The fol­low­ing is an arti­cle based on a RPA pre­sen­ta­tion at PACK EXPO Las Vegas by Keith Schall, Mem­ber, Reusable Pack­ag­ing Asso­ci­a­tion; Direc­tor of Busi­ness Sys­tems and Tech­nol­ogy, Con­tainer and Pool­ing Solu­tions, Inc. (CAPS)

By imple­ment­ing reusable trans­port pack­ag­ing into their sup­ply chains, many com­pa­nies are gain­ing finan­cial and envi­ron­men­tal ben­e­fits. How­ever, reach­ing this state requires con­sid­er­able ini­tial plan­ning as well as ongo­ing fine-tuning of oper­a­tions. One of the most impor­tant issues a com­pany must address is know­ing where all the pack­ag­ing is within their sup­ply chains at any given time. This arti­cle will review and com­pare sev­eral dif­fer­ent options avail­able for track­ing assets and raise some of the key deci­sion fac­tors to help you decide which solu­tions are right for your orga­ni­za­tion. For the pur­poses of this arti­cle, “reusables”, or “reusable pack­ag­ing”, refers to pal­lets, con­tain­ers, and dun­nage, designed for reuse for its orig­i­nal pur­pose within a sup­ply chain.

If you’re not track­ing and man­ag­ing your reusable assets, then it is likely that some­one else is ben­e­fit­ting from your invest­ment. There is a strong sec­ondary mar­ket for reusable con­tain­ers, with resellers and regrinders cap­i­tal­iz­ing on com­pa­nies that do not prop­erly mon­i­tor their con­tain­ers. When you’re mov­ing prod­uct from a dis­tri­b­u­tion cen­ter to stores that you own, asset loss might not be a big issue. But when you’re going out to an open loop, asset loss is sure to be more preva­lent with the poten­tial loss com­pounded by the num­ber of turns. Per­haps your loss rate per issue is only about 1 per­cent, but if you have 20 turns, that’s 20 per­cent of the pool you need to replace every year. You have to under­stand where the assets are going and how you’re going to get them back.

To help address the issue of asset loss, the Reusable Pack­ag­ing Asso­ci­a­tion (RPA) has formed an asset loss com­mit­tee. The com­mit­tee is work­ing on the solu­tion side of the prob­lem, work­ing with retail­ers and other stake­hold­ers to define where the prob­lem resides, and how to address it. A sep­a­rate group is tack­ling the prob­lem by pros­e­cut­ing instances of theft, ensur­ing the RPA is aggres­sively tack­ling the issue from all angles.

Aggre­gate ver­sus indi­vid­ual tracking

There are two pri­mary track­ing sys­tems: aggre­gate and indi­vid­ual. The best way to deter­mine which one sup­ports your sup­ply chain is to look at it in ret­ro­spect to the trans­ac­tion itself. An aggre­gate exam­ple is one truck deliv­er­ing 2,000 con­tain­ers. Think of that as one trans­ac­tion with a quan­tity of 2,000. An indi­vid­ual track­ing sys­tem how­ever would account for it as 2,000 trans­ac­tions, each with a quan­tity of one. An aggre­gate sys­tem records in the net, and an indi­vid­ual sys­tem records each asset.

The chart below depicts key dif­fer­ences between aggre­gate and indi­vid­ual level track­ing. It’s designed to be a guide­line to give you some direc­tion about which option is right for your orga­ni­za­tion. For exam­ple, imple­men­ta­tion of an aggre­gate track­ing sys­tem will likely be eas­ier and accom­plished in a shorter time­frame than an indi­vid­ual track­ing sys­tem. How­ever, that depends on the type of aggre­gate or indi­vid­ual sys­tem you select.

Aggre­gate track­ing sys­tems
There are four key aggre­gate track­ing sys­tems:
• Tribal Knowl­edge
• Return to Labels
• In-Out Net­ting Man­ual by Con­tainer Type
• In-Out Net­ting Elec­tronic Asso­ci­a­tion with Con­tainer Contents

Tribal Knowl­edge is the most sim­plis­tic of the sys­tems. In this exam­ple, there is a ded­i­cated sup­plier or cus­tomer at a man­u­fac­tur­ing facil­ity or a plant. There is only one ori­gin and one sin­gle des­ti­na­tion. It is a closed loop with a one-to-one rela­tion­ship. A Tribal Knowl­edge sys­tem cen­ters on indi­vid­u­als who exe­cute their jobs well. They know which con­tain­ers belong to which man­u­fac­tur­ers, and have an estab­lished process to sort and return the assets. This is a very sim­ple and inex­pen­sive sys­tem; how­ever, it is prone to errors, and it is not scal­able for growth.

The sys­tem of Return to Labels is a bit more sophis­ti­cated, but still fairly sim­ple. A man­u­fac­tur­ing plant sends the con­tain­ers out to three dif­fer­ent sup­pli­ers, and they in turn, send them back to the plant. “Return to labels” refers to actual iden­ti­fi­ca­tion on the asset that says some­thing along the lines of “return to”, or “prop­erty of” and it usu­ally includes the com­pany name and phone num­ber. The worker at the dock knows the asset needs to be sorted, set aside, and the com­pany called to come and retrieve the assets. This model is suc­cess­ful when there is a lim­ited num­ber of sup­pli­ers and a lim­ited num­ber of con­tainer types.

Although this is not very sophis­ti­cated, it can be pow­er­ful. The labels alert han­dlers that some­one is mon­i­tor­ing and track­ing the assets. It sends a mes­sage that mis­plac­ing the asset might have a finan­cial impact on the receiv­ing com­pany. This model is visual, very clear and rather low cost. Of course, labels can be removed, and ulti­mately, there is extremely low accountability.

The third aggre­gate track­ing sys­tem is In-Out Net­ting Man­ual by Con­tainer Type. This is sim­ply the record­ing of the asset through a tool, like Excel or an Access data­base. It enables the record­ing in and out of ships and receipts from one loca­tion to the next, almost like a debit/credit sys­tem. This model works well with a low amount of sup­pli­ers, or a low amount of con­tain­ers, and it can be up and run­ning quickly. How­ever, it is sus­cep­ti­ble to errors when a sup­ply chain starts get­ting more complex.

The fourth and final aggre­gate track­ing sys­tem — In-Out Net­ting Elec­tronic Asso­ci­a­tion with Con­tainer Con­tents — is rel­a­tively new in the indus­try. It is also the most accu­rate of the aggre­gate sys­tems. It is built upon the in and out net­ting through elec­tronic asso­ci­a­tion with the con­tainer con­tents. The fol­low­ing exam­ple depicts three sup­pli­ers deliv­er­ing goods to a man­u­fac­tur­ing facil­ity. A business-to-business trans­ac­tion is occur­ring between these two locations.

Advanced Ship­ping Notice (ASN) would sup­port this model.
Step 1: A sup­plier sends an ASN to the plant stat­ing the date and parts that will be shipped.
Step 2: The plant plans for the ship­ment and ties the elec­tronic data trans­fer to a pack­ag­ing spec data­base, which allows them to deter­mine stan­dard packs and stan­dard den­si­ties.
Step 3: When the parts are deliv­ered, the con­tain­ers are auto­mat­i­cally trans­ferred as well.
Step 4: If com­pli­ance is estab­lished and sup­pli­ers are fol­low­ing it, the con­tain­ers track themselves.

The down­side is that it requires some level of inte­gra­tion and IT devel­op­ment. For these rea­sons, it is the most expen­sive of the four aggre­gate models.

Indi­vid­ual track­ing sys­tem: Asset level detail

Now let’s con­sider indi­vid­ual track­ing sys­tems. The fol­low­ing illus­tra­tion depicts a more com­plex sup­ply chain. The plant has sup­pli­ers that send prod­uct directly to and from the plant. Per­haps the man­u­fac­tur­ing facil­ity is using an off­site ware­house or a third party to sort and man­age and clean the con­tain­ers. That ware­house, in turn, can send them to an addi­tional sup­plier who can return it to the ware­house, or ship directly to the plant. This model would be too com­plex for an aggre­gate sys­tem to handle.

Also note that an indi­vid­ual sys­tem can be self cor­rected. This means that if some con­tain­ers were left behind at a loca­tion for some rea­son, or did not get prop­erly scanned at out­bound ship­ping, the error would be iden­ti­fied when the con­tain­ers were scanned upon receipt at the next loca­tion. This is an “excep­tion han­dling process” and you can cre­ate and define the busi­ness rules that suit your sup­ply chain.

Four meth­ods for indi­vid­ual tracking

With an indi­vid­ual sys­tem, each asset is uniquely iden­ti­fied. There are four com­mon ways to iden­tify indi­vid­ual assets:
• Bar­code scan­ning
• Pas­sive RFID tags
• Active RFID tags
• GPS

The sys­tem with the longest his­tory is bar­code scan­ning, which has been around about 35 years. Bar­code scan­ners, which process linear/2D bar­codes, are fairly sim­ple to use, are the low­est cost of the asset label­ing meth­ods, work in any indus­try, and pro­vide the capa­bil­ity for instant rec­on­cil­i­a­tion. Addi­tion­ally, the scan­ners can be in the form of a hand­held or fixed scan­ner. The chal­lenges with this method include the inabil­ity to han­dle all the data mov­ing through your sys­tem today with­out addi­tional hard­ware or soft­ware and a very man­ual inten­sive scan­ning process that requires a line of sight to the bar code, with ongo­ing hard­ware main­te­nance and improvements.

A sec­ond method is pas­sive RFID tags (radio fre­quency iden­ti­fi­ca­tion), which is the use of an object applied to a prod­uct for the pur­pose of iden­ti­fi­ca­tion and track­ing using radio waves. Pas­sive is the rel­a­tively inex­pen­sive RFID model since these tags are not pow­ered by a source and only receive their charge when they pass through a reader. When that sig­nal hits them, it bounces back to an antenna and says, “I’m here” so it can be read.

You have prob­a­bly heard of RFID before. There was con­sid­er­able hype about it when it first came out and pro­po­nents said it would dra­mat­i­cally change asset track­ing. Since that time, the hype has died down con­sid­er­ably, and along with it, the costs. It is more afford­able today in part because of stan­dard­iza­tion. That was a big bar­rier with RFID ini­tially. There were nearly 50 dif­fer­ent mod­els, and dif­fer­ent stan­dard­iza­tions, across dif­fer­ent indus­tries and com­pa­nies. One exam­ple of stan­dard­iza­tion today was devel­oped by the Auto­mo­tive Indus­try Action Group (AIAG). They have cre­ated their own pas­sive man­u­fac­tur­ing RFID stan­dard. Some of the key ben­e­fits of pas­sive RFID are auto­matic data read­ing (when the reader is fixed). This capa­bil­ity elim­i­nates the man­ual labor asso­ci­ated with bar­code scan­ning. And pas­sive RFID tags pro­vide RTI track­ing at the indi­vid­ual level.

Pas­sive RFID is a lower cost per tag than Active, but be aware that there are other asso­ci­ated costs includ­ing con­sult­ing resources and envi­ron­men­tal chal­lenges such as liq­uid and steel that impact the via­bil­ity of RFID reading.

You also need to be aware that RFID is open, which cre­ates secu­rity risks. Even if you encrypt your data, it can still be stolen, so be care­ful to ask about and weigh all secu­rity risks before imple­ment­ing an RFID solu­tion. Addi­tion­ally, if you are using these in the form of a hand­held device, they are still man­u­ally inten­sive like bar­code scan­ners and pas­sive RFID tags require higher equip­ment costs than bar­code scanning.

An active RFID tag has its own power source. For this rea­son, they are much more expen­sive when com­pared to a pas­sive tag. The price per tag can typ­i­cally range from just under $20, all the way up to $80, depend­ing on the fea­tures and func­tion­al­i­ties. The costs of the read­ers and instal­la­tion are also high. The ben­e­fits include an extended range: more than 400 feet, and it requires less man­ual labor than a pas­sive RFID tag because it doesn’t have to pass through a por­tal or a hand­held reader. A fixed read­ing device sends out an inter­mit­tent sig­nal and hits the active tag which is con­stantly send­ing a sig­nal say­ing, “I’m here, I’m here, I’m here.” The tags have more stor­age capac­ity than pas­sive ones, and they have advanced mon­i­tor­ing and read/write capa­bil­i­ties. These capa­bil­i­ties can let you mon­i­tor and cap­ture infor­ma­tion on motion, tem­per­a­ture and other fac­tors that might affect your product.

Some of the chal­lenges, in addi­tion to cost, are the lim­ited life of the tags. Most last three to five years, although some have been known to last up to seven years. How­ever, even­tu­ally you will need new tags and this will require you to re-label your whole fleet; a big cost to operations.

GPS stands for global posi­tion­ing satel­lite. We are all famil­iar with this tech­nol­ogy that enables cell phone use. There have been hints of GPS being used on reusable pack­ag­ing, but moreso in terms of an over­all solu­tion. GPS is really a high value track­ing sys­tem. If you have a con­tainer or a prod­uct that is very high value, then you might want to explore this option. How­ever, there are still chal­lenges that need to be worked out, such as lim­i­ta­tions of receiv­ing sig­nals indoors.

Which solu­tion makes the most sense for your sup­ply chain? The matrix below will give you some direc­tion. For exam­ple, if your con­tainer value tends to be higher, you want to invest in bet­ter tech­nol­ogy to track indi­vid­ual items and give you bet­ter account­abil­ity. An aggre­gate sys­tem would not be sufficient.

There are strong cor­re­la­tions with imple­men­ta­tion costs. If you don’t have a lot of money to get a track­ing sys­tem going, you’re prob­a­bly not going to look toward pas­sive or active RFID.

Also, it is pos­si­ble to have some­one else host and pro­vide your track­ing sys­tem rather than devel­op­ing it in-house. This ser­vice would come through a Soft­ware as a Ser­vice (SaaS) provider. The down­side of a SaaS provider is that you will con­tin­u­ally have ongo­ing fees. You will keep pay­ing for the sys­tem, but you will never own it. Also there are some cus­tomiza­tion limitations.

A ben­e­fit of SaaS is that you don’t need to spend resources devel­op­ing a track­ing sys­tem in house. Also, with a SaaS provider, the ser­vice is scal­able. You don’t need to worry about adding more con­tain­ers or more loca­tions. And keep in mind that sev­eral com­pa­nies, includ­ing RPA mem­bers, are inno­vat­ing with dif­fer­ent types of solu­tions so the field of pos­si­bil­i­ties is likely to change.

Addi­tional chal­lenges to consider

There are addi­tional issues to weigh when choos­ing and imple­ment­ing a track­ing sys­tem. These include:

• Freight repo­si­tion­ing
• Loss/damage/maintenance
• Fleet siz­ing
• Man­u­fac­tur­ing lead time
• Pal­lets and lids
• Stor­age
• Com­pli­ance

In pre­vi­ous years, asset track­ing was looked at as a lux­ury. More and more it is becom­ing a neces­sity. With com­pli­ance stan­dards and gov­ern­ing enti­ties such as Sar­banes Oxley, its becom­ing more crit­i­cal to imple­ment reli­able track­ing solu­tions into our sup­ply chains. If a com­pany has $10 mil­lion of return­able con­tain­ers on their bal­ance sheet, Sar­banes Oxley will require that the com­pany know exactly where and when those assets passed what point. This is a sig­nif­i­cant devel­op­ment and will greatly accel­er­ate the use of track­ing systems.

Lastly, it is not enough just to track your con­tain­ers. You must also incor­po­rate key per­for­mance indi­ca­tors (KPIs) and con­tin­ual improve­ments to mon­i­tor and opti­mize your fleet. Even the best tech­nol­ogy won’t deliver opti­mal results if you don’t have ade­quate oper­a­tional procedures.

The con­tent of this arti­cle was orig­i­nally deliv­ered at the Reusable Pack­ag­ing Asso­ci­a­tion Fun­da­men­tals of Reusable Pack­ag­ing Work­shop at PACKEXPO in 2010.