iTECH: Sending the Right Signals Efficiently

By Andrea Fischer
Editor of Publications, American Trucking Associations’ Information Technology & Logistics Council

This article appears in the February/March issue of iTECH, published in the Feb. 16 print edition of Transport Topics. Click here to subscribe today.

Efficiency is the cornerstone of most successful supply-chain operations, and in a bad economy it’s the little things that can make or break a business struggling to survive. No one knows better than a trucking company that the most mundane tasks, such as routinely monitoring tire air pressure and meticulously tracking driver idling time, really do make a difference.

As for information technology investment across the entire supply chain, does anyone know for sure which technologies and processes give the system an adequate return on investment for the efficiencies gained?

“There’s just not enough freight data out there — it’s a big black hole right now,” said Dan Murray, vice president of research at the American Transportation Research Institute.

And as trucking companies are forced more by their shippers or by government programs into IT decisions — such as building electronic data interface systems — they risk sacrificing their own operational efficiency to get the business of clients who want to use custom IT processes.

The answer to this dilemma may be very simple: Come together as an industry to set IT technology standards, specifically the standards that would govern daily data exchanges among trucking companies, their customers and the government. That’s what Conrad Persels, chief executive officer of Corvedia, an electronic data management company, recommends.

Currently, “there’s a lot of flexibility” in how electronic transactions are used across the supply chain, Persels said. “Even though we may all employ the same structures for [electronic data interchange] messages, they tend to be used a little differently by each company. And that creates a problem, because it decreases efficiency and increases the difficulty of setting up a trade partnership when each company has its own information process.”

Small and medium-size trucking companies often do not have the resources or capital to invest in electronic data interchange systems, much less research how they would implement and use EDI systems, said Tom Olive, chairman of the Collaborative Transportation Management group, a subset of VICS, an industry standards-setting organization.

As large shippers increasingly push their carriers to provide EDI capabilities to do everything from process invoices to track freight, the companies that don’t understand how to implement those systems could find themselves losing a competitive edge, Olive said.

To combat that problem, CTM is scheduled to release a business implementation guide for EDI this year, a tool the group hopes will help companies understand how to use EDI.

“These guidelines are really a very big deal,” Olive said, “because there’s really nothing out there to help an organization implement EDI in a uniform way across the industry.” The implementation standards will give carriers “concrete methods of how to implement and use EDI messages,” and they, in turn, will help the industry maintain the consistency of EDI messages as the technology becomes more widespread.

“There are two different kinds of companies when it comes to EDI,” Olive said. “One group is EDI-savvy and fully knowledgeable about how to use it — and there is real consistency in that group, as far as how EDI is implemented.”

However, “the other group is made up of those organizations that are fairly immature when it comes to EDI and cannot research what they need to do to implement it,” he said.

“These guidelines are really for that group, because if an organization doesn’t have the resources to fully understand how to implement EDI — so that it is consistent with the rest of the industry — they are just going to buy a package from a vendor and implement it on their own.”

Knowledge and comfort with a technology may not be the only benefit standards development brings to the trucking industry. Standards also pave the way for the advancement of older, more established systems such as radio frequency identification, said Craig Harmon, president of MH10, a subcommittee within the American National Standards Institute.

Harmon’s group is responsible for forming U.S. standards for RFID and last year adopted the nation’s first international standard for RFID — which will open the door for carriers and shippers to use the technology to track freight.

“We’ve never adopted an international standard as an American standard. This is the first time we’ve done that, and we did it because people will implement RFID only where standards exist,” Harmon said.

Most freight now is tracked by manually scanning bar codes to identify the quantity, origin and destination of a given load. RFID technology would allow trucking companies to gather the same information without unloading or manually scanning their freight, Harmon said.

However, the technology will not be feasible for tracking goods across the supply chain unless all RFID users are operating on the same basic platform.

If RFID technology developed for trucking and shipping companies is different from retail RFID or bar code data, “it will be chaos,” Harmon said.

“There’s a need within the industry to establish what we can expect to see from our trading partners, on our trading partners’ labels and eventually on our trading partners’ RFID tags,” he said.

The international standard “sets the stage for wider use of RFID. We’ve seen RFID being used by manufacturers and retailers to track a product at factories and stores, but we haven’t seen it used to track shipping. This is the first step toward using RFID to track shipping,” Harmon said.

Passive RFID tags have embedded circuits and antennas powered by incoming radio signals from RFID readers. When the circuit on the tag is powered up, it can transmit far more information than a simple bar code, such as a serial number or the origin of a product being shipped.

The benefit for trucking and logistics companies is that the bar code on a case or pallet no longer needs to be swiped to identify the contents, eliminating human error and time lost during loading and unloading freight.

Although it is one of several RFID standards that MH10 has considered, ISO 17364 is the only standard that has a direct effect on trucking operations, Harmon said. “This standard pertains to pallets and how RFID tags can identify what is on a truck” after freight is palletized and loaded.

MH10 — composed of representatives from small package delivery giants FedEx and UPS, Department of Defense logistics personnel and automotive, aerospace and telecommunications executives — is responsible for setting U.S. standards for bar codes and RFID.

Harmon’s group also represents the United States as a voting member of the International Organization for Standards.

U.S. retailers and manufacturers already have adopted RFID standards, and two of the technology’s largest users, Wal-Mart and the Department of Defense, have outfitted distribution centers with RFID.

Nevertheless, use of the technology remains low. According to Wal-Mart, only about 600 of the retail giant’s 60,000 nationwide suppliers are RFID-equipped.

Without widespread standards and subsequent adoption of the technology at the retail, manufacturing and shipping levels, the cost of RFID tags, readers and supporting systems will remain a barrier.