The future of RFID and pallet tracking has supposed to be right around the corner for more than a decade. But, it remains far from reality for most unit loads.
CHEP USA first began tests in conjunction with the RFID Lab at the Massachusetts Institute of Technology in the late 1990s. It started a RFID test pilot and explored real-time tracking of assets in November 2001 and launched its PLUS RFID pallet in the mid 2000s. Yet few customers are willing to pay extra for it today.
iGPS marched onto the scene in 2006 touting its RFID-enabled pallet pool. Remember how iGPS was going to be able to offer a more expensive pallet than wood for the same price, because the RFID imbedded pallets would be less likely to go astray, thereby allowing them to remain in the pool to keep on working. In reality, iGPS suffered the same challenges that other rental companies have faced when growing its pool. Leakage occurred despite the fact that pallets were RFID enabled because RFID is only as good as the last scan. Most leakage occurs because of a lack of discipline in the supply chain, and RFID is mainly a tool to help identify problem areas after the fact.
The iGPS case study shows that mere RFID alone is not enough to protect pallets. It must be used in conjunction with proper management and asset protection policies in place.
While the retention part may not have exactly worked according to plan, iGPS was enormously successful in winning customers up until last year. New customers touted RFID as a major reason for switching to iGPS. The trouble is that the iGPS pallet was priced in the same range as wooden rental pallets. This makes it hard to know whether RFID was really a factor, or just a bonus feature to brag about. If the iGPS would have been premium priced, it would have been easier to assess how much value customers placed on the allure of RFID.
In a recent article carried on Modern Materials Handling website, iGPS stated that one of its customers was using the tag on the iGPS pallet to enable its automated warehousing processes. The RFID tag helps in guiding automatic guided vehicles (AGVs) to know where to store a pallet load, when to retrieve, verifying proper order fulfillment, etc. This cuts down on the amount of human operators needed to run the warehouse system. Jack Sparn, CIO of iGPS told Modern that this customer has “been using the system for 18 months and are literally getting 100% accurate reads.”
The world is awash today with RFID success stories in other business sectors. And there are a few in the reusable packaging industry that may translate to pallets. For example, Container Centralen, the floral industry reusable packaging program based in Europe recently announced an annual rental rate reduction thanks to RFID.
Tonny Vangsgaard Gravesen, CEO of Container Centralen, said that by requiring all reusables to be tagged its network had reduced costs, such as substandard counterfeits that were previously infiltrating its system. While this may just be floral trays, trolleys and containers rather than pallets, could this approach ever work for pallets?
In the case of Container Centralen, it was easier for RFID to make an impact. Given its an ongoing rental program rather than per trip rental, the larger concern is the substitution of substandard counterfeits versus attrition, and by all accounts, RFID has worked great. Maybe RFID could help reduce the potential for improperly marked pallets. For example, 9BLOC, the new whitewood pallet cooperative, has discussed putting RFID on its new pallets.
Going back a decade or more, the notion of RFID tagged pallets caused a lot of excitement among supply chain visionaries, technology suppliers, and yes, even pallet people.
It was an easy vision to like. It was a time when tags were still rather expensive. By placing them on a durable pallet, the cost could be spread against repeated reuse, resulting in a low cost per use. And for users, there was the promise of a high quality pallet in combination with a truly automated data capture system, one that would provide unparalleled visibility in the supply chain and thereby allow for optimization decisions to be made in real time in the field.
For some pallet people at least, the RFID pallet was an opportunity to de-commoditize the pallet so that they could sell a higher-value unit. The pallet would be a potentially much more valuable partner whose job was not only to support, protect and transport the load, but also to house, protect and enhance the RFID tag which would be critical to supply chain execution. It could be inferred that customers would be willing to spend more for the pallet because of the strategic importance of the tag.
In other words, the RFID would save
so much money, that a more expensive pallet would be money well spent. In addition, because of the imbedded or affixed tag or chip, the pallet would be better managed and less likely to disappear into the abyss of the U.S. supply chain – presuming that enough points along the way had the readers strategically placed and linked together to detect leaks.
GS1, the RFID standards body, has argued that it makes sense to be RFID tagging pallets just from the perspective of the pool operator. Back in 2008 when I interviewed Stephane Pique, European director EPC-RFID of GS1 in Europe, he stressed that for pools such as EPAL, there was a business case for tagging the pallets, regardless of whether the tags were utilized by customers, to promote efficient operations by pallet companies, as well as in preventing counterfeits.
As a result of the RFID interest, some plastic pallet rental providers such as Sweden’s Retursystem, and later, iGPS, went ahead and imbedded RFID right across their pools. Others, including CHEP, began to offer RFID as an option – as did several pallet manufacturers.
So what happened? The pallet, as it turned out, has not really emerged as the leader when it comes to RFID installations. There have been too many options in terms of slap and stick tags, as well as case and item level tagging, not to mention the emergence of 2D barcodes as a lower cost alternative in many applications.
There, however, has been some progress. “I think the application is gaining some traction as another tool for warehouse management systems and for use in managing promotions,” said Michael McCartney, principal of QLM Consulting.
Pool providers agree there has been some uptake. Container Centralen notes that there has been utilization of the RFID tags on its containers by some of its customers. “Many users are beginning to use the technology to optimize their logistics and not just for checking the authenticity of the containers,” commented Gravesen. Meanwhile, Retursystem also has also seen a similar trend. Petter Björkman, product and technical manager at Retursystem stated that they now have two meat packers and a vegetable shipper utilizing RFID for their own purposes.
“There is some evidence that companies are starting to use RFID-enabled pallets to take advantage of the data they provide,” summarized Mark Roberti, founder of RFID Journal. “But it is not a sweeping trend as far as I can see.”
Roberti added, “ I think that as Walmart and others start to come back around, more companies will be looking at the data from smart pallets. In the shorter term, it will mostly be manufacturers using the data to track shipments.”
One area that could drive greater use of RFID and tracking technology in the future is the food and drug safety issue. Some suppliers have developed smart tags capable of tracking a lot more than traditional tags. This includes the temperature and ambient conditions for the unit load, possible cross contamination, etc. Until these or others concerns become a bigger problem in the mind of materials handling users, RFID tracking on pallets may remain a niche solution still searching for a cost-effective problem that it can solve in the wider supply chain.
