The Supply Chain Doctors

Warehousing Fundamentals

The Supply Chain DoctorsKimball Bullington, Ph.D.Cliff Welborn, Ph.D.

The Supply Chain Doctors

• Technologies– Optical bar code scanning (cheap technology,

widely available)– Radio Frequency Identification (distance, area

scanning, rapidly developing technology)

Electronic Data Capture

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• Technology is changing in optical barcodes, enabling more data to be encoded

Optical Barcodes

Code 93UPC DataMatrix 2D“Wikipedia, the free encyclopedia”

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• The first retail product scanned was a pack of Wrigley’s gum

• Projected industry savings of $40M were not achieved by the mid 1970’s

• Technology required adoption of expensive scanners while manufacturer’s simultaneously adopted bar codes

“The Supermarket Scanner that Failed” Business Week

The Supply Chain Doctors

• Fast-selling products can be identified quickly and automatically reordered to meet customer demand

• Slow-selling products can be identified and, preventing accumulation of unwanted inventory

• Effects of repositioning or repackaging can be identified

Benefits of Using Barcodes

The Supply Chain Doctors

• A Unique Identifying Number (UID) can be assigned to an item when it is packed in a box by a manufacturer

• A database can be created to relate the UID to relevant information in the box; order number, items packed, quantity, destination, etc.

Benefits of Using Barcodes

The Supply Chain Doctors

• The information can be transmitted so the retailer or distributor has info on the shipment before the shipment arrives

• When the shipment gets to the final destination, the UID gets scanned, and the store knows where the order came from, what’s inside the box, and how much to pay the manufacturer

Benefits of Using Barcodes

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• Advantages over manual methods– Speed, capacity, high volume– Labor savings (eliminates extra steps)

Electronic Data Capture

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• Advantages over manual methods– Error reduction• Manual entry: 1 error in 300• Optical entry: 1 error in 1,000,000

– Cheap

Electronic Data Capture

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• Hand held link with warehouse management system

• Mobility

Bar Codes + Radio Frequency

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• RFID is an automatic identification method, relying on storing and remotely retrieving data using devices called RFID tags or transponders.

Radio Frequency Identification

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RFID Tags

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RFID Tags

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RFID Tags

The Supply Chain Doctors

RFID Tags

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• 2007 – Hitachi’s 2nd generation μ-Chip– 0.05 X 0.05 mm– Thin enough to be embedded in a sheet of

paper– Antenna is up to 80X as big

RFID – Current Technology

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• June 2003 – Wal-Mart announced plan to implement RFID with 100 top suppliers

• November 2003– Specified what the EPC would be– What class of chips they would accept– Which distribution centers would start

accepting RFID deliveries

• Late 2006 – Implement with all suppliers

RFID – Wal-Mart Initiative

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• RFID-enabled• Mistake-proof• Error-free• Transparent• Traceable at the product level

Wal-Mart’s RFID Supply Chain of the Future

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• RFID-enabled• Mistake-proof• Error-free• Loss-reduced• Labor-reduced

Wal-Mart’s RFID Store of the Future

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• SmartCode - $0.05 each• Size – postage stamp to post card• Polymer tags – printed like a magazine• Range for passive tags – 4 cm to several

meters

RFID – EPC

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• "At the Tesco Cambridge store, a camera trained on the Gillette blade shelf, and triggered by RFID tags, captures a photo of each customer who removes a Mach3 pack. Another photo is taken at the checkout and security staff compare the two images to ensure they always have a pair.”

RFID – Privacy Issues

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• According to the spokesman, "there are certainly not any privacy concerns" in relation to these tags. He adds that there is plenty of in-store signage indicating the supermarket's use of CCTV cameras. ""

RFID – Privacy Issues

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• Purchaser of an item will not necessarily be aware of the presence of the tag or be able to remove it

• The tag remains functional after the item is removed from the store and taken home

• The tag can be read at a distance without the purchaser’s knowledge

RFID – Privacy Issues

The Supply Chain Doctors

• If a tagged item is paid for by credit card or in conjunction with a loyalty card, it would be possible to connect the ID number with identity of the purchaser

• The EPC system creates a globally unique serial number for all products

• Clipped tag technology could retain traceability, but limit range

RFID – Privacy Issues

The Supply Chain Doctors

• Child security• Convenience• Security

RFID – Weird Science