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Actively Managing Supply Chains

Savi Technology made its name providing battery-powered RFID systems to help the U.S. military manage its supply chain. Now Savi's expanding to the commercial sector to secure its market position.
By Bob Violino
Tags: Standards
Aug 31, 2003—Sept. 1, 2003 - All of the talk these days is about using radio frequency identification to track unique items with low-cost passive RFID tags. Yet one of the most successful RFID companies, Savi Technology, has focused on providing active (battery-powered) RFID tags and software infrastructure to track shipping containers.
Savi's Verma

Savi's biggest customer is the U.S. Department of Defense. All of the pallets and containers that the U.S. Army ships to Afghanistan and Iraq are required to have RFID tags (see Military Orders RFID Tracking), and military supplies all around the world are tracked using Savi supply chain software and RFID hardware. Now Savi is deploying its technology in ports to allow shipping companies to track and secure containers traveling around the world. And Savi is partnering with other companies to provide the item-level visibility that businesses will need.

Savi was launched 14 years ago by Rob Reis, after his son wandered off in a grocery store. Reis found his son, but started the company to develop an RFID tag that could track lost children. He hired Vic Verma, an engineer at Stanford University, to build the product. Reis eventually left the company and Verma became its president & CEO.

The child-tracker never panned out, but the military took an interest in Savi's active tag technology because the battery-powered signal provided a long-enough read range to track tanks, containers and other military equipment. During the first Gulf War, the Army shipped 40,000 containers to the Middle East and had to open up 25,000 of them to see what was inside. After that, the Army began looking for a technology that could help it track supplies sent overseas.

In 1994, Savi won a $70 million contract to build out the U.S. Department of Defense's Total Asset Visibility (TAV) network, designed to improve the tracking and security of shipments from the United States to forces overseas. The network features RFID hardware and software for tracking cargo containers, electronic event-driven alerts, anti-tamper systems, virtual inspections and authenticated audit trails. Using Savi active tags on its shipping containers, the U.S. military now knows the whereabouts and contents of shipped equipment.

The military has continued to rely on Savi to build out its TAV infrastructure. In 1997, the Department of Defense gave Savi a $112 million contract, which was extended for two years in 2002, and this past February, the DOD awarded Savi a $90 million U.S. military procurement contract. Savi now tracks more than 200,000 items—ranging from ammunition to spare parts—for the military each year. Around 60 percent of Savi's revenue in 2003 will come from military contracts, up from 50 percent in 2002 because of the deployments of U.S. troops in Afghanistan and Iraq.

Verma says that Savi had long known that the military would be a primary market for RFID systems because of its supply chain problems. The army never wanted soldiers to be short of supplies, so they shipped extra containers overseas. But often the distribution managers didn’t know what they were getting. If, for instance, 70 containers of C-rations were in the pipeline, some soldiers would wind up eating breakfast food three times a day for a week.
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