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Logistics Providers Move, Slowly, Toward RFID

The business cases for internal and global visibility have been identified, but cost and data interoperability remain roadblocks to widespread adoption.
By Mary Catherine O'Connor
Apr 01, 2011—Since mid-2010, Kerry Logistics, a Hong Kong-based third-party logistics company, has been using RFID at one of its facilities to track the camera products it packs and ships for Canon. Kerry Logistics makes sure all the correct camera components, accessories and warranties are packed into each product box, and that the right boxes are put in cases, placed on pallets and shipped to retail locations. The RFID system has removed some manual steps, cutting time in the kitting process and ensuring accuracy. It has also sped the process of verifying that each order is complete.

"The speed for capturing serial numbers has been enhanced around 70 percent," says Wilson Lee, Kerry Logistics' director of information technology. "The processing time has been shortened from 18 seconds to five seconds for scanning one carton, in which six items are packed."

Photo courtesy of Kerry Logistics.

The RFID project is only in its first phase. Kerry Logistics has a number of other applications in mind, including extending the RFID system to Canon retail stores in Hong Kong, where the tagged products are shipped. Kerry Logistics drivers could use handheld readers to check the RFID tags on the cases as they disassemble the pallets. This would replace a bar-code system for verifying the order has been shipped and delivered, expediting the process and boosting accuracy.

The RFID deployment initiated by Kerry Logistics represents a small but growing trend among logistics providers, the link between manufacturers and retailers. In the past, manufacturers—under the gun of retailer mandates—asked their logistics companies to RFID-tag goods, says Drew Nathanson, director of operations for VDC Research, a technology research firm. Today, it's the logistics companies approaching manufacturers and asking them to consider the benefits of RFID. They recognize the internal visibility RFID can provide, such as quicker and more accurate data, which can be used to lower labor costs. "It takes out manual steps that can lead to mistakes," Nathanson says, "and then the logistics companies can pass all those benefits on to their customers."

Some logistics companies are also leading an effort to collaborate with their customers, developing applications that are mutually beneficial. And as in manufacturing and other industries, logistics providers are using RFID to track returnable transport items (RTIs), and cargo containers and vehicles in yards or ports. In the near future, logistics providers that service food producers may be asked to adopt RFID temperature-tracking solutions, to help their customers comply with government regulations).

Meanwhile, many of the largest logistics firms—including DHL, Maersk Line and NYK Line—worked with manufacturers, retailers, industry groups and governments to provide global visibility throughout the supply chain. A multiphase pilot project, led by EPCglobal's Transportation and Logistics Services Industry Action Group (TLS IAG), tracked consumer items, including electronics, footwear and agricultural machinery, from the Port of Shanghai to the Port of Los Angeles. A key goal was to establish standards for sharing EPC RFID data among trucking, shipping and air cargo carriers, securely and in real time. The information could help logistics providers speed through customs, and thwart counterfeiting and theft, and visibility into the whereabouts of their goods could enable companies to make smart business decisions.
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