Shipping giant UPS has studied RFID for a number of years, yet hasn’t adopted the technology for its world-wide operation. The company delivered some 3.4 billion packages and documents last year.
“RFID hasn’t been adopted for widespread use, but we do have pilots currently underway,” said Donna Barrett, UPS’ technology public relations manager from the company’s Atlanta, Georgia office. One of the pilots is taking place at Worldport, UPS’s four million square-foot facility at Louisville, Kentucky, which serves as the company’s main air hub.
“We’re testing (passive) RFID on the tote boxes, used not only in that facility but in other facilities,” she said. “These tote boxes go on conveyor belts and we put a lot of very small or irregular packages inside those tote boxes. We tag the boxes with bar codes so we know what packages are in those tote boxes.”
But the tote boxes are reused many times in a day “and the bar code labeling, through wear and tear, becomes unreadable,” added Ms. Barrett.
“So we put RFID tags on a couple hundred of these tote boxes in Louisville.”
With some 220 miles of conveyor belts in that one facility, better tracking is obviously a must. The pilot is still relatively new. It was started in the third quarter, she said, after a smaller pilot in UPS’ lab outside Atlanta during the second quarter proved successful.
“We then put in the RFID readers and all the equipment we needed,” she added. “We anticipate an improvement in read rates and we’ll be able to reduce what we call exceptions, where we have a tote box that doesn’t move through our process as it’s supposed to. Then it becomes a manual exercise of dealing with that exception. We don’t want exceptions; we want everything to run in a standard fashion through our automated systems.”
Another RFID pilot UPS has under way involves tracking its capital assets, such as trucks, both the brown ones which deliver some 13.6 million packages a day, and the tractor trailers. Pilot projects, she said, are running in Atlanta and the company’s Manhattan, New York plant.
“We have put RFID tags on our package cars (the brown trucks) and on our tractor trailers–we call them feeders–that we use to move packages from one UPS facility to another,” said Ms. Barrett.
“For security purposes we want to track the trucks coming off the property. Every morning in Manhattan, we have 600 of those brown trucks leaving that facility. We’re testing RFID to monitor the trucks as they leave and return to the facility. At the exit and entrance we have a camera and RFID reader set up so we can monitor them, we can watch the trucks as they’re entering or leaving the building. When they come back, we know which truck that is.”
The cameras, she added, aren’t set up to identify the driver. “Really, it’s more to monitor the truck to see if it’s leaving or returning when it’s supposed to. These are secure facilities. We don’t want even a UPS employee getting into a tractor trailer when they’re not supposed to be there.”
This pilot will continue to run this year “and then we’ll look at the test results, and determine whether or not to proceed with an implementation schedule,” said Ms. Barrett.
Another pilot, completed more than a year ago, involved tagging the huge air cargo containers. “Within our Worldport facility there are hundreds of these containers. We’re using barcodes now, but one of the benefits with RFID is that it would be easier to locate a specific container because of the wireless capabilities.”
All these RFID tags are passive, “the ones on tote boxes, even the ones on trucks are passive,” she said. “There are applications where active ones make lot of sense, like cargo containers on ships; where you want an inexpensive active tag. In these cases, they could be easily justified, but everything we’ve discussed here is passive.”
Just because a pilot is successful, as the two above seem to be, doesn’t necessarily mean the $33.5 billion shipping company will gravitate to RFID. At least not immediately. The air cargo container project is a case in point.
“It worked very well, but we just made a determination at that point that the current barcoding system worked fine. There was nothing to compel us to take that from the pilot stage into production stage,” said Ms. Barrett. “We may ultimately one day move to that, because the pilot was successful, but right now there is no compelling business reason to move to it.”
That’s not to say UPS isn’t working closely with its customers who need RFID technology. “We have 7.9 million customers who we work with everyday, some who work with Wal-Mart or the Department of Defense, who need to be RFID-compliant,” said Ms. Barrett. “We’re sharing with them what we’ve learned about the technology through our own pilots, and we’re still in conversations with clients, whom I can’t disclose, on how they’re moving forward (to comply with Wal-Mart) and how their processes have to change. We’ll work with our customers to figure out a way to meet their needs.”
UPS has what it calls “WorldShip” and “ConnectShip,” software products which have been RFID enabled.
“WorldShip, with an installed base of 500,000, is a tool for customers who ship regularly,” said Ms. Barrett. “They use this shipping tool to generate shipping labels within their own supply chains. ConnectShip is used by customers who are shipping 10,000-plus packages a month. It is used to create shipping labels, track order entries, etc.”
The two products, thanks to being RFID-enabled, “can print out labels with RFID tags embedded in them,” said Ms. Barrett. “What we’ve done to this point, is a very rudimentary enhancement to these products to enable customers to be able to produce a shipping label with RFID capabilities. Both have been RFID-enabled since this summer. It’s an emerging market. There doesn’t seem to be a huge need for it in the marketplace, but it’s there for our customers when they’re ready. It would also help them become RFID-compliant with Wal-Mart or DoD. “
But she said UPS wants to help its customers move beyond simple compliance. “Right now, for a lot of people, (RFID) is a cost of doing business. We’re working more deeply with customers on helping them figure out what’s beyond Wal-Mart compliance, and how they can use the technology in other ways. We’re just at the beginning of the market life cycle. We’re looking at trying to help customers move to the next step; so that long-term they can have a positive ROI on their RFID investment.”
UPS is also looking to grow its RFID knowledge, Ms. Barrett said, by investing in companies which market RFID technology.
Its Strategic Enterprise Fund “makes investments to acquire knowledge for the company in an area where we see an emerging technology that will impact our business,” she said. “We want to know where that technology seems to be going, so we’ll make investments in companies to give us that knowledge.”
So far, UPS has announced publicly two such investments: Savi Technology “best known for its RFID technology that it provides to the DoD,” said Ms. Barrett, and Impinj, Inc., a semiconductor company developing RFID chips. “Our primary motivation is to gain knowledge that we don’t have internally,” she added.
UPS is also a member of EPCGlobal “to help insure we come up with a global standard on this technology. We deal with customers worldwide and we want to make sure there are global standards in place,” she said.