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Radio Frequency Identification Tags in Modern Distribution Processes

©LMI 2011. Reproduction for personal and educational purposes is authorized.

The military services and the Defense Logistics Agency (DLA) have invested millions in radio-
frequency identification (RFID) tags and infrastructure since 1996. The Department of Defense (DOD) has aimed most of this investment at producing in-transit visibility (ITV) information, some of which is used to make such decisions as whether or not to order more supplies, redirect cargo delayed en route, or get materials-handling equipment and download teams ready. In June 2007, DOD selected RFID technology to help track assets across its supply chain.

Using RFID to modernize logistics processes—and not just to gather ITV information—could result in substantial improvements in distribution operations. We propose that DOD could improve its existing RFID infrastructure and investment by adding RFID to daily distribution processes.

Focus on the Process

More than 3 million active RFID tags are in circulation today in the military distribution system, with approximately 3,100 tag-reader devices in place in Kuwait, Iraq, Pakistan, and Afghanistan. DOD customers, especially the Army, could start using that investment not only to make better use of the ITV data but also to reap the greater benefits of process improvements in supply, inventory management, and transportation. That is where DOD would get the big payoff from RFID.

DOD urgently needs total ITV, but what it needs more are the efficient distribution processes that RFID-enabled information systems can support. ITV data would be collected as a transaction byproduct. DOD logisticians have been slow to embrace the process efficiencies that RFID tags offer. By using just the current RFID infrastructure to support transactions in automated systems, DOD can achieve valuable changes in distribution business processes with little incremental cost.

The Framework Is There

The Army, for example, has already made large investments to establish theater ITV by purchasing millions of RFID tags and establishing thousands of RFID tag interrogator (reader) sites, not only at distribution activities but also at major nodes along routes. The tags cost around $60 each. Interrogator equipment can cost between $2,000 and $20,000 per site, plus $75 an hour for the field service representatives to maintain the equipment.

As a result of this investment, customers in the military services and joint operations centers have the advantage of an already-established RFID network. They have attained excellent ITV coverage in the Iraq areas of operations and good coverage in and around Afghanistan. The radio frequency ITV (RF–ITV) network has been invaluable to distribution and deployment ITV in these two theaters.

Office of the Secretary of Defense policy states that all theater-bound shipments will be equipped with RFID tags to help track cargo. Both the U.S. Central Command (CENTCOM) and the Army G–4 directed that shippers affix RFID-enabled container-intrusion-detection devices to unit-move equipment headed to the CENTCOM area of responsibility to help prevent pilferage.

For years, DOD has used RFID to track U.S.-originating shipments as they pass chokepoints along key routes, through strategic ports, and along lines of communication into the battlespace. RFID data can be correlated with information originating in systems used in distribution processes, giving commanders more complete information on the status of the shipments. The information is available in a number of different systems used by the supply technician checking on orders, the movement specialist assembling a convoy, or the controllers monitoring force flow from a faraway headquarters.

ITV Data Could Improve Distribution

The most fundamental bit of data that an RFID tag can provide is a time stamp for a supply-chain event such as a transportation closeout, which confirms that an item has arrived at its destination. Unfortunately, a transportation closeout rarely takes place and no one initiates a trace when a closeout does not take place by an estimated arrival date. In fact, the lack of a transportation closeout event is so common that its occurrence generally does not raise concerns anywhere in the DOD supply chain. Using RFID tags to generate a closeout notice could result in two significant supply chain improvements: better use of transportation assets and lower supply costs.

Tagging Needs Discipline

DOD has found that the information gathered from tags does not typically provide a complete picture. In December 2009, the Product Manager for Joint-Automatic Identification Technology (PM J–AIT) published the results of its 2009 RFID site analysis.

PM J–AIT operates the DOD global RF–ITV system, infrastructure, and database, which aggregates RFID tag data for all customers. The interrogator reads of RFID tags provide simple visibility data: item X passed location Y at date and time Z. In the 2009 PM J–AIT sample, only 60 percent of tags stayed with their cargo from origin to final destination. Of the 60 percent of tags that did arrive, only 16 percent created a transportation closeout in the RF–ITV system. From an ITV perspective, these are disappointing statistics.

The RFID tag writing and reading depend on manual processes—the “human touches” that allow errors to enter the system. Inaccurate information starts at the shipping origin. People can make mistakes when they manually enter data at the onset of movement; tag writers sometimes enter invalid consignees on the tags. Personnel do not always set up interrogators at key nodes or chokepoint locations. System administrators can forget to register an interrogator that allows the RF–ITV server to recognize the location where interrogators are reading tags. As a result, RFID tags and the infrastructure in place do not always provide accurate ITV information.

For DOD to achieve a higher percentage of tags successfully triggering accurate ITV feeds, the RFID network will need to consider “human-factor corrective measures” to figure out how to improve tag data and the reader-network setups. Consistent accuracy is fundamental to DOD’s ability to rely on RFID to support transportation-related decisions and its ability to use RFID for more complex supply chain business processes.

Use RFID in Systems That Support Processes

The more than 3 million RFID tags already circulating through DOD distribution networks should be a factor in improving business processes as they perform their ITV function. Once the tags are integrated with the transactions and information in automated distribution systems, the investment in tags and infrastructure could provide more significant process improvement dividends.

What will integrating RFID technology with a system provide? It can reduce manual data entry, which produces a decrease in errors and also an increase in efficiency because automatic reading saves time. Today’s RFID technology allows automated correlation of information, such as linking tag identification to inventory, ordering, or shipment data. This technology can be used to eliminate manual steps in a business process and reduce the time spent searching for information, human error in gathering information, and the numbers of screens for completing tasks. It can also allow tasks to be completed automatically and enable an automatic transaction.

Using Passive RFID in Process Improvement

As DOD finds the right path to a synchronized, integrated use of RFID throughout the supply chain, some customers are enjoying the benefits of successful, small-scale implementations. Implementing RFID use across DOD logistics all at one time is impossible. However, these projects are producing tangible benefits and demonstrating uses that break barriers, help others to see the value of RFID, and identify technical solutions that can be applied across the enterprise.

These solutions may exist in passive RFID experiments. Passive RFID uses less expensive tags that work by waiting for an active tag (or some other signal) to trigger a limited-range radio transmission. Each of the services has invested in passive RFID equipment, and three of them are showing particular promise in how they are implementing this technology. The Navy has shown the potential for a positive return on these investments. The Air Force is using passive RFID to increase its control of special items. And the Marine Corps is starting to use passive RFID to support receipt of supplies at its large bases.

Navy. The Navy, in partnership with DLA, is taking advantage of its RFID investments to improve business processes in Hawaii. Navy organizations placed RFID readers at receiving points and warehouse doors throughout their supply chain in Hawaii, and they established interfaces with distribution systems. In addition to using the RFID-to-Automatic Information System (AIS) interface to automate their business processes, the Navy made each tag-read transaction visible to its customers.

Because they are satisfied with the progress of these improvements to shore-based operations, Navy ordnance and supply experts are seeking approval to establish RFID capability on vessels to support their onboard supply processes. The Navy’s primary hurdle for getting onboard RFID has been the complexity of the hazards of electromagnetic radiation to ordnance (HERO). More analysis must be done, but recent testing shows passive RFID technology can be used effectively and safely within Navy HERO limits. This step, if adopted, will bring detailed asset visibility to a very difficult environment—shipboard supply.

Air Force. The Air Force is using RFID technology not only to improve its business processes but also to add rigor to the inventory management of sensitive items such as nuclear weapons-related materiel. Air Force inventory experts are using the technology to capitalize on the time and effort invested in individual item management by using passive RFID tags.

In addition to requiring two-person identification and documentation on each item, the Air Force is using passive RFID to help with intensive item management inventory requirements. Using a handheld terminal, employees can complete an inventory of an entire warehouse within minutes—usually the time it takes to walk up and down the aisles. Tags are also being used to identify when items are moved from one area to another inside a facility, between separate facilities, or between installations. The system provides an alert when items are not received by a receiving installation by the expected delivery date.

After establishing the inventory capabilities for nuclear weapons-related materiel, the Air Force will be able to expand its use of the equipment to include tagging and tracking the movement of all supply items into and out of the five selected installations.

Marine Corps. The Marine Corps has equipped each of its main operating bases with the capability to read passive RFID on items shipped from DLA and use the information to document receiving and on-base deliveries. Once distribution managers complete the integration with their information systems, the Marine Corps expects to reduce errors and increase efficiency by automating processes that are currently being completed by hand.

RFID in the Supply Receipt Process

DLA provides item-level tagging and rolls up content-level information on the tags it affixes to intermodal shipping containers. Many of its prime vendors do the same. Much of industry’s supply chain has shifted to the practice of using “trusted vendors” to eliminate costly item-level hands-on piece counts at receiving points. Assuming the military services adopt this philosophy, military supply facilities could download a DLA tag’s data file to automatically update transportation closeout and inventory records at receiving points.

The Army’s RFID-triggered transportation closeouts could be documented in their transportation business system and routed to a database at the Army Materiel Command’s Logistics Support Activity. To support Army supply receipt with an RFID-triggered inventory update, the Standard Army Retail Supply System (SARSS) would simply need to accept an automated file receipt from an RFID tag. For arriving containers that an activity’s supply personnel do not immediately unload, SARSS could allow users to designate that container as a storage location at the supply facility. This change would eliminate a recurrence of the Iraq and Afghanistan theaters’ asset visibility gap for the many supplies that arrived at a supply node but did not move quickly from an intermodal container onto an inventory record.

Is It Time for Inventory Policy Changes?

The services have policy reasons for requiring people to do supply-receipt piece counts, but a business case could be made for limiting these manual counts to high-value items. To transition to this inventory process change, the services could develop reasonable rules that focus manual processes on high-dollar or critical items and rely on RFID tag-supported inventory updates for low-cost items. This would require DOD to shift from the existing policy that requires 100-percent inventory accuracy at any cost for every item. In its place, DOD would need to establish a new policy that relies on periodic random counts for deliveries from trusted vendors or simply uses packing list data for item counts for most categories of items.

DOD has already made extensive RFID tag and infrastructure investments. A higher return on these investments comes from instilling discipline in all tag-associated functions and then integrating tag reads with the automated systems supporting DOD’s supply chain processes. The cost of delaying these changes is great. Facing an immediate need to reduce overhead and find efficiencies, DOD now has a real opportunity to get more value out of its RFID infrastructure—in more accurate ITV with better supply chain and distribution operations.

Patricia Kelly is an LMI senior fellow in logistics, supporting Department of Defense and Department of Homeland Security clients. She previously worked for the Department of the Army, G–4, as the director for force protection and distribution. She holds a B.A. degree from the University of North Carolina-Chapel Hill, an M.B.A. degree from the College of William and Mary, and an M.S. degree from the National War College.

Catherine Robertello is a senior consultant with LMI, providing support to the Office of the Secretary of Defense, Supply Chain Integration, on supply-chain policy. She is an expert in theater distribution, supply-chain, and logistics processes supported by automation systems, including automatic information technology and asset visibility systems. She holds a B.A. degree from George Mason University and an M.S. degree in transportation and logistics from the Air Force Institute of Technology.

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