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A MODEL FOR THE IMPLEMENTATION OF A RADIO FREQUENCY
IDENTIFICATION SYSTEM INTO A WAREHOUSE ENVIRONMENT

By

Michelle Renée Ryan

A THESIS

Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

MASTER OF SCIENCE
Department of Packaging

2002

ABSTRACT

A MODEL FOR THE IMPLEMENTATION OF A RADIO FREQUENCY
IDENTIFICATION SYSTEM INTO A WAREHOUSE ENVIRONMENT

By

Michelle Renée Ryan

As competition in business continues to rise, companies are becoming
increasingly interested in achieving a competitive advantage. A competitive advantage
can provide companies with success within the marketplace.

Many companies are examining the supply chain in order to identify opportunities
for improvement. Traditionally, components of the chain operate independently,
resulting in lack of communication. The value-based chain, however, views components
holistically and focuses on increased communication flow.

Communication can be improved by increasing Information Technology (IT)
capabilities. One type of IT is Automatic Identification and Data Collection (AIDC).
AIDC can improve the speed and accuracy of operations within the supply chain. An
AIDC technology that is gaining popularity is called Radio Frequency Identification
(RFID).

This research proposes a Model that offers companies an unbiased method, in the
form of decision trees, that can be used as a tool to help companies decide if RF ID
technology is a viable solution for their warehousing operations. Suggestions for
utilizing RFID in the warehouse are provided based on how packaging is tracked through

the warehouse. Benefits and issues to consider are also given for each suggestion.

DEDICATION
TO MY PARENTS, THERESA & ERIC,

KELLY & MATT, AND BRANDON.
I LOVE YOU ALL!

iii

ACKNOWLEDGEMENTS

There were many people that contributed to the completion of this thesis and I am
thankful to have the chance to acknowledge them.

I would like to thank my major professor, Dr. Robert Clarke, for giving me the
opportunity to research RF ID and providing me with both academic and financial
assistance during my career at MSU. I appreciate the time he invested and the patience
he demonstrated while I finished the last of my research.

I would also like to thank the other members of my committee: Dr. Diana Twede,
Dr. Shawnee Vickery, and Dr. Laura Bix. Thank you, Dr. Twede, for providing me with
academic as well as financial support during my years at MSU, and helping to motivate
me to complete this thesis. Thank you, Dr.Vickery, for displaying continuous support
throughout the research process. And a big thank you to Dr. Bix who stood by me every
step of the way and always managed to put a smile on my face. I appreciate the constant
help with the writing (and re-writing) of this thesis and allthe suggestions provided to
me. Thanks for being a great role model and a wonderful friend.

I would like to thank all the faculty and staff at the MSU School of Packaging
because each person has helped me in some unique way through the years. Thank you to
all the graduate students for adding laughter, fun, and friendship to my experience at
MSU. Thanks especially to Renae McKinley, my study buddy and good friend who
always kept me thinking positively.

I’d like to thank my wonderful parents, Linda and Jerry Krause, for everything
they have done for me. Thanks mom for all the little things that helped me so much.

Lastly, I thank Brandon, for always believing in me.

iv

TABLE OF CONTENTS

LIST OF FIGURES ............................................................................ vi
INTRODUCTION .............................................................................. 1

CHAPTER ONE

BACKGROUND ................................................................................ 7
CHAPTER TWO

LITERATURE REVIEW ..................................................................... 43
CHAPTER THREE

METHODOLOGY ............................................................................ 60
CHAPTER FOUR

MODEL ......................................................................................... 67
CHAPTER FIVE

DISCUSSION/CONCLUSION ............................................................ 109
REFERENCES ............................................................................... 112

Figure 1:

Figure 2:

Figure 3:
Figure 4:
Figure 5:
Figure 6:
Figure 7:
Figure 8:

Figure 9:

Figure 10:
Figure 11:
Figure 12:
Figure 13:

Figure 14:

LIST OF FIGURES

Components of Traditional Supply Chain .................................... 2
Relationship of Packaging and Transportation to Traditional .............. 2
Supply Chain

Overview of Grocery Supply Chain ........................................... 3
Outline of Warehousing ......................................................... 4
Flow of Information Through Members of a Supply Chain ............... 18
AIDC Technologies .............................................................. 22
UPC/BAN Linear Barcode ...................................................... 23
2D Matrix Bar Code ............................................................. 25
RFID Components ............................................................... 26
Relationship of Hardware to Sofiware ........................................ 41
Receiving Decision Tree ........................................................ 69
Put-Away Decision Tree ........................................................ 70
Order Selection Decision Tree ................................................. 71
Shipping Decision Tree ......................................................... 72

vi

INTRODUCTION

In today’s volatile market, companies must constantly strive to improve in every
aspect of their operations. Competition continues to rise with each passing day.
Businesses have become more knowledgeable and technologically advanced over the past
few years, increasing the need to “keep up” with the competition. Companies that
become complacent will end up losing valuable customers which may lead to an
insurmountable financial disaster. Achieving a competitive advantage provides
companies with reassurance that they will be able to possess a significant share within the
marketplace.

Successful managers realize the importance of customer satisfaction. If the
customers are happy, the business can continue to grow. Many companies are
reevaluating their own strategies by paying more attention to their customers’
perspective. Jeff Holmes, Vice President of Industry Marketing for Manugistics, Inc.,
states, there is an “. . .escalating need for companies to be much more efficient in how
they do their business, how they serve their customers. They need to create bottom-line
efficiency-to get the cost out-and they have to change their organization structure to
support that” (Harrington 1999). As businesses explore different options to enhance their
overall efficiency, a key component is getting the most attention: the supply chain. Jim
Shepherd, Vice President of Research at Advanced Manufacturing Research (AMR),
points out, “success now depends on the ability to meet customer demands for delivery,
quantities, and options. Companies are scrambling to improve supply chain performance

just to remain competitive.” (Harrington 1999).

Many companies have realized that supply chain management plays a key role in
obtaining a competitive advantage. According to Rick Balsgen, vice president of the
supply chain for Nabisco, Inc.,

“The opportunities in supply chain management are second to none, and

there’s never been a time that’s been more exciting and with a higher

degree of optimism across the spectrum of supply chain management than
today. Many of us are finding that we are moving from a liability to be

managed to a competitive weapon in the marketplace, and that there is a

lot more value the logistics supply chain can deliver than ever before”

(Johnson 2000).

United States companies are recognizing this value; there has been great interest
in the power and potential that supply chain management can provide (Quinn 1998). Due
to the fact that the supply chain affects profits, market share, and customer satisfaction,
many CEO’s across the country are increasing their efforts to improve their supply chain
processes and are attempting to emulate a “world-class” supply chain model.

A review of the literature reveals several common elements that exist in supply
chains characterized as world class. They include: collaboration with external partners
such as vendors; intragration between all logistics-related functions within the company
such as transportation, distribution, warehousing, sourcing, and manufacturing; a holistic
approach to management that views the supply chain as a single entity rather than
individual components; and integration of the customer’s needs and requirements (Quinn
1998; Markland et a1. 1998; Parks 1998; Anderson et al. 1997). These elements work
cooperatively to optimize material and information flow throughout the supply chain.

This, in turn, results in greater efficiency and accuracy, characterized by a reduction in

inventory, an increase in the visibility of goods, and greater labor productivity.

Information Technology

A key factor in maximizing the competitive advantage of a supply chain is the use
of information technology. Managing the flow of information can be as crucial as
managing the flow of products in a successful supply chain. According to Lance
LaCross, Movex product director,

“Information can be used as a competitive tool to connect and

communicate all the way from suppliers to the end customers. The more

information you can get within the supply chain, and the more tools you

have to optimize the exchange of that information, the more competitive

you can be” (Deveau 1999).

Many companies agree that increased information technology has shown major
improvements in supply chain management. Author Peter J. Metz (1998), states, “no
other factor has had as much to do with the development of supply chain management as
the advance in key technologies: information, manufacturing, and transportation. The
competitive urge has inspired us to implement these technology advances swiftly.” In an
effective supply chain, an increase in the flow of information can result in a decrease in
inventory, and improved productivity and customer service. “The more we know about
our products, inventory, and their movement,” states Rick Bushnell, president of Quad II,
a consulting firm, “the less uncertainty we have” (Trebilcock 2000). Knowledge about
particular goods within a supply chain can help upper management make wiser decisions
regarding the amount of inventory they utilize or store. Bushnell adds, “when we’re
certain about the movement and location of goods, we don’t need to have as much
product in the pipeline.” (Trebilcock 2000).

Incorporation of information technology into the supply chain aids in the

collection and processing of data in order to increase the speed and accuracy of the

information flow. The knowledge and effective use of technology has been a competitive
differentiator among companies for some time (Quinn 1999). Technology can provide
increased product visibility, such as the identification, location, and quantity of goods,
which can help companies predict more accurately what and when they will need to order
or deliver. Dan Sholler, an analyst at the Meta Group, says, “using this information,
(companies) can cut down on waste from overproduction; lost revenue from
underproduction and late deliveries; and storage costs involved in making or getting
items too early” (Holt 1998).

Automatic data collection (ADC), a type of information technology, is at the heart
of a supply chain management and execution system (Trebilcock 2000). Different forms
of ADC include barcodes, Radio Frequency Identification (RFID), smart cards, voice
recognition, and biometrics. These technologies collect information and transmit/receive
them to and from a relevant software system for processing. The data may include, for
example, inventory levels, quantity of orders picked in an allotted time frame, or location

of product in transit.

RFID

Radio frequency identification is a type of ADC that utilizes the radio fi-equency
portion of the electromagnetic spectrum in order to communicate data. It is a system that
has the ability to automatically identify and track objects often without line-of-sight, such
as a barcode system requires. The individual components within an RFID system include

a tag, reader, and host computer. Tags are information vessels that can transmit and/or

receive data, readers emit frequencies in order to detect and/or send data to tags, and a
computer device decodes and interprets the information contained within tags.

RF ID can offer many advantages to a supply chain logistics system. Rich
Krueger, Director of RF ID Business Development for Motorola, points out, “It gives you
much more detailed and fine demarcation points in the overall logistics pipe” (Hickey
1999). “RFID is very exciting,” states Larry Sur, founder of ilogistics.com. “Depending
on the application, it can provide a solution to a number of different problems.” (Bumell

2000)

RFID Implementation into the Supply Chain

Many supply chain processes can be enhanced using RFID technology. This
study specifically focuses on the application of RFID technology within a grocery and
consumer goods supply chain. From the receipt of raw materials to the delivery to the
end-consumer, RFID can be implemented into a variety of activities in order to provide a
competitive advantage.

Due to the higher cost of an RFID system, applying the technology to each step in
the supply chain can become very expensive. Therefore, companies should investigate
their own practices in order to determine which functions and logistical activities will
benefit the most from it.

One of the challenges of implementing RF ID into an existing system is deciding
the most effective way to utilize the hardware to achieve the desired results. The location
where the information is acquired is also an important factor to consider when

implementing the system. Depending on the information a company wishes to extract,

tags can be placed on either full pallet loads or individual cases, and readers can be
handheld or mounted in fixed positions on forklifts or over bay doors. This research
explores the concerns and eventual outcomes between the placement of tags on pallets
versus the placement of tags on individual cases within the warehouse. Deciding which
method is best suited for an individual company requires a thorough investigation of the
functions within the warehouse and a complete understanding of RF ID technology.

The objective of this research is to analyze current warehousing operations and
propose possible improvements to the systems by implementing RFID technology.
Utilizing the most advantageous placement of RF ID equipment will prove to increase
efficiency and lower current warehousing costs.

The remainder of this thesis is comprised of a Background section, Literature
Review section, Methodology section, Model section, and Conclusion section. In the
Background section, a detailed description of the supply chain and supply chain
management will be provided, as well as a thorough discussion of information
technologies, including, most specifically, RF ID. The purpose of the Literature Review
section is to lend support to the statements and ideas produced in this thesis by asserting
the valuable opinions of business and technology experts and revealing relevant statistical
data. In the Methodology section, the course of action used to validate the model is
explained. The Model section presents the research in the form of decision trees and then
offers suggestions of how to implement RF ID into a warehouse based on the outcome of
those trees. The value of an RF ID system and the evidence gathered from this study will

be discussed in the Conclusion section.

CHAPTER ONE
BACKGROUND
Supply Chain

A supply chain incorporates all the processes involved in transferring materials
and subsequent information from a beginning point to an end point. The definition
applied by Markland et a1. (1995), states,

“The supply chain is the connected series of value activities that is

concerned with the planning, coordinating, and controlling of materials,

parts, and finished products from suppliers to the final customer.”

Every company has its own unique supply chain and, therefore, each maintains a
slightly different definition of what a supply chain incorporates. Recently, there has been
a great emphasis placed on the importance of adding value to the traditional, product
focused elements.

The traditional model of the supply chain incorporates three major components:
the supplier network, the manufacturing unit, and the customer network (Markland et a1.
1995) (Figure l). The supplier network refers to the group of suppliers, or vendors, that
are responsible for providing goods and services to an organization. The manufacturing
unit is a series of steps performed by the organization to transform the raw materials from
the supplier into finished products. The finished products are distributed to the end

customer, such as a distribution center or wholesaler, also referred to as the customer

network.

 

   
 

Traditional '

Supply
Chain

bf.
'-61 "'

 
   

 

 

 

 

Supplier Network Manufacturing Unit Customer Network

 

 

 

 

 

 

 

 

 

 

Figure 1: Components of Traditional Supply Chain

The traditional supply chain approach includes many additional elements that can
significantly impact the efficiency of the supply chain, but are not considered to be
primary components. Two of these elements that require further consideration are

packaging and transportation. Both play a role in each component of the supply chain, as

 

  
  

 
 
 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

illustrated in Figure 2.
Traditional
Supply .3
Chain ,4
Supplier Network Manufacturing Unit Customer Network
Transportation Transportation
Packaging Packaging Packaging

Figure 2: Relationship of Packaging and Transportation to Traditional Supply

Chain

The importance of packaging to the supply chain is often overlooked, or at least
underestimated, in an organization (Bowersox and Closs 1996). This is unfortunate,
since the cost and productivity of a supply chain can either be positively or negatively
affected by the packaging of a product. The extent to which it affects the supply chain is
determined by the overall cost as well as its ability to successfully accomplish the four
main functions of a package: containment, protection, utility, and communication
(Abbott 1989). These four functions apply to any type of packaging, whether it is crates
used at the supplier, pallets used at the manufacturer, or corrugated cases used at the
customer level. Each component utilizes the most effective packaging system for their
needs, in an attempt to achieve these basic fimctions at the lowest possible cost.

A fundamental relationship exists between the packaging of a product and the
distribution, or transportation, of a product. Transport of goods occurs from the supplier
to the manufacturing plant, and also from the manufacturing plant to the retailer, which
can expose the package to unfavorable conditions such as shock, vibration, extreme
environments, and mishandling. Not only must a package survive this abuse to protect its
contents, but it must also communicate its identity, destination, and other relevant
information for appropriate handling and delivery.

The transportation and delivery of goods must be accomplished accurately and in
a reasonable time frame in order to positively impact the supply chain. Obviously,
delivering the wrong goods to the wrong customer at the wrong time will result in
harmful consequences to the company, however, an increase in speed and accuracy can

increase productivity and ensure customer satisfaction.

The traditional view of the supply chain has received much criticism due to the
linear interaction between the three major components: suppliers, manufacturers, and
customers. Within a company, these components are often managed separately, which
may lead to miscommunication or minimal information exchange. Robert Olsen, of
Tompkins Associates states,

“In a traditional flow, each step in the chain works independently of the

others. Other than information passed on about an order, each

organization is oblivious to the activities of all others in the supply chain.

The reaction of the system is hindered. Product is not delivered in a

timely manner, stock buildups occur, production capacity is wasted, and

costs rise” (“Ready, set, plan” 1999).

As mentioned by Olsen, several complications can result from inadequate
commrmication between supply chain components. Using the grocery industry as an
example, consider the problems that could arise if a manufacturer of animal crackers
decided to change its primary packaging from a tall, thin plastic container to a wider,
stand-up flexible pouch but did not communicate this change to the warehouse or the
store. Also, because the pouches now had the ability to lie flat during transport,
modification could also be made to the secondary packaging, or the case. The warehouse
personnel might not recognize this case, however, afier the initial confusion, would be
able to determine its appropriate storage location. Since the storage racks would be
constructed using the previous, larger case dimensions, the entire space would not be
utilized, resulting in extra space that cannot be used unless the racking is altered. When
the case finally reaches the store, the store employee would not recognize it immediately.
Since the shelving would have been designed for the previous container dimensions, only

one of the wider pouches could fit in the space allotted instead of two containers. The

product would not receive adequate merchandising space allocation and thus may result

10

in a reduction in sales unless the shelves are adjusted. Packaging modification may seem
trivial, but if changes are not effectively communicated, substantial difficulties can result
for all the components of the supply chain.

Increased awareness of the consequences that can arise from disassociated
components of the supply chain is causing companies to reject this traditional approach.
Communication flow throughout the chain is extremely important to its overall
efficiency, and the way to achieve this is through total integration of all supply chain
elements. F rohlich and Westbrook (2001) found that the more integration with suppliers
and customers, the higher the improvement in performance. Coordination of activities
across the supply chain adds value for the customer as well as increasing profitability of
every link in the chain (Anderson et a1 1997). Adding value to the traditional supply
chain results in a new, innovative, customer-centric model, described as a value-based
chain.

A value-based chain is more complex, parallel, and relationship-oriented than the
traditional supply chain model. It not only views components holistically, the value-
based chain focuses on increased communication flow throughout the chain. It
incorporates such activities as sharing information (collaboration) with suppliers and
customers, increased information technology, and offers more personalized services for
customers. The greater the amount of value in a supply chain, the greater the competitive
advantage the business will have. Rick Blasgen, Vice President of the supply chain for
Nabisco, Inc., describes the effect of the value-based chain on customer satisfaction by
stating,

“If your inventory accuracy isn’t what it should be, you have
inefficiencies, and you don’t have the relationships with your customer;

ll

think about the effect you’re going to have on a customer that is going to

be so much more demanding for customer-specific personalized service

than ever before. You’ll get one or two chances at best to deliver that type

of service and the minute you fail that person is going to your competitor”

(Johnson 2000).

A world-class supply chain model embodies the additional complexity of the
value chain that has been ignored by the traditional model. It involves the interaction of
many different areas, in different locations, utilizing the same product in different ways.

Significant increases in competition among businesses today has driven many
companies to take notice of their practices and pursue initiatives to discover a way to
improve overall efficiency. Attention falls on the supply chain, due to its substantial
importance to business operations. “Business has accelerated to such velocity that, in
many industries, a company’s fortunes can rise and fall on its ability to monitor and
manage the supply chain” (“Visible assets” 2000). Graham C. Stevens (1989) stated that
“the design and operation of an effective supply chain is of fundamental importance to
every company.”

Managing the supply chain is crucial, considering that nearly $3.4 trillion dollars
are spent on supply chain operations globally (Nelson 2001). “Much of that cost is
wasted because companies fail to recognize potential savings in trucking, inventory
control, order fulfillment, packaging, material handling, data management, distribution,
and more” (Nelson 2001). In fact, a study by consultants at AT. Kearney revealed that

inefficiencies in the supply chain can waste as much as 25% of an organization’s

operating costs (Quinn 1998).

12

The ability of a supply chain to either “make or break” a company is evidenced by
the fact that there is a tremendous amount of wasted effort that does not add value to the
final product.

“Basically, the supply chain costs much more than it should. It takes

much longer than necessary to move goods. And to make matters even

worse, the supply chain as it now stands is not a good deliverer of

customer satisfaction” (“Ready, set, plan” 1999).

Evidence of the waste inherent in the supply chain is substantiated by Jim Allred
of Eskay Corporation in a statement referring to one company’s supply chain: “We found
that each product was touched 37 times before it was shipped. And of those 37 touches,
29, or nearly 80%, were touches that added no value” (“Ready, set, plan” 1999).
Productivity increases when non-value-added steps are diminished, thus resulting in a
significant financial gain for the company.

The supply chain offers many areas for improvement, and companies are
beginning to take notice. Rick Blasgen states, “Many of us are finding that we are
moving from a liability to be managed to a competitive weapon in the marketplace, and
that there is a lot more value the logistics supply chain can deliver than ever before”
(Johnson 2000).

The management of the necessary elements of a supply chain is very important in
order to develop an efficient and effective system. Modern supply chain management has

evolved as a way to control the system and combine the separate elements into one

holistic chain with a consistent flow of product and information.

13

Supply Chain Structure

Although there are various ways of viewing the supply chain and its
corresponding management, the basic structure relating to the flow of goods is similar for
every industry. Since the grocery industry is the main focus of this research, a
fundamental description of the organization within a typical grocery supply chain is
obligatory.

The key stages involved in the movement of goods and information within the
grocery supply chain include acquisition of raw materials, manufacturing of raw
materials into a final product, warehousing of final products, and transportation and
distribution to the retailer. Related to these processes are additional activities that are
specific to each function. Due to the importance of packaging, a general description of
package movement throughout the supply chain should be noted.

The main processes involved in a supply chain can be demonstrated with the
following example (refer to Figure 3). A farmer sells his crop, corn, to a vendor for a
large cereal corporation, Cereal-Biz. The vendor sells the corn to Cereal-Biz and
transfers it to the proper manufacturing plant (acquisition of raw materials). The corn
would most likely be transported in some kind of bulk, containerized package, such as a
rail car. The manufacturing plant uses the corn to create its final product, cereal
(manufacturing). The cereal is first inserted into a pouch, then the pouch is inserted into
a printed carton. A pre-deterrnined quantity of cartons is then placed into a corrugated
shipping case, which acts as the secondary package. The cases are loaded onto a pallet
and pOSSibly stretch wrapped for load stabilization. Pallets of cereal are loaded onto a

trailer and shipped to a Cereal-Biz, or a public, warehouse. The cereal pallets are stored

14

at the warehouse until a retailer places an order for a specific quantity. The cereal is then
loaded onto a trailer and delivered to the store that requested it. The store receives the
cereal, employees open the cases, stock the shelves, and ultimately, the cereal is bought
by the consumer. The point at which the cereal is purchased by the consumer is

considered the end of this supply chain.

 

Raw Material

t
1 Vendor I

1

Manufacturing
Facility

1
Warehouse
T

Grocery Store

I

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 3: Overview of Grocery Supply Chain

Warehousing

Warehousing is the act of maintaining goods within a warehouse facility. It
accepts an inbound flow of goods from manufacturing sites, stores them for a short
period of time, and then releases them as an outbound shipment to the stores. It is the
intermediate step in the supply chain between manufacturing and the sale of the product
in the grocery store where the flow of goods is temporarily stopped.

The three main components, or resources, of warehousing are space, equipment,

and people (Ackerman 1990) (Figure 4). The space within a warehouse must be
sufficient to allow effective flow of goods and productive operations. “The physical

structure must be capable of orderly, damage-free and timely staging of full goods” (Koss

15

1998). Space management must also consider the second component of warehousing:
equipment. Equipment used in a warehouse includes all material handling devices such
as forklifts, conveyors, racks, and also the hardware and software systems utilized to
manage warehouse functions. The most critical component of warehousing is people
(Ackerman 1990). Quality and efficiency of operations largely depends on the
performance of warehouse personnel. “Adequately trained warehouse crews are essential
for handling the continuing increase in packages, products and volumes within the set
bounds of physical conditions” (Koss 1998). Capitalizing on these three components
maximizes the success of warehousing functions.

The fundamental fiinctions of warehousing are classified as movement and
storage (Bowersox and Closs 1996) (Figure 4). Movement, or material handling, is
emphasized and divided into three categories; storage is secondary and is divided into

two categories (Bowersox and Closs 1996).

   

 

Resources of Warehousing

_ __ _—_J

  

  
 

 

 

 

 

 

 

Equipment
J Functions of Warehousing h

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Movement Storage
Receiving In-storage Shipping
Handling -
Planned Extended

 

 

 

 

 

 

 

 

Figure 4: Outline of Warehousing

l6

The three activities involved in movement are receiving, in-storage handling, and
shipping (Figure 4). These three activities correspond to the handling of goods from
arrival at the warehouse to the eventual shipment to the customer.

The activity of receiving takes place at the receiving bay doors of a warehouse
dock and consists of a multitude of basic tasks. Employees begin by unloading the
products from the trailer of a vendor’s truck. Although products can be shipped using
different methods depending on the distribution environment (i.e. floor loading or use of
slip sheets) industrial use of wooden pallets is common and, therefore, will be the only
method considered for this research. Pallets are unloaded using a forklift and placed at
the warehouse dock. The products contained upon the pallet must be “checked in”, or
verified against documentation of the order, such as an advance shipping notice (ASN).
Once all the goods have been accounted for, the receiving operation ends and in-storage
handling begins.

In-storage handling is a general term referring to two separate activities,
designated as put-away and order selection. Put-away, as its name implies, involves
transporting pallet loads from the receiving dock and “putting them away” to their proper
storage locations. This operation can be performed manually or automatically, depending
on the capabilities of the warehouse. The identification of storage locations is also
dependent on the technology employed by the warehouse. For instance, an employee can
determine location based on previous knowledge of where the product is stored, or can

automatically display the storage location on a handheld device through the use of

17

barcodes. Once the goods have been stored appropriately, they should remain stationary
until selected for an order.

Order selection, or picking, refers to the process of extracting individual products
from storage and compiling them to fulfill a customer’s order. Many different strategies
exist for the picking operation. Implementing these strategies can provide optimum
picking patterns and effective route determination. Each company must decide on the
most beneficial strategy by considering the layout of the warehouse facility, the
equipment owned, the capability of employees, and the level of automation in place. The
properties of the specific products contained within an order must also be considered
when picking. “We have to plan the picking route,” explains Ann Neumann, Operational
Product Manager of a grocery business, “so that fragile items, such as potato chips, are
picked after heavier stuff” (Witt 1999). Picking of an order is complete when every
product of a customer’s order has been compiled; the goods are assembled onto pallets
and transferred to the shipping dock for outbound shipment.

Shipping is the third activity involved in material handling, and is the last
operation executed before an order is transported to the customer. It encompasses the
verification of an order, the loading of goods onto the trailer, and the actual transport to a
customer site. Employees verify that each item of an order is contained upon the pallets
before they are loaded onto a trailer. The process of verification can differ based on
technological capabilities of the warehouse. One system may require an employee to
manually record the individual products, yet a more advanced system could utilize
technology that is capable of automatically inputting data into a computer program, such

as barcodes. Shipping provides the last opportunity to correct errors made by the

18

previous operations before the items leave the facility and are transported to the
customer. When the items on the pallets match the order documentation, they are loaded
onto the trailer and sent to the customer.

The secondary function of warehousing, storage, is divided into two categories:
planned and extended (Figure 4). Planned storage refers to goods stored for the basic
replenishment of inventory, and extended storage refers to the excess inventory that is not
required for normal warehouse operations (Bowersox et al 1996).

The resources, functions, and activities of warehousing all contribute to the
achievement of its overall objective, which is getting the right product to the right place
at the right time. The successful achievement of this objective results in obtaining
customer satisfaction, one of the top priorities of the company. As previously stated, a
company is challenged with providing a high level of customer service while
simultaneously decreasing costs in order to obtain a profit. By meeting its objective,
warehousing offers significant value to the company in achieving these aspirations.

There are many goals that must be met in order for warehousing to achieve its
objective. Research suggests that goals generally involve some, if not all, of the
following: improved accuracy of information and outbound orders, faster
communication, optimized use of space, quicker turn-around, lower labor costs, increase
in on-time shipments, reduction in inventory, elimination of shrinkage, and increase in
equipment utilization (Lenius, 1998; Mohrrnan 1999; Schmidt 2001; Schulz 2000).
Meeting these goals increases the productivity of warehousing. Increased productivity
results in getting the customer the right product at the right time while simultaneously

reducing costs.

19

Reduction in inventory has been designated as the major goal of many warehouse
managers due to the considerably high cost of carrying inventory. “One of a company’s
most significant investments after its people and facilities is its investment in inventory”
(Margison 2000). Many costs are associated with maintaining an inventory that can be
reduced through increased productivity.

The costs involved with storing inventory are referred to as inventory carrying
costs. It is estimated that companies pay an annualized carrying cost based on all
quantities on hand of roughly 25 to 30 percent (Stratman 2000). One type of carrying
cost is the cost of capital investment of inventory. Money invested in sustaining on-hand
inventory cannot then be utilized for other operations that could improve the company’s
performance. Taxes and insurance costs also contribute to inventory carrying costs.
Inventory can be considered as property and be taxed accordingly in some locations.
Insurance cost is based on estimated risk or exposure over time, thus, an item of higher
value will require a greater investment in insurance than one of lesser value (Bowersox et
al 1996). Another factor that increases carrying cost is the potential obsolescence or
pilferage of inventory. Obsolescence refers to the deterioration of a product or the
discontinuation of a particular item, and pilferage refers to the loss of products as a result
of theft. The expense of maintaining the storage area (warehouse) is also a significant
cost of inventory. Utilities such as electric and water, as well as the expense of
purchasing and maintaining equipment are all elements of inventory carrying costs.

The significant cost involved with storing inventory heightens the need for its

rapid turnover. Turnover refers to the quantity of goods that have been sold and

20

restocked in a designated period of time. Idle inventory adds to a company’s costs, while
those products that are repeatedly being sold (those with a high turnover) increase profits.

Reducing inventory costs without sacrificing customer service is a balancing act
in warehousing. Customer satisfaction is acquired when a warehouse maintains sufficient
stock to fulfill the customer’s request. The trend in business today is to “cut inventories
and inventory costs to the bone - and then cut them some more - without inducing a
stock-out at the store level” (“Trends in the grocery industry” 2001). A stock-out occurs
when a warehouse depletes its inventory to a point where it cannot ship a particular item
of a store’s order. The store may lose sales of that product and, more drastically, lose the
loyalty of the end consumer. The severity of these consequences can lead warehouses to
carry surplus inventory despite the exorbitant costs. The goal “is to achieve the desired
customer service with the minimum inventory commitment, consistent with the lowest
cost” (Bowersox et al 1996).

With such a dynamic flow of goods, a company must be aware of its exact
inventory at all times. Decisions made by various departments within the company are
greatly affected by the accuracy of inventory levels. A salesperson, for example, must
have access to the correct quantity of goods so he/she does not sell an amount to a
customer that exceeds the amount actually stored in the warehouse. The inventory
management system, or computer program that monitors inventory levels, must contain
correct levels of inventory or lost sales and lower productivity will result. Jon
Schreibfeder, of Effective Inventory Management, Inc., claims, “in order to receive all of
the benefits from a good inventory management system, stock balances must be at least

97% accurate, every day of the year” (Schreibfeder 2000). In other words, if a company

21

believes it has a quantity of 100 cans of green beans in the warehouse, there should be no
less than 97, and no more than 103 (Schreibfeder 2000).

Two methods that many companies employ to examine their inventory levels are
cycle counting and annual physical counts. Cycle counting refers to a manual count of a
small percentage of inventory on a regular basis. The amount of inventory to be counted
and the frequency of the counts is decided by management (Ackerman 1990). These
auditors can be employees at the warehouse or externally contracted. The main objective
of cycle counting is to compare current inventory levels with inventory records on a
continual basis in order to identify and correct errors as soon as they are found.

Annual inventory counting employs the same objective as cycle counting,
however, as it is performed only once a year, the entire warehouse inventory must be
counted in one session. In order to complete this time-consuming and expensive process,
a company can decide whether to count during regular business hours or close down the
warehouse for a period of time. Counting inventory while simultaneously conducting
business activities can lead to mistakes within both operations. However, closing the
warehouse can result in tremendous financial losses in sales and productivity, not to
mention the additional overtime expense for employees. Another issue for a company to
consider when performing annual counts is the amount of time that the inventory level
will remain accurate. Once inventory levels are corrected, how much time will pass
before new errors are introduced? Errors can happen at any time and they might not be
discovered until the next annual inventory count, which could result in relying on

inaccurate information for a considerable length of time.

22

SUPPLY CHAIN INFORMATION

Information is vital to the success of the entire supply chain. Operations and
activities within the chain rely on both internal and external information in order to
perform their required functions. As previously noted, external information, or
information provided from one unit within the chain to another, is the factor that
differentiates the value-based supply chain from the traditional approach. This
communication of information forward and backward throughout the chain is a necessary
condition for competitive advantage (Markland et a1. 1995).

Communication of information between members of a supply chain, i.e., vendors,
manufacturing, warehousing, store, and consumer, is essential for each unit to maximize
efficiency (refer to Figure 5). This is also referred to as “integration.” Integration is the
development of external partnerships between supply chain members. These partnerships
allow for the exchange of valuable information, i.e. demand forecasts, production data
and inventory data, which helps to eliminate the amount of “guesswork” involved in
decision-making. According to John Burnell (2 1999),

“In truly progressive supply chains, information flow is not one way.

Information, in the form of forecasts and reports, is jointly created among

trading partners, then continuously communicated and updated.”

An example of the desire for information flow is as follows: a manufacturing
plant that produces pretzels must have information regarding the raw materials (flour,
salt, etc.) sent by the vendors in order to plan their production schedules. The warehouse

managers, in turn, rely on information received from the pretzel manufacturer in order to

effectively manage the flow of incoming products to storage and to outbound shipment to

23

the customer. Each unit receives and supplies information which creates a bi-directional

flow that increases the efficiency of the entire chain.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VENDOR __
A
MANUFACTURING
lnformatio Information
STORE
_ CONSUMER V

 

 

 

 

 

 

 

Figure 5: Flow of Information Through Members of a Supply Chain

The significance of information flow to the efficiency of the supply chain has
been noted by many members in industry. Integration of supply chain members has
provided benefits to Texas Instruments such as significant cost efficiencies, customer-
service enhancements, and marketing advantages (Quinn 1998). Bob Trebilcock,
Contributing Editor of Modern Materials Handling, states, “. . .in an effective supply
chain, an increase in the flow of information can result in a decrease of inventory, and
improved productivity and customer service” (Trebilcock 2000). These benefits provide
the company with competitive leverage, and, according to Lew Pritchett, a retired Procter
& Gamble executive, “success in the next century will depend on access to information,

not access to capital” (Burnell 2 1999).

24

Additionally, integration can provide considerable time advantages. Julie
England, Vice President of Texas Instruments’ Semiconductor Group, claims that having
partnerships with external members of the chain provides a critical time advantage in
bringing new products to the market before competitors and delivering them on time at an
acceptable cost (Quinn 1998). The effective management of time is another competitive
advantage that can be a result of improved communication and more rapid information
transfer. Dave Hubbard, Vice President of Global Supply Chain Management at lomega
Corp., explains,

“ ‘The key battleground in this whole value-chain thing is the concept of

time. From the supplier’s supplier to the customer’s customer, you want

to make the cycle time as fast as possible because you have to improve

quality, improve efficiency, improve productivity, improve cost, etc. . .If I

can take time out of the chain and take out my redundant steps I can keep

my price competitive, still make a good profit, and be at the forefront of

the competition rather than always fighting based on price considerations.

I have extra weapons I can fight with. I’ve got delivery, customer

satisfaction, reduced obsolescence. The value chain is giving me more

things to compete with than just price’ ” (Taninecz 2000).

The knowledge that increased information flow can lead to a competitive
advantage has caused many companies to consider expanding their information
technology capabilities. Information technology (IT) incorporates hardware and software
components that collect and analyze data in order to manage the flow of information. IT
offers quicker, more accurate management of information compared to the traditional
manual methods. “Technological investments may be the route to improved
competitiveness and increased revenue” (Schwartz 1997). The investment in technology

helps to build value through better logistics services that are required by customers.

Francis Quinn, Editor of Supply Chain Management Review, agrees, “The knowledge

25

and effective use of technology has for some time been a competitive differentiator
among companies” (Quinn 1999).

Many companies are realizing this; a survey of 200 North American
manufacturers and distributors found that “75% of the companies plan to significantly
increase their spending on supply chain technology to support their improvement
initiatives and to attain competitive advantage” (“Survey spotlights. ..” 1998). The
survey concentrated on supply chain systems and technologies, particularly information
systems. According to the survey, “many companies believe that managing the flow of
information in the supply chain may be as important as managing the flow of the
products” (“Survey spotlights...” 1998).

The improvements gained by implementing appropriate information technology
can be demonstrated in many supply chain operations. At the manufacturing level,
technology can accelerate the production line and also support the control of Materials
Requirements Planning (MRP) which can result in reduced costs and more efficient
product flow (www.aimglobal.org). In warehousing applications, technology can
eliminate many errors by replacing traditionally manual methods with automated ones,
and it also aids in managing the incoming and outbound flow of good. In transportation,
technology can provide greater visibility of goods, that is, the ability to monitor and track
the movement of goods at any point in the supply chain.

“By improving supply chain visibility in the transportation industry,

shippers and carriers alike can improve the quality of their information.

When quality of information improves, efficiency improves and that

translates into money saved” (Schwartz 1997).

At the store level, technology can significantly improve errors caused by inaccurate

manual ordering and incorrect pricing of goods. A reduction in these inaccuracies and

26

errors by implementing technology results in an improvement in revenue for the company
as well as increased customer satisfaction.

The challenge of implementing technology is to discover the most appropriate
technology to meet the needs and requirements of the company. “To add value to the
enterprise, IT must be applied intelligently and strategically to where it will do the most
good” (Hollinger 2000). Bob Auray, President and CEO of USCO Logistics, agrees,
“You need to carefully evaluate the fit of technology before investing in it” (Loudin
2000). Technologies differ in the benefits they offer to certain applications, therefore,
choosing the most advantageous technology for an operation is crucial to its success.

As noted, IT is a broad term that encompasses a variety of hardware components
and software applications utilized to manage information flow. Hardware components
generally extract or collect the data while the software components process the data.
Each component is a tool for collecting or analyzing information, but many forward-
thinking companies are beginning to understand the value attained when they are
integrated. “They transform the movement of product through the supply chain from a
necessary cost of doing business into a competitive advantage in the battle to retain
customers and expand market share” (Trebilcock 2000).

The most critical technological component required in warehousing is a computer
network. Computers can be utilized for many repetitive and complex firnctions such as
issuing bills of lading, retaining vast amounts of information regarding inventory,
receiving and transmitting data through Electronic Data Interchange (EDI), and receiving
information from automatic identification methods (Ackerman 1990). A computer is the

link between the hardware and software components of information technology.

27

Hardware for the automatic collection of data is necessary in order to eliminate
errors caused by manual data entry. Automatic Identification and Data Collection
(AIDC) is “the worldwide industry term which describes the identification and/or direct
collection of data into a computer system, programmable logic controller (PLC), or other
microprocessor-controlled device without using a keyboard” (www.aimglobal.org 2002).
Technologies of AIDC support two goals: to eliminate identification and/or data
collection errors and to accelerate the throughput process (www.aimglobal.org). There
are various forms of AIDC technology, including, but not limited to, barcodes, 2D (two
dimensional) barcodes, Radio Frequency Identification (RFID), Card Technologies
(including Magnetic Stripe and Smart Card), Voice and Vision Systems, Optical
Character Recognition (OCR), and Biometrics (see Figure 6). Due to the focus of this
thesis, the only AIDC technologies that will be discussed in detail are bar codes and

RFID.

 

Voice & Vision
Systems

 

 

 

   
 
 
 

 

 

I 20 Bar Codes

 

 

 

 

 

I Bar Codes Biometrics

 

 

 

 

 

Card
Technologies

E/\E

Magnetic Strirfl Smart Card

 

 

 

 

 

 

 

 

 

 

Figure 6: AIDC Technologies (only the items in bold type will be discussed in this

document).

28

Bar Codes

Bar codes are one of the best known and most widely used AIDC technologies.
Invented in the early 1950’s, bar code technology is defined by AIM, a global trade
organization that is the worldwide authority on AIDC, as technology that

“encompasses the symbologies that encode data to be optically read, the

printing technologies that produce machine-readable symbols, the

scanners and decoders that capture visual images of the symbologies and
convert them to computer-compatible digital data, and the verifiers that

validate symbol quality” (www.aimglobal.org 2002).

A linear bar code is made up of a pattern of parallel dark bars and spaces which
are graphical images of data characters and control characters (also referred to as bar
code symbology). The amount of data a typical bar code can represent varies from 15 to
50 characters. The most familiar bar code is called UPC/BAN (Universal Product
Code/European Article Number) which is used widely throughout the grocery industry,

printed on almost every product that is stocked in the store (refer to Figure 7). The

equivalent human-readable code appears below the encrypted design.

2 03489 34382 2

Figure 7: UPC/BAN Linear Barcode
This linear bar code is one out of 250 variations that have been designed over
time, although industry only considers 10-12 linear bar codes as acceptable for use
(www.aimglobal.org). Depending on the symbology used (specific examples aside from
UPC/BAN include Code 128, Code 39, Code 93, and Interleaved 2 of 5), the bar code

may encode only numeric data or all or part of the American National Standard Code for

29

Information Interchange (ASCII) character set by varying the width of the bars and
spaces (www.aimglobal.org 2002). Industry specific requirements are the determining
factor on which symbology must be used.

Bar codes can be produced in a variety of ways. The most common method is by
printing the pattern on a separate label and applying it to the product. It can also be
directly applied to the product by printing (www.aimglobal.org 2002).

The data is extracted from a bar code by scanning it with an electro-optical
system. The system, casually referred to as a bar code scanner, operates by illuminating
the symbol and measuring the reflected light. The light waveform data is then converted
from analog to digital, in order to be processed by a decoder and eventually transmitted to
the computer-based software system (www.aimglobal.org 2002).

The scarmer itself can be either a handheld version or fixed mount version.
Handheld scanners can be in the form of a contact wand, a charge-coupled device (CCD),
or a laser. Fixed mount scanners incorporate either a moving-beam laser or “vision-
based” technology. A grocery checkout is a common application of both fixed mount
and handheld laser scanners. Overhead or side-mounted laser scanners can also be used
in industrial applications. Vision based scanners are useful for high speed sorting

operations.

2D Bar Codes
A second type of barcode, a two dimensional (2D) bar code, provides a means for
incorporating a large amount of data in a very limited space (refer to Figure 8). The

advantage they possess over linear bar codes is the vast amount of data they can store.

30

2D bar codes can store up to 7000 numeric or 4200 alpha-numeric characters (as
compared to 50 stored in linear codes). The disadvantage is that 2D bar codes require the

use of a specialized scanner.

 

Figure 8: 2D Matrix Bar Code
There are three types of 2D barcodes: stacked symbologies, matrix symbologies,
or packet symbologies. Stacked symbologies are comprised of linear bar codes stacked
on top of each other. Matrix symbologies consist of a pattern (or matrix) of dark and
light elements including squares, circles, or hexagons. Packet symbologies refer to a

collection of “randomly” arranged linear symbols on a page.

Radio Frequency Identification (RFID)

Radio Frequency Identification (RF ID) is a type of automatic identification
method that has acquired extensive interest in recent years.

An RF ID system is based on data flow throughout an air interface, in other words,
transmission of data by wireless communication. The system requires the collaboration
of three components: a data carrier, a method of adding, retrieving, or changing the data,
and an information system to manage the data. In RF ID terminology, these components
are referred to as a transponder (commonly known as a tag), a reader, and a host

computer, respectively (see Figure 9). These components will be discussed in further

31

detail, however, it is necessary to first gain an understanding of wireless data systems

since they are vital to the operation of RF ID technology.

 

COMPUTER

Figure 9: RFID Components

In an RFID system, data is communicated between a transponder and a reader
through an air interface, also referred to as a “channel.” The data is transmitted in a form
called a “bit” which is represented by voltage or current levels imposed upon a radio
frequency carrier waveform. Bit is an abbreviation for “binary data,” which indicates a
single element (0 orl) in a binary number (www.aimglobal.org 2002). The rate in which
data (bits) are transferred, or streamed, between the transponder and reader is termed the
“bit rate”. The process of communicating information from tag to reader in the form of
bits requires methods referred to as encoding and modulation.

Encoding for channel communication begins with the input of raw data into a
computer. The data bits distinguished in this way are added to other bits to serve a
variety of syntactical, organizational, data identification, and error control purposes. This

process is referred to as “source encoding”. Attention must be given to the form in which

32

the data is communicated, and thus, a restructuring of the bit stream is required to
accommodate these needs (www.aimglobal.org 2002). This restructuring is called
“channel encoding”.

Once this process has occurred, the next step is to transfer the encoded data
through the air space using a process called modulation. In order to transmit data
effectively, it must be superimposed upon a rhythmically varying (sinusoidal) field or
radio frequency carrier wave (www.aimglobal.org 2002). This is achieved by varying
one of the primary features of an alternating sinusoidal source: its amplitude, frequency
or phase, in accordance with the data carrying bit stream (www.aimglobal.org 2002).
The methods used are referred to as amplitude shift keying (ASK), frequency shift keying
(FSK), and phase shift keying (PSK). The choice of which method to utilize is
determined by the RF ID manufacturer. Each method has its own checking scheme and
error rate (www.aimglobal.org 2002). A checking scheme is generally in the form of a
“checksum” which refers to additional bits included in the tag’s message that insure the
reliability of the data transmission (Beigel 1999). The error rate depends on the accuracy
of the data transmission and is reported as a percentage, such as a 2% error rate.

Thus, data is carried through the air interface at a designated radio frequency.
The operating frequencies are allocated by the governments of a country. The authority
for managing the radio frequency spectrum within the United States is partitioned
between the National Telecommunications and Information Administration (N TIA) and
the Federal Communications Commission (FCC). Policies made by NTIA and FCC
establish the radio services that are allowed to operate in the United States in a given

frequency band (www.ntia.org 2002). In other words, the spectrum is divided into bands

33

which are assigned to different purposes (e. g. broadcasting, maritime mobile satellite,
etc.) Three frequency ranges are generally distinguished for RFID systems in the US:
100-500kHz (low frequency), 10-15MHz (intermediate frequency), and 850-950MHz,
2.4-5.8 GHz (high frequency) (www.aimglobal.org 2002).

Since frequency allocations are managed by governments, other countries may
not use the same RF ID operating frequencies as the US. This can create problems with
applications of RFID systems in certain countries. Due to increasing global interest in
RF ID technology, however, efforts in standardization are currently underway to resolve
this issue.

The low, intermediate, and high frequency allocations for RFID systems differ in
the capabilities that they provide. A high frequency carrier wave will produce a higher
rate of data transfer than a low frequency carrier wave. Low frequencies offer the
advantage of less environmental interference than high frequencies. The determination of

operational frequency is specific to the application at hand.

RFID Components

As mentioned previously, an RFID system consists of three components: a tag,
reader, and computer (refer to Figure 8). Each unit performs a specific operation within
the communication exchange in order to provide the means to meet its objective:
automatic identification.

The tag acts as the data carrier, which responds to a communicated request for the
data it carries (www.aimglobal.org 2002). A tag is comprised of an antenna and an

electronic circuit; it is affixed in some way to the object in question. Tags are

34

manufactured in many shapes and sizes and possess different performance capabilities
based on pre-prograrnmed characteristics.

RFID tags require power in order to operate. They are generally classified
according to how they derive their power; they can be either passive tags or active tags.
A passive tag uses electromagnetic energy generated by the reader as its power source.
They are lighter, smaller, and less expensive than active tags, and have a virtually
unlimited useful life. The disadvantage is that they have a shorter read range than active
tags and require a more powerful reader. Also, due to the limited power capabilities, they
provide less data storage capacity and increased sensitivity to electromagnetically noisy
environments (www.aimglobal.org 2002). However, due to their low cost and long
operational lifetime, they are preferred over active tags in many applications.

An active tag differs from a passive tag in that it contains an on-board battery
source that supplies its power. They are heavier than passive tags, more expensive, and a
have a limited operational lifetime (although this could be up to 10 years). The benefit of
active tags is that they provide a longer read range which makes them more functional for
large-scale operations.

The applicability of a tag to certain operations depends largely on its memory
capabilities. The type of memory programmed to a tag determines the amount of
information that can be stored on it. Tags can incorporate a Read Only memory (RIO),
Write Once/Read Many (WORM), or Read/W rite memory (R/W).

Read Only memory is usually incorporated into passive tags. Specific
information or data is written onto the tag, usually during its manufacture, and it cannot

be altered. This tag is useful for identification of objects, in that the memory can store a

35

specific code for the item, comparable to a license plate for a vehicle. In essence, it acts
as an electronic bar code. A tag consisting of R/O memory is typically less expensive
than one with R/W memory.

Write Once/Read Many memory differs from R/O tags because information can
be written to the tag, although only one time. Once information has been written to the
tag, it can be read many times, as in a R/O tag.

Read/Write memory provides certain benefits over R/O tags. The data it contains
is not fixed; it allows the user to program additional information into the memory as the
need arises. This characteristic is beneficial for work-in-process tracking, such that
information can be written to the tag at various points of a product’s lifecycle.

The second component of an RF ID system is an interrogator, or reader. A reader
is necessary to communicate with the tags and receive and transmit data. The reader
generates an electromagnetic (interrogation) zone, and as a tag enters this zone, it can
supply power to a passive tag, collect information by decoding the tag’s transmitted
signal, or send out a different signal in order to write additional information onto an R/W
tag. The reader then conveys the data to the host computer for processing. Readers can
be manufactured into a multitude of different shapes and sizes. Readers are usually
handheld or fixed-mount (including portal readers).

A computer is the third component of an RFID system. Once the reader has
gathered data from the RFID tags, it transmits that data to a host computer for further
processing. The software incorporated in the computer is ultimately responsible for

transforming the entered data into usable information. The success of the data collection

36

method relies on the ability of the computer to effectively display the desired
information.
RF ID Performance

Evaluation of an RFID system is based upon its operational performance with
respect to certain parameters. For logistical applications such as warehousing, the
parameters of an RF ID include communication range, amount of transmittable data,
communication time, and speed of tag during communication (Dinnyés and Kulcsar
1999)

The communication range of an RFID system refers to the distance in which the
reader can transmit or receive (communicate) data to the tag. Two types of
communication are recognized: read range and write range. Read range refers to the
distance in which the data contained within the tag can be read by the reader, and write
range is the distance in which the reader can write data onto the tag. When a tag exits the
communication range, it cannot be acknowledged by the reader. The size and shape of
the tag greatly affect this range. Generally, a larger tag will boast a greater
communication range than a smaller tag, given the larger size of its antenna. For
example, Texas Instruments (TI) sells a “disk transponder” in two different sizes: 30mm
and 85mm. Tl’s website (www.tiris.com 2002) displays the specifications for both tags;
the 30mm disk has a read range of approximately 60cm, while the 85mm disk has a read
range close to 150cm. The only difference between these two tags is their antenna size.
The larger the disk, the larger the antenna, and therefore, the longer the read range.

Another factor that influences read range is the intensity of the reader’s

interrogation zone. Power output of a reader can be adjusted to maximize read range,

37

however, the Federal Communications Commission (FCC) has regulations regarding the
radiated emissions from such devices. For instance, in the frequency range of 13.553-
l3.567 MHz, the field strength emissions cannot exceed 10,000 mV/meter at 30 meters
(www.fcc.gov). In the frequency range of 902-928 MHz, the field strength cannot
exceed 500mV/meter at 3 meters (www.fcc.gov). In some cases, a tag and reader may
have a very large read range, but the power output may be above FCC regulations. Since
the power output must be compliant with FCC regulations, electromagnetic shielding
may be necessary. Shielding reduces radio frequency emissions outside of the
interrogation zone and may also help to eliminate additional electromagnetic “noise” that
can interfere with the transmission of signals (Beigel 1999).

The orientation of the tag to the reader can also affect read range. There is an
optimum orientation of the tag to the reader that will produce the greatest reading
distance, and a lesser reading distance will result from sub-optimal orientation (Bei gel
1999). Dinnyés and Kulcsar (1999) define an “ideal” orientation as

“. . .having the operating environment ideal and the orientation of the coils

in such a way that the DC’s [Data Carrier] coil plane is parallel with the

reader’s coil plane and the coil centres of the RFID components are set at

the same height (‘ideal’ orientation)”

Dinnyés and Kulcsar acknowledge the fact that maintaining an ideal orientation during
dynamic communication is not realistic. Considering a tag in the form of a label, for
instance, the tag might read accurately at 20cm from the reader in one orientation, but if
rotated 90 degrees, it may not read at all.

If a read/write tag is used, the maximum distance from which it can be read may

be considerably different from the distance at which it can be written to. A study

conducted by the Defense Logistics Agency (DLA) which tested several tags and readers

38

from a variety of vendors, discovered that the write distance was usually less than one
inch, while the read distance was much greater (Harmon 2000). This difference must be
accounted for when evaluating an RFID system.

The amount of transmittable data is another parameter of RF ID performance. The
amount of data that is transmitted between the tag and the reader affects both the time it
takes to transmit the data as well as the accuracy of the transmission. In general, the
more data that is transferred between the tag and the reader, the longer communication
time that is needed (Dinnyés and Kulcsar 1999). By adding bits for error checking, the
reliability of the message is improved, however, the extra length of the message increases
the communication time needed.

Two additional performance parameters for RFID systems are the communication
time and the speed at which a tag can enter the reader’s interrogation zone and be read
accurately. As mentioned above, the communication time is the amount of time
necessary for the transmission of data between the tag and the reader. The tag must
spend a sufficient amount of time in the reader’s zone before it exits in order to be read
effectively. There is a maximum velocity at which a tag can pass by the reader and
transmit a complete message (Beigel 1999). The probability of reading a tag above this
critical speed is close to zero (Beigel 1999). As mentioned above, the greater the amount
of data to be transferred, the more slowly the tag will need to pass by the reader for an
accurate read. Speed also depends upon the tag orientation, noise interference, and other
factors (Beigel 1999).

These performance parameters for RF ID systems lead to the determination of

objectives for certain applications. In warehousing applications, objectives of an RFID

39

may include: communication with the tag as far as possible from the reader,
communication at any orientation, transfer of data in the shortest amount of time, error-
free transfer of data, and transfer of data with the velocity of the tag as high as possible.
Identifying an RFID system that meets these objectives will not compromise any current
warehousing activities.

In addition to the parameters stated above, there are other issues that may affect
performance of an RF ID system. These issues include the memory of the tag,
anticollision properties, and processing of data.

The amount of memory contained within the tag should be sufficient for the
specific application. The amount of memory required depends upon the number of
unique codes necessary. This number should be kept to a minimum due to its tendency to
slow the process of transmitting data. However, the number of unique codes should
accommodate the needs of the system over an extended period of time (Beigel 1999).

Anticollision mechanisms are very important to the performance of RFID
systems, especially in warehousing. Anticollision mechanisms are programmed into the
RFID system to prevent more than one tag from being read by the reader at a time. When
multiple tags enter a reader’s interrogation zone, they will all respond to the reader by
transmitting bits through radio frequency waves. These waveforms will become jumbled
(collision) and the reader does not receive any data An anticollision mechanism allows
only one tag at a time to communicate with the reader; in essence, only one tag is “on”
while the others are “off.”

Another issue that may indirectly affect the performance of an RF ID system is

data processing. Processing of transmitted data into usable form should occur in “real

40

time”, or almost simultaneously with the tag passing through the reader’s interrogation
zone. “The decoded ID tag events must be stored, transmitted to a central location and
recorded or displayed for analysis purposes” (Beigel 1999). If the information is not

available in real time, the RFID system performance loses its value.

Warehouse Management System

After the computer collects data generated by the AIDC system, it must be
processed and presented in a logical, organized fashion (refer to Figure 1 1). The software
component of the system is responsible for synthesizing the data and manipulating it into
relevant information that can be utilized by warehouse personnel. A type of software

system employed by warehouses is called a Warehouse Management System, or WMS.

 

 

 

 

 

 

Input: D Computer I f . Output
Automatic ata n ormatron (inventory reports,
Identification ‘—’ ilnfomafioni <—> puck orders, bun of

lading, shipping

(bar codes, RFID, WMS invoices)

card technologies)

 

 

 

 

 

 

 

 

 

Figure 10: Relationship of Hardware to Software

A WMS system manages the data in order to provide efficient material and
information flow through warehouse operations. For instance, data received through an
automatic identification method, such as scanning a bar code on a case of goods upon
arrival to the warehouse, is interpreted by the WMS which then utilizes this data to
generate valuable information. This information can consist of inventory reports,

determination of proper storage location, efficient pick routes for order selection, and

41

shipping invoices. Many functions of the WMS have replaced traditional manual
operations, resulting in more rapid and accurate information flow, and therefore, an
increased competitive advantage.

The WMS is designed to meet specific requirements dictated by the warehouse
managers. In the food industry, some of the general applications that a WMS should
incorporate are: date tracking; support for high productivity and efficiency levels such as
pick strategies; catch-weight capability for tracking and billing meat and dairy products;
fail-safe regulatory compliance; and ability to support cross-docking (Navas 2, 1999).

Date tracking ability is very important to the grocery industry due to the
considerable amount of perishable goods. Many perishable goods such as milk and lunch
meat, have expiration dates or “sell-by” dates printed on the package. Other perishable
goods, such as fresh fruit and vegetables, do not incorporate this feature and rely instead
on inherent quality characteristics such as firmness or color. In either case, a consumer
will typically purchase the products that are the freshest. This behavior of consumers
exemplifies the value of fresh products, and therefore, retailers must continually stock
fresh goods in order to maintain customer satisfaction. Date tracking enables the
warehouse to keep track of when the products arrived and allows retrieval of products on
a first-in-first—out (FIFO) basis. This ensures that the goods with the oldest dates are

shipped to the retailer in a timely fashion to maintain their freshness.

42

CHAPTER TWO
LITERATURE REVIEW

In the Background chapter, the importance of implementing appropriate
information technology to supply chain operations in order to gain a competitive edge
was discussed. One emphasized technology was Radio Frequency Technology, or RF ID.
There has been great interest in RFID for applications that require or will benefit from
faster, more accurate information than a current bar code system can provide. This
Literature Review examines industry’s need for improved information technology and
provides examples of current applications of RF ID and the benefits realized.

As competition continues to increase in the marketplace, companies must
differentiate themselves with a key competitive weapon. According to a recent survey
conducted by Forrester Research, three-quarters of the retailers surveyed claimed that the
quality of logistics operations is a significant factor in competition (Konicki 2001).
Professor Hau Lee at Stanford University states, “the battle for market supremacy will
not be between enterprises but between supply chains” (Enslow 2001). According to
Enslow (2001), that battle will result in the “fast and accurate beating the slow and
imprecise.”

For warehouse operations in particular, speed and accuracy are of considerable
importance. With respect to warehouse managers, “success is not only getting the job
done fast, but also in the most accurate manner possible” (“Trends in the grocery
industry” 2001 ). “The need for effective and accurate management of warehouse
processes is thus being seen more and more as a vital element in the continuing battle to

remain competitive” (The Logistics Business 2001). The importance of warehousing is

43

plainly stated by Chris Newton, Senior Analyst of supply chain strategies for AMR
Research, “A warehouse is the last chance a company has to get an order right” (Douglas
2001)

Implementing Information Technology, or IT is one step that companies are
taking to improve the speed and accuracy of their supply chain operations. A recent
survey determined that 80% of CEOs (Chief Executive Officer) from 26 countries claim
the role of technology is significant to the success of their companies, and 77% reported
that their IT investment will increase over the next three years (Janoff 2001). Another
study found that 60% of businesses expect to increase their IT budgets by an average of
27% over the next year (Johnson 2001).

Research conducted by Rogers et al. (1996) explored the relationship between IT
and warehousing performance. They concluded that companies that used more
warehousing information technologies had better performance in the areas of quality
improvements, cycle time reductions, and productivity improvements than the low user
group. Also, “there appears to be a realization that warehousing firms must invest in
information technology to remain competitive” (Rogers et al. 1996).

To increase order accuracy as well as warehousing efficiency, one type of IT that
companies rely on is a Warehouse Management System, or WMS. Investing in a WMS
can help to organize workflow, make better use of storage space, eliminate paper-based
procedures, and cut the time required to complete operations, all while keeping costs at a
minimum (Douglas 2001). Other benefits of a WMS include higher inventory accuracy
levels, reductions in labor cost due to efficient allocation of employees, reduced picking

errors, and ultimately, more reliable service to customers (Gurin 2000).

44

However, a WMS will provide substantial benefits only if it receives precise,
immediate data. An employee manually entering data into the WMS a half hour after
receipt of inventory will not offer the same benefits of an automatic, real time data
collection system. The following excerpt describes the advantages it can provide.

“Real time data capture and keyless data entry can instantly ring up a retail

purchase, accurately adjust in-store inventory, signal the warehouse for

replenishment, initiate an order with the manufacturer, speed the flow of

raw goods from suppliers to manufacturers, and follow the manufacturing

process through to the delivery of the new product to its destination”

(Trends in the grocery industry” 2001).

Radio Frequency (RF) data transmission, in conjunction with bar codes, is
frequently used to capture and transmit information in order to save time and reduce
errors. I on Zaturn, Director of Distribution Operations for Dana Corporation, asserts,
“RF devices give us a lot of power. They allow us to make real-time decisions based on
a purchasing standpoint, customer-promise standpoint, and ordering standpoint” (Owen
2000). A new bar code system also allowed Bryan Foods to increase productivity within
its distribution center, enabling it to “. . .receive, put-away, and pick and pack quicker,
and with a greater accuracy” (“Trends in the grocery industry” 2001).

Having access to real time information is also crucial for the management of
inventory within a warehouse. As mentioned in the Background chapter, inventory can
account for up to 40% of the cost of doing business (Enslow 2001). Companies that
reduce inventory levels “. . .can plug a cash drain that costs them hundreds of thousands
of dollars annually” (Krizner 2001). The cost of inventory can be substantial if time is
wasted in locating “lost” products or inventory data is inaccurate. Gino Nannini, Plant

Manager for Peer Bearing Co., implemented a bar code inventory tracking system

because his company was, “. . .tired of dealing with inventory errors” (Randall 1998).

45

The system improved traceability and eliminated errors for Peer Bearing, and, in fact,
saved them almost three times the cost of implementation (Randall 1998). Both Bryan
Foods (“The magic of barcodes” 2001) and Medis Health & Pharmaceutical Services Inc.
(Aichlmayr 2001) have realized significant improvements in inventory management
through the use of bar codes and WMS.

It is no secret that bar codes can provide considerable improvements in many
supply chain applications; there have been many companies that have publicized their
success using this system. There are, however, limitations to the use of bar codes such as
the requirement for line-of-sight and print and legibility quality issues. As bar coding
applications become increasingly common, companies are looking for an even faster,

more accurate solution to supply them with a competitive edge: RFID.

RFID

RFID has achieved considerable growth and recognition as a valuable automatic
identification in the last few years. In fact, it has sustained an annual growth rate of 24%,
which is higher than any other automatic identification technology (Venture
Development Corporation 2001). Venture Development Corporation (V DC) reported
that global shipments of RF ID systems approximated $890 million in 2000, and are
expected to reach $2.65 billion by 2005 (VDC 2001). In 2000, the RF ID market was
dominated by security/access control applications, however, by 2005, VDC expects that
supply chain management applications will join others in holding the bulk of market

revenues (V DC 2001).

46

History of RF ID

The use of RF ID dates back to the 1940’s, during World War II, the British
desired a method to distinguish between their own aircraft and the aircraft of the enemy.
The system that was developed, termed “Identify: Friend or Foe” (IF F ) consisted of
placing a transponder onto a “friendly” aircraft which would generate an appropriate
response to a radar interrogation signal (The Eagle’s Nest 2001). Present day commercial
and private aviation traffic control is still based on IFF concepts (Auto-ID Center 2002).

Throughout the 1960’s and 1970’s, RFID development was primarily a
government-sponsored endeavor due to safety and security issues involving the use of
nuclear materials (Auto-ID Center 2002). In the late 1970’s, the public sector gained
access to the technology that had been developed in government laboratories (The
Eagle’s Nest 2001). This acquisition of knowledge led to further investigation into
alternate applications for RF ID technology.

One of the first commercial uses of RFID technology in the late 1970’s was
tracking livestock in Europe (Auto-ID Center 2002). Throughout the 1980’s, RF ID was
found useful for applications such as railroads, automatic toll collection, access control.
and Remote Keyless Entry (RKE) (Emory University 2002). As technology advanced
through the 1990’s, tag performance continued to increase while size and cost of tags
reduced dramatically. Today, RFID is receiving considerable attention due to new
developments in technology that permit its use in a wide variety of applications,

especially supply chain initiatives.

47

RFID in the Supply Chain

In the past few years, RFID has been expanding into new arenas such as tracking
video cassettes in rental stores for inventory management (Intermec 2001), tracking
animal tissue (meat) throughout processing to monitor pH levels and temperatures
(“Beefing up with RFID” 1998), and tracking Retumable Produce Containers (RPCs) as
they are transferred between supplier and manufacturer (Intermec 2001). The success of
these applications has encouraged industry members to continue to strive for the end goal
of their supply chain initiatives. Schmidt (2001) asserts,

“. . .the ultimate goal is to put a [RFID] tag on virtually every

manufactured item, each tracked by a network of millions of readers in

factories, trucks, warehouses and homes, transforming huge supply chains

into intelligent, self-managing entities.”

The advantages over bar codes that companies expect to gain from implementing
RF ID include faster information retrieval, increased visibility into the supply chain, more
information content, and less probability of theft (Hickey 1999). Rich Krueger, of
Motorola, supports the usage of RFID, stating, “it gives you much more detailed and fine
demarcation points in the overall logistics pipe” (Hickey 1999).

According to C10 Kevin Turner, Wal-Mart, a renowned leader in supply chain
efficiency, has been considering and experimenting with RFID for over 12 years (Roberti
2002). Wal-Mart has identified some key areas that RFID can significantly benefit. One
of these areas is reducing lost or misdirected products. According to Kevin O’Marah,
Vice President of Global Supply Chain Strategies at AMR Research, supply chain losses
can average 3 to 5 percent of total supply chain costs (Roberti 2002). Reducing these

costs with RFID could “. . .add millions more to the bottom line of companies that

implement the technology” (Roberti 2002).

48

Reducing shrinkage is another area in which RF ID can contribute. A National
Retail Security Survey discovered that almost 2 percent of total sales in the United States
is lost every year due to shrinkage (Roberti 2002). Shrinkage encompasses employee
theft, customer theft, vendor fraud, and administrative errors. RFID can reduce shrinkage
by providing real-time information about product movement and alerting security
systems of unauthorized product movement.

The third area that Wal-Mart has identified as benefiting from RFID is in reduced
out-of-stocks. In the consumer products industry, out-of-stocks can average about 7
percent (Roberti 2002). RFID can provide more knowledge of product movement which
can aid in forecasting and inventory issues, resulting in decreased out-of-stocks.

The perception of RFID providing a competitive advantage has resulted in the
hesitancy of companies to disclose information regarding their experiences with RF ID
systems. Kevin Sharp (2 1999) clarifies this perception by stating, “the competitive
advantage to be gained comes not from RFID technology itself but from the
improvements to software systems and business processes that would be impossible.
without the RF ID devices.” Nevertheless, Chris Rezendes, an ADC market researcher at\~\._\
VDC, confirms, “there are no publicly available analyses of the economic impact of
RFID on core, closed-loop supply chain applications and that is an impediment to the
industry” (Sharp 2 1999). There are, however, some examples of RFID technology

currently being utilized by a number of companies, although details are limited.

49

RFID Applications

The automotive industry has been a forerunner in the adoption of RF ID
technology. RFID tags are preferred over bar codes for use in many manufacturing
plants to track Work-In-Process (WIP) (N avas 2 1999). The ability of RF ID tags to
withstand harsh conditions such as high temperatures, shock, and painting allow them to
penetrate this market successfully. These achievements have paved the way for
examination of new applications for RFID tags, such as remote access and security
systems (N avas 2 1999).

General Motors, Ford, Daimler Chrysler, and Toyota are a few of the major
automotive companies that have invested in RFID systems. Chevrolet Creative Services
has implemented an RF ID system from Texas Instruments to track the movement of
crates into and out of its Wixom, Michigan warehouse (Texas Instruments 2001).
Benefits that this system has provided Chevrolet are the elimination of human error,
elimination of costly shipping charges, and greater speed and efficiency of shipping
(Texas Instruments 2001).

Ford Motor Company, in collaboration with WhereNet, has implemented a real
time locating system (RTLS) using RFID tags to locate and track inventory. Ford claims
that the system is extremely accurate, with over 13 million transmissions without one
missed communication (Maloney 2000). The system has also resulted in labor
efficiencies, increased flexibility, and an estimated $500,000 savings compared to a wired
system (Maloney 2000).

Toyota-South Afiica has also invested in an Automatic Tracking System (ATS)

using an RF ID solution provided by Escort Memory Systems (EMS). The capabilities of

50

the RFID tags have impressed Toyota-South Africa; they are continuing a second phase
of the RFID project (Escort Memory Systems 2001).

Although the automotive companies have sought out RFID solutions
independently, the Automotive Industry Action Group (AIAG), which includes
representatives of General Motors, Ford, and Diarnler Chrysler, has currently been
pursuing an RFID standard for tires (Krizner 2001). This standard will enable the
companies to attach an RFID tag to the inside of the tires. When the tag is read, a vast
amount of information about the tire can be retrieved, including the time, date, and
specific plant of tire manufacture. This information is crucial in the event of a tire recall.

RFID has also been successful in the airline industry for the identification and
tracking of baggage. The amount of baggage that passes through a busy airport on any
given day is alarming. Bar codes have been helpful in providing accurate transport of
baggage, however, in prototype demonstrations at London Heathrow, San Francisco,
Seattle, Houston, and Singapore, it has been shown that “. . .airports can gain up to a 25%
greater throughput from their existing baggage systems by incorporating RF ID
technology” (Wilson 2001). In fact, the tag read performance exceeded 98%,
substantially outperforming that of barcode systems (Wilson 2001).

There are many benefits to using RF ID for baggage handling at airports: it can
speed baggage processing at airports, baggage can be loaded faster onto the aircraft, and
compensation claims for misplaced or stolen bags are decreased (Wilson 2001). This
increase in accuracy can amount to a 90% savings over the current cost of reconnecting

misplaced bags with their rightful owners (Nelms 1999).

51

Another area that has realized benefits from RFID is the parcel carrier industry.
Although bar codes have traditionally worked well for caniers, limitations such as the
line-of-sight requirement and damaged, unreadable labels have created the need for a new
solution. Lyanxpress is one parcel carrier that has achieved handling and shipping
advantages due to RF ID (“Money well spent” 2000). The new system increases the
handling speed by 70%; it now has the capacity to handle up to 40,000 parcels an hour,
compared to the previous system of only 3,000 parcels an hour (“Money well spent”
2000)

The grocery business is an example of one industry that has publicized its interest
in RF ID applications but continues to struggle with implementation issues. In the United
Kingdom, J. Sainsbury, a leader in the grocery industry, conducted a trial using RF ID
tags to track and automatically record boxes, cartons, and pallets as they moved
throughout the supply chain (Sharp 1 1999). The result of this trial proved to Sainbury
that there was “much more value to be had from RFID than anyone could quanitify at the
beginning” (Sharp 1 1999).

Sainsbury recently invested in RF ID technology to track its returnable transit
packaging (RTP) crates throughout its supply chain. A reusable RFID tag is embedded
into a crate and read by portal antennas at certain points in the supply chain. Mark Gillot,
Project Manager for Sainsbury, claimed that the RFID tags reduced the receiving
function from 2 1/2 hours to 15 minutes (Falkman 2000). He also commented that
inventory accuracy had improved and the speed of the distribution firnction had been
increased (F alkman 2000). According to Gillot, “This is a level of control that is simply

impossible to achieve with bar codes, manual data entry or any other system. And even

52

better is the fact that it is totally automatic, enabling more efficient use of labor
resources” (Falkman 2000).

Another company that has found success using RFID for tracking food products is
another UK retailer, Marks & Spencer. Marks & Spencer used returnable plastic trays
labeled with a bar code to track products throughout the supply chain. Although the bar
code system was accurate and reliable, the bar codes had to be scanned manually and
were continually ripped or torn (RF ID Journal 2002). A re-examination of their
identification methods led them to take a closer look at RFID as a replacement. A trial
was conducted using RF ID tags attached to trays which were then stacked onto dollies
and read by a portal antenna. The trial proved to be successful. Marks & Spencer
“. . .established that it takes 29 seconds to scan a dolly compared to 5 seconds via the
portal. That is an 83 percent reduction in speed of read” (RFID Journal 2002). They also
benefited from the ability to write to RFID tags to reflect changes in product’s status.
Other advantages that RFID has provided to Marks & Spencer include longer production
runs, higher accuracy, reduced label costs, improved speed, and faster data movement
throughout the supply chain (RF ID Journal 2002).

One application of RFID that provided more valuable results than the examples
above was a demonstration conducted by the Defense Advanced Research Projects
Agency (DARPA), Defense Logistics Agency (DLA), Air Mobility Command (AMC)
and USTRANSCOM, in 1998. The goal of this demonstration was to successfully read
RFID tags on cargo boxes stacked on a pallet (Fetech 1999). Results proved that the tags
could be read in all positions on the cargo boxes, including tags attached to boxes buried

inside the load, tags not visible to the perimeter, and tags that were affixed to a variety of

53

materials, including metal. Problems that occurred were issues due to shielding, speed of
movement through the portal, time designated to read a pallet load, design configuration
of the portal, and placement of the antenna. Reported final results included a “100
percent detection of as many as 90 tags per pallet, at walking speeds of 3 to 5 miles per
hour, with an average read time of 0.47 seconds per tag” (F etech 1999).

The type of information submitted by Fetech is valuable when considering RFID
implementation into a warehouse setting. Accuracy and speed are crucial for the system
to be beneficial. Again, it is unfortunate that there is very limited information of this kind
in the literature because it forces the companies that are interested to conduct trials such
as this before deciding if the technology will meet their needs and requirements.

The Massachusetts Institute of Technology (MIT) Auto ID Center has been a key
player in researching RFID technology and its applicability into a retail environment.
Some of the biggest names in retailing are joining forces with MIT to investigate the use
of RFID tags to track inventory throughout the supply chain. A few of the companies
involved include Gillette, Johnson & Johnson, Kraft Foods, Procter & Gamble, Unilever,
and Wal-Mart (Merritt 2001). A pilot test conducted at distribution centers in Tulsa,
Oklahoma, will uncover any problems in capturing the information from the RF ID tags,
and allow the Auto ID Center to address various issues. Kevin Ashton, Executive
Director of the Auto ID Center explained, “The first thing we have to do is capture data
about what’s going on, to know what [products] are moving around and where they are”
(Merritt 2001). The information obtained from RFID is valuable in analyzing and

managing inventory, which can significantly help in keeping costs down for retailers.

54

Barriers to RFID Implementation

The advantages of RF ID over bar codes have been evidenced in both laboratory
testing as well as in experimental trials. So why aren’t all companies eagerly jumping on
the bandwagon to replace bar code applications with RFID? The answer hinges on the
fact that there are a few obstacles for RFID to overcome before a company can justify the
investment.

The first challenge facing RFID is price. Traditionally, vendors of RFID tags
have made the mistake of trying to sell their tags by marketing them as a replacement for
bar codes. The two technologies should not be compared apples-to-apples as vendors
have started to learn. Cliff Horwitz, CEO of SAMSys Technology, explains, “Early on, it
was irresponsible for some to talk about RFID as if it would replace barcoding. Paper
will always be cheaper than silicone” (Loudin 1999). Since the bar code is cheap to
produce and many companies already have the infrastructure set up, the higher cost of
implementing RF ID, even considering its many advantages, is difficult for many
companies to justify.

Additionally, determining the cost in order to justify implementation can be
difficult. The actual cost of RFID systems is hard to determine. Since prices are based
on the volume of units sold, many vendors will submit a quote for a system based on an
extremely high quantity in order to make their prices more appealing (Burnell 2001).
Price also depends upon the type of tag, the amount of information it can retain, the read
range, the size, as well as many other factors. However, prices have continued to
decrease over the last few years, as evidenced by the literature (Burnell 2001; “Is RF ID

on track?” 2001; Schell 2001; McGarvey 2001). Kim Jacobs, of Menasha

55

Services/Orbis, claims, “the cost of using RF ID has gone down 75% while the accuracy
is twice as good as it was 5 years ago” (“Is RFID on track?” 2001).

Some members of industry agree with Martin Dunsby, a Deloitte Consulting
manager, who claims that “price isn’t an obstacle to [RFID] adoption anymore”
(McGarvey 2001). One of them, Jack LeVan, former President and CEO of SCS Corp.,
says, “Information about unrealistic tag prices has scared off many potential users.
That’s unfortunate, because at today’s actual cost points, many applications are
economically viable” (Schell 2001). Also, Frederic Coustere, of Gemplus, states,
“People say price is an issue with RFID, but the real issue is that they’re not ready”
(Burnell 1 1999). Others remain more skeptical. Larry Kellam, of Procter & Gamble, is
interested in RFID but points out, “unless tag prices drop, ‘we can’t create value for the
consumer’” (Forcinio 1 2001). Horwitz (Forcinio 1 2001) agrees, “technology needs to
be affordable in order to deploy it on a widespread basis.” In the end, a company must
evaluate their current system and decide if RFID can be justified. “In many
applications,” states Patrick Kennedy, of The Kennedy Group, “increased productivity
and reductions in lost assets or products can justify the investment into RF ID systems
very easily” (Forcinio 1 2001).

The second barrier to deployment of RF ID is the lack of true standardization.
“The importance of standards is not overrated and can’t be overstated” (Burnell 2001).
The acquisition of standards provides the opportunity for interchangeability of different
RFID systems, thus resulting in the compatibility of equipment from different vendors.
Steve Halliday, Chairman of the International Standards Organization (ISO) RFID

committee states,

56

“The goal is to set a standard so any manufacturer can make equipment to

read any other manufacturer’s tag. Right now, RFID is a fairly proprietary

industry, with many companies developing their own way of creating an

RFID system that typically does not port from one company to another.

We hope with an ISO-compliant system any company can enter the

business” (Wilson 2001).

Having ISO approval will be crucial for the utilization of RFID in a global economy.
These standards will make it possible to track an item all over the world. They also offer
reassurance that the purchase of a system will continue be operational in the future.
“People have the security of knowing that something they bought won’t be obsolete
because the supplier decided to design something new or went out of business,” claims
Halliday (Forcinio 1 2001).

It is believed by many industry members that RFID standardization will positively
impact the market for RF ID products. Salkin (1999) predicts, “. . .the RF products market
will be steadier and warehousing managers will be more likely to invest in these
products.” In 2000, the lack of standards caused Venture Development Corporation
(2001) to report that the growth of RFID supply chain management applications will
continue to be stifled by the absence of standards. When standards are finally issued, the
interoperability of RFID systems “. . .should also eventually drive down RF ID system
costs” (Burnell 2001). “As equipment is built to meet standards, availability increases
and costs decrease” (Forcinio 2 2001). Ultimately, lower costs are predicted to drive an
increase in sales for RF ID products.

Specific standards are currently in debate by RFID manufacturers, retail industry

members, and industrial community members. At present time, two different standards

57

are being promoted: one supports an industrial tag, called MH10.8.4 (commonly referred
to as .4), and the other a retail-based tag, named GTAG (Cooke 2001).

The standard for MH10.8.4, originally for use of RF ID on returnable containers,
makes reference to a previous standard issued by the National Committee for Information
Technology Standards (NCITS), dubbed NCITS256 (Cooke 2001). The details of the
communication protocol in MH10.8.4 provide instructions for communication based on
Interrnec’s Intellitag “air interface” technology (Cooke 2001). Companies supporting
MH10.8.4 include lnterrnec, Gemplus, and Phillips (Cooke 2001). This standard is
exclusive to North America and focuses on an ultrahigh frequency (UHF) band of 902-
928 MHz (Forcinio 2 2001).

The retail industry promotes the second standard that is currently in debate: the
GTAG. The GTAG is a joint initiative of the UCC and EAN, as well as the Automatic
ID Center at Massachusetts Institute of Technology (MIT), Texas Instruments, BiStar
Technology, and SCS Corporation (F orcinio 2 2001). This standard will focus on the
UHF band between 860 and 928 MHz, which is somewhat broader than that of MH10.8.4
in order for it to be utilized in Europe as well as North America (Forcinio 2 2001). The
GTAG is a performance standard, which does not specify the design of the transponders,
but instead dictates performance requirements such as read range and anticollision
algorithms (Cooke 2001).

It remains unclear if there will be one standard or two for RFID item
identification (Cooke 2001). However, the acceptance of the GTAG will result in the
creation of two different RFID standards that may cause problems if they remain

incompatible with each other. Ron Tillinger, Program Manager for AIAG, has adopted

58

MH10.8.4 for now but hopes that “the tag manufacturers will allow software on the

reader to capture data from both types of tags” (Cooke 2001). Craig Harmon, a chair on
the industry committees that oversaw development of MH10.8.4, claims that “efforts are
under way to convince the retail industry to make GTAG interoperable with MH10.8.4”

(Cooke 2001).

59

CHAPTER THREE
METHODOLOGY

The growth and development of the RFID industry over the last few years has
generated a great deal of interest from companies that are pursuing new tactics to increase
supply chain efficiency. As companies strive to learn all they can about RFID
technology and what it can offer to a supply chain, they will most likely discover that a
significant amount of the literature available falls into one of the three following
categories: a general overview of how RF ID works, information about specific RF ID
product lines published by vendors, and opinions from RFID “experts” about the
potential growth or obstacles that exist for RF ID.

Although much can be learned from the preceding types of information, there is
little, if any, information published that will clearly aid a company in determining
whether or not an RF ID system can work for their operations and also give suggestions
on how to implement the technology. An RF ID vendor or integrator can provide this
type of assistance, however, a company could receive biased information since the
vendor may try to sell his technology and products rather than suggesting other
alternatives.

The proposed Model in this thesis was developed to offer companies that are
interested in RFID an unbiased method that can be used as a tool to help companies
decide if RFID technology is a viable solution for their operations. The model
incorporates a method, in the form of decision trees, that considers current warehousing
practices. From this information, suggestions for utilizing RFID in the warehouse are

provided.

60

There are three parts to the model; each will be discussed in further detail in
following sections. The first part involves the use of decision trees to explore current
grocery warehousing techniques. Each path of the decision tree leads to an ending point,
at which a code is given. This code corresponds to an implementation suggestion for the
company to pursue. This part of the model elaborates on the appropriate code, which
specifies the level of tag placement (i.e. pallet or case) and the type of reading device.
The third part integrates the implementation suggestion given previously into an overall
“result” that specifies how the technology can be used and also offers benefits and

drawbacks to the suggestion.

Warehousing Operations Decision Trees

The decision trees presented here encompass a broad range of the most common
processes used in receiving, put-away, picking, and shipping. However, it is important to
remember that there are many different methods used and it would be impossible to
include all of them into one tree.

The decision trees were composed using knowledge acquired through extensive
research of warehousing operations and RF ID systems. This research was conducted by
studying reference materials, observing processes within multiple warehouses, attending
seminars and conferences focusing on RFID applications, and through conversations with
multiple RFID vendors and warehouse managers. The information was compiled to
develop decision trees of current warehousing systems in order to identify areas of

possible RFID implementation.

61

Receiving Decision Tree

The Receiving Decision Tree details the process of accepting incoming goods into
the warehouse, verifying the agreement to the initial order, and then adding them to
inventory via a software system such as a Warehouse Management System (WMS). The
decision tree provides avenues for both technologically enabled processes as well as more
antiquated, paper-based processes.

One assumption is made at the start of the Receiving Decision Tree: all incoming
goods arrive on a pallet. There are two reasons that govern this assumption. One, the
majority of grocery warehouses receive goods from suppliers on pallet loads, and two, it
simplifies the highly complex and variable system of warehousing.

The primary question in the Receiving Decision Tree, “Are pallet loads
homogenous?”, distinguishes between a characteristically simple receiving process and a
more intricate, involved process. A homogenous pallet load refers to a pallet that
contains identical product. If the incoming pallet load is not homogenous, it is called
“mixed.” A mixed pallet contains various quantities of different products, thus making it
more difficult to identify the incoming goods.

The Receiving Decision Tree branches off into more detailed questions after the
primary question in order to identify the points in need of improvement. Processes such
as checking in individual cases will obviously occupy more time than accepting a pallet

load “as is.”

62

Put-A way Decision Tree

The Put-Away Decision Tree details the process of transferring goods (after they
have been checked-in during the receiving operation) to their appropriate storage location
within the warehouse. This process involves obtaining the storage location from the
WMS, physically delivering the goods to that location, and updating the WMS with the
new location of the goods in inventory.

This decision tree relies on the assumption made for the Receiving Decision Tree
which is that all incoming goods arrive on a pallet. The different outcomes of this tree
depend upon whether or not the warehouse currently puts-away the entire pallet load or if

individual cases are removed from the pallet to be put-away to their respective locations.

Picking Decision Tree

The Picking Decision Tree involves the process of selecting goods from storage
locations within the warehouse to firlfill a customer’s order. The order selector, or
picker, obtains a pick list that has been created by the WMS that includes items for a
particular customer order. The picker must locate the item, remove it from storage, and
verify the pick through the WMS. Verification of the pick notifies the WMS that the
item has been removed from inventory and is on its way to the shipping area to be sent to
the customer.

One assumption is made at the start of the Picking Decision Tree: all goods are
shipped to the customer on pallets. As previously discussed in the Receiving Decision
Tree section, this assumption was made because many grocery warehouses ship goods to

their customers on pallets and, also, to simplify the complexity of warehousing.

63

The Picking Decision Tree branches off into detailed questions in order to identify
any points that are in need of improvement. Manually recording or checking-off items
that have been picked for an order and then keying the data into a computer system could
potentially lead to errors as well as taking a great amount of time to complete. Also, the
gap in time between the actual removal of an item from storage and the entry of the data
into the computer could cause problems with inventory accuracy. When inventory levels
are not accurate, mistakes can be made throughout the supply chain resulting in decreased
customer satisfaction. These types of issues can affect the cost justification argument and

should be carefully investigated.

Shipping Decision Tree

The Shipping Decision Tree details the process of accepting goods from the order
selectors, verifying that all the goods are accounted for by comparing it to the customer’s
order, and updating the WMS to reflect the adjusted inventory levels. Again, the
assumption regarding this decision tree is that goods are being shipped to customers on
pallets.

The Shipping Decision Tree is very similar to the Receiving Decision Tree.
Processes such as disassembling a pallet load and manually scanning the barcodes of
each case for verification are prone to errors, not to mention the great deal of time it takes

to complete.

Implementation Suggestions

The designated code obtained from the Warehousing Decision Trees is identified
and explained in the second part of the model, Implementation Suggestions. This section
was developed to provide companies with a specific method of utilizing tags and readers
for warehousing operations.

Although there is a great deal of information about specific RFID tags and
readers, it is difficult to determine which ones would be most effective for certain
processes. This part of the model suggests one of two types of readers, either a handheld
reader or a fixed-mount reader, and one of two ways to utilize an RF ID tag, either on a
case or on a pallet.

A handheld device used to read RF ID tags is similar to a handheld device used to
scan barcode labels. An employee points the device toward the tag and after pushing a
button or a trigger, receives a response. The employee must acknowledge the response
by pushing another button on the unit. Handheld devices are typically the least expensive
and most versatile readers used for RF ID.

In contrast, a fixed-mount unit is stationed at a specific location within the facility
and cannot be moved. The tag must enter the reader’s interrogation zone, so it must be
transported to the reader by some means, such as a conveyor, forklift, or physically
carried by an employee. Fixed-mount readers are usually more expensive but also have a
longer read range and can be less labor-intensive than using handhelds.

The two levels of tag placement, case or pallet, were chosen based on current
warehousing practices. Warehouses typically receive, store, and ship full pallet loads of

product, but pallet loads may also be disassembled at some point within the warehouse,

65

requiring the need for tags at case level. A case in this model refers to the packaging
used to stack the product onto the pallet. The most common packaging of a case is the
use of corrugated shippers, however, a case could also refer to bulk-size bags or other

packages that are stacked on a pallet.

Results of Decision Trees

At this point in the model, a company has investigated its current warehousing
techniques, discovered points of potential errors and wasted time, and has been advised
on the method of tagging and reading the products. The third part, Results of Decision
Trees, incorporates the implementation suggestion and provides additional explanation of
how to actually implement the technology into an existing warehouse system, points out
benefits that can be achieved, and also recommends issues to consider which can be
potential drawbacks to the given system.

A thorough investigation of warehousing and RF ID technology were required for
the creation of the implementation suggestions. This investigation involved researching
literature regarding both topics, observing warehousing practices on-site, speaking to
warehouse personnel and RFID vendors, viewing demonstrations of RFID technology,
and gathering information from various trade shows and seminars. Compilation of this
information resulted in establishing generalized suggestions of how to effectively utilize

RF ID technology within the warehouse, as shown in the Model.

66

CHAPTER FOUR
MODEL

As mentioned in the Methodology section, this Model was developed to fill a void
within the RF ID industry as it relates to warehousing. There is very limited available
information about how to apply RFID to warehousing operations. Companies that are
interested in utilizing the technology within their warehouses may find it difficult to
obtain information on their own. Speaking to vendors can help to formulate ideas;
however, as salespeople, vendors tend to heavily promote their own products which has
the potential of introducing bias. This Model offers companies unbiased information that
can assist them in the evaluation of RF ID technology.

The Warehousing Decision Trees must be consulted first in order to utilize the
Model. There are four decision trees, Receiving (Figure 12), Put-Away (Figure 13),
Order Selection (Figure 14), and Shipping (Figure 15). A company can determine which
tree they wish to consult based upon their interest in using RF ID for certain processes.

The beginning point of each decision tree starts with a primary question and is
identified by a star ( * ). A “yes” answer to the question is symbolized with a plus sign
(+) and a “no” answer is symbolized with a minus sign (-). The question leads to another
question based upon a yes or no answer, until the end is reached. Each path ends with a
designated code that will be required for the following section. There may be
circumstance where a company answers the questions, only to find that at the end, their
answer is “no” and the only option available is a “yes”. In this instance, it can be
assumed that the company utilizes practices that are not addressed in the decision tree.

The company can choose not to pursue the Model, or continue on as if their answer had

67

indeed been “yes”. Most likely, the implementation suggestion given at the end point can
benefit the company for both a yes or a no answer.

The two digit code given at the end of each path is made up of a number and a
letter. The first digit of the code is numerical and refers to the implementation suggestion
given in the second part of the Model. The numbers are given again below:

1. Pallet Tag with Handheld Reader

2. Pallet Tag with F ixed-Mount Reader
3. Case Tag with Handheld Reader

4. Case Tag with Fixed-Mount Reader

The second digit of the designated code is alphabetic, specifically, “A” through
“D.” This digit represents the process that the implementation suggestion is
recommended for. The processes are defined below:

A. Receiving

B. Put-Away
C. Order Selection
D. Shipping

Once the Implementation Suggestions section has been referred to, the last part of
the Model can be utilized. A company finds the code that was designated by the decision
tree within the section “Results of Decision Trees.” This section contains a suggested
process for implementing the technology and also gives the benefits and drawbacks to
that system. A company can utilize this information to determine whether or not to

pursue the implementation of RFID within their facility.

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RESULTS OF DECISION TREE

I. RECEIVING DECISION TREE
1A: Pallet Tag with Handheld Reader

Process: As the pallet is removed from the vendor’s trailer and brought into the
warehouse, an employee would use a handheld reader to read the contents of the pallet
tag. Basically, an employee would approach the pallet and read the tag with the reader
within the specified read range of the tag. The reader then sends the data to the computer
system which updates the WMS with the receipt of goods. The WMS assigns the goods

to a particular storage location within the warehouse.

Benefits: Using a pallet tag instead of individual case tags can drastically reduce
the time required for the receiving process since only one tag has to be read. Using an
RF ID pallet tag instead of a barcode pallet tag offers many benefits. One benefit is that
an RFID pallet tag can withstand harsh environments that may render a barcode useless.
Water damage, ice, dirt, grease, oil, and breakage can all interfere with the ability of a
barcode to be scanned but will not render an RF ID tag unusable.

Another benefit is the read/write capability of RFID tags, where applicable. By
using a read/write tag, information can be added, deleted, or changed upon the pallet tag
by using the handheld unit. For example, the time the pallet was received can be written
to the tag during the receiving process. Also, the tag can be reused if desired, which can
cut the cost of new tag purchases.

The use of a handheld reader voids the issue of read range, which offers another

benefit to this process. The employee will be able to get close enough to the tag in order

73

to read it, which means that the complex process of assuring that the tag enters the
reader’s interrogation field can be dismissed.
Two other benefits are the minimal space requirements with using a handheld

reader and the low cost compared to other RFID systems.

Issues to Consider: Using a handheld reader may require extra time for an
employee to locate and read the tag, therefore the tag location should be standardized.
Extra time spent by employees may result in extra costs to the company in hourly wages
and also in decreased efficiency.

The process is also dependent upon the employee so human error can be an issue.
The employee may forget, or choose not to read the tag and, hence, the pallet may not be
received properly, if received at all. The employee could also read the pallet more than
once during the receiving process, which, depending on the equipment and software used,

may result in data confitsion for the WMS.

2A: Pallet Tag with Fixed-Mount Reader

Process: As pallets are removed from the vendor’s trailer and brought into the
warehouse, they must pass through a “choke point” either by forklifi or conveyor. The
choke point is an area within the warehouse through which all pallets must pass; fixed-
mount readers are positioned at this choke point in order to identify the incoming goods.
For the receiving process, the choke point might be the receiving bay doors. Using a
portal antenna to surround the entryway would be one option for receiving pallet loads of

goods. If pallets are placed on a conveyor upon arrival, a fixed-mount reader positioned

74

on the side of the conveyor can read the pallet tag as a pallet approaches. For either
example, the information acquired from the tag is transmitted to the computer system,
which updates the WMS with the receipt of goods. A storage location is assigned by the

WMS and the conveyor routes the pallet to the appropriate location.

Benefits: Using a pallet tag instead of individual case tags can drastically reduce
the time required for the receiving process since only one tag has to be read. Using an
RFID pallet tag instead of a barcode pallet tag offers many benefits. One benefit is that
an RFID pallet tag can withstand harsh environments that may render a barcode useless.
Water damage, ice, dirt, grease, oil, and breakage can all interfere with the ability of a
barcode to be scanned but will not render an RF ID tag unusable.

Another benefit is the read/write capability of RFID tags, where applicable. By
using a read/write tag, information can be added, deleted, or changed upon the pallet tag
by using the fixed-mount reader. For example, the time the pallet was received can be
written to the tag during the receiving process. Also, the tag can be reused if desired,
which can cut the cost of new tag purchases.

If the pallets pass by the reader while on a conveyor, the use of a fixed-mount
reader can eliminate the need for employee involvement. Therefore, the time and cost of
an employee to use a handheld device to read the tags can be utilized elsewhere in the
warehouse. If the pallet is handled by a forklift, a terminal and screen contained upon the
forklift would display information and directions to the driver, which would enable the
driver to read the pallet tag during the normal process of moving the pallet. Thus, no

additional time would be required for this process.

75

Issues to Consider: This process may require that the reader be positioned on or
near a conveyor, so there must be a location on the conveyor to do this. Also, all pallets
must pass by this same point, or in other words, all pallets must be placed upon the same
conveyor to ensure that every pallet that enters the warehouse is officially received.

Similarly, if forklifis are used, the forklift must be equipped with a terminal and
screen and the employees must be trained to operate it correctly. The fixed-mount
antennas must be positioned so it is accessible to the drivers but does not interfere with
the normal activities of the warehouse. A portal antenna may require a significant
amount of space and also may require additional fixtures such as concrete posts for
protection from forklift damage.

Another issue to consider when using fixed-mount readers, especially a portal
antenna, is that once they are positioned, they can be very difficult, even impossible, to
move. It is important to make sure that the location for these antennas/readers will be
permanent.

A pallet tag must enter the interrogation zone of the reader, so read and write
range can be an issue with this process. Since the tag must pass by the reader within its
read range, the pallet should be positioned accordingly. This may require that the pallet

be placed upon the conveyor in a specific orientation (tag facing reader).

4A: Case Tag with Fixed Reader

Process: As pallets are removed from the vendor’s trailer and brought into the

warehouse, they may be disassembled, or “broken down” in order to check in each

76

individual case. These cases may be placed upon a conveyor for routing to their storage
locations. A fixed-mount reader positioned on the side of the conveyor can read the case
tag as the case approaches.

If a conveyor system is not used, the use of RFID can eliminate the need for
employees to disassemble pallets for check-in. As the pallet is moved by forklift, it can
pass through a choke point, or an area within the warehouse through which all pallets
must pass. Fixed-mount readers are positioned at this choke point in order to identify
incoming goods. For the receiving process, the choke point might be the receiving bay
doors. Using a portal antenna to surround the entryway would be one option for
receiving pallet loads of goods.

For both examples, the information acquired from the tag is transmitted to the
computer system, which updates the WMS with the receipt of goods. A storage location

is assigned by the WMS and the conveyor routes the case to the appropriate location.

Benefits: Using an RF ID case tag instead of a barcode case tag offers many
benefits. One benefit is that an RFID case tag can withstand harsh environments that
may render a barcode useless. Water damage, ice, dirt, grease, oil, and breakage can all
interfere with the ability of a barcode to be scanned but will not render an RFID tag
unusable.

Another benefit is the read/write capability of RFID tags, where applicable. By
using a read/write tag, information can be added, deleted, or changed upon the case tag
by using the fixed-mount reader. For example, the time the case was received can be

written to the tag during the receiving process.

77

Another benefit to this process is that placing tags on individual cases identifies,
or helps to identify the case during its journey through the put-away process. Therefore,
if the case becomes misrouted, the tag could be read and the case sent to its proper
location. Tags on individual cases can also serve as a record of where a case has been.

If the cases pass by the reader while on a conveyor, the use of a fixed-mount
reader can eliminate the need for employee involvement. Therefore, the time and cost of
an employee to use a handheld device to read the tags can be utilized elsewhere in the
warehouse. If the pallet containing the cases is handled by a forklift, a terminal and
screen incorporated upon the forklift would display information and directions to the
driver, which would enable the driver to read the case tags during the normal process of
moving the pallet. Thus, no additional time would be required for this process.

One benefit for using a portal antenna around a dock door is that all pallets must
enter through the dock door, so every pallet that is received has to pass through the portal.
"Therefore, no tagged goods can enter the warehouse without beng acknowledged and
accepted by the WMS. Occurrences of misplaced or lost goods would be virtually

eliminated.

Issues to Consider: Placing tags on individual cases can drastically increase costs
associated with implementing the system. Costs can be minimized if care is taken to
select tags with minimal functionality, such as those containing read only capability,
small memory capacity, short read range, or small size. Also, ordering a large volume of
tags may decrease the price since most vendors have price breaks at certain volumes

(although most are very high volumes).

78

Another issue to consider that relates to the cost of the tags is that the tags would
most likely be placed on expendable cases, which means that the tags would be disposed
of along with the packaging. Tags placed directly on cases can rarely be reused, except
where the expendable case is reused. .

Since a tag must enter the interrogation zone of the reader, the read range is an
important issue with this process. The tags on the cases within the pallet load must each
be located at a distance within the read range to the reader. The most critical cases are
the ones buried in the middle of the pallet, which would be the farthest away from the
reader (assuming antennae on each side of the pallet). The signal fi'om the portal reader
can (usually) penetrate to the center of a pallet load if all conditions are optimal. This
may require that the tags on the cases be placed in a specific orientation to the reader.
This would require that the vendor stack its pallet accordingly, which may have an affect
on pallet stacking patterns or space utilization.

The frequency of the tags is an issue if the product they are attached to contains
components that interfere with radio waves. For instance, a 915 MHz tag on a case filled
with liquid might have problems being read, especially on those cases that are buried in
the middle of the pallet load. The frequency also affects the read range, and a 915 MHz
tag boasts a longer read range than a 13.56 MHz tag. In some instances, the 13.56 MHz
frequency might not allow a long enough read range to read all the tags on the pallet.

Since many tags might need to be read at one time, anticollision is also an issue.
Most tags have an anticollision mechanism that allows them to be “turned off” once they
are read in order for the other tags to be read. Anticollision is a characteristic of the tag,

so this issue should be acknowledged when choosing a type of tag. Similarly, some

79

portal readers can only read a maximum number of tags at one time. This also needs to
be accounted for.

This process may require that the antennae be positioned on or near a conveyor,
so there must be a location on the conveyor to do this. Also, all cases must pass by this
same point, or in other words, all cases must be placed upon the same conveyor to ensure
that every case that enters the warehouse is officially received.

Similarly, if forklifts are used, the forklifi must be equipped with a terminal and
screen and the employees must be trained to operate it correctly. The fixed-mount
antennas must be positioned so it is accessible to the drivers but does not interfere with
the normal activities of the warehouse. A portal antenna may require a significant
amount of space and also may require additional fixtures such as concrete posts for
protection from forklifi damage.

Another issue to consider when using fixed-mount readers, especially a portal
antenna, is that once they are positioned, they can be very difficult, even impossible, to
move. It is important to make sure that the location for these antennas/readers will be

permanent.

II. PUT-AWAY DECISION TREE
lB: Pallet Tag with Handheld Reader

Process: As the pallet is transported from the receiving area to its storage
location, an employee would use a handheld reader to read the contents of the pallet tag.

When the pallet arrives to the storage location, the employee would approach the pallet

80

and read the tag with the reader within the specified read range of the tag. The reader
then sends the data to the computer system which updates the WMS with the new

location of goods.

Benefits: Using a pallet tag instead of individual case tags can drastically reduce
the time required for the put-away process since only one tag has to be read. Using an
RF ID pallet tag instead of a barcode pallet tag offers many benefits. One benefit is that
an RF ID pallet tag can withstand harsh environments that may render a barcode useless.
Water damage, ice, dirt, grease, oil, and breakage can all interfere with the ability of a
barcode to be scanned but will not render an RFID tag unusable.

Another benefit is the read/write capability of RFID tags, where applicable. By
using a read/write tag, information can be added, deleted, or changed upon the pallet tag
by using the handheld unit. For example, the time the pallet was put-away can be written
to the tag during the put-away process. Also, the tag can be reused if desired, which can
cut the cost of new tag purchases.

The use of a handheld reader voids the issue of read range, which offers another
benefit to this process. The employee will be able to get close enough to the tag in order
to read it, which means that the complex process of assuring that the tag enters the
reader’s interrogation field can be dismissed.

Two other benefits are the minimal space requirements with using a handheld

reader and the low cost compared to other RFID systems.

81

Issues to Consider: Using a handheld reader may require extra time for an
employee to locate and read the tag, therefore the tag location should be standardized.
Extra time spent by employees may result in extra costs to the company in hourly wages
and also in decreased efficiency.

The process is also dependent upon the employee so human error can be an issue.
The employee may forget, or choose not to read the tag and, hence, the pallet may not be
put-away properly, if put—away at all. The employee could also read the pallet more than
once during the put-away process, which, depending on the equipment and sofiware used,

may result in data confusion for the WMS.

28: Pallet Tag with Fixed-Mount Reader

Process: As the pallet is transported from the receiving area to its storage
location, it would pass through a choke point, or area within the warehouse through
which all pallets must pass, by a forklift or conveyor. This choke point would contain
fixed-mount readers that can read the contents of the pallet tag. For the put-away
process, a choke point might be the entrance of a freezer. Using a portal antenna to
surround the entrance would be one option for the put-away of frozen goods.

If pallets are transported to the put-away location by conveyor, a fixed-mount
reader positioned on the side of the conveyor can read the pallet tag as the pallet
approaches. For both processes, the reader sends the data to the computer system which

updates the WMS with the storage location of goods.

82

Benefits: Using an RFID pallet tag instead of a barcode pallet tag offers many
benefits. One benefit is that an RFID pallet tag can withstand harsh environments that
may render a barcode useless. Water damage, ice, dirt, grease, oil, and breakage can all
interfere with the ability of a barcode to be scanned but will not render an RFID tag
unusable.

Another benefit is the read/write capability of RF ID tags, where applicable. By
using a read/write tag, information can be added, deleted, or changed upon the pallet tag
by using the handheld unit. For example, the time the pallet was put-away can be written
to the tag during the put-away process. Also, the tag can be reused if desired, which can
cut the cost of new tag purchases.

If the pallets pass by the reader while on a conveyor, the use of a fixed-mount
reader can eliminate the need for employee involvement. Therefore, the time and cost of
an employee to use a handheld device to read the tags can be utilized elsewhere in the
warehouse. If the pallet is handled by a forklifi, a terminal and screen contained upon the
forklifi would display information and directions to the driver, which would enable the
driver to read the pallet tag during the normal process of moving the pallet. Thus, no

additional time would be required for this process.

Issues to Consider: This process may require that the reader be positioned on or
near a conveyor, so there must be a location on the conveyor to do this. Also, all pallets
must pass by this same point, or in other words, all pallets must be placed upon the same

conveyor to ensure that every pallet is officially put-away.

83

Similarly, if forklifts are used, the forklift must be equipped with a terminal and
screen and the employees must be trained to operate it correctly. The fixed-mount
antennas must be positioned so it is accessible to the drivers but does not interfere with
the normal activities of the warehouse. A portal antenna may require a significant
amount of space and also may require additional fixtures such as concrete posts for
protection from forklifi damage.

Another issue to consider when using fixed-mount readers, especially a portal
antenna, is that once they are positioned, they can be very difficult, even impossible, to
move. It is important to make sure that the location for these antennas/readers will be
permanent.

A pallet tag must enter the interrogation zone of the reader, so read and write
range can be an issue with this process. Since the tag must pass by the reader within its
read range, the pallet should be positioned accordingly. This requires that the pallet be
placed upon the conveyor in a specific orientation (tag facing reader).

One other issue to consider is that it may be difficult to specify choke points for
the put-away process. Certain storage locations that have definite entryways, such as

freezers or coolers, offer an advantage for implementing fixed-mount readers.

38: Case Tag with Handheld Reader

Process: As a mixed pallet is transported from the receiving area to storage
locations, an employee would use a handheld reader to read the contents of the case tag.
When cases arrive to their storage location, the employee would remove the cases and

read the individual tags with the reader within the specified read range of the tag. The

84

reader then sends the data to the computer system which updates the WMS with the

storage location of goods.

Benefits: Using an RFID case tag instead of a barcode case tag offers many
benefits. One benefit is that an RF ID case tag can withstand harsh environments that
may render a barcode useless. Water damage, ice, dirt, grease, oil, and breakage can all
interfere with the ability of a barcode to be scanned but will not render an RFID tag
unusable.

Another benefit is the read/write capability of RF ID tags, where applicable. By
using a read/write tag, information can be added, deleted, or changed upon the case tag
by using the fixed-mount reader. For example, the time the case was put-away can be
written to the tag during the put-away process.

Another benefit to this process is that placing tags on individual cases identifies,
or helps to identify the case during its journey through the put-away process. Therefore,
if it became misrouted, the tag could be read and sent to its proper location. Tags on
individual cases can also serve as a record of where that case has been and, additionally,
continue to keep track of every place that it goes.

The use of a handheld reader voids the issue of read range, which offers another
benefit to this process. The employee will be able to get close enough to the tag in order
to read it, which means that the complex process of assuring that the tag enters the
reader’s interrogation field can be dismissed.

Two other benefits are the minimal space requirements with using a handheld

reader and the low cost compared to other RF ID systems.

85

Issues to Consider: Placing tags on individual cases can drastically increase costs
associated with implementing the system. Costs can be minimized if care is taken to
select tags with minimal functionality, such as those containing read only capability,
small memory capacity, short read range, or small size. Also, ordering a large volume of
tags may decrease the price since most vendors have price breaks at certain volumes
(although most are very high volumes).

Another issue to consider that relates to the cost of the tags is that the tags would
most likely be placed on expendable cases, which means that the tags would be disposed
of along with the packaging. Tags placed directly on cases can rarely be reused, except
where the expendable case is reused.

Using a handheld reader may require extra time for an employee to locate and
read the tag, therefore tag location should be standardized. Extra time spent by
employees may result in extra costs to the company in hourly wages and also in
decreased efficiency.

The process is also dependent upon the employee so human error can be an issue.
The employee may forget, or choose not to read the tag and, hence, the pallet may not be
put-away properly, if put-away at all. The employee could also read the pallet more than
once during the put-away process, which, depending on the equipment and sofiware used,

may result in data confusion for the WMS.

86

48: Case Tag with Fixed-Mount Reader

Process: As the cases are transported from the receiving area to their storage
locations, they would pass through a choke point, or area within the warehouse through
which all the cases must pass, by a forklift or conveyor. This choke point would contain
fixed-mount readers that can read the tags. For the put-away process, a choke point
might be the entrance of a freezer. Using a portal antenna to surround the entrance would
be one option for the put-away of frozen goods.

If cases are transported to the put-away location by conveyor, a fixed-mount
reader positioned on the side of the conveyor can read the case tag as the case
approaches. For both processes, the reader sends the data to the computer system which

updates the WMS with the storage location of goods.

Benefits: Using an RF ID case tag instead of a barcode case tag offers many
benefits. One benefit is that an RF ID case tag can withstand harsh environments that
may render a barcode useless. Water damage, ice, dirt, grease, oil, and breakage can all
interfere with the ability of a barcode to be scanned but will not render an RFID tag
unusable.

Another benefit is the read/write capability of RFID tags, where applicable. By
using a read/write tag, information can be added, deleted, or changed upon the case tag
by using the fixed-mount reader. For example, the time the case was put-away can be
written to the tag during the put-away process.

Another benefit to this process is that placing tags on individual cases identifies,

or helps to identify the case during its journey through the put-away process. Therefore,

87

if it became misrouted, the tag could be read and sent to its proper location. Tags on
individual cases can also serve as a record of where that case has been and, additionally,
continue to keep track of every place that it goes.

If the cases pass by the reader while on a conveyor, the use of a fixed-mount
reader can eliminate the need for employee involvement. Therefore, the time and cost of
an employee to use a handheld device to read the tags can be utilized elsewhere in the
warehouse. If the pallet containing the cases is handled by a forklift, a terminal and
screen incorporated upon the forklift would display information and directions to the
driver, which would enable the driver to read the case tags during the normal process of

moving the pallet. Thus, no additional time would be required for this process.

Issues to Consider: Placing tags on individual cases can drastically increase costs
associated with implementing the system. Costs can be minimized if care is taken to
select tags with minimal functionality, such as those containing read only capability,
small memory capacity, short read range, or small size. Also, ordering a large volume of
tags may decrease the price since most vendors have price breaks at certain volumes
(although most are very high volumes).

Another issue to consider that relates to the cost of the tags is that the tags would
most likely be placed on expendable cases, which means that the tags would be disposed
of along with the packaging. Tags placed directly on cases can rarely be reused, except
where the expendable case is reused.

Since a tag must enter the interrogation zone of the reader, the read range is an

important issue with this process. The tags on the cases within a pallet load must each be

88

located at a distance within the read range to the reader. The most critical cases are the
ones buried in the middle of the pallet, which would be the farthest away from the reader
(assuming antennae on each side of the pallet). The signal from the portal reader can
(usually) penetrate to the center of a pallet load if all conditions are optimal. This may
require that the tags on the cases be placed in a specific orientation to the reader.

The frequency of the tags is an issue if the product they are attached to contains
components that interfere with radio waves. For instance, a 915 MHz tag on a case filled
with liquid might have problems being read, especially on those cases that are buried in
the middle of the pallet load. The frequency also affects the read range, and a 915 MHz
tag boasts a longer read range than a 13.56 MHz tag. In some instances, the 13.56 MHz
frequency might not allow a long enough read range to read all the tags on the pallet.

Since many tags might need to be read at one time, anticollision is also an issue.
Most tags have an anticollision mechanism that allows them to be “turned off” once they
are read in order for the other tags to be read. Anticollision is a characteristic of the tag,
so this issue should be acknowledged when choosing a type of tag. Similarly, some
portal readers can only read a maximum number of tags at one time. This also needs to
be accounted for.

This process may require that the antennae be positioned on or near a conveyor,
so there must be a location on the conveyor to do this. Also, all cases must pass by this
same point, or in other words, all cases must be placed upon the same conveyor to ensure
that every case that enters the warehouse is officially put-away.

Similarly, if forklifts are used, the forklift must be equipped with a terminal and

screen and the employees must be trained to operate it correctly. The fixed-mount

89

antennas must be positioned so it is accessible to the drivers but does not interfere with
the normal activities of the warehouse. A portal antenna may require a significant
amount of space and also may require additional fixtures such as concrete posts for
protection from forklift damage.

Another issue to consider when using fixed-mount readers, especially a portal
antenna, is that once they are positioned, they can be very difficult, even impossible, to
move. It is important to make sure that the location for these antennas/readers will be

permanent.

III. ORDER SELECTION DECISION TREE
1C: Pallet Tag with Handheld Reader

Process: After a pick list is generated for an order, an employee travels to the
appropriate storage location to retrieve the pallet. The employee would use a handheld
reader to read the contents of the pallet tag. The employee would approach the pallet and
read the tag with the reader within the specified read range of the tag. The reader then
sends the data to the computer system which updates the WMS with the selection of

goods.

Benefits: Using a pallet tag instead of individual case tags can drastically reduce
the time required for the order selection process since only one tag has to be read. Using
an RFID pallet tag instead of a barcode pallet tag offers many benefits. One benefit is

that an RFID pallet tag can withstand harsh environments that may render a barcode

90

useless. Water damage, ice, dirt, grease, oil, and breakage can all interfere with the
ability of a barcode to be scanned but will not render an RFID tag unusable.

Another benefit is the read/write capability of RF ID tags, where applicable. By
using a read/write tag, information can be added, deleted, or changed upon the pallet tag
by using the handheld unit. For example, the time the pallet was selected can be written
to the tag during the selection process. Also, the tag can be reused if desired, which can
cut the cost of new tag purchases.

The use of a handheld reader voids the issue of read range, which offers another
benefit to this process. The employee will be able to get close enough to the tag in order
to read it, which means that the complex process of assuring that the tag enters the
reader’s interrogation field can be dismissed.

Two other benefits are the minimal space requirements with using a handheld

reader and the low cost compared to other RFID systems.

Issues to Consider: Using a handheld reader may require extra time for an
employee to locate and read the tag, therefore the location of the tag should be
standardized. Extra time spent by employees may result in extra costs to the company in
hourly wages and also in decreased efficiency.

The process is also dependent upon the employee so human error can be an issue.
The employee may forget, or choose not to read the tag and, hence, the pallet may not be
selected properly. The employee could also read the pallet more than once during the
picking process, which, depending on the equipment and software used, may result in

data confusion for the WMS.

91

2C: Pallet Tag with Fixed-Mount Reader
Process: After a pick list is generated for an order, an employee travels to the

appropriate storage location to retrieve the pallet. As it is selected, the pallet must pass
through a choke point, or area within the warehouse through which all pallets must pass,
by a forklift or conveyor. This choke point would contain fixed-mount readers that can
read the contents of the pallet tag and verify that the pallet was selected. For the order
selection process, a choke point might be the exit of a fieezer. Using a portal antenna to
surround the exit would be one option for the order selection of a pallet of frozen goods.

If pallets are transported to a conveyor as they are selected, a fixed-mount reader
positioned on the side of the conveyor can read the pallet tag as the pallet approaches.
For both processes, the reader sends the data to the computer system which updates the

WMS with the selection of goods.

Benefits: Using an RFID pallet tag instead of a barcode pallet tag offers many
benefits. One benefit is that an RF ID pallet tag can withstand harsh environments that
may render a barcode useless. Water damage, ice, dirt, grease, oil, and breakage can all
interfere with the ability of a barcode to be scanned but will not render an RF ID tag
unusable.

Another benefit is the read/write capability of RFID tags, where applicable. By
using a read/write tag, information can be added, deleted, or changed upon the pallet tag

by using the handheld unit. For example, the time the pallet was selected can be written

92

to the tag during the order selection process. Also, the tag can be reused if desired, which
can cut the cost of new tag purchases.

If the pallets pass by the reader while on a conveyor, the use of a fixed-mount
reader can eliminate the need for employee involvement. Therefore, the time and cost of
an employee to use a handheld device to read the tags can be utilized elsewhere in the
warehouse. If the pallet is handled by a forklift, a terminal and screen contained upon the
forklift would display information and directions to the driver, which would enable the
driver to read the pallet tag during the normal process of moving the pallet. Thus, no

additional time would be required for this process.

Issues to Consider: This process may require that the reader be positioned on or
near a conveyor, so there must be a location on the conveyor to do this. Also, all pallets
must pass by this same point, or in other words, all pallets must be placed upon the same
conveyor to ensure that every pallet is officially selected.

Similarly, if forklifts are used, the forklift must be equipped with a terminal and
screen and the employees must be trained to operate it correctly. The fixed-mount
antennas must be positioned so it is accessible to the drivers but does not interfere with
the normal activities of the warehouse. A portal antenna may require a significant
amount of space and also may require additional fixtures such as concrete posts for
protection from forklift damage.

Another issue to consider when using fixed-mount readers, especially a portal

antenna, is that once they are positioned, they can be very difficult, even impossible, to

93

move. It is important to make sure that the location for these antennas/readers will be
permanent.

A pallet tag must enter the interrogation zone of the reader, so read range can be
an issue with this process. Since the tag must pass by the reader within its read range, the
pallet should be positioned accordingly. This requires that the pallet be placed upon the
conveyor in a specific orientation (tag facing reader).

One other issue to consider is that it may be difficult to specify choke points for
the order selection process. Certain storage locations that have definite entryways, such

as freezers or coolers, offer an advantage for implementing fixed-mount readers.

3C: Case Tag with Handheld Reader

Process: After a pick list is generated for an order, an employee travels to the
appropriate storage location to retrieve the cases. The employee would use a handheld
reader to read the case tags. The employee would select the case and read the tag with
the reader within the specified read range of the tag. The reader then sends the data to the
computer system which updates the WMS with the selection of goods. At this point, the
employee can add the case to a pallet that he/she is building for the order, or send it to the
shipping area by conveyor or some other method.

If the employee is building a new pallet for the order with the goods he/she
selects, the new pallet could contain an RF ID pallet tag. As the employee reads the case
tag that he/she selected, he/she could also write the information on the case tag to the new
pallet tag, if it allows this operation. After all the cases are selected, the pallet will

contain one pallet tag with information about each case that rests upon it. This method

94

would make the shipping process quicker since only one tag (pallet) would need to be

read instead of each individual case tag.

Benefits: Using an RFID case tag instead of a barcode case tag offers many
benefits. One benefit is that an RF ID case tag can withstand harsh environments that
may render a barcode useless. Water damage, ice, dirt, grease, oil, and breakage can all
interfere with the ability of a barcode to be scanned but will not render an RFID tag
unusable.

Another benefit is the read/write capability of RF ID tags, where applicable. By
using a read/write tag, information can be added, deleted, or changed upon the case tag
by using the fixed-mount reader. For example, the time the case was selected can be
written to the tag during the order selection process.

Another benefit to this process is that placing tags on individual cases identifies,
or helps to identify the case during its journey through the picking process. Therefore, if
it became misrouted, the tag could be read and sent to its proper location. Tags on
individual cases can also serve as a record of where that case has been and, additionally,
continue to keep track of every place that it goes.

The use of a handheld reader voids the issue of read range, which offers another
benefit to this process. The employee will be able to get close enough to the tag in order
to read it, which means that the complex process of assuring that the tag enters the
reader’s interrogation field can be dismissed.

Two other benefits are the minimal space requirements with using a handheld

reader and the low cost compared to other RFID systems.

95

Issues to Consider: Using a handheld reader may require extra time for an
employee to locate and read the tag, therefore tag location should be standardized. Extra
time spent by employees may result in extra costs to the company in hourly wages and
also in decreased efficiency.

The process is also dependent upon the employee so human error can be an issue.
The employee may forget, or choose not to read the tag and, hence, the pallet may not be
selected properly. The employee could also read the pallet more than once during the
picking process, which, depending on the equipment and software used, may result in
data confusion for the WMS.

Placing tags on individual cases can drastically increase costs associated with
implementing the system. Costs can be minimized if care is taken to select tags with
minimal functionality, such as those containing read only capability, small memory
capacity, short read range, or small size. Also, ordering a large volume of tags may
decrease the price since most vendors have price breaks at certain volumes (although
most are very high volumes).

Another issue to consider that relates to the cost of the tags is that the tags would
most likely be placed on expendable cases, which means that the tags would be disposed
of along with the packaging. Tags placed directly on cases can rarely be reused, except

where the expendable case is reused.

96

4C: Case Tag with Fixed-Mount Reader

Process: After a pick list is generated for an order, an employee travels to the
appropriate storage location to retrieve the cases. As it is selected, the case must pass
through a choke point, or area within the warehouse through which all cases must pass,
by a forklift or conveyor. This choke point would contain fixed-mount readers that can
read the contents of the case tag and verify that the case was selected. For the order
selection process, a choke point might be the exit of a freezer. Using a portal antenna to
surround the exit would be one option for the order selection of a case of frozen goods.

At this point, the employee can add the case to a pallet that he/she is building for
the order, or send it to the shipping area by conveyor or some other method.

If cases are transported to a conveyor as they are selected, a fixed-mount reader
positioned on the side of the conveyor can read the case tag as the case approaches. For
both processes, the reader sends the data to the computer system which updates the WMS
with the selection of goods.

If the employee is building a new pallet for the order with the goods he/she
selects, the new pallet could contain an RFID pallet tag. As the employee reads the case
tag that he/she selected, he/ she can also write the information on the case tag to the new
pallet tag. After all the cases are selected, the pallet will contain one pallet tag with
information about each case that rests upon it. This method would make the shipping
process quicker since only one tag would need to be read instead of each individual case

tag.

97

Benefits: Using an RFID case tag instead of a barcode case tag offers many
benefits. One benefit is that an RF ID case tag can withstand harsh environments that
may render a barcode useless. Water damage, ice, dirt, grease, oil, and breakage can all
interfere with the ability of a barcode to be scanned but will not render an RF ID tag
unusable.

Another benefit is the read/write capability of RFID tags, where applicable. By
using a read/write tag, information can be added, deleted, or changed upon the case tag
by using the fixed-mount reader. For example, the time the case was selected can be
written to the tag during the order selection process.

Another benefit to this process is that placing tags on individual cases identifies,
or helps to identify the case during its journey through the picking process. Therefore, if
it became misrouted, the tag could be read and sent to its proper location. Tags on
individual cases can also serve as a record of where that case has been and, additionally,
continue to keep track of every place that it goes.

If the cases pass by the reader while on a conveyor, the use of a fixed-mount
reader can eliminate the need for employee involvement. Therefore, the time and cost of
an employee to use a handheld device to read the tags can be utilized elsewhere in the
warehouse. If the pallet containing the cases is handled by a forklift, a terminal and
screen contained upon the forklift would display information and directions to the driver,
which would enable the driver to read the case tag during the normal process of moving

the pallet. Thus, no additional time would be required for this process.

98

Issues to Consider: Placing tags on individual cases can drastically increase costs
associated with implementing the system. Costs can be minimized if care is taken to
select tags with minimal functionality, such as those containing read only capability,
small memory capacity, short read range, or small size. Also, ordering a large volume of
tags may decrease the price since most vendors have price breaks at certain volumes
(although most are very high volumes).

Another issue to consider that relates to the cost of the tags is that the tags would
most likely be placed on expendable cases, which means that the tags would be disposed
of along with the packaging. Tags placed directly on cases can rarely be reused, except
where the expendable case is reused.

Since a tag must enter the interrogation zone of the reader, the read and write
range is an important issue with this process. The tags on the cases within the pallet load
must each be located at a distance within the read range to the reader. The most critical
cases are the ones buried in the middle of the pallet, which would be the farthest away
from the reader (assuming antennae on each side of the pallet). The signal from the
portal reader can (usually) penetrate to the center of a pallet load if all conditions are
optimal. This may require that the tags on the cases be placed in a specific orientation to
the reader.

The frequency of the tags is an issue if the product they are attached to contains
components that interfere with radio waves. For instance, a 915 MHz tag on a case filled
with liquid might have problems being read, especially on those cases that are buried in

the middle of the pallet load. The frequency also affects the read range, and a 915 MHz

99

tag boasts a longer read range than a 13.56 MHz tag. In some instances, the 13.56 MHz
frequency might not allow a long enough read range to read all the tags on the pallet.

Since many tags might need to be read at one time, anticollision is also an issue.
Most tags have an anticollision mechanism that allows them to be. “turned off” once they
are read in order for the other tags to be read. Anticollision is a characteristic of the tag,
so this issue should be acknowledged when choosing a type of tag. Similarly, some
portal readers can only read a maximum number of tags at one time. This also needs to
be accounted for.

This process may require that the antenna be positioned on or near a conveyor, so
there must be a location on the conveyor to do this. Also, all cases must pass by this
same point, or in other words, all cases must be placed upon the same conveyor to ensure
that every case that enters the warehouse is officially selected.

Similarly, if forklifts are used, the forklift must be equipped with a terminal and
screen and the employees must be trained to operate it correctly. The fixed-mount
antennas must be positioned so it is accessible to the drivers but does not interfere with
the normal activities of the warehouse. A portal antenna may require a significant
amount of space and also may require additional fixtures such as concrete posts for
protection from forklift damage.

Another issue to consider when using fixed-mount readers, especially a portal
antenna, is that once they are positioned, they can be very difficult, even impossible, to
move. It is important to make sure that the location for these antennas/readers will be

permanent.

100

IV: SHIPPING DECISION TREE
1D: Pallet Tag with Handheld Reader

Process: Pallets designated for specific orders may arrive to the shipping area
unitized and ready to load onto the trailers. An employee would use a handheld reader to
read the contents of the pallet tag. Basically, an employee would approach the pallet and
read the tag with the reader within the specified read range of the tag. The reader then
sends the data to the computer system which updates the WMS that the goods are ready
to ship. Once the pallet tag has been read, the pallet is loaded onto the trailer for

shipment.

Benefits: Using a pallet tag instead of individual case tags can drastically reduce
the time required for the shipping process since only one tag has to be read. Using an
RF ID pallet tag instead of a barcode pallet tag offers many benefits. One benefit is that
an RFID pallet tag can withstand harsh environments that may render a barcode useless.
Water damage, ice, dirt, grease, oil, and breakage can all interfere with the ability of a
barcode to be scanned but will not render an RFID tag unusable.

Another benefit is the read/write capability of RFID tags, where applicable. By
using a read/write tag, information can be added, deleted, or changed upon the pallet tag
by using the handheld unit. For example, the time the pallet was shipped can be written
to the tag during the shipping process. Also, the tag can be reused if desired, which can

cut the cost of new tag purchases.

101

The use of a handheld reader voids the issue of read range, which offers another
benefit to this process. The employee will be able to get close enough to the tag in order
to read it, which means that the complex process of assuring that the tag enters the
reader’s interrogation field can be dismissed.

Two other benefits are the minimal space requirements with using a handheld

reader and the low cost compared to other RFID systems.

Issues to Consider: Using a handheld reader may require extra time for an
employee to locate and read the tag, therefore tag location should be standardized. Extra
time spent by employees may result in extra costs to the company in hourly wages and
also in decreased efficiency.

The process is also dependent upon the employee so human error can be an issue.
The employee may forget, or choose not to read the tag and, hence, the pallet may not be
shipped properly, if received at all. The employee could also read the pallet more than
once during the shipping process, which, depending on the equipment and software used,

may result in data confusion for the WMS.

2D: Pallet Tag with Fixed-Mount Reader

Process: Pallets designated for specific orders may arrive to the shipping area
unitized and ready to load onto the trailers. As the pallet enters the shipping area, it must
pass through a choke point, or area within the warehouse through which all pallets must
pass, by a forklift or conveyor. This choke point would contain fixed-mount readers that

can read the contents of the pallet tag and verify that the pallet is matches the order to be

102

shipped. For the shipping process, a choke point might be the shipping bay doors. Using
a portal antenna to surround the door would be one option for the shipping process.

If pallets are transported to the shipping area via a conveyor, a fixed-mount reader
positioned on the side of the conveyor can read the pallet tag as the pallet approaches.
For both processes, the reader sends the data to the computer system which updates the

WMS to acknowledge that the goods are ready to ship.

Benefits: Using an RFID pallet tag instead of a barcode pallet tag offers many
benefits. One benefit is that an RF ID pallet tag can withstand harsh environments that
may render a barcode useless. Water damage, ice, dirt, grease, oil, and breakage can all
interfere with the ability of a barcode to be scanned but will not render an RF ID tag
unusable.

Another benefit is the read/write capability of RF ID tags, where applicable. By
using a read/write tag, information can be added, deleted, or changed upon the pallet tag
by using the fixed-mount unit. For example, the time the pallet was shipped can be
written to the tag during the shipping process. Also, the tag can be reused if desired,
which can cut the cost of new tag purchases.

If the pallets pass by the reader while on a conveyor, the use of a fixed-mount
reader can eliminate the need for employee involvement. Therefore, the time and cost of
an employee to use a handheld device to read the tags can be utilized elsewhere in the
warehouse. If the pallet is handled by a forklift, a terminal and screen contained upon the

forklift would display information and directions to the driver, which would enable the

103

driver to read the pallet tag during the normal process of moving the pallet. Thus, no
additional time would be required for this process.

Another benefit to using a fixed-mount reader for the shipping process is that the
dock doors serve as an excellent choke point for pallets to pass through. Every pallet or
case that is loaded onto the trailer must go through the door, so it gives an excellent
opportunity to gather information on the goods being shipped and compare it to the

customer’s order before the trailer leaves the site.

Issues to Consider: This process may require that the reader be positioned on or
near a conveyor, so there must be a location on the conveyor to do this. Also, all pallets
must pass by this same point, or in other words, all pallets must be placed upon the same
conveyor to ensure that every pallet is officially selected.

Similarly, if forklifts are used, the forklift must be equipped with a terminal and
screen and the employees must be trained to operate it correctly. The fixed-mount
antennas must be positioned so it is accessible to the drivers but does not interfere with
the normal activities of the warehouse. A portal antenna may require a significant
amount of space and also may require additional fixtures such as concrete posts for
protection from forklift damage.

Another issue to consider when using fixed-mount readers, especially a portal
antenna, is that once they are positioned, they can be very difficult, even impossible, to
move. It is important to make sure that the location for these antennas/readers will be

permanent.

104

A pallet tag must enter the interrogation zone of the reader, so read and write
range can be an issue with this process. Since the tag must pass by the reader within its
read range, the pallet should be positioned accordingly. This may require that the pallet

be placed upon the conveyor in a specific orientation (tag facing reader).

4D: Case Tag with F ixed-Mount Reader

Process: Cases designated for specific orders may arrive to the shipping area on
unitized pallets, ready to load onto the trailers. Since each individual case contains an
RFID tag, a fixed-mount unit should be able to read each tag on a pallet load. As the
mixed pallet enters the shipping area, it must pass through a choke point, or area within
the warehouse through which all pallets must pass, by a forklift or conveyor. This choke
point would contain fixed-mount readers that can read the individual tags and verify that
the cases match the order to be shipped. For the shipping process, a choke point might be
the shipping bay doors. Using a portal antenna to surround the door would be one option
for the shipping process.

If pallets are transported to the shipping area via a conveyor, a fixed-mount reader
positioned on the side of the conveyor may be able to read the case tags as the pallet
approaches. For both processes, the reader sends the data to the computer system which

updates the WMS to acknowledge that the goods are ready to ship.

Benefits: Using an RF ID case tag instead of a barcode case tag offers many
benefits. One benefit is that an RF ID case tag can withstand harsh environments that

may render a barcode useless. Water damage, ice, dirt, grease, oil, and breakage can all

105

interfere with the ability of a barcode to be scanned but will not render an RFID tag
unusable.

Another benefit is the read/write capability of RF ID tags, where applicable. By
using a read/write tag, information can be added, deleted, or changed upon the case tag
by using the fixed-mount reader. For example, the time the case was shipped can be
written to the tag during the shipping process.

Another benefit to this process is that placing tags on individual cases identifies,
or helps to identify the case during its journey through the shipping process. Therefore, if
it became misrouted, the tag could be read and sent to its proper location. Tags on
individual cases can also serve as a record of where that case has been and, additionally,
continue to keep track of every place that it goes.

If the cases pass by the reader while on a conveyor, the use of a fixed-mount
reader can eliminate the need for employee involvement. Therefore, the time and cost of
an employee to use a handheld device to read the tags can be utilized elsewhere in the
warehouse. If the pallet containing the cases is handled by a forklift, a terminal and
screen contained upon the forklift would display information and directions to the driver,
which would enable the driver to read the case tag during the normal process of moving
the pallet. Thus, no additional time would be required for this process.

Another benefit to using a fixed-mount reader, especially a portal antenna, for the
shipping process is that a mixed pallet load does not have to be disassembled prior to
shipping. Breaking down a pallet in order to verify individual cases can take a significant
amount of time and manpower. This method eliminates the need for disassembly, which

also eliminates the chance for human error.

106

Issues to Consider: Placing tags on individual cases can drastically increase costs
associated with implementing the system. Costs can be minimized if care is taken to
select tags with minimal functionality, such as those containing read only capability,
small memory capacity, short read range, or small size. Also, ordering a large volume of
tags may decrease the price since most vendors have price breaks at certain volumes
(although most are very high volumes).

Another issue to consider that relates to the cost of the tags is that the tags would
most likely be placed on expendable cases, which means that the tags would be disposed
of along with the packaging. Tags placed directly on cases can rarely be reused, except
where the expendable case is reused.

Since a tag must enter the interrogation zone of the reader, the read range is an
important issue with this process. The tags on the cases within the pallet load must each
be located at a distance within the read range to the reader. The most critical cases are
the ones buried in the middle of the pallet, which would be the farthest away from the
reader (assuming antennae on each side of the pallet). The signal from the portal reader
can (usually) penetrate to the center of a pallet load if all conditions are optimal. This
may require that the tags on the cases be placed in a specific orientation to the reader.

The frequency of the tags is an issue if the product they are attached to contains
components that interfere with radio waves. For instance, a 915 MHz tag on a case filled
with liquid might have problems being read, especially on those cases that are buried in

the middle of the pallet load. The frequency also affects the read range, and a 915 MHz

107

tag boasts a longer read range than a 13.56 MHz tag. In some instances, the 13.56 MHz
frequency might not allow a long enough read range to read all the tags on the pallet.

Since many tags might need to be read at one time, anticollision is also an issue.
Most tags have an anticollision mechanism that allows them to be “turned off” once they
are read in order for the other tags to be read. Anticollision is a characteristic of the tag,
so this issue should be acknowledged when choosing a type of tag. Similarly, some
portal readers can only read a maximum number of tags at one time. This also needs to
be accounted for.

If forklifts are used, the forklift must be equipped with a terminal and screen and
the employees must be trained to operate it correctly. The fixed-mount antennas must be
positioned so it is accessible to the drivers but does not interfere with the normal
activities of the warehouse. A portal antenna may require a significant amount of space
and also may require additional fixtures such as concrete posts for protection from
forklift damage.

Another issue to consider when using fixed-mount readers, especially a portal
antenna, is that once they are positioned, they can be very difficult, even impossible, to
move. It is important to make sure that the location for these antennas/readers will be

permanent.

108

CHAPTER FIVE
DISCUSSION/CONCLUSION

As competition in business continues to grow, companies need to seek out
improvements within their supply chains in order to remain competitive. Achieving total
customer satisfaction while simultaneously operating at ideal efficiency is a goal that
many companies aspire to, and thus, are increasing their efforts in the strategic planning
of their supply chains to meet this goal.

There has been increased interest in expanding information technology within
businesses as a way to streamline the supply chain. Enhanced information technology
can help to alleviate communication problems between supply chain partners. The faster
and more accurate the communication can flow through the supply chain, the more
functional the supply chain can be.

The role of warehousing within the supply chain has been receiving more
attention due to many commonly identified areas that are in need of improvement As
discussed in the Background Chapter, the efficiency and accuracy of warehouse
processes greatly contribute to the overall success of the supply chain as a whole.
Investing in information technology is one avenue that companies are exploring to
improve warehouse processes.

Automatic identification is an information technology that has great potential to
increase the accuracy of warehouse processes. It is a fast, reliable method of data
collection that can replace manual tasks and eliminate human error. The Literature
Review section provided examples of the many ways that automatic identification has

contributed to the success of various business processes.

109

The focus of this thesis was on Radio Frequency Identification (RF ID) as an
automatic identification method that can provide many benefits to the supply chain, or
more specifically, warehousing. RFID is gaining recognition as an exciting emerging
technology that can potentially provide a competitive advantage to a company.

As RFID continues to gain popularity, more information becomes available to the
general public. However, concrete evidence and specific data of how RFID has benefited
companies is still closely guarded. As long as RF ID remains elusive, the companies that
are first to use it will achieve a competitive advantage, and are therefore unwilling to
divulge any specific information.

The reluctance of companies to publish data on RF ID implementation was a
major hurdle in the development of this thesis. The majority of information given
regarding RF ID systems is very general (i.e. components, benefits). Although this
information is made available to companies, there is very little information relating to
how to actually implement the technology to achieve the greatest benefits. A goal of this
thesis is to assist companies in bridging the gap between general information about RFID
and implementing RFID into current warehousing processes.

The Model was developed for companies to relate their own warehousing
processes to a method of implementing RFID that would potentially result in the greatest
benefits. The Model acknowledges current processes and aims to provide a non-
disruptive suggestion on how and where to use RFID. It offers benefits of
implementation as well as issues to consider that may lead a company to decide that

RF ID is not the best option at the present time.

110

The Model is directed toward each warehousing process individually, in order for
a company to isolate one process at a time to determine weaknesses and areas of
improvement. A company may determine that RFID may not be needed for each activity,
or that different methods of operation may be required. It is impractical to suggest one
method of RF ID for each process since they are all unique.

This Model is intended to provide a basis for future research. There are many
important issues presented by the Model that deserve to be explored further. As
technology advances, some of the assumptions given may be obsolete (e. g. read/write
ranges, anticollision, cost) and will need to be updated to include new information.
Individual warehousing processes can be investigated more thoroughly to provide more
customized decision trees for specific industries or businesses. More diverse methods of
reading and writing to the tags can be examined, as this Model only gives general
information. Field trials could be conducted using RFID to track an item throughout
warehouse processes and analyzing the benefits compared to barcodes. A survey could
be created for various companies and industries to reveal actual data about the opinion of
RF ID systems.

There is an unlimited amount of options for future research on RF ID. Many areas
of the technology have yet to be explored. There will remain a remarkable interest in
research that can offer companies further insight into the possible competitive advantages

that can result from RFID. The Model presented in this thesis is just the beginning.

111

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