RFID technology has the potential
- to make logistical processes more transparent
- to secure goods in transit
- to reduce losses in revenue
Despite current political developments, globalisation continues to advance rapidly, and the field of logistics is one of the strongest engines of global commerce. The focus no longer lies on simply transporting goods from one place to another – the possibilities have become more varied and the requirements of senders and recipients more demanding. Digitisation has opened up a range of possibilities for global supply chains all the way to the recipients. However, these dynamic developments do not come without side effects or risks.
The number of forfeited or manipulated goods – ranging from spare parts to brand textiles – is increasing globally, causing enormous financial losses for brand owners. For the EU countries alone, according to the European Union Intellectual Property Office (EUIPO), these losses amount to approximately 60 billion euros per year. In addition to these financial losses, customers might turn away from the brand due to loss of trust.
RFID & Wireless IoT Global interviewed Ralf Kodritsch of NXP Semiconductors and talked about the conflicts occurring in global supply chains, same-day-delivery goals, and real-time information made possible by and improved through RFID technology.
Ralf Kodritsch, Director Global Segment Manager RFID Solutions, NXP Semiconductors, in an interview with RFID & Wireless IoT Global
Director Global Segment Manager RFID Solutions
Manager, Marketing Communications
Austin, United States
Short lead times and high speeds are required
In recent decades, delivery times for goods could be steadily reduced. However, at the same time, demands from customers for a quick order process have increased drastically. “Same-daydelivery options are no longer an exotic exception but rather are now offered by numerous retailers, especially in major cities,” Ralf Kodritsch reports. Distribution logistics play an essential role here and countless companies – manufacturers, retailers, and service providers – react directly to these requests with processes supported by IT and customised logistical concepts.
If wares are only ordered right before their assignment or use, then short delivery time becomes the key quality feature of the logistical process. The same goes for easily perishable or temperaturesensitive goods. Continuous information coming directly from the supply chain is crucial. “To make it possible for companies to keep the promise of quick delivery, they need information – in real time – about the location of transport vehicles, the availability of wares, and – for certain kinds of goods – information about the condition of the goods during transit,” Ralf Kodritsch explains the challenges.
Global commerce pushes logistics forward
“Smart Logistics is the umbrella term for concepts and scenarios that help participants to face the growing challenges in the supply chain,” says Ralf Kodritsch and continues, “The driving force for this type of logistics is growing worldwide trade. The global exchange of wares leads to an increase in logistical processes. Of course, there is also online business to consider. The consequence here is that parcel services are at the centre of commerce and are an integral part of the supply chain.
Only a few years ago logistics could be managed centrally. This is no longer possible,” according to Ralf Kodritsch. To him, online streaming services like Amazon or Alibaba especially are crucial drivers of this transformation. “All these factors have changed commerce and logistics dramatically and advanced them in such a way that the exchange of goods and smart logistics grows even more. The exchange of goods includes certain challenges that have to be met with proactive and innovative solutions. There is not only potential for increases in efficiency and transparency with the use of technology, but also for gaining trust. The customers’ trust is anchored in the certainty that they will receive an authentic product and not a fake or manipulated item.”
“Various developments have changed retail and logistics majorly and will contribute to increases in the movement of goods and smart logistics in the future. Currently, the movement of goods is subject to challenges that need to be solved proactively and innovatively. There is absolutely potential for increases in efficiency and transparency through the use of technology, but also there is potential for improved customer confidence: customers can have confidence that the object they receive is 100% original and has not been plagiarised or manipulated.” – Ralf Kodritsch.
RFID creates a solid basis for trust
Efficiency, transparency, protection against plagiarism – for Ralf Koditsch, these are crucial topics that need to be addressed by a smart supply chain. “A key factor must be the establishment of trust-building measures. Every customer must be openly informed if a delivery has been manipulated. If this happens automatically, efficiency increases. Traceability applications have the potential to protect the supply chain against unwanted manipulations and serve the purpose of verification of authentic goods.”
From a technological standpoint, traceability solutions can be realised in different ways, according to Ralf Koditsch. A suitable start from his point of view is passive RFID solutions. “The solution that is most easily implemented is the application of an RFID tag onto a parcel or an item. Depending on the requirements, different frequencies – UHF or HF/NFC – can be employed. From this moment on, IT-based solutions can be utilised for tracing the items back to the brand owner and verifying their authenticity.”
Where is the container?
Today, more than 90 percent of globally traded wares are transported by ship. In 2000, around 240 million TEUs were handled. According to estimates of Alphaliner from January 2018, the number of handled TEUs increased to 775 million TEUs in 2017 – more than three times what it was previously. “For shipping companies and their customers, it is of great importance to know where containers are at all times. For this, an active system, powered by a battery, is required to determine the location and gather and transfer additional sensor information.
Ultimately, GPS and mobile connections are needed for such applications. This also goes for transportation via roads. Trucks need to be incorporated into the network. This is the only way that the logistical processes and intersections – for example at a port or airport – can be designed more efficiently. For these kinds of networks for intermodal transport, NXP can offer a variety of solutions, depending on the technology used,” says Ralf Koditsch.
Online shopping vs. originality
The percentage of wares that are ordered online is continuously increasing. More and more areas of trade have started investing into online commerce. Competition stimulates business and potential sellers are aiming to outdo one another with low prices and short delivery times. The downside of this positive development for the end customer is security gaps. “Both customers and brand owners are ultimately interested in having only authentic, original items on the world market,” says Ralf Kodritsch, adding, “Manufacturers need to be one hundred percent sure that there are no wares being exchanged for forgeries during the international supply chain or traded on the grey market.
If wares and/or transport vehicles are outfitted with RFID, checkpoints along the supply chain provide security during the process. This is of particular importance in the fields of pharmaceuticals and high-priced luxury items.” Here, continuous controls are necessary because manipulated pharmaceutical items can have severe medical consequences for the end customer.
Automation with RAIN RFID is the solution
“For the solution design, a system integrator that collaborates with the component providers is necessary for nearly all projects,” according to Ralf Kodritsch. NXP recognises an increasing interest in wireless IoT solutions, especially in the field of CEP service providers. “But there is also a visible increase in the activities of globally active airlines to secure the luggage of passengers.” According to the Baggage Report 2017 by SITA, the utilisation of RFID in baggage handling may lead to saving more than three billion US dollars in the aviation industry over the next seven years through the reduction of mishandled and manipulated bags alone.
IATA has decided that all member airlines from 2020 onwards have to use RAIN RFID baggage tags.” Every action in logistics aims to increase and improve automation. If manual identification, localisation, and control requiring manual scans can be reduced, the cost decreases as well. In addition to this, the risk of forgery or mix-ups decreases. Taking the future into account, new technologies will be needed for wide-spread application, meaning simple reading of parcels across longer distances. At the same time, the reading points have to be documented to ensure higher accuracy and efficiency,” says Ralf Kodritsch.
Blockchain – a development leading to a faster supply chain?
The requirements of all participants of the supply chain are ever increasing and expanding. Deliveries within 24 hours or even on the day of order are being requested more frequently. A great service for the customer – but a significant challenge for the distribution centre and the subsequent logistical chain. Ralf Kodritsch says: “The customer is long used to being able to check the delivery status of their ordered goods online on a website. For the field of logistics this means that there is no room for mistakes.
Consequently, this amounts to companies having to invest in new systems. New technologies such as Blockchain which ensure a secure supply chain are essential. Blockchain increases supply chain transparency and traceability. Real life projects are already deployed in the area of diamonds and food. The high level of security is achieved by distributed databases which work with a so called consent-mechanism which maintains a common version of record. With blockchain, every product possesses a unique, non-manipulable “curriculum vitae”.
The potential is immense for nearly every industry – manufacturers of electronics like NXP, system integrators, but also end customers because they can expect a much-improved service.” The same goes for the automotive industry. “Just-in-sequence always equals labour intense identification of parts and complete documentation of the assembly and installation. Here, RFID and blockchain tools are used to make processes more secure and more efficient.”
Japanese retail in the driver‘s seat
The Japanese Ministry of Economy, Trade, and Industry (METI) is realising a RAIN RFID project – in collaboration with five partners – on an unprecedented scale. By 2025, all retail products are supposed to be outfitted with an RAIN RFID label. In the course of this project, Japan’s convenience stores are implementing the next generation of self-checkout systems to counteract the negative effects of an ageing demographic and the resulting labour shortage in retail.
“This project will have a significant impact on RAIN RFID developments and applications in commerce and in the field of logistics on a global scale. A deciding step forward towards the Internet of Things is currently being prepared in Japan,” says Ralf Kodritsch.