SUPPLY CHAIN OVERVIEW
1.3 ECONOMIC FEASIBILITY OF ROLLING OUT RFID
1.3.9 Lessons Learned
In this section, we talk about lessons lear ned from Iraq, Wal-Mart, International Paper, and Procter & Gamble. The latter three were sponsors of the Auto ID Center.
1.3.9.1 Iraq: Asset Visibility
Prior to the mandate from the U.S. Department of Defense (DoD) on passive RFID tags for logistical items by 2005, RFID tags were underutilized within
the United States for items shipped to the theater during the Operation Iraqi Freedom (OIF). Reasons for the under-utilization were that users did not understand how passive RFID technology worked, combat commanders did not require items with RFID tags, and the tag failed because it got separated from a pallet or damaged, or the batteries stopped working during the transit overseas and in Iraq.
The handler did not have the proper training to use the interrogator thinking it could be used just like a bar-code reader. The tag was not visible in the in-transit visibility (IVT) system, as the interrogator was not available or got misplaced at a location to scan the tag. Another reason was that the interrogator malfunctioned due to insufficient power, inability to connect, or mechanical failure.
In a report, the U.S. GAO [5] gives several reasons. Hundreds of material containers were backlogged at distribution points because of identification and transportation problems and inadequate asset visibility. The difference between material shipped to Army forces in the region and material they received resulted in accounting discrepancies in terms of billion dollars.
Late fees were incurred on leased or lost shipping containers because of distribution chokepoints or losses.
Usable vehicles were stripped because of lack of spare parts or poor container identification. Products and product requests were duplicated because of bad management and accounting procedures and inadequate container identification. Supplies were not configured to meet Army unit requirements. Communications infrastructure was inadequate.
Theater distribution capability was insufficient and ineffective. The dis- tribution of supplies was also delayed because cargo arriving in shipping containers and pallets had to be separated and repacked several times for delivery to multiple units in different locations. The U.S. DoD’s lack of an effective process for prioritizing cargo for delivery precluded the effective use of scarce theater transportation assets. Assets got lost or taken by unau- thorized personnel due to insufficient physical security at distribution points.
Other factors that may have contributed to the logistics support problems include the following.
Poor Asset Visibility. DoD did not have adequate visibility over all equipment and supplies transported to, within, and from the theater of operations in support of OIF. For example, although the U.S.
Central Command issued a policy requiring, whenever feasible, the use of RFID tags to track assets shipped to and within the theater, these tags were not used in a uniform and consistent manner. In addition, units operating in the theater did not have adequate access to, or could not fully use, DoD’s logistics and asset visibility systems in order to track equipment and supplies because these systems were not fully interoperable and capable of exchanging information
or transmitting data over required distances. Bandwidth and com- munications infrastructure were not adequate to allow access to asset visibility and other logistics information systems.
Insufficient and Ineffective Theater Distribution Capability. DoD did not have a sufficient distribution capability in the theater to effectively manage and transport the large amount of supplies and equipment deployed during OIF. For example, the distribution of supplies to forward units was delayed because adequate transpor- tation assets, such as cargo trucks and material handling equipment, were not available within the theater of operations. The distribution of supplies was also delayed because cargo arriving in shipping containers and pallets had to be separated and repackaged several times for delivery to multiple units in different locations. DoD’s lack of an effective process for prioritizing cargo for delivery precluded the effective use of scarce theater transportation assets.
Failure to Apply “Lessons Learned” from Prior Operations. The failure to effectively apply lessons learned from Operations Desert Shield and Desert Storm and other military operations may have contributed to the logistics support problems encountered during OIF. GAO’s prior reports, as well as DoD and military service after- action reports and other studies of prior military operations, have documented some of the same problems that appear to be occurring in Operation Iraqi Freedom (OIF).
Shortages of Spare or Repair Parts. At times there were shortages of some spares or repair parts needed by deployed forces. Military personnel noted shortages of items such as tires, tank track, heli- copter spare parts, and radio batteries. As a result, units resorted to cannibalizing vehicles or circumventing normal supply channels to keep equipment in ready condition.
Inadequate Configurations. Army prepositioned equipment used for OIF was not adequately configured to match unit needs. For example, parts inventories contained in the prepositioned stocks were not sufficient to meet the needs of the units that relied on them.
Ineffective Logistics Support. DoD contractors used for logistics support during OIF were not always effective. For example, we were told that some commercial shippers were unable to provide
“door-to-door” delivery of supplies to units in the theater, as was required by their contracts.
Inadequate Physical Security. Physical security at ports and other distribution points in the theater was not always adequate to protect assets from being lost or taken by unauthorized personnel. For example, Army officials noted cases where vehicles and expensive communications and computer equipment had been lost from var- ious distribution points in Kuwait.
Lesson learned: Solve logistics problems by applying “lessons learned”
from this and prior operations, including asset visibility, spare and repair parts availability, and physical security.
1.3.9.2 Wal-Mart: Implementation Training
In late Spring 2004, Wal-Mart appeared to be cutting back on the mandate that all its suppliers comply with RFID tracking of cases and pallets by the beginning of 2005. Few suppliers had the experience in implementing RFID technology. Many had just the basic understanding of this technology and had been working on the issues. The rest were just starting out and needed time to learn technologies. Prior to its mandate, Wal-Mart apparently did not send out a survey to its suppliers to determine its readiness for RFID implementation, and appropriateness of its testing facility and provide or recommend RFID implementation training for those who needed it.
Wal-Mart just gave the mandate without ever providing RFID technologies to the suppliers to help them get started.
Lesson learned: Consider supplier’s readiness for RFID implementation.
1.3.9.3 International Paper: Business Processes
In September 2004, International Paper (www.internationalpaper.com) signed an agreement with Globe Ranger’s iMotion Edgeware platform for RFID supply chain solutions. The company has recognized the importance of optimizing business processes using process and workflow manage- ment to deliver user-defined business rules for immediate visibility and exception alerts. International Paper is number one in its industry for the second year.
Lesson learned: Consider business processes in selecting and imple- menting RFID technologies.
1.3.9.4 Procter & Gamble: Docking Loading Throughput
In 2001, Procter & Gamble (P&G, www.pg.com) in Spain experienced bottlenecks at the loading dock where forklift drivers would run out of room on the dock for stacking pallets to be shipped. To make room, pallets were moved twice or production stopped for the loading dock to be cleared.
To save time, the company moved the pallets to the trucks from the dock.
However, these pallets were sometimes sent to the customers by mistake when they were supposed to reload back to the dock from the trucks.
To increase throughput and eliminate costly mistakes, P&G developed an RFID-based system to identify the pallets. This has allowed the plant to shift to direct loading, increase the speed of loading, and reduce the number of forklift truck drivers needed.
Lesson learned: Eliminate the costly mistake of delivering the pallets to the wrong distributors and customers.