16 DC VELOCITY JUNE 2014 www.dcvelocity.com
newsworthy
Companies continue to take small steps
toward the implementation of item-lev-
el passive radio-frequency identification
(RFID) technology, according to a survey of
readers of DC VELOCITY and CSCMP’s Supply
Chain Quarterly by consultant Collaborative
Energizer LLC. Item-level RFID refers to the
practice of affixing unique identification
tags to individual products. Tags are con-
sidered “passive” if they require an outside
power source for activation.
Only 29 percent of survey respondents
said they had deployed item-level passive
RFID technology. As for the benefits of
going that route, 72 percent of survey
takers said they had already achieved or
expected to achieve improvements in accuracy. Other benefits cited included better
customer service (70 percent) and enhanced
inventory management ( 60 percent).
Few respondents are tagging their entire
line of products. More than half ( 55 percent) of the participants said they use or
plan to use item-level RFID on less than 25
percent of their product line. Another 25
percent said they expected to tag between
25 and 50 percent of their products, while
10 percent had plans to tag 50 to 75 percent. Another 10 percent said they expected to tag more than 75 percent of their
product line.
Costs continue to be a barrier, the
research found. When asked what kept
them from making wider use of item-level
passive RFID, 75 percent of respondents
cited the technology’s price. Other impediments mentioned were a poor return on
investment ( 48 percent), a lack of collaboration with supply chain partners ( 28 percent), and a lack of in-house expertise with
the technology ( 23 percent).
Collaborative Energizer founder Joseph
C. Andraski said the survey indicates that
many companies that could benefit from
item-level RFID don’t fully understand the
technology’s potential to improve inventory visibility and track items in real time.
“The industry needs to do more education
on item-level RFID,” he said.
Survey: Use of item-level
RFID growing …
but slowly
grow as better supply chain technology allows shippers to build
smaller shipments that move in shorter-haul ground networks. This
reduces inventory carrying costs by cutting the time a shipper’s cash
is tied up in the goods, he said.
Carriers, for their part, see brokers and 3PLs as a source of new
shipper business. A growing number of small to mid-sized shippers now work with third parties, and carriers see intermediaries as
the best way to tap that market. According to the consulting firm
Armstrong & Associates, about 80 percent of the 100 smallest Fortune
500 companies used 3PLs to some extent in 2012, up from 65 percent
in 2008. About 81 percent of the companies that make up the Fortune
300 to 400 reported using a 3PL in 2012, up from 71 percent in 2008.
Those rates of growth were faster than for companies at the higher
end of the Fortune 500 scale, according to Armstrong.
DIFFERENCES AND DISTINCTIONS
Not all freight is alike, however, and experts caution that brokers and
3PLs that are accustomed to working with truckload carriers will need
a separate playbook if they take to the LTL field.
Brokering a truckload shipment is relatively simple: Freight moves
in a linear fashion from point A to point B. A typical LTL shipment,
by contrast, involves multiple stops and numerous human touches,
and carrier tariffs can be as tricky to navigate as minefields. In addition, LTL freight must be classified under specific, and sometimes
obtuse, commodity codes that are based on various product characteristics. In short, LTL is everything that truckload isn’t.
Experts on a TIA panel said brokers can successfully handle LTL if
they understand that LTL’s complexity makes it nearly impossible for
brokers and 3PLs to manage each shipment without draining their
margins. “LTL is … not a [good] niche opportunity if you have to
touch every load,” Andy Berke, vice president, strategic development
for Riverview, Fla.-based 3PL BlueGrace Logistics, told brokers.
Manually managing each individual LTL shipment would result in a
broker’s only making about $30 to $50 a load, Berke said.
The good news, Berke said, is that brokers can “automate the heck
out of LTL.” Although tools like rate and routing engines require an
upfront investment and can be expensive to implement, they can
yield enormous benefits if used right, he said. “If you can crack the
code where the customer is tendering [the freight] and selecting your
provider through you, you are making money in your sleep,” Berke
told the group.
Brokers must also know the details of a shipper’s products because,
unlike truckload, LTL shipments are governed by a phalanx of classification codes. Carriers reweigh every shipment they receive, and
any misclassification identified during that process means the broker
or 3PL must go back to the shipper for more money. Matt Williams,
president of Pro Star Logistics, a Salt Lake City-based 3PL, said the
goal is to make it easy for the carrier to execute a shipment and to
avoid classification problems. “You have to understand your shipper’s commodity better than when you’re shipping via truckload,”
he said.
