Asset Tracking in Supply Chain: ROI Using Infrastructure-less Technologies

by From the Top on 2012-03-22 00:02:56

Introduction
Today’s supply chain is dynamic, with raw materials and finished products flowing between manufacturers, vendors, and end customers across multiple touch points. At each touch point, different entities collaborate to add value to the article with one ultimate goal: timely and accurate fulfillment of the original order.  Such a complex process, on top of the level of collaborative effort required to meet that singular goal, makes real-time visibility across all touch points in the supply chain absolutely essential.  We make the case that the most efficient way to realize this visibility is to track the actual totes, pallets, steel racks, or other assets used to transport supply chain articles.  

The use of such assets is quite common and, in practice, many companies own reusable containers that are shared with vendors and customers. While the fundamental purpose of these assets is to enable transport of the articles they contain, a growing number of companies are now tracking their location in order to gain real-time visibility into all of the touch points spread across their manufacturing, distribution, and transportation webs.              

Benefits of Tracking
The biggest benefit is the productivity gain that stands to be realized by monitoring the flow, across the supply chain, of what begins as a ‘work in process’ and ends as finished inventory destined for delivery into the hands of the end customer. This ‘stock and flow’ information is of immense value because it can be used to allocate resources — labor, transportation, storage — on a real-time or near-real time basis much more quickly and efficiently than is possible using the often untimely and inaccurate information produced by legacy communication systems. For example, with reference to automatically reported, near-real time location information, companies can shift transportation assets from locations where they are in excess to locations where they are more urgently needed; labor and available storage space can be similarly allocated and reallocated on a real-time basis as needs change.

A secondary benefit is loss prevention.  The average cost of a reusable steel rack is around $1500; the cost of a reusable plastic pallet averages $70. The ability to track the real- time location of these expensive assets helps squeeze the maximum amount of value out of them by enabling them to be used time and again without loss.  If an asset can be continually tracked, it can always be located; if it can be located, it can be reused or repurposed. In the process, logistics personnel are saved from wasting valuable labor hours trying to locate and recover ‘missing’ assets spread far and wide across the supply chain.

Technology Options for ‘Real Time Visibility’
Many different technology options are available for asset tracking in the supply chain, ranging from simple bar codes, RFID technology, and GPS- and cellular- or satellite-based technologies.

Currently, most companies use bar code technology to track the movement of their containers. There are two disadvantages to this option. First, the process of reading the bar code requires someone to physically read the tags, thus taking valuable labor time.  Second, if the container is at an unpredicted or an unknown location (where the bar code has not been scanned), it may be impossible to locate. Similarly with RFID, only those locations that have RFID infrastructure will be able to report the location of the containers; a significant limitation if the entire supply chain network is not equipped with such infrastructure.

For high value, reusable assets, a GPS-equipped cellular- or satellite-based tracking solution offers real- time visibility at all locations, without requiring site-level infrastructure. Hence, this solution is referred to as ‘Infrastructure-less’.  This is a great benefit for companies who have assets in multiple locations.

DNA and the Case for Managed Services
A complete solution includes more than just a tracking device attached to the asset. Other key components are the cellular- or satellite-based network the device needs to communicate over and the application needed to interface with, and manage, the device and the data it generates. Together, the Device, Network, and Application complete the solution required to enable real-time visibility of tracked assets at every touch point in the supply chain.

While identifying the ideal technical solution is important, it is irrelevant if it does not make good business sense. The question of return on investment (ROI) needs to be addressed before these solutions can be deployed in volume. By spreading one-time investments over multiple years, the monthly expense can be significantly less than the benefits accrued starting on Day One. This financial/business model, often known as a ‘managed service,’ can mitigate the technical and financial risks, providing a smoother, straighter path to improved returns. Under a managed service approach like Numerex’s, many customers have successfully deployed asset tracking solutions resulting in immediate, tangible ROIs.

In summary, a secure, automated, real-time, GPS-equipped and cellular- or satellite-connected asset tracking solution can provide tangible returns on top of peace of mind. Numerex is one of the few vendors that can provide the technology, the cellular-and satellite-based network connectivity, the application support, and the expertise needed to successfully implement such a solution.

Author: Darren Koenig, Vice President Marketing & Products, Numerex