RFID in Logistics

Despite the best efforts of retailers, the IGD survey of Retail Logistics for 2004 shows retail distribution costs still increased from 3.44% of total turnover in 2002 to 3.6% in 2003. Investment in the 'hard' elements of the supply chain, such as larger depots, have only been partly successful in tackling the problem, so now many retailers are looking at what answers technology can provide.

Over 5 billion cases are moved through Retailer's distribution sites a year and the drive has been to reduce overall distribution costs and reduce stock holding. Major retailers have invested in their supply chains to help deliver such cost reductions. Larger depots is one such move, investing in technology is another.

Despite this investment transport costs will make up almost 35% of retailer's costs and this is second highest distribution cost element.

Any reduction in transport costs will have a major impact on the retailer's bottom line but legislation is conspiring to increase costs rather than reduce them. Operators are increasingly looking at technology to help them reduce costs and improve efficiencies.

Efficient management of transport resources – drivers, tractor units, trailers, maintenance schedules etc is fundamental to maximising utilisation. Ensuring the right resources are in the right place at the right time, as well as having just the right number of pieces of equipment available, is fundamental to any logistics organisation.

There are a number of ways of tracking these assets, of which satellite tracking is probably the best known. This can tell any vehicle where it is on the planet. The downside however, is that data has to be communicated back to the user's central control and this usually has to rely on some radio or mobile phone system. High call costs have users reflecting on other methods of vehicle location and management.

RFID has gained prominence within the retail sector with major retailers like Wal Mart, Tesco, Marks & Spencer and Sainsbury looking at how RFID product tagging can bring them stock control efficiencies. Unfortunately, item level tagging brings little benefit to the manufacturer or the supply chain. In this area it is RFID of unit loads (cases, roll cages, dollies or trucks) that can have a major saving on distribution costs by automating despatch and receiving operations and reducing product theft and losses.

Unisto Encrypta Products claims to be the world leader in reusable electronic seals which, according to the company, are the industry standard for the retail, parcel carriers and bulk food industry. Incorporating RFID technology within their electronic seal now enables users to track and manage their vehicles.

Legislation is putting more pressure on the logistics operation. The forthcoming EU Working Time Directive will restrict drivers to 8 hours/day of driving time. Driving time is defined as “any time the driver is actually driving, or available to drive, the vehicle.” Therefore if a driver is waiting in a queue and moving up occasionally, this will count as 'driving time' – and on busy days queues to get in and out of depots can last hours because security must go through specific checks before vehicles can be allowed on or off site.
The costs of having fewer hours available on the road are clearly highlighted by a recent survey by MAN-ERF that revealed: “drivers currently average a 63 hour week for £441. Under WTD with a 48 hour average drivers will expect the same wage – which will result in a potential cost increase of 30%.”

One solution might be to increase security guard numbers during peak periods but legislation, in the form of licensing for security guards and again the Working Time Directive, is also affecting this sector. Tesco's head of distribution security, Barry Vincent, is quoted as saying that his company's guarding costs “will rise by £2m/year because of these changes.”

Unisto Encrypta Products has utilised RFID technology in a way it believes will address both of these problems.

The company developed a battery operated, reusable electronic seal, which is permanently mounted on the truck door next to the locking handle. It electronically generates a random seal number each time the wire cable is passed through the door catch and is secured onto the seal. This number is recorded on the manifest and checked by security.

Such a permanently mounted, reusable system offers considerable cost savings and many security benefits. The electronic seal has a built-in audit trail memory, which records the times and dates of each sealing and opening operation. The cost of the seals is recovered against efficiency improvements within an average of 12-24 months, according to Unisto Encrypta Products' – effectively providing security sealing for free for up to the next six years.

With such a clear benefit, it is perhaps not surprising that figures suggest over half of all retail merchandise currently sold in the UK is secured by Unisto Encrypta Products electronic seals.

Eliminating the security stop

With most transport operations, whether it be primary distribution, (goods from manufacturer to distribution warehouse), or secondary (warehouse to end-user), trucks tend to leave at around the same time in order to meet scheduled deliveries.

A distribution centre with 100 trucks, which all stop at the security gate where the tail lift is dropped, the seal checked, tail lift raised, paperwork checked, can take two minutes per truck. To complete these checks for all 100 trucks takes over three hours, then another three hours when all the trucks return.

With a typical truck burning 4 litres of fuel per hour on tick over, saving just one hour a day is the equivalent of saving £3.00 per truck, per day, in fuel alone. But the potential benefits are not just restricted to cost savings. The average articulated lorry running 98,000kms/year, generates between 80 and 130 tonnes of Carbon Dioxide. It has been calculated that the environmental benefits of a company like Tesco eliminating queuing at its depots nation wide would include a reduction of 5000 tonnes in CO2 emissions.

Queuing vehicles can stretch around a distribution centre at times, and – worse still – clog up public roads when returning to the DC. Excluding fuel costs a waiting truck costs £20 (Euro 32) per hour to run. Saving just an hour per day could improve an operator's bottom line by £6,000 (Euro 9,320) per truck per year.

Unisto Encrypta Products responded to these pressures faced by their customers by developing a system for eliminating waiting time without compromising security.

How does their system work?

The depot computer system will determine the product to be picked and the schedule to be run on a particular route. Any trailer is loaded on the dock. When the trailer is sealed, the Crypta® Data Tag, fitted to the rear door generates a random seal number which can either be scanned or manually uploaded to the depot PC.

Scanning the Crypta® also records the trailer ID so the depot scheduling system now knows which trailer has been loaded, its seal number and when it was loaded and allocates a driver and tractor unit to the specific route.

The trailer is collected and driven to the depot gates. As it approaches the gate it is interrogated by a Radio Frequency (RF) reader. This reads a passive RFID on the tractor unit, wakes up the Crypta® Data Tag, which transmits back its ID and seal number, and finally captures the driver ID. As long as all the IDs match the barrier is raised and vehicle departs without stopping. Mismatches result in the vehicle being diverted for inspection. The system can identify which vehicle is in which lane, may have the mismatch and can also discriminate between vehicles which may be on circuit around the distribution centre rather than going out.

Gatetrak™ Software

The system is operated by Unisto's Gatetrak™ software. The software is networkable allowing multi-user and remote login and access. The system will allow a Transport Department to log-in, create/amend any route information, give trailer visibility and produce reports.

At the Gatehouse the screen will indicate validation of the seal number, trailer ID, tractor ID, driver ID etc. Verification can include all or a combination of any of the above.

The software builds a database of all trailer/tractor movements on and off site along with seal openings/closings and driver activity.

Gatetrak™ software not only deals with vehicles fitted with RFID but can also deal with third party suppliers and users of mechanical seals using simple key entry rather than a paper based system, as well as hired in or temporary tractors and trailers.

The software also allows sealing and verification from other systems such as driver ID card access systems.

The system also has the facility to report on arrival/departure of remote sites/stores/branches using the Unisto GateTrak™ LAN reader.

Factory gate pricing is being driven by the grocery trade in an effort to both negotiate lower prices and improve vehicle utilisation with return loads. The downside is that the retailer is responsible for the load on collection. It is even more important to guarantee trailer security on this unchecked leg, but at least the retailer's own truck can be 'green laned' back into the DC whereas suppliers often have to wait.

Yard Management

Once vehicles are within the depot yard knowing where they are can also be a problem. Again, using the RFID solution the Unisto LAN reader will pick up unloaded /open /sealed /loaded status of trailers and locate them in zones.

Networking multiple depots together then gives full asset visibility at any time, saving personnel having to record every trailer number at the end of the week and fax them to a central hub.

'Lost' trailers are flagged up if the system has not seen them for a pre-determined period, for example, 4 days. One of the major maintenance headaches is knowing where trailers are so they can be bought in for their regular MOT inspections and servicing. Gatetrak™ also keeps track of maintenance schedules and warns the system operator of trailers that need to be scheduled in and when. This saves operators from the risk of substantial fines for running trailers without an MOT certificate.

Technical issues

The trucking environment is a fairly hostile one for electronics due to weather conditions, road conditions, vibration and, occasionally rough handling by some operatives. Unisto Encrypta Products has tested its technology to ensure it will continue functioning in all extremes, including temperatures from -40°C to +70°C or submerged 1m under water. It will also withstand 40g shocks and resist any electrical interference. It is a testament to the security of the Crypta® product itself that there are over 70,000 units currently operating in locations from Alaska to Australia. They also have HM Customs & Excise acceptance and meet BS7480 security seal standard.

Trucks contain a high level of metal and can carry metal cages or have thick metal tail lifts to facilitate offloading. The RF system has been designed to cope with these demands whilst keeping power consumption to an acceptably low level.

Because seal numbers and trailer IDs are captured electronically, it is possible to transmit this data to the first delivery locations where the seal can either be verified manually or a reader can be installed for automatic verification. Networking all readers provides seamless security of the whole delivery route, right back to the DC. When used in conjunction with Unisto Encrypta Products' TCP/IP architecture this gives real time internet tracking world-wide.

Summary of system benefits

1. Waiting time is eliminated, enabling operators to optimise drivers' hours.
2. Guarding costs can be reduced. Case studies suggest savings of up to 50% can be achieved without compromising security.
3. Improved efficiencies possible by using software to integrate yard management and asset maintenance.
4. Gatetrak™ reports allow monitoring of on time delivery performance and security even with factory gate pricing.
5. Security verification both on and off site of seal numbers, routes, trailers, tractors and drivers in any combination.

Future enhancements

Unisto Encrypta Products offers intrinsically safe versions of its seals for use on petroleum tankers and it will be submitting the tag version for testing as a number of petroleum companies are looking for simple sealed parcel delivery systems.

The benefits in automating distribution centres are clear. However, retailers are actively looking at RFID tagging unit loads to automate the customer delivery. Installing simple readers to automatically check vehicles and loads in at the customer/store end will bring these benefits.

Since 9/11 the USA has been extremely concerned about both shipping containers and trucks entering across its borders. RFID technology is ideally suited to fast track the entry of such vehicles and for the past 18 months an ISO Working Group has been attempting to come up with an International Standard. To date, no agreement has been reached and such an impasse cannot be to the benefit of any legitimate operators.

Whatever happens it appears that the technology is out there and major blue chip companies are testing the benefits.