Wireless technology is key to better control of the supply chain. As Candice Goodwin discovered, it all comes down to getting better, faster information about goods and services right down the chain, from the manufacturer to the retailer's shelf
Better supply chain control brings a whole host of benefits: shorter time to market, lower retail price, lower inventory costs, happier customers, and improved collaboration between trading partners. It all comes down to getting better, faster information about goods as they move from manufacturer through to the retailer, and a battery of mobile technologies are being used to relay that information.
As goods travel between the production line and the point of sale, moving from depot to depot and being loaded and unloaded from lorries, there are many opportunities for them to be lost or stolen or languish on shelves beyond their sell-by date.
This is where wireless technology, such as wireless networking (Wi-Fi), RFID (radio frequency ID), Bluetooth, GPRS and GPS, comes into its own.
In the warehouse, Wi-Fi and Bluetooth technology are improving logistics and saving costs. Instead of being sent out with a static list of goods to collect or stack, staff equipped with mobile terminals can receive instructions in real time, making it easier for companies to react to changing circumstances.
Data terminals on delivery trucks can alert warehouse staff of incoming goods and receive information about consignments. On the road, GPS systems linked to onboard computers enable head office to track the truck's whereabouts and change routes in response to changing demand.
For example, delivery firm UPS plans to equip its trucks with handheld computers with GPRS and GPS capability, to give drivers more detailed directions to customer pick-up or delivery points, as well as Wi-Fi and Bluetooth connectivity so that they can communicate with systems in the depot.
So far, mobile technology has been mostly used to improve warehouse logistics and drivers' delivery routes. The next step is to use it to support a truly integrated supply chain, where information flows seamlessly between all business parties involved in the process.
"As goods are being moved from one place to another, suppliers want to make sure goods are received and of good quality at each stage," says Tony Fish, chairman of Wireless Ecademy, an organisation set up to discuss and promote the use of wireless and mobile applications.
For this to happen, suppliers need better information about items moving through the supply chain, and this is where RFID technology comes in.
Like the humble barcode, RFID tags hold information that can be read for input directly into a computer system. But they also have a number of crucial advantages for the supply chain, and retailers, including Walmart in the US and Tesco and Metro in Europe, are in the process of rolling out major RFID implementations.
In the warehouse, RFID already has a number of benefits: it does not require line of sight, so tags can be read inside packing cases, and tags can be read as a batch rather than one by one like barcodes.
However because RFID tags have built-in chips, they have the potential to store more information and be used, along with sensors, to transmit information about parameters like temperature, movement and radiation.
RFID technology has been around since the 1970s, but two factors are driving its wider uptake. First, chip technology has evolved to the point where tags and readers can be produced more cost-effectively - though at the moment they cost more than barcodes so are mainly used for higher-value items like CDs.
Second, standards are now appearing that enable RFID systems to work together. Previously, most systems were proprietary within organisations but common standards will enable different partners in the supply chain to read the same product tags.
EPCglobal, a joint venture set up to commercialise Electronic Product Code technologies, is being backed by retail giants including Walmart and Tesco, and has plans to submit protocols for ISO approval.
Co-operation between all the players in the supply chain will, however, be key to the widespread uptake of RFID. "Companies like Walmart can dictate that all products must be RFID tagged, but smaller companies do not have the muscle to do that," points out Jonathan Friedlander, operations support manager for Whitbread supply chain.
As is often the case it will be politics, rather than technology, that stands in the way of a truly automated supply chain.
RFID in the supply chain
German company Metro Group is working with technology partners including IBM, Philips and NCR on what it claims will be the world's first RFID project to extend throughout the supply chain. The first phase of the roll-out starts in November, with about 20 suppliers, and will be extended to about 100.
RFID tags will be used to track goods from distribution centres to the shop floor, giving Metro better visibility across the supply chain and helping to ensure better product availability in shops. Metro is also looking to RFID to provide in-store benefits. For example, higher value items such as CDs and DVDs will be tagged individually using a system that incorporates theft prevention. RFID multimedia kiosks will also enable customers to swipe a CD or DVD and get a preview of the album or film.
The tags will support real-time inventory and expiry date control, help to generate sales data and find misplaced items. Metro also plans to use the tags with NCR FastLane checkouts to enable shoppers to scan, bag and pay for their own purchases.
Gerd Wolfram, executive project manager of Metro's Future Store Initiative, says, "RFID technology will make retail processes much more efficient at all points up to the front-end checkout."
Pilot projects have indicated that RFID tagging will lead to up to 18% reduction in lost items, 11% reduction in warehouse staff and 14% improvement in stock availability in stores.
Mobile technologies for the supply chain
- Barcode readers: lasers read barcodes at a distance of up to 20in. This is a cheap, well-proven technology - but needs direct line of sight and can only read one tag at a time
- Bluetooth: Uses short-range radio for voice and data communications, at distances of up to 30ft and at data rates of 1mbps. Good for linking scanners to handheld terminals in a warehouse or delivery centre
- Electronic article surveillance systems: security tags that emit radio signals that are detected by a pair of antennae at the shop or warehouse door
- GPRS: General Packet Radio Service, cellular data service offering rates of up to 115kbps. Good for vehicle tracking and for data communications to and from delivery vehicles
- GPS: Global Positioning System terminals use satellites to pinpoint their exact position. Used to track the whereabouts of delivery vehicles and optimise their routes
- RFID: uses radio frequency signals to read data from electronic tags on goods and consignments. It is more expensive than barcoding and can be affected by surrounding objects, but RFID tags can hold more data, do not require line-of-sight communication, can be read in a batch, and often from longer distances than many technologies
- WiFi: Wireless Fidelity, better known as wireless networking, uses Ethernet protocols to send and receive data over distances of a few hundred feet. Good for linking mobile terminals in trucks or carried by staff to central computers in warehouses and delivery centres.
Whitbread's mobile warehouse
The Whitbread Group's distribution arm is using wireless technology to improve productivity in its Reading and Manchester warehouses.
The system went live in the Reading warehouse earlier this year and results are impressive. "We have reduced stock errors by half, which means a better service to customers because fewer items are lost," says Jonathan Friedlander, operations support manager, Whitbread supply chain. "We have also moved to real-time operations so we know exactly where we are, have an instant view of productivity, and can manage and allocate tasks more effectively."
Warehouse staff used to get their work instructions on paper. As each task was completed it was checked off the list, and the paper handed back to warehouse administrators who entered the changes on the warehouse management system (WMS). "It was labour-intensive and time consuming," Friedlander says.
This has been replaced with hands-free voice headsets for the order pickers who collect goods from the warehouse. Mobile data terminals with built-in barcode scanners are used for communicating information with warehouse truck drivers.
As goods arrive, pallet truck drivers scan the barcode and confirm the quantity of packs or cases it contains as they unload. Their mobile terminals tell the WMS which products have arrived, enabling it to match stock records to suppliers' delivery schedules. The WMS sends back instructions about where to deposit the pallet.
Picking staff now receive instructions one by one via lightweight headsets that leave their hands free. The WMS even manages the picking order to ensure that heavy or bulky items are picked first so they are placed at the base of a stack for load stability and to reduce the risk of damage. "We can now schedule tasks in real time and react to situations much more quickly," says Friedlander.
This article is part of Computer Weekly's Special Report on wireless mobility, produced in association with Intel