How to Determine if You Need an RFID Tracking Solution

How to Determine if You Need an RFID Tracking Solution

The Returnable Container Challenge Returnable transport items (RTIs) are a critical component of many supply chains. RTIs include reusable totes, trays, pallets, boxes, carts, large shipping containers and other assets that are used to ship goods from a supplier to a manufacturer, retailer, or other trading partner. The containers are then returned and re-used throughout the supply chain. These fleets of returnable assets may be managed by the original supplier, or by a third-party operator. But no matter who is responsible for RTI management, tracking these expensive assets can be a challenge. The containers are handled by a mix of third-party logistics providers, trading partners, and end customers, each of which may also be receiving goods in RTIs from other companies. Even in a closed-loop system in which the containers are only sent back and forth between two partners or end points, the containers can disappear or be damaged. Companies often lack visibility into where the containers are or how many are in circulation. That leaves them vulnerable when there are unexpected shifts in demand there may be too many containers in one location, and too few in an area with high demand. To compensate, companies may lease additional containers at considerable expense, or over-purchase containers so that they can make sure they always have enough on hand. 2

That means the companies managing the RTIs spend additional money and time making sure that there are enough containers to meet their customers needs, without any sort of guarantee that their investment is actually going to provide the right number of containers at the right time. Efforts to better manage returnable containers are often time-consuming, rely heavily on manual labor, or can be extremely costly. And because the containers are passed back and forth among third parties, there is no guarantee that the tracking information is accurate or timely. Fortunately, there is a better way: radio frequency identification (RFID) technology. RFID can provide accurate, up-to-date information on RTI location and status. RFID tags can be embedded in reusable totes, trays, or containers, and quickly scanned by employees, drivers, or customers at each end point in the supply chain. This data can be used to view container inventories, or even initiate replenishment orders for specific locations. RFID technology has evolved to the point that it is a cost- and process-effective way to monitor returnable packaging, containers, and trays. It provides visibility into where each asset is located, and highlights bottlenecks and weaknesses within the returnable supply chain. 3

So how do you know if your RTI or other returnable asset operation could benefit from RFID tracking? If your company is experiencing any of the following conditions, RFID could help regain control of your container/tray fleet and save you money: You are unable to control container cycle times and associated costs With a lack of visibility into the container fleet comes a lack of control. With poor visibility, it is difficult to optimize the velocity of the containers moving through the system and the cost of managing and handling those assets may wind up exceeding the asset investment value. As a result, you may add more containers to the system than you really need. If you can t properly manage container cycle times and costs, you may also find yourself using substitutes or one-time use containers. If a container is missing or making a slow return, you may be forced to add these additional assets to the fleet, resulting in additional costs and inefficiencies. By using RFID to track containers, you can measure cycle times and adjust operational procedures to speed their movement throughout the supply chain. You can also easily note where containers are in the chain, eliminating the need for substitute containers or over-investment in RTIs. 4

Inventory shrinkage is a problem In supply chains where containers are moved from customer facilities to retail locations and back again, it can be difficult or even impossible to determine exactly how many containers each customer actually has under their control. That makes it difficult to manage the container fleet, and results in additional assets moving through the value chain at great cost. Customers may also redirect those assets to other third parties by mistake, creating shortage. Are your partners or customers misplacing containers or sending them back to the wrong supplier? RTI pools can experience shrink rates of anywhere from 3% to 9% of containers, resulting in significant replacement costs. Often, companies will purchase an additional 10% to 15% more returnables than they actually require to accommodate for shrink and unexpected demand. If you have difficulty determining when containers will return to your facility, or if you have experienced problems with trading partners mishandling, mis-shipping, or hoarding your containers, RFID can improve your asset management efforts. With real-time visibility into where the containers are, along with a record of how long they ve been there, you can present customers and partners with hard data on container use and status. This can help ensure that containers are returned in a more timely fashion. In some applications, RFID has generated a 30% to 50% reduction in reusable packaging losses. 5

You purchase extra containers to cover any losses If you removed some percentage of your container fleet from service, could you do so without affecting the overall efficiency of your fleet? If so, it is likely that your container inventory is larger than you actually need. In an analysis of global automotive manufacturers, IBM Global Services found that most manufacturers are carrying as much as 30% more containers than they need to meet actual demand. In most cases, these larger-than-needed safety stocks are the direct result of a lack of visibility into the container fleet. When the containers can t move through the supply chain as efficiently as possible, companies purchase these extra containers during peak demand times to take up the slack. By eliminating these extra conveyances, companies not only reduce their capital expenses associated with purchasing new containers, but also eliminate the cost of managing, maintaining, and storing those containers. The purchase of additional containers can also add to the burden of tracking and managing the entire asset fleet. With data from an RFID tracking solution, operators know exactly how many containers are in service and where they are located. The data from RFID tracking solutions can then be analyzed to evaluate the flow of assets through the supply chain, identify bottlenecks or shortages, and optimize the total number of containers or trays needed to service each customer. 6

You have lost customers because of a lack of efficiency While container mismanagement can lead to unnecessary costs and inefficiencies, the most significant impact of poorly managed RTIs falls on your own customers. Without access to accurate location data, you can find yourself missing important deadlines because you lack the correct number of containers. This can lead to chargebacks and other penalties, in addition to an erosion of customer confidence that could ultimately undermine your business. Without the visibility enabled by RFID tracking, it can be more difficult to adapt your RTI fleet to new conditions, such as additional routes, new customers, labor shortages, process changes, or other supply chain alterations. It is more difficult to verify arrival and departure times, increases supply chain cycle times, delays shipments, and can cause customers or even your own facility managers to hoard containers and create bottlenecks in the system. With RFID, you can ensure that you have enough containers to meet your customers needs and provide valuable insight into the location of not only the containers, but the goods within. In this way, you not only improve your own internal operations, but also provide actionable supply chain intelligence to your customers. 7

Summary Managing a fleet of returnable transport items (RTIs) using manual processes can result in excess container purchases, additional operating costs, inefficient deployment of containers, and delays in the supply chain that can negatively affect customer service. RFID can provide critical visibility into the location and status of your returnable containers. If you struggle with excess container inventory, container shrink/loss, long cycle times and high costs, then an RFID tracking solution can improve your operations. RFID can reduce the size of the RTI pool at significant cost savings and reduce the risk of container shortages that can affect customer service. Using RFID can reduce your asset investment costs and overall container inventory, while making it easier for companies to provide accurate and timely shipments. About Quest Solution, Inc. Quest Solution, Inc. serves as a national mobility systems integrator with a focus on design, delivery, deployment and support of fully integrated mobile solutions. The Company takes a consultative approach by offering end to end solutions that include hardware, software, communications and full lifecycle management services. The highly tenured team of professionals simplifies the integration process and delivers proven problem solving solutions backed by numerous customer references. For more information, visit our website at www.questsolution.com. Quest Solution Inc. 860 Conger St., Eugene, OR 97402 800-242-7272