Case Study: Achieving "Last Tactical Mile" Supply Chain ...

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Case Study: Achieving "Last Tactical Mile" Supply Chain ...

  1. 1. April 9, 2007 Case Study: Achieving “Last Tactical Mile” Supply Chain Visibility Using Active RFID By Patrick Connaughton with Sharyn Leaver and Elisse Gaynor Executive Summary IN REMOTE AND HARSH During Operation Desert Storm, the term “mountains of iron” was ENVIRONMENTS, ASSET AND SHIPMENT TRACKING coined to describe the thousands of unopened shipping containers sitting IS CLOSE TO IMPOSSIBLE in the desert, rusting away, because the contents were unknown or the Take away that network, add in materials were grossly oversupplied. Since then, there have been dramatic extreme weather, battle conditions, and changes in the way inventory is distributed and managed by the US De- “virtual”/unwired distribution centers, and you have what would seem to be partment of Defense (DoD). One such change was the implementation of a an impossible SCV scenario. This, new technology solution: the active radio frequency identification (RFID) however, is the exact environment the intransit visibility (ITV) network and subsequent introduction of the Por- US armed forces deal with on a daily basis in managing the most multifac- table Deployment Kit (PDK). Using a mobile RFID reader and an Iridium eted and demanding supply chains in modem, this solution enables the location tracking, receipt, and manage- the world. Inventory is closely tracked within the distribution centers using an ment of inventory in remote regions with no telecommunications infrastruc- RFID infrastructure, but as soon as the ture. By capturing this critical “last tactical mile” information and linking it shipments leave the yard and head to remote regions with no telecommunica- back to the centralized command and control, better decisions can be made, tions, SCV is lost. The result: Soldiers ultimately streamlining inventory and supply chain management. don’t get the supplies they need, and they don’t have visibility into the con- TARGET AUDIENCE cares that the product is delivered at the tents and timing of inbound shipments time you promised, with all the correct essential for planning ongoing tactical Business process and applications components, and in good condition. For operations. It was these conditions, professional. retail operations, the customer simply along with a press and government pile- cares whether the product is in stock on spotlighting the “mountains of iron” SITUATION: WIRED NETWORK and priced correctly. For large sup- after Operation Desert Storm, that set LIMITS “LAST TACTICAL ply chain operations, achieving global, the DoD team on a path to innovation to MILE” ASSET VISIBILITY end-to-end visibility of inventory levels reinvent the distribution process. and locations — particularly in that last Getting the tactical units the right For years, supply chain strategists mile — has proven to be a complex and supplies, at the right time, and in the have been emphasizing the importance expensive task.1 With modern telecom- right place is the ultimate goal. To do of “the last mile” — the final leg of munications and tools, companies have this, assets need to be closely tracked delivery direct to the customer or retail made great strides forward; but as man- and managed at every step in the pro- outlet. Ultimately, a customer does not ufacturing continues to migrate to the cess. That is not a simple proposition, care how efficiently you move the prod- outskirts of the developed world, supply and a solution was desperately needed uct overseas, across borders, and to your chain visibility (SCV) only stretches as to plug serious efficiency gaps, like the local distribution center. The customer far as the existing network. following: © 2007, Forrester Research, Inc. Reproduction Prohibited
  2. 2. Case Study: Achieving “Last Tactical Mile” Supply Chain Visibility Using Active RFID • In-transit shipments enter a black Source: Forrester Research, Inc. hole of visibility, affecting forward operations. Once an asset leaves the networked facility, the real-time location and status is unknown until the asset is received at its final destination. For planners in the field, this means less accurate receiving operations due to the wider estimated arrival windows, reducing the ability to quickly turn assets around for field use and potentially affecting time- sensitive missions that are relying on the in-transit reinforcements. • Field inventories are manually tracked, resulting in data entry errors and inefficiencies. When the shipments reach an intermediate or final staging point, the teams record the receipt and track the location in the yard or staging area using manual checks and paper-based auditing procedures. Considering the volume of goods, this becomes a tedious process leading to data entry The US Army (not its suppliers) applies the active tags directly to assets for use with the errors and, as a result, inaccurate RFID-PDK solution. Each tag is encoded with a unique number to identify the asset. The asset counts and location information. details, along with the unique ID, are stored in a central database. What starts off as a simple data entry Upon loading the materials into the outbound truck, the tags are read again and the asset IDs issue can become an epidemic when are associated with the vehicle and convoy IDs in the system. it’s compounded over the massive Virtual checkpoints can be set up at intervals in the field. When a convoy passes the check- number of assets being managed. point, the PDK reader automatically picks up the unique IDs and transmits convoy asset This can quickly snowball into information and location coordinates to the ITV server. millions of dollars of overstock as At remote staging areas or the final point of consumption, the receipt of goods is also PDK inventory levels are never updated automated, scanning the tags as they are unloaded and stocked and transmitting information and replenishment orders continue to to the ITV server. flow in. Goods that are not used can easily be incorporated back into the supply chain using the same • Logistics and inventory planners tags, allowing quick routing for disposal or cross docking to another outbound shipment. lack a centralized view, resulting in costly redundancy. Agile supply chains require a single source of are made in silos and without insight BEST PRACTICE: BY GOING real-time information to make quick into the upstream and downstream adjustments to the plan. Changes in ripple effects of each motion. With- WIRELESS, THE VISIBILITY the plan are inevitable and compa- out real-time and reliable visibility to NETWORK IS EXTENDED nies that differentiate themselves are in-transit and field asset information, To address these challenges head on, an the ones who better manage the ex- the ability to make educated deci- Innovation Network of teams, collaborat- ceptions. The DoD’s logistics opera- sions is compromised and the supply ing across branches of the armed forces tions are no different and, without a chain becomes sluggish, unable to and the IT industry, worked closely to single source for the truth, decisions react quickly to exceptions. © 2007, Forrester Research, Inc. Reproduction Prohibited
  3. 3. Case Study: Achieving “Last Tactical Mile” Supply Chain Visibility Using Active RFID gather the requirements of the soldiers while commanders and theater distribu- orchestrate an elaborate and multi- and translate them into specifications for tion managers have the data they need faceted supply chain from a central a solution.2 These specifications were to make better decisions. The PDK is point with real-time information, presented to the vendor community, and currently being used in a production ca- transforming the discord of chaotic Savi Technology took on the challenge pacity, and the rollouts are continuing to exceptions management into the of assembling a product that could not expand. As that happens, new opportuni- harmony of a predictable and syn- only capture location updates from the ties for SCV improvements will be real- chronized operation. The Department field where there is no fixed reader or ized. In the short term the solution is off of Defense now has visibility into power but also transmit that information to a good start, having already plugged who signed for each container at each to the ITV server even when no tele- some key gaps by: step. With this, it has reduced the communications infrastructure exists.3 • Enabling virtual checkpoints to number of shipments sitting idle and The solution also had to meet the rigid provide real-time location and has gotten better asset use along with requirements of the military to withstand status information. The PDK can be less redundancy. extreme weather and harsh battle condi- set up at checkpoints in the field to With this solution it is possible to build tions as well as be packaged in a single capture asset IDs as they pass within a “SmartChain” (Savi’s solution trade- mobile carrying case that one person can a certain radius. As a convoy passes, mark) to tie together a convoy, includ- transport. The end result: the RFID Por- the active tags are interrogated by ing the personnel, vehicles, supplies, table Deployment Kit (RFID-PDK). the reader and the unique asset IDs and containers inside the vehicles. This are captured. These IDs are then information can be seen by command SAVI TECHNOLOGY transmitted to the ITV server along and control elements if it’s moving in the DELIVERS THE RFID-PDK with real-time location coordinates, right direction in near real time — the effectively illuminating the in-tran- idea being that anything can be tagged The RFID-PDK is a completely self- sit visibility black hole experienced with active RFID and a virtual check- contained, portable unit packaged in a before. point can be set up in the field to identify carrying case that one person can lift. • Automating field inventory receipt the convoy and transmit the data to a The kit includes a ruggedized laptop, and audits to reduce manual efforts central command and control. This could an Iridium modem with GPS, a thermal and data errors. The PDK can also eventually enable a view to the complete label printer, and a portable RFID reader/ be used for receiving inventory in the hierarchy of a convoy — linking the interrogator. The reader is designed to field and scanning the tags as they strategic mission details to the shipment read an active RFID tag (which has been come off the truck to update the cen- manifest down to the contents of a case associated with an asset at its origin) tral inventory systems. Major Julian and the supporting personnel. With that, within a 200-foot radius, marry that to Toro, US Army product manager at the DoD would have successfully over- the current location coordinates, and the Joint-Automatic Identification come the greatest challenges of manag- transmit that data to a central ITV server Technology office, helps coordinate ing the last logistical mile, linking the via satellite connection. Using the ITV the fielding of the PDK units. Major plan closely with the actual execution. Web portal, commanders now have a Toro explained that the solution can complete view of inventory levels and be used to minimize the amount of RECOMMENDATIONS: locations of their critical assets along the time required to find one asset in the last mile (see Figure 1). yard among thousands of other pieces LESSONS LEARNED THAT BEST PRACTICE RESULTS: of equipment. By using the PDK ALL RFID PROJECTS CAN from a moving vehicle to scan tags THE RFID-PDK SOLUTION within a 200-yard radius, soldiers BENEFIT FROM HELPS PROVIDE TOTAL can quickly know what’s in a specific The road to RFID adoption has been VISIBILITY container without having to open it. rocky with abandoned projects littering • Interfacing with centralized vis- the wayside. It is generally accepted that With this technology, military units in ibility applications to supply “total the biggest reason for failure is a lack of the field can now better manage inven- situational awareness.” This is the a clear business case. Companies rushed tory in remote and disconnected regions, holy grail of SCV — the ability to in with IT-led initiatives to see how this © 2007, Forrester Research, Inc. Reproduction Prohibited
  4. 4. Case Study: Achieving “Last Tactical Mile” Supply Chain Visibility Using Active RFID technology could be applied to their tory cycle counts in the field are a business, but they didn’t focus on the real perfect example of this. Endnotes problem they were trying to solve. Suc- • Think strategically as well as cessful projects like the RFID-PDK start tactically. The field-level automa- 1 As companies attempt to cast with diligently defining the end user’s tion is positive, and the soldiers are their adaptive supply networks requirements, independent of the tech- more productive as inventory is being globally, they are faced with nological solution. Active and/or passive tracked better, but the ultimate ad- long lead times and the inabil- RFID may turn out to be the right solu- vantage comes with the centralization ity of small trading partners to tion, but it does not have to be presumed. of the data across all operations for offer visibility. This prevents Companies piloting RFID can apply the better multidimensional exceptions firms from building agile sup- lessons learned from the PDK project in a planning. Commanders now have ply chains that are real-world few key areas: the capability to reroute shipments aware, event-driven, and • Focus first on the business require- quickly or source field requirements self-regulating. As individual ments, second on the technology. from other remote locations with the firms seek to improve their Major Toro sums it up perfectly by information at hand. When running global supply network visibil- saying, “First we asked ourselves, an RFID project, it is important to ity, they are challenged by the ‘What are the process requirements have both the tactical and strategic exorbitant costs and manage- of the user?’ Once we understand perspectives on how the data can be ment skills needed to manage this, we can find a technology to fit used. The sum of the two makes for a a global information network. the business need.” The PDK is a much stronger business case. See the June 21, 2005, Trends good example of designing a solution • Look beyond what’s available “Improving Visibility In Adaptive with the end user in mind — the suit- today in prepackaged solutions. Trading Networks.” case can be carried by one person; The PDK was assembled using off- the unit can be quickly assembled; the-shelf technology from a variety 2 The final solution includes an the application is easy to use and of sources. It took innovations across Itronix laptop, Iridium modem, delivers on durability, power, and multiple vendors to tie together the GPS antenna, SATCOM an- communications requirements. If any final solution, and it’s a great exam- tenna, handheld reader, Savi piece of this did not deliver, end user ple of how tight collaboration across mobile reader, Zebra printer adoption would suffer; and without companies (often competitors) can kit, SmartChain Site Manager, the data from the field, the SCV goals drive innovation. End user companies SmartChain Mobile Manager, would not have been met. should learn from this and not limit SmartChain Client tools, and an • Engage the end user as much as themselves to what’s currently gener- Iridium Modem Table. possible during requirements gath- ally available in any one packaged 3 The United States Department ering. This was a global development solution. Instead, firms should look to of Defense ITV portal provides effort that had the ultimate users create new use cases and applications (in this case, the soldiers in Iraq) — either internally or by partnering a centralized view to the iden- intimately involved in the process. with multiple vendors. The result: tity, location and movement of By including the eventual users of the relevant dynamic applications that materials and supplies through- system in the requirements gathering are more flexible and designed with out the supply chain. and brainstorming sessions, unex- the people who use them in mind. pected benefits of the solution can be Forrester Research, Inc. (NASDAQ: FORR) is an independent technology and market research company that provides identified that help drive adoption. pragmatic and forward-thinking advice to global leaders in business and technology. For more than 23 years, The business users know their pro- Forrester has been making leaders successful every day through its proprietary research, consulting, events, and peer-to-peer executive programs. For more information, visit www.forrester.com. cesses inside and out and can quickly © 2007, Forrester Research, Inc. All rights reserved. Forrester, Forrester Wave, RoleView, Technographics, and Total identify the areas that need the most Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respec- attention and will have the biggest tive companies. Forrester clients may make one attributed copy or slide of each figure contained herein. Additional reproduction is strictly prohibited. For additional reproduction rights and usage information, go to www.forrester.com. return on investment. The automation Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. To purchase reprints of this document, please email resourcecenter@forrester.com. of the receiving process and inven- © 2007, Forrester Research, Inc. Reproduction Prohibited

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