Radio frequency identification (RFID) technology in conjunction with unique asset tracking is clearly the ‘next big thing’ in technology for tracking pallets and containers. So far, however, it is finding acceptance mainly in applications involving relatively expensive assets, such as plastic pallets or high priced containers.
Having the ability to track pallets and containers may be attractive for any number of businesses and organizations in the pallet industry. For example, a pallet supplier may want tracking capability in order to start pallet rental services. It may be an option for another company that wants to be a pure pallet rental business. Tracking pallets and containers also may be important for a common pool association that wants to improve quality assurance or a user of rental or exchange systems that seeks to trim pallet costs.
Companies providing RFID-based tracking solutions include Xterprise, which developed software for iGPS, and Fluensee, which, among other applications, has a mining company customer that uses its AssetTrack system to track plastic pallets.
Batch or bulk tracking solutions, which do not require an infrastructure of tagged pallets and readers, address the needs of a broader range of pallet rental providers as well as users in rental and exchange applications.
Collectively, applications are available to meet the range of tracking requirements, from expensive pallets to inexpensive.
Balance Forward,
Serialized Approaches
There are two basic approaches to tracking reusable pallets and containers, according to Eric Swanson, director of container management group for Orbis Corp., which manufactures plastic pallets and containers.
Speaking at a recent seminar at the
Within the balance forward approach, Eric differentiated between bulk or batch tracking versus tracking that is tied to the Enterprise Resource Planning (ERP) software of the pallet user’s business. With ERP software, a certain number of specific pallets and containers may be automatically tied to a certain shipment quantity, thereby imputing pallet and container shipment totals based on knowledge of product types and quantities shipped. In some applications, this can be an effective approach. For example, a salt products manufacturer in
This approach is less useful in applications such as grocery distribution, where customers may order in less than full pallet quantities due to space constraints. Grocery pallets usually have been tracked by bulk or batch methods in the past; for example, 24 GMA pallets under load would be exchanged for 24 empty GMA pallets. Pallet exchange has been discontinued at many major grocery retailers, but batch tracking endures for a majority of applications where pallets are tracked by type, not by unique identifier – such as the majority of CHEP pallets.
For serialized assets or those with a unique ID, either bar code or RFID tags provides a way to uniquely identify pallets or containers. Unique identification programs have the potential to contribute a treasure chest of valuable information. For example, they can identify where pallets leaked out of a system, where they were damaged and where they dwell. This approach also can provide important information about the goods being moved under load.
Sarbanes-Oxley and NAFTA
At the
Peter Kastner, president of Vestigo Corp., has written about the Sarbanes-Oxley law and how it pertains to reusable transport packaging. He points out that without an asset tracking solution, public companies that manage supply chains or asset inventories open themselves up to Sarbanes-Oxley liability if error-prone processes lead to significant misstatements of asset inventories.
For pallet-using companies, Sarbanes-Oxley also can be a huge consideration. In both
After its rapid growth in
Pam recently underwent a pilot program at two IP operations, using it primarily to audit IP’s large pallet rental invoices. Previously a daunting task, auditing with the aid of 2ic Pallets quickly identified the number of pallets shipped or received, broken pallets returned for credit and effective dates of transfer, which impact daily rental charges.
“We found more discrepancies than I would have ever thought possible,” said Pam. She also found 2ic Pallet software very effective for speedy data entry.
Another reason to track reusable pallets and containers is to avoid unnecessary duties or taxes. Customs officials of NAFTA countries require a voluntary declaration on any import that may be subject to duties or taxes. This may raise a disclosure obligation on the return of returnable shipping assets that have been outside their country of ownership for more than a year. Therefore, tracking containers to ensure they are repatriated annually is an important opportunity to reduce costs.
NWPCA Study, EPAL Project
The National Wooden Pallet and Container Association is studying the feasibility of establishing a new block pallet pool. The pallets may be equipped with RFID tags, the association has indicated.
This approach is hardly surprising to participants in an RFID project involving EPAL, the European pallet association. To the Europeans, RFID tags for pallets make perfect sense for a pool that wants to ensure authenticity of pallets and to rationalize pallet depot operations. The European office of GS1, an industry technology standardization body, has been partnering with EPAL in tests. The EPAL pool consists of about 500 million pallets and involves about 400 pallet suppliers and 1,000 pallet repair and recycling facilities.
“The standardized EPAL pallet is a key carrier in the supply chain of all industries,” Harry Jacobi, CEO of EPAL, said in a statement. “It was a logical step for us to use the GS1 EPC global standards for this pilot project. Some manufacturers and retailers have already shown their interest in exploring the benefits of the RFID tagged EURO-pallet.”
“The open pool is a driving force for standardization of RFID,” Stephane Pique, European director EPC-RFID of GS1 in
“This project is very important to us, and we are glad that EPAL has approached us to help them in the realization,” Stephane added. “All GS1 EPC global standards will be involved. I am convinced that the realization of the full deployment of this project will have a major impact in the supply chain and overall in the RFID industry. More pilot programs complementary to this one are planned to be realized in the coming months.”
The EPAL system has an internal business case for RFID that is quite separate from and in addition to the interests of pallet users, Stephane noted. One consideration is ensuring the authenticity of the EPAL pallet because of counterfeit or look-alike pallets entering the market. “There is a very good business case for keeping the high quality of the pallet and replacing existing marking technologies,” he said.
Stephane believes that, through control of the pool and automating processes, RFID adds significant value. “The EPAL system is based on quality and relies on pallet markings, specially stamped nails,” and so on, he said. “With RFID, they can better identify counterfeit pallets in the pool.”
In addition, RFID tags enable more efficient processing of pallets and reporting of EPAL pallet activity at authorized depots.
As for tracking software, it is important that stakeholders own data, Stephane said. “Data is private, and no one should be able to see it unless authorized.” For example, EPAL may be interested in capturing data about important pool measures, such as throughput. Software should provide different views of data for different stakeholders.
While EPAL is not specifically contemplating RFID benefits for pallet users, the availability of information from tagged pallets certainly would help them. For example, for manufacturers still using a ‘slap and ship’ tagging solution, a rewritable RFID tag attached to the pallet can be a cost effective alternative. EPAL has tested its solution to ensure compliance in the typical retail environment.
Environmental constraints on tag performance and longevity have not proved to be an issue, Stephane indicated. The RFID tag is attached to the middle of the pallet, on the center board of the mat. Various pallet tag configurations have been used to date. For example, EPAL and CHEP use a single tag while LPR (a European pallet rental company) has used four tags.
“Within GS1 we want to bring all these players together and define one solution,” said Stephane. “Right now we see several different solutions, and we need to come to a conclusion.”
Evaluating Vendors
Some companies that provide tracking software also host Web-based services for users, charging a monthly or per-transaction fee; other vendors simply sell the software. Depending on the requirements of the customer, most providers listed below will offer either.
Providers of these kinds of services include Vestigo Corp., an Ontario-based pallet and container tracking provider; the Canadian Pallet Council, with its CTSweb pallet tracking service developed by iLogic; and NativeTrax, a Web-based service offered by Ongweoweh Corp.
Texas-based Xterprise Inc. and Fluensee, headquartered in
“The choice is the customer’s,” said Tim Harvie, CEO of Fluensee.
Xterprise supplied tracking software to iGPS for its pool of plastic rental pallets. Xterprise customers typically run the service on their own computers, according to Jim Caudill, Xterprise senior vice president. “However,” he added, “we have seen recent requests for us or others to host the solution to minimize the IT impact, which is already small.”
Additionally, noted Jim, Microsoft is making a big push into Web-based services. “Our vision is that (pallet and container tracking) solutions…are excellent candidates to be deployed that way as it manages a widely distributed fleet of assets across multiple stakeholders and technology environments.”
Vendors that provide hosting services offer convenient and typically less expensive solutions, especially for businesses such as pallet companies that want to develop a program for a specific customer. Other factors to consider are risk, control, and the experience and reputation of the vendor. Pallet rental companies, which need to manage risk and control, likely would prefer a self-managed approach.
Another factor to consider is a vendor’s track record – its success in deploying beyond a pilot, said Jim. “As the pilot moves to a general roll-out, then a wide-scale roll-out, many technical and operational hurdles need to be overcome,” he said. “If a vendor hasn’t had experience with that, and the application hasn’t been proven in that scenario, then the customer is putting themselves at risk.”
Other considerations include whether the asset tracking solution can ‘grow’ with a company or if it will become obsolete. Can the software work with multiple data capture technologies – RFID, bar code, sensors and GPS? Will it be open enough to work with new data capture technologies that may be developed in the future? The more flexible a solution is, the longer you will be able to use it.
“Ask vendors to help you build a business case,” suggested Tim from Fluensee. “The best vendors will offer to do a site analysis or an engineering study to see how RFID and asset tracking software would work in your unique environment. While you may have to pay them a small amount to visit your location and conduct the study, you’ll have exactly what you need to build a business case for your management team, and this information can help determine your return on investment. Even in these tough economic times, spending $50,000 now may help you save $100,000 next year. It’s worth finding that out, and an RFID site analysis is the best way to get there.”
What Features Should
Tracking Software Have?
Peter Kastner, president of Vestigo, originally started out providing an ASP tracking service for pallets, but within a year or two the company was forced to reinvent itself. “We quickly found there was reluctance on the part of companies to pay much to track lower cost assets,” he said. “I thought there would be more interest in tracking expensive pallets.”
Today, Vestigo does provide tracking services for some pallet applications as well as for other, more expensive assets, such as plastic crates, tanks and totes.
“We have a number of applications provided for owners of asset fleets as well as for third parties acting as recovery agents,” said Peter. For example, Vestigo provides a tracking service for pallets valued at more than $100 that are used to transport aluminum siding.
The market for Peter’s company is tracking very expensive assets or, alternately, large fleets of moderately priced assets. Examples would be a small fleet of 250-gallon tanks worth $5,000 each or 250,000 totes valued at $6 each.
Vestigo’s fee may be a fixed monthly charge or based on volume. The Vestigo system does not necessarily pinpoint the location of a pallet or container or other asset, Peter noted. It provides a ‘passport’ or permanent archived history of locations where it has been tracked as it moves through the supply chain.
Vestigo also can provide a number of valued-added services – ‘smart features’ – for clients. For example, it can generate ‘exception’ reports that are triggered by logistics or handling events that are out of the ordinary. “If I’m FedEx, I don’t need to know about the 40,000 parcels that were delivered without incident,” explained Peter. “I just need to know about the one that didn’t. That’s where we can add real value through timely notifications.”
Other services include providing reports about stranded assets, excessive dwell time or unacceptable damage rates. Customers can be ranked from first to worst in terms of asset performance, and assets can be flagged for regular maintenance, cleaning, recertification, or to identify them as unsuited for a particular use.
“Asset tracking software is ideal to automate the management of a pool of pallets or containers,” noted Tim Harvie of Fluensee. “Fluensee’s AssetTrack, for example, uses RFID to capture each physical move of a pallet or container. Capturing that data and updating the asset information is automated with RFID. This helps reduce labor, save time and help companies better utilize assets.”
According to Fluensee, a company considering investing in RFID and asset tracking software should ensure the software:
• Monitors and tracks asset movements and status in real-time
• Identifies deviations from expected asset location or condition
• Triggers exception-based alerts or specific warning notifications
• Accesses historical data to identify and eliminate operational bottlenecks
• Validates asset utilization, maintains asset inventories and tightens internal controls
• Provides detailed reports on asset location, history and more
• Can work with RFID, bar code, GPS, etc. – multiple data capture technologies for different purposes.
The Canadian Pallet Council, which operates a pallet pool in a pallet exchange environment, provides the CTSweb pallet tracking service to its member. Developed by iLogic, CTSweb has a unique feature that identifies opportunities for three separate trading partners in the CPC pool to effectively clear imbalances among them without actually moving pallets. For example if company A owes company B 300 pallets, and company B owes company C 300, and C owes A the same amount, CTSweb can identify the opportunity to reconcile the imbalances – eliminating the expensive handling and transfer of pallets.
Xterprise offers two tracking programs, Clarity RTI and Clarity RTI Lite. Clarity RTI provides highly granular visibility and control of RTI assets across all stakeholders, explained John Webb, Xterprise engagement manager, matching supply to demand while continuously measuring fleet performance.
Clarity RTI Lite is targeted for closed loops, said John. It is more suitable for applications that are not faced with the nuances of an open pool, such as business and commercial operations related to the issue, deposit and transfer of an asset. For some closed pool customers, shipping and receiving dates, quantities and inventory balancing may be all that is required. For other applications, interfaces with planning and transportation systems may be needed.
The basic package typically may meet 80% of a customer’s requirements, John explained, while the remaining may have to be configured to meet specific application needs. Successful RFID-based applications provide such benefits as visibility and data, which result in better asset utilization and smaller pool requirements, he added. Openness and information sharing results in less friction among trading partners, said John.
RFID or Non-RFID?
Providers of RFID-based tracking technology acknowledge that interest in their services generally is associated with businesses that own high priced assets. There is also a difference of opinion about the suitability of wood pallets for RFID tags and systems.
RFID applications involving wood pallets sometimes are challenging because of the moisture content of wood or the damage that can be incurred by the pallet, “If it is a wood-based pool, it would be a concern for me,” said John.
On the other hand, wood clearly is not viewed as an obstacle to the EPAL RFID test, observed Stephane of GS1.
The complexity of many wood pallet pools and the challenge to provide a thorough network of RFID readers dictate that, for the near future at least, batch tracking will endure. It may be, as in the EPAL test, that pallets will increasingly be RFID-tagged, and that it will be up to pallet users to decide if they want to utilize the benefits of RFID.
For pallet companies wishing to pursue third-party pallet management or rental opportunities, pallet pools looking to take the next step, or pallet users wishing to prevent pallet loss and Sarbanes-Oxley exposure, help is definitely at hand.
