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RFID Chops Timber Costs
Using tags embedded in plastic nails, German forestry company Cambium tracks logs as they move from the forest to the factory.
Though the system has not been in place long, Cambium is already enjoying faster customer payments, higher accuracy in accounting and the elimination of manual reconciliation among various systems. Billing process is faster and more accurate because the new system eliminates the need to enter inventory lists manually into the ComForst database software. The company has also reduced shrinkage, or the loss of logs in the woods because they are forgotten or left behind by drivers, by 70 percent. In addition, Cambium saves on fuel thanks to improved logistics.
End customers naturally receive better raw materials quicker, and information about the supply pipeline can help companies better plan their own production. End customers, such as Pollmeier or Uhlein, sawmill operators that participated in the trial, receive lists of information about logs in inventory. The data, written in XML or ELDAT, can then be quickly imported into their systems.
The Log Tracking System can be used in yet another way that could improve revenues. According to the University of Münster, Germany's forest industry consists of 185,000 companies, with total annual sales of about 181 billion euros ($218 billion), and employs 1.3 million workers. With two-thirds of its land forested, Germany's domestic industry produces 1.8 million cubic feet of wood per year and meets two-thirds of the country's demand. Of the forested land, roughly one-third belongs to the federal government and one third to local communities, with the final third staying in private hands.
At present, many small tracts of land in Germany are not profitable to log because of government-mandated reporting requirements, and because of the effort needed to pay each of the multiple owners of land for their timber. With the LTS, a nail could be placed in each tree prior to cutting it in a small patch of land. Reports about which trees are chopped down and which ones remain standing could be generated electronically, significantly lessening the burden of the reporting and billing process. This system could also be used to verify sustainable management of forests and track newly planted or endangered trees. German forest owners must be able to report to the government how many trees, and which types, they have on their land, and these reports could be generated electronically as well.
Friemel is considering adding GPS functionality to readers in order to chart the logs' exact locations in the forest. This would give Cambium more control over the supply chain and allow it to fill trucks to maximum capacity by better utilizing logistics know-how, together with the location data. However, initial tests showed a poor reception of GPS signals under the trees of the Odenwald.
Friemel doesn't plan to get into the IT business, but he does intend to sell the RFID application starting in mid-2006, in partnership with DABAC. All license revenues will be split evenly between the partners, and fees collected for operating the system will go to DABAC. The company has filed for a patent for its application and will operate the LTS with its own servers, acting as a service provider.
A complete system for a small company the size of Cambium's would include thousands of nails, at least two hammers, four handheld computers with readers, two helmets and a software license. DABAC was reluctant to estimate what it would charge for the system, since such details have not yet been made final. If potential customers do not want to invest in the handhelds, helmets and readers, DABAC will lease them through a third party. The details on which company would handle the leasing are still being worked out. Gross said DABAC has a list of 50 companies around the world that are interested in the LTS.
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