2023 Will Become the Year of Smart Supply Chains

What do the changes in logistics and supply chains have to do with digitalization?

Locating products and transport assets are problems of supply chain logistics which can easily be addressed by means of tagging – and they should, as this grants visibility to all supply chain items. Speed of goods dispatch and receipt and inventory accuracy improve markedly in digital supply chains.

Unexpectedly perhaps, tagging of transport assets takes absolute precedence in these processes. The transport asset is the necessary link to the product, and it is an absolute requirement for shipping it safely and in a timely manner.

Digital supply chains, in other words, start with tagged reusable transport assets. NXP Semiconductors' UCODE ICs on transport assets are an optimal starting point for digitizing the supply chain in 2023.

2023 will become the year of smart supply chains.

Manufacturing and retail companies have found it difficult in recent years to achieve transparent, sustainable and cost-efficient asset management.

Governments, the media, executives and consumers exert pressure to adopt sustainable business practices. (Source: MIT)

Changes in Supply Chains and Logistics

The supply chain, logistics and retail markets have faced some challenges in recent times due to the recent societal and economic developments and changing demands from consumers. Lack of visibility on the supply chain operations and the journey of the assets might result in problems with cost and reputation.

Ensuring asset visibility, be it of the manufactured product itself (item level) or the returnable transport packaging (RTP) that is carrying the items from A to B, helps preventing these problems from happening. By adopting new technologies, assets become smarter and connected, allowing accurate track&tracing practices to become common sense while future-proofing the supply chain operations.

COVID-19 and Energy Crisis: Supply Chain Shock and Growth of E-commerce

The COVID-19 pandemic and the pandemic- related restrictions have affected international supply chains severely. Supply chain shocks account for around 33 % of the strains in global production networks in 2021 (ECB). After a brief recovery phase, the shortage of materials worsened again at the beginning of 2022. This, in turn, has had a negative effect on energy prices and on inflation.

Profit margins have therefore been affected in many industries. At the same time, e-commerce is growing steadily. 58.4 % of internet users are buying online each week. By 2023, e-commerce websites will make up 22.3 % of total retail sales.

Online food retail is predicted to constitute up to 30 percent of the food-at-home market by 2030 (McKinsey). As a result, global goods flows are expected to grow at a rate of 1.0 % to 3.4 % in 2023 (WTO).

Re-orienting toward Sustainable Business Practices

86 percent of respondents in a recent KPMG survey consider the issue of sustainability to be important or very important. They also want to know more about the products they consume. For businesses, RTP is a key component for satisfying these demands. They are also a significant business asset, but only when they are tracked and asset loss is avoided.

Complexity: Globalized Supply Chains

Tracking assets is even more important as the complexity of supply chains has increased. Today, around half of global trade is linked through global and complex value chain activities. China plays a dominant role here. Between 2000 and 2019, the volume of trade between the EU and China expanded nearly eightfold to $590 billion. Freight tonnage has increased and is predicted to increase further.

Disruptions in the Chinese economy therefore strongly affect global trade traffic and supply chains. An additional strain is placed on supply chains as open supply chain loops are adopted more widely. This means that used products and business assets are recovered by other firms and reused instead of being returned to the original producers.

As delivery times lengthened, raw materials were in short supply and production slowed down globally. (Source: ECB)

Tagging Returnable Transport Containers

Returnable transport containers are crucial business assets and they need to be tracked in order for supply chains to become fully transparent.

Inaccurate Pallet Inventory

Missing returnable containers cause revenue loss, as when there is no way to locate RTPs at the time of goods dispatch, products or parts cannot be moved. This might mean that delivery and production schedules are disrupted, that the quality of fruit and vegetable produce deteriorates, or that products cannot be sold at all. Secondly, in the automotive industry, components and parts must arrive at a production line in the right order at the right time as scheduled before they get assembled (just in sequence production).

Modern automotive manufacture facilities are far more complex and more than one vehicle type is often produced on a single production line, but multiple types of cars and different configurations of a single vehicle, requiring specific parts at specific times.

Production delays cause costly production line downtime upwards of quarter of a million dollars'. Thirdly, RTP loss causes added cost. In some companies, up to 20% of the container pool is lost and needs to be continually replaced, thus making it impossible to reach sustainability goals.

Why are Tagged RTPs the Solution?

NXP offers a solution to this problem – tagging RTPs with UCODE based tags. NXP is a leading IC manufacturer and, along with ecosystem partners, can help find the right solution to help automate RTP tracking. RTPs are environmentally friendly. Their usage is increasing as national regulations intended to eliminate single-use plastic is spreading globally. They include wood and plastic pallets, bins, tanks, intermediate bulk containers, reusable plastic containers and other hand-held containers.

Products which are packed in RTP can be stacked safely and efficiently; the containers preserve the quality of the product. But most importantly, tagged returnable packaging provides visibility to the supply chain by automatically recording the transactions as they move in and out of factories, distributions centers and other facilities.

Monitoring and Control

In many industries, products themselves are often not tracked individually. It is the tag attached to the RTP which makes the product visible. With the tag, product conditions can be monitored at each step in the supply chain. By associating the contents of the RTP to the UCODE based RAIN RFID tag, the contents can be tracked. This association often happens automatically during the picking or box loading process.

From that point, the tagged box, and therefore the contents, are tracked through every stage of the supply chain automatically. Operatives no longer need to count or barcode scan the incoming or out going shipments. Using UCODE chips to tag RTPs makes operations both faster and more accurate.

Investment in Resilient Supply Chains

Trackable assets make for supply chains which can recover from disruptions easily. But businesses need more than speedy recoveries. With complete transparency over where products are at each step along the supply chain, and with high-performing software systems to collect, filter and interpret the data which is generated by tags, businesses can start forecasting supply chain disruptions and respond to changes much quicker. Tagged assets therefore strengthen the supply chain and make the flow of goods more resilient against disruptions.

Connectivity and RAIN RFID

Leveraging the Benefits of UCODE ICs

RAIN RFID is a wireless technology that connects billions of everyday items to the internet, enabling businesses and consumers to identify, locate, authenticate, and engage each item. Integral to it is the link between the tag and the cloud. NXP’s UCODE ICs evince the benefits of this technology. They are battery-less, passive ultra-high frequency identification devices which enable an exceptionally long read range of 15+ meters.

Line of sight is not required for reading. Readers are capable of reading hundreds of tags simultaneously (bulk capture), so within seconds information about shipments consisting of several hundred boxes are captured and added to the ERP system in the cloud. Logistics processes using UCODE ICs are therefore distinctly different from processes without it.

Warehouse and Supply Chain Logistics with UCODE ICs

Operatives on goods dispatch and receipt have the important task of accurately registering the goods passing through. With RAIN RFID readers such as handhelds, gates or tunnels, the time required for this is reduced enormously while the accuracy increases.

As every item is visible via its unique ID, exceptions in the supply chain are highlighted in the cloud system early and can be responded to immediately. If special orders arrive in the depot, these can also be dealt with swiftly and be shipped out straight away. This ensures customer satisfaction.

Digital Logistics are the Future

UCODE based solutions are the means for increasing speed and accuracy at every point of the supply chain. They reduce the error margins of every single logistics process and cut costs.

UCODE BASED TAGS

Long read range
No line of sight required
Standards based
Bulk reading
High accuracy
Higher automation
Leading to
- Lower mistakes
- Lower operating cost
- Higher efficiency

Producers of raw materials, supply chain managers and manufacturers all rely on advanced connectivity to make their processes work.

NXP's UCODE product family can be used for logistics or inventory control and enable accurate tracking of assets, providing greater visibility of the overall supply chain process.

Interview

Visibility of Products and Assests

Returnable packaging is crucial for many manufacturing supply chains and visibility of these assets is vital to maximize efficiencies within these industries. RFID & Wireless IoT Global spoke with James Goodland, Director of RAIN RFID Solutions at NXP Semiconductors.

1. Why is asset management a topic which deserves more attention today?

Asset management, and specifically tracking RTP in the supply chain, is of vital importance. Sustainability is a growing concern, and the more we have asset traceability, the more opportunities we have to use reusable containers, the more efficient the supply chains are and, of course, the more sustainable the business solutions are.

Clearly returnable assets exist in every sector but food retail and manufacturing industries are particularly prominent. In the automotive sector, we know that returnable assets can range from a few dollars to thousands of dollars. Especially the very expensive assets are designed to hold a specific parts. Even the material inside in the RTP to protect the items, the dunnage as it's called, is a valuable asset. This is just one of many reasons why businesses should care about where their returnable assets are.

2. If the specific RTP which are needed cannot be found, what is the alternative?

First of all, nothing can be transported through the logistics chain without appropriate packaging. If you don't have the right RTPs, the only alternative is to use temporary packaging. Not only is temporary packaging more expensive per trip than reusable packaging, it also has a greater risk of damaging the product, is more difficult to handle and is less efficient for transport on vehicles because boxes are often not easily stackable. So there are many reasons why you wouldn't want to resort to temporary packaging. So, it's crucial that the right packaging is in the right place at the right time to transport products.

3. Is there a difference between asset management 10 years ago and today?

For sure. Today, there's a lot more pressure to get the right product to the right store or the right place at the right time.

We have much more complex supply chains today, meaning that assets like RTPs can be required by a wide variety of organizations within supply chain ecosystems. There are more supply chains in total, which can make the management of assets far more complicated. Some assets are in open loops and some in closed loops, and that added complexity means that these assets and supply chains need to be tracked with a higher level of visibility.

Another difference is that now, of course, we have a lot more technology which can support supply chains, not just RAIN RFID, which is the key technology that I'm particularly interested in, but also all of the software solutions and the connectivity which enables the transfer of data to make sure that the visibility we get from tagging is understood properly.

4. Why is connectivity such an important game changer?

Better connectivity allows different supply chain locations and companies which aren't necessarily in the middle of highly populated areas to be connected to anywhere in the world. Whether the business is a farm or a fishery or whatever – today, this does not make a difference. Everyone is able to be connected to the system so that both the packaging itself and the product in the returnable packaging can be tracked throughout the supply chain. That wasn't as feasible 10 or 15 years ago as it is today because the connectivity wasn't there.

5. How difficult is it for companies starting to integrate RAIN RFID technology to achieve optimized asset tracking?

There have been a few obstacles. Whilst some assets cost thousands of dollars, the overwhelming majority only cost a few dollars. Pallets can cost between six and 10 dollars or maybe 10 euros, and there is a similar price for plastic boxes at the low end. In light of these lowpriced assets, RAIN RFID has in the past been considered prohibitively expensive. But RAIN RFID has become much more cost effective over time.

In fact, it has become the preferred technology for tracking these types of assets. One of the big challenges when introducing asset tracking solutions is that the items that are already in the field must be found first to allow them to be tagged. This is a necessary painful step, however, once that big process is overcome and the assets are retrofitted, the efficiency of all the assets in the asset pool starts to stack up.

6. What are the main reasons business decide to implement a RAIN RFID system?

It is quite simple: if you don't know where your assets are, you can't move parts and products easily or efficiently. So understanding the status of assets within the pool that you have is key to helping to ensure the right part gets to the right place, but also to make sure that you're using the asset pool efficiently, for example, to reduce dwell time and improve usability and to determine how often a particular asset is being used. Asset tracking is also about making sure that we know where the product is. Visibility of products within the asset is the ultimate goal of using RAIN RFID.

7. What differentiates RAIN RFID from other tracking technologies?

RAIN RFID is a passive technology, meaning that no additional power source is required for the tagged items, so no need to recall the assets from the field when batteries need replacing. There's a long read range of multiple meters and unlike optical systems, the RAIN RFID readers do not need to be able to see the tag.

Therefore, RAIN technology allows faster, more efficient and more accurate operations at receipt, dispatch, inventory and all other points of the supply chain. Also important to understand that NXP's UCODE ICs are completely standards- based. This means that anyone in the supply chain can read and track these items through their own facilities using any RAIN RFID reader, special proprietary equipment is not required.