, without web purchases, same-store sales for the fourth quarter would have only increased 0.6 percent. Ms. Hogue spent a good portion of the call discussing the omni-channel strategy, and because Macy’s is one of the most successful omni-channel retailers, it is worth reporting what she said in some detail. All quotes below are from Ms. Hogue’s comments.

Omni-channel offers “enormous opportunities,” which Macy’s has only begun to tap. The retailer has put significant resources into figuring out “how to best optimize the use of warehouses and our stores in an ever changing fulfillment environment.” For Macy’s, this means “filling many items that are ordered in our stores from the inventory either from other stores or from our online fulfillment centers. At the same time we began in 2012 to fill orders entered online out of inventory in our stores. 292 stores are enabled to fulfill goods, up from only 23 a year ago. By fall of this year, we expect to have 500 stores fulfilling orders.”

When it comes to fulfillment, “we are finding customers don’t really care where we fulfill the goods from, as long as we fill the order accurately and the delivery is timely.” Macy’s stores that are capable of omni-channel fulfillment have expanded back rooms where goods are packed. The picking is done in the front of the store. “One of our early lessons is that we had thought we would have special purpose people doing the fulfillment activity. We discovered we were better off using the support of the [store] associates we had because they better understood the merchandise. And people who are putting merchandise on the floor are going to find it much quicker.”

Nevertheless, store picking is not easy. Picking fashion items is difficult because of size, color, and style product variations. Macy’s is investing aggressively in RFID for replenishment. “By the fall we are hoping to have roughly half our replenishment business utilizing RFID… And we are just waiting as the vendors come up [to speed] and begin to tag the goods.” RFID will greatly aid store fulfillment people in locating the correct goods in the front of the store.

In addition to being an execution problem, store fulfillment is an optimization problem. “We’ve built algorithms to help us determine from where we pull the inventory…In the future we expect these formulas will be key to offering faster and even same-day deliveries. And [they will also] enable the customer to buy online and pick up in our stores. We’ve done a lot of experimenting this year with goods that are in the stores for which we don’t have [sufficient store] inventory backing it up.  A lot of those initiatives have done very well. We’ve also experimented with putting merchandise online that we don’t have inventory for in the online warehouses. The inventory is only in the stores. In the 4th quarter we had about 700 items we tested this with, very successfully. It is good from a profit perspective because these are typically goods whose economics don’t do so well in big warehouses.” I interpreted this as meaning that Macy’s has a tool for calculating granular total landed costs by product by channel. If true, that is impressive.

Another key initiative for Macy’s is focused on store personnel training. It is important for omni-channel and training initiatives to reinforce each other. “We are encouraging our store associates to think omni-channel. This means selling customers merchandise that may in fact not be in that store, whether it be out of stock or not even carried in that particular location. It also means embracing the customer making a return.”

In conclusion, an omni-channel strategy can be an important driver of growth for brick-and-mortar retailers. But it is not a quick fix. Macy’s began its omni-channel initiative in 2009. And it cannot succeed in isolation. “It all starts for us with our merchandise acumen and our ability to run great stores. These are central to our omni-channel success.”

[Editor's Note: For related commentary, watch last week's Talking Logistics episode where Adrian Gonzalez interviews two retail executives about omni-channel fulfillment and the future of retail logistics].

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Predicting the future has never been easy. Back in 1943, Tom Watson, the president of IBM at the time, said “I think there is a world market for maybe five computers.” And in 1995, Robert Metcalfe, the founder of 3Com and the co-inventor of Ethernet, made this astonishing prediction:

“Almost all of the many predictions now being made about 1996 hinge on the Internet’s continuing exponential growth. But I predict the Internet will soon go spectacularly supernova and in 1996 catastrophically collapse.”

Two years later, Mr. Metcalfe literally ate his words by putting a printed copy of the article where he made that prediction in a blender, then he added some liquid and drank the resulting mix from a bowl.

The bottom line is that even great leaders and innovators like Tom Watson, Robert Metcalfe, and many others don’t always get it right when it comes to envisioning the future. Steve and I take comfort in knowing that if we are completely wrong about our predictions for 2013, we’ll at least be in great company.

Adrian’s Predictions

The biggest challenge with making supply chain and logistics predictions is keeping the list short because there is so much going on in this field. Nonetheless, here’s my abridged list:

1. Big Data, Social Media, Cloud Computing, and Mobile Technologies will continue to dominate the headlines. These are such dominating trends that you can easily take this prediction and break it down into a dozen or more. Simply put, if you look at all of the press releases issued by technology companies over the past two years, the majority of them dealt with one or more of these trends. And we’ll see more of the same in 2013 and beyond, with the greatest innovation coming from the convergence of these four trends. Here are some quick thoughts on each:

Big Data: continued progress with predictive analytics and sentiment analysis, continued challenges with data quality.

Social Media: more startups, more acquisitions, more case studies.

Cloud Computing: the biggest value will come from B2B connectivity and the insights derived from network-level data and analytics.

Mobile Technologies: tablets and smartphones are quickly becoming the preferred computing platform for business professionals, and we’ll see more enterprise applications designed and optimized for these devices in the years ahead.

2. User Interfaces for Supply Chain Apps Will Get a Social Makeover. Software vendors will transform the look and feel of their user interfaces by adding capabilities similar to Facebook and Google + (think of creating “Circles” of your carriers, suppliers, customers, and even other shippers), Twitter (to send short status messages), and Dropbox (for sharing purchase orders, invoices and carrier credential documents). The Holy Grail is a user interface that allows a person to access business intelligence information, execute transactions, and communicate/collaborate with others (via embedded email, chat, microblogging, video calls, and VOIP) all from a single screen.

3. “Siri” Comes to Enterprise Apps. Instead of manually executing tasks with a mouse or touch screen, why not speak them? We already see this in the consumer realm with smartphones, and in the warehouse too with voice picking technologies. It’s only a question of time before speech recognition gets embedded into other enterprise and supply chain applications. A TMS user, for example, can say to the system, “Show me all uncovered loads,” or an inventory manager can ask, “Which stores have less than three days inventory of product X?” and up come the results on the screen. To get a sense of how quickly speech recognition technology is progressing, check out this informative Microsoft video where Chief Research Officer Rick Rashid demonstrates a speech recognition breakthrough that converts his spoken English words into computer-generated Chinese language in near real time.

4. The Robots Keep Coming. Amazon’s acquisition of Kiva was one of the biggest stories this year, which basically underscored the changing nature of automation in the warehouse. But robots and automation are playing a bigger role in other areas too, such as the rise of driverless cars and the use of robots to track inventory in stores. Where does that leave us humans? As Erik Brynjolfsson and Andrew McAfee from MIT state in their book, Race Against the Machine, “Our technologies are racing ahead but many of our skills and organizations are lagging behind. So it’s urgent that we understand these phenomena, discuss their implications, and come up with strategies that allow human workers to race ahead with machines instead of racing against them.”

5. Continued Focus by Retailers and Service Providers on Innovating the Final Mile. Amazon, Walmart, Google, eBay, and USPS all launched or ramped up their efforts to provide same-day delivery to consumers this year (see “On Amazon’ Quest for Same Day Delivery,” “Google, Same-Day Delivery, and Container Tracking,” and the WSJ article, “Same-Day Delivery Becomes a Costly Web Battleground”). Earlier this month, Google acquired BufferBox, which provides lockers for customers to receive packages from online e-commerce retailers (very similar to Amazon Locker). Couple this trend with urbanization and omni-channel retailing, and you can see why innovating “final mile delivery” will remain a priority for retailers and service providers in the years ahead. Optimization and mobile technologies will play an important role here, as will couriers and public transportation.

6. Further Blurring of the Lines Between 3PLs, Tech Providers, and Consultants. Over the past few years, we’ve seen 3PLs offering technology-only solutions to customers, software vendors introducing managed services, and consultants offering technology and managed services in addition to their standard project-based services. As I said in a recent posting, a successful 3PL today is an operations manager, a consultant, and a technology provider all rolled into one. You can say the same thing for software vendors and consultants.

7. Increased Adoption of Alternative Fuel Vehicles. Frito-Lay, UPS, Ryder, Sunny Delight, FedEx, Waste Management, Staples, AT&T, and Mohawk Industries are among the many companies that have started using alternative fuel vehicles — including natural gas, electric, and hybrids — in their transportation operations. The rising cost of diesel and sustainability goals have been the main driving forces, and they’ll continue to lead other companies in this direction in the months and years ahead.

8. More Programs and Partnerships to Address the Talent Shortage Problem. There is a shortage of supply chain and logistics talent in the industry. One way to address this problem is for companies to partner with local universities and community colleges to create training programs that align with their talent requirements. The partnership between TNT Express and Tilburg University is one example. Other examples include the AllianceTexas logistics park and its partnership with the Tarrant County College Corporate Training Center, which trains people to become certified logistics associates (CLA) and certified logistics technicians (CLT), and the partnership between MIT and the Zaragoza Logistics Center in Spain. Software vendors are also donating their solutions to colleges and even high schools to give students hands-on experience using supply chain and logistics software before entering the workforce.

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Steve’s Predictions

Omni-channel retail is a trend we have been talking about for a few years, prematurely for the most part. Retailers, particularly big box retailers, are facing pressure from two directions — Walmart’s low prices and Amazon’s e-commerce driven convenience. This year several of these retailers began reinventing themselves by embracing omni-channel commerce, which aims to deliver a seamless consumer shopping experience through all available channels — i.e., mobile devices, personal computers, bricks-and-mortar stores, catalogs, and so forth. For omni-channel to be successful, retailers need to address the appallingly bad inventory accuracy that exists at many stores. For years, retailers have bought automatic identification (AutoID) solutions to improve inventory accuracy in their warehouses. Next year retailers will make big investments in AutoID solutions to use in their stores.

When a solution provider has done something particularly innovative or successful, you can be sure that others will do the same. These types of predictions are easier to make, and here are two that fall in this category:

This year Infor (an ARC client) took a real step forward with its innovative new user interface. The Infor solution blends traditional process flows, in-line analytics, and logical opt-in social community groups. Social media is something that many logistics professionals still struggle with, but I suspect that many of them who view the Infor solution will be as impressed as I was. I believe we will see other software vendors providing the sincerest form of flattery by copying the look and feel of Infor’s user interface.

Kiva is another successful company that others will copy. This material handling robotics firm was purchased at a high price by Amazon. We are already seeing material handling firms making questionable assertions that they also provide robotic solutions. But I think we will see innovative new autonomous, mobile robotic solutions emerge and gain traction in the coming year.

Now here are a few predictions that I am certain of, although it might take longer than a year for them to come true.

Mobile and autonomous robots will change the layout and look of warehouses. Traditional warehouses have 40 foot ceilings; robots can operate in facilities with much lower ceilings or even in multi-floor buildings. I believe we will begin to see traditional strip malls bought and modified (by adding new truck doors) into robotic warehouse facilities. This will often prove to be much cheaper than building a brand new warehouse.

The biggest optimization hole in logistics is around the difficulty of arranging for collaborative, multi-party backhauls. Too many trucks still go out full and come back empty. I believe transportation management systems with a multitenant architecture and new LinkedIn-style logistics communities will begin to provide us with a real solution to this problem.

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So, do you agree or disagree with our predictions? What predictions are on your list? Post a comment and let us know!

Editor’s Note: You can watch a video of Adrian discussing his 2013 supply chain and logistics predictions at Talking Logistics.

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