Technology In Support of Supply Chains
Completed for Prof. Steve DeLurgio’s Supply Chain Management Class
November 18, 2006
Operations Assignment 5
Completed for Prof. Steve DeLurgio’s Supply Chain Management Class...............1
Automated Identification and Data Capture........................................................................3
Electronic Data Interchange.................................................................................................7
Magnetic Stripe Card.........................................................................................................13
Optical character recognition.............................................................................................14
Warehouse Management System (WMS)..........................................................................21
Automated Identification and Data Capture
Automated Identification and Data Capture (Auto-ID Data Capture; AIDC) refers to
the methods of identifying objects, collecting data about them, and entering that data
directly into computer systems (i.e. without human involvement). Technologies typically
considered as part of AIDC include bar codes, RFID, biometrics, magnetic stripes, OCR,
smart cards, and voice recognition. AIDC is also referred to as “Automatic Identification”
A barcode (also bar code) is a machine-readable representation of information in a
visual format on a surface. Originally barcodes stored data in the widths and spacings of
printed parallel lines, but today they also come in patterns of dots, concentric circles, and
hidden in images. Barcodes can be read by optical scanners called barcode readers or
scanned from an image by special software. Barcodes are widely used to implement Auto
ID Data Capture (AIDC) systems that improve the speed and accuracy of computer data
While traditionally barcode encoding schemes represented only numbers, newer
symbologies add new characters such as the uppercase alphabet to the complete ASCII
character set and beyond. The drive to encode more information in combination with the
space requirements of simple barcodes led to the development of matrix codes (a type of
2D barcode), which do not consist of bars but rather a grid of square cells. Stacked
barcodes are a compromise between true 2D barcodes and linear codes, and are formed
by taking a traditional linear symbology and placing it in an envelope that allows multiple
Since their invention in the 20th century, barcodes -- especially the UPC code -- have
slowly become an essential part of modern civilization. Their use is widespread, and the
technology behind barcodes is constantly improving. Some modern applications of
Practically every item purchased from a grocery store, department store, and mass
merchandiser has a barcode on it. This greatly helps in keeping track of the large number
of items in a store and also reduces instances of shoplifting (since shoplifters could no
longer easily switch price tags from a lower-cost item to a higher-priced one). Since the
adoption of barcodes, both consumers and retailers have profited from the savings
Rental car companies keep track of their cars by means of barcodes on the car bumper.
Airlines track passenger luggage with barcodes, reducing the chance of loss.
More recently, barcodes have even started appearing on humans. Fashion designers
stamp barcodes on their models to help coordinate fashion shows. The codes store
information about what outfits each model should be wearing and when they are due on
Barcodes allow for better inventory management, which allows a company to become
A barcode reader (or barcode scanner) is a computer peripheral for reading barcodes
printed on various surfaces. Like a flatbed scanner, it generally consists of a light source,
a lens and a photo conductor translating optical impulses into electrical ones.
Additionally, nearly all barcode readers currently produced contain decoder circuitry
analyzing the barcode's image data provided by the photo conductor and sending the
barcode's content to the scanner's output port.
Biometrics (ancient Greek: bios ="life", metron ="measure") is the study of automated
methods for uniquely recognizing humans based upon one or more intrinsic physical or
In information technology, biometric authentication refers to technologies that measure
and analyze human physical and behavioural characteristics for authentication purposes.
Examples of physical characteristics include fingerprints, eye retinas and irises, facial
patterns and hand measurements, while examples of mostly behavioural characteristics
include signature, gait and typing patterns. Voice is considered a mix of both physical
and behavioural characteristics. However, it can be argued that all biometric traits share
physical and behavioural aspects.
Uses and initiatives
Since the beginning of the 20th century, Brazilian citizens have used ID cards. The
decision by the Brazilian government to adopt fingerprint-based biometrics was
spearheaded by Dr. Felix Pacheco at Rio de Janeiro, at that time capital of the Federative
Republic. Dr. Pacheco was a friend of Dr. Juan Vucetich, who invented one of the most
complete tenprint classification systems in existence. The Vucetich system was adopted
not only in Brazil, but also by most of the other South American countries. The oldest
and most traditional ID Institute in Brazil (Instituto de Identificação Félix Pacheco) was
integrated at DETRAN (Brazilian equivalent to DMV) into the civil and criminal AFIS
system in 1999.
The United States government has become a strong advocate of biometrics with the
increase in security concerns in recent years. Starting in 2005, US passports with facial
(image-based) biometric data were scheduled to be produced. Privacy activists in many
countries have criticized the technology's use for the potential harm to civil liberties,
privacy, and the risk of identity theft. Currently, there is some apprehension in the United
States (and the European Union) that the information can be "skimmed" and identify
people's citizenship remotely for criminal intent, such as kidnapping. There also are
technical difficulties currently delaying biometric integration into passports in the United
States, the United Kingdom, and the rest of the EU. These difficulties include
compatibility of reading devices, information formatting, and nature of content (e.g. the
US and UK currently expect to use only image data, whereas the EU intends to use
fingerprint and image data in their passport RFID biometric chip(s)).
Visitors intending to visit Australia may soon have to submit to biometric authentication,
linking individuals to their visas and passports. Biometric data are already collected from
some visa applicants by Immigration.
The border crossing points from Israel to the Gaza Strip and West Bank are controlled by
gates through which authorised Palestinians may pass. Thousands of Palestinians
(upwards of 90,000) pass through the turnstiles every day to work in Israel, and each of
them has an ID card which has been issued by the Israeli Military at the registration
centres. At peak periods more than 15,000 people an hour pass through the gates. The ID
card is a smartcard with stored biometrics of fingerprints, facial geometry and hand
geometry. In addition there is a photograph printed on the card and a digital version
stored on the smartcard chip.
Several banks in Japan have adopted palm vein authentication technology on their ATMs.
This technology which was developed by Fujitsu, among other companies, proved to
have low false rejection rate (around 0.01%) and a very low false acceptance rate (less
Biometrics allows the security and tracking of personnel within the supply chain.
Biometrics can be used to access an area, such as a gym, or to inventory prisoners for
Electronic Data Interchange
Electronic Data Interchange (EDI) is the computer-to-computer exchange of structured
information, by agreed message standards, from one computer application to another by
electronic means and with a minimum of human intervention. In common usage, EDI is
understood to mean specific interchange methods agreed upon by national or
international standards bodies for the transfer of business transaction data, with one
typical application being the automated purchase of goods and services.
Despite being relatively unheralded, in this era of technologies such as XMLservices, the
Internet and the World Wide Web, EDI is still the data format used by the vast majority
of electronic commerce transactions in the world.
There are several advantages of using EDI all of which provide distinct benefits to the
user. One of the most notable benefits to using EDI is the time-saving capability it
provides. By eliminating the process of distributing hard copies of information
throughout the company, easy access to electronic data simplifies inter-department
communication. Also, another time-savings advantage is the ability to track the origin of
all information therefore significantly reducing time spent on corresponding with the
source of the information.
Another benefit for the user of this information system is the ultimate savings in costs for
the company. Although the initial set-up costs may seem high, the overall savings
received in the long run ensures its value. For any business, regardless of its size, hard-
copy print outs and document shipping costs add up. EDI allows for a paper-less
exchange of information reducing handling costs and worker productivity that is involved
with the organization of paper documents.
Electronic data interchange has another strong advantage over paper-based information
exchange which has to do with accuracy of information. When the information is already
stored electronically, it speeds up an organization's ability to check for accuracy and
make any necessary corrections as the data is already inputted in the system. Also, unlike
paper-based methods, EDI allows for the ability to send and receive information at any
time thereby tremendously improving an organization's ability to communicate quickly
There are a few barriers to using electronic data interchange. One of the most significant
barriers is the accompanying process change. Existing processes built around slow paper
handling may not be suited for EDI. For example, a business may receive the bulk of
their goods by 1 or 2 day shipping and all of their invoices by mail. The existing process
may therefore assume that goods are typically received before the invoice. With EDI, the
invoice will typically be sent when the goods ship and will therefore require a process
that handles large numbers of invoices whose corresponding goods have not yet been
Another significant barrier is the initial set-up. The preliminary expenses and time that
arise from the implementation, customization and training can be costly and therefore
may discourage some users.
In computing, a scanner is a device that analyzes an image (such as a photograph,
printed text, or handwriting) or an object (such as an ornament) and converts it to a
digital image. Most scanners today are variations of the desktop (or flatbed) scanner The
flatbed scanner is the most common in offices. Hand-held scanners, where the device is
moved by hand, were briefly popular but are now not used due to the difficulty of
obtaining a high-quality image. Both these types of scanners use charge-coupled device
(CCD) or Contact Image Sensor (CIS) as the image sensor, whereas older drum scanners
use a photomultiplier tube as the image sensor.
Another category of scanner is a rotary scanner used for high-speed document scanning.
This is another kind of drum scanner, but it uses a CCD array instead of a
Other types of scanners are planetary scanners, which take photographs of books and
documents, and 3D scanners, for producing three-dimensional models of objects.
Drum scanners capture image information with photomultiplier tubes (PMT) rather than
the charged coupled device (CCD) arrays found in flatbed scanners and inexpensive film
scanners. Reflective and transmissive originals are mounted to an acrylic cylinder, the
scanner drum, which rotates at high speed while it passes the in front of precision optics
that deliver image information to the PMTs. The Most modern color drum scanners use 3
matched PMTs, which read red, blue and green light respectively. Light from the original
artwork is split into separate red blue and green beams in the optical bench of the
A flatbed scanner is usually composed of a glass pane (or platen), under which there is a
bright light (often xenon or cold cathode fluorescent) which illuminates the pane, and a
moving optical array, whether CCD or CIS. Colour scanners typically contain three rows
(arrays) of sensors with red, green, and blue filters. Images to be scanned are placed face
down on the glass and the sensor array and light source move across the pane reading the
entire area. An image is therefore visible to the charge-coupled device only because of
the light it reflects. Transparent images do not work in this way, and require special
accessories that illuminate them from the upper side.
Hand scanners are manual devices which are dragged across the surface of the image to
be scanned. Scanning documents in this manner requires a steady hand, as an uneven
scanning rate would produce distorted images. They typically have a "start" button which
is held by the user for the duration of the scan, some switches to set the optical resolution,
and a roller which generates a clock pulse for synchronisation with the computer. Most
hand scanners were monochrome, and produced light from an array of green LEDs to
illuminate the image. A typical hand scanner also had a small window through which the
document being scanned could be viewed. They were popular during the early 1990s and
usually had a proprietary interface module specific to a particular type of home computer,
usually an Atari ST or Commodore Amiga.
Scanners typically read red-green-blue color (RGB) data from the array, process it with
some proprietary algorithm to correct for different exposure conditions, and send it to the
computer via the device's input/output interface (usually SCSI or USB, or LPT in
machines pre-dating the USB standard). Color depth varies depending on the scanning
array characteristics, but is usually at least 24 bits. High quality models have 48 bits or
more color depth. The other qualifying parameter for a scanner is its resolution, measured
in pixels per inch (ppi), sometimes more accurately referred to as samples per inch (spi).
Instead of using the scanner's true optical resolution, the only meaningful parameter,
manufacturers like to refer to the interpolated resolution, which is much higher thanks to
software interpolation. As of 2004, a good flatbed scanner has an optical resolution of
1600–3200 ppi, high-end flatbed scanners can scan up to 5400 ppi, and a good drum
scanner has an optical resolution of 8000–14,000 ppi.
Manufacturers often claim interpolated resolutions as high as 19,200 ppi; but such
numbers carry little meaningful value, because the number of possible interpolated pixels
is unlimited. The higher the resolution, the larger the file. In most cases, there is a trade-
off between manageable file size and level of detail. Resolutions higher than 1200dpi are
overkill for colour printers and monitors.
The third important parameter for a scanner is its density range. A high density range
means that the scanner is able to reproduce shadow details and brightness details in one
The scanning or digitization of paper documents for storage is quite different from the
scanning of pictures for reproduction though it uses some of the same technology. While
document scanning can be done on general-purpose office scanners, in major operations
it is performed on dedicated, specialized scanners, manufactured by companies like
Canon, Fujitsu, Kodak, and others.
Document scanners have document feeders, generally larger than those found on copiers
or all-purpose scanners. They scan at lower resolution than other scanners, usually in the
range 150dpi to 300dpi, since higher resolution is usually not needed and makes files
much larger to store.
A lot of scans can be made at high speed, traditionally in grayscale but now in color as
well. Many are capable of duplex (two-sided) scanning at or near full speed (20ppm
(pages per minute) to 150ppm). Sophisticated document scanners have either firmware of
software that “cleans up” scans as they are produced, eliminating accidental marks and
sharpening type. They also usually compress the scan on the fly.
Many document scans are converted using OCR technology into searchable files. Most
scanners use ISIS or Twain device drivers to scan documents into TIFF format so that the
scanned pages can be fed into a document management system that will handle the
archiving and retrieval of the scanned pages.
The biggest issues with document scanning are preparation and indexing. Preparation
involves taking the papers to be scanned and making sure that they are in order, unfolded,
without staples or anything else that might jam the scanner. This is a manual task and can
be time consuming. Indexing involves associating keywords with files so they can be
found later. This process can be automated in some cases, but may involve manual labor.
A specialized form of document scanning is book scanning. Technical difficulties arise
from the books usually being bound and sometimes fragile and irreplaceable, but some
manufacturers have developed specialized machinery to deal with this. Often special
robotics are used to turn the pages automatically.
Magnetic Stripe Card
A magnetic stripe card is a type of card capable of storing data by modifying the
magnetism of tiny iron-based magnetic particles on a band of magnetic material on the
card. The magnetic stripe, sometimes called a magstripe, is read by physical contact and
swiping past a reading head. Magnetic stripe cards are commonly used in credit cards,
identity cards, transportation tickets, and so on.
In most magnetic stripe cards, the magnetic stripe is contained in a plastic-like film. The
magnetic stripe is located 0.223 inches (5.66 mm) from the edge of the card, and is 0.375
inches (9.52 mm) wide. The magnetic stripe contains three tracks, each 0.110 inches
(2.79 mm) wide. Tracks one and three are typically recorded at 210 bits per inch (8.27
bits per mm), while track two typically has a recording density of 75 bits per inch (2.95
bits per mm). Each track can either contain 7-bit alphanumeric characters, or 5-bit
Magstripes come in two varieties: high-coercivity (HiCo) and low-coercivity (LoCo).
High-coercivity magstripes are harder to erase, and therefore are appropriate for cards
that are frequently used or that need to have a long life. Low-coercivity magstripes
require a lower amount of magnetic energy to record, and hence the card writers are
much cheaper than machines which are capable of recording high-coercivity magstripes.
A card reader can read either type of magstripe, and a high-coercivity card writer may
write both high and low-coercivity cards (most have two settings, but writing a LoCo
card in HiCo mode will still work), while a low-coercivity card writer may write only
Magnetic stripe cards are used in very high volumes in the mass transit sector, replacing
paper based tickets with either a directly applied magnetic slurry or hot foil stripe.
Banks leverage this technology to dispense money as well as credit to customers without
the need of using physical money.
Optical character recognition
Optical character recognition, usually abbreviated to OCR, is computer software
designed to translate images of handwritten or typewritten text (usually captured by a
scanner) into machine-editable text, or to translate pictures of characters into a standard
encoding scheme representing them (e.g. ASCII or Unicode). OCR began as a field of
research in pattern recognition, artificial intelligence and machine vision. Though
academic research in the field continues, the focus on OCR has shifted to implementation
of proven techniques.
Optical character recognition (using optical techniques such as mirrors and lenses) and
digital character recognition (using scanners and computer algorithms) were originally
considered separate fields. Because very few applications survive that use true optical
techniques, the optical character recognition term has now been broadened to cover
digital character recognition as well.
Early systems required "training" (essentially, the provision of known samples of each
character) to read a specific font. Currently, though, "intelligent" systems that can
recognize most fonts with a high degree of accuracy are now common. Some systems are
even capable of reproducing formatted output that closely approximates the original
scanned page including images, columns and other non-textual components.
The United States Postal Service has been using OCR machines to sort mail since 1965
based on technology devised primarily by the prolific inventor Jacob Rabinow. The first
use of OCR in Europe was by the British Post Office. In 1965 it began planning an entire
banking system, the National Giro, using OCR technology, a process that revolutionized
bill payment systems in the UK. Canada Post has been using OCR systems since 1971.
OCR systems read the name and address of the addressee at the first mechanized sorting
center, and print a routing bar code on the envelope based on the postal code. After that
the letters need only be sorted at later centers by less expensive sorters which need only
read the bar code. To avoid interference with the human-readable address field which can
be located anywhere on the letter, special ink is used that is clearly visible under UV
light. This ink looks orange in normal lighting conditions. Envelopes marked with the
machine readable bar code may then be processed.
Radio Frequency IDentification (RFID) is an automatic identification method, relying
on storing and remotely retrieving data using devices called RFID tags or transponders.
An RFID tag is an object that can be attached to or incorporated into a product, animal, or
person for the purpose of identification using radio waves. Chip-based RFID tags contain
silicon chips and antennas. Passive tags require no internal power source, whereas active
tags require a power source.
An advanced automatic identification technology such as the Auto-ID system based on
the Radio Frequency Identification (RFID) technology has two values for inventory
systems. First, the visibility provided by this technology allows an accurate knowledge on
the inventory level by eliminating the discrepancy between inventory record and physical
inventory. Second, the RFID technology can prevent or reduce the sources of errors.
Benefits of using RFID include the reduction of labour costs, the simplification of
business processes and the reduction of inventory inaccuracies.
Implantable RFID chips designed for animal tagging are now being used in humans. An
early experiment with RFID implants was conducted by British professor of cybernetics
Kevin Warwick, who implanted a chip in his arm in 1998. Night clubs in Barcelona,
Spain and in Rotterdam, The Netherlands, use an implantable chip to identify their VIP
customers, who in turn use it to pay for drinks
RFID tags are being embedded in passports issued by many countries. The first RFID
passports ("e-passports") were issued by Malaysia in 1998. In addition to information
also contained on the visual data page of the passport, Malaysian e-passports record the
travel history (time, date, and place) of entries and exits from the country.
The New York City Subway is conducting a trial during 2006, utilizing PayPass by
MasterCard as fare payment.
The Moscow Metro, the world's busiest, was the first system in Europe to introduce
RFID smartcards in 1998.
In the UK, op systems for prepaying for unlimited public transport have been devised,
making use of RFID technology. The design is embedded in a creditcard-like pass, that
when scanned reveals details of whether the pass is valid, and for how long the pass will
Since 2002, in Taipei, Taiwan the transportation system uses RFID operated cards as fare
In Hong Kong, mass transit is paid for almost exclusively through the use of an RFID
technology, called the Octopus Card. Originally it was launched in September 1997
exclusively for transit fare collection, but has grown to be similar to a cash card, and can
be used in vending machines, fast-food restaurants and supermarkets. The card itself can
be recharged with cash at add-value machines or over the counter in shops, and can be
successfully read several centimetres from the reader.
"Navigo" passes for the Paris public transport system (RATP) also use RFID technology.
RFID tags are used for electronic toll collection at toll booths
Public transport network of buses and trains employs passive RFID cards.
A number of ski resorts, particularly in the French Alps, have adopted RFID tags to
provide skiers hands-free access to ski lifts
RFID provides a company stronger control of their inventory allowing them to become
A smart card, chip card, or integrated circuit(s) card (ICC), is defined as any pocket-
sized card with embedded integrated circuits. Although there is a diverse range of
applications, there are two broad categories of ICCs. Memory cards contain only non-
volatile memory storage components, and perhaps some specific security logic.
Microprocessor cards contain memory and microprocessor components.
Contact Smart Cards have a small gold chip about ½ inch in diameter on the front. When
inserted into a reader, the chip makes contact with electrical connectors that can read
information from the chip and write information back.
A second type is the contactless smart card, in which the chip communicates with the
card reader through RFID induction technology (at data rates of 106 to 848 kbit/s). These
cards require only close proximity to an antenna to complete transaction. They are often
used when transactions must be processed quickly or hands-free, such as on mass transit
systems, where smart cards can be used without even removing them from a wallet.
The applications of smart cards include their use as credit or ATM cards, SIMs for
mobile phones, authorization cards for pay television, high-security identification and
access-control cards, and public transport and public phone payment cards.
Smart cards may also be used as electronic wallets. The smart card chip can be loaded
with funds which can be spent in parking meters and vending machines or at various
merchants. Cryptographic protocols protect the exchange of money between the smart
card and the accepting machine. Examples are Proton, GeldKarte, Moneo and Quick.
A quickly growing application is in digital identification cards. In this application, the
cards are used for authentication of identity. The most common example is in conjunction
with a PKI. The smart card will store an encrypted digital certificate issued from the PKI
along with any other relevant or needed information about the card holder. Examples
include the U.S. Department of Defense (DoD) Common Access Card (CAC), and the
use of various smart cards by many governments as identification cards for their citizens.
When combined with biometrics, smart cards can provide two- or three-factor
authentication. Smart cards are a privacy-enhancing technology, for the subject carries
possibly incriminating information about him all the time. By employing contactless
smart cards, that can be read without having to remove the card from the wallet or even
the garment it is in, one can add even more authentication value to the human carrier of
Smart cards are used within some governments to track health records. This provides the
health industry a way to provide better care for their patients as they will have access to
past medical records.
Smart labels combine RFID with bar coding for case/pallet pilot applications
Smart labels are shipping labels with embedded RFID tags. They offer promise in helping
organizations deploy RFID for compliance with retail industry and Department of
Defense mandates. Smart labels allow the retention of bar code/shipping label
information in popular formats while adding RFID.
The use of voice technology in logistics operations continues to grow and although most
applications to date are in the warehouse and relate to picking functions, other
applications are also feasible and emerging.
Depending on your current levels of pick productivity you can expect anywhere from a
10 to 50% improvement by adding voice technology to the mix. There are also a number
of flavours of voice recognition ie; local vs. remote processing, dependant vs.
independant recognition. Each have their advantages and disadvantages depending on
your needs and application, so a careful investigation of this technology is warranted
In conjunction with the expanding use of wireless technology for mobile applications
throughout the supply chain expect even more innovative uses voice in the supply chain
to be developed and introduced in the near future.
Warehouse Management System (WMS)
The evolution of warehouse management systems (WMS) is very similar to that of many
other software solutions. Initially a system to control movement and storage of materials
within a warehouse, the role of WMS is expanding to including light manufacturing,
transportation management, order management, and complete accounting systems. To
use the grandfather of operations-related software, MRP, as a comparison, material
requirements planning (MRP) started as a system for planning raw material requirements
in a manufacturing environment. Soon MRP evolved into manufacturing resource
planning (MRPII), which took the basic MRP system and added scheduling and capacity
planning logic. Eventually MRPII evolved into enterprise resource planning (ERP),
incorporating all the MRPII functionality with full financials and customer and vendor
management functionality. Now, whether WMS evolving into a warehouse-focused ERP
system is a good thing or not is up to debate. What is clear is that the expansion of the
overlap in functionality between Warehouse Management Systems, Enterprise Resource
Planning, Distribution Requirements Planning, Transportation Management Systems,
Supply Chain Planning, Advanced Planning and Scheduling, and Manufacturing
Execution Systems will only increase the level of confusion among companies looking
for software solutions for their operations.
Even though WMS continues to gain added functionality, the initial core functionality of
a WMS has not really changed. The primary purpose of a WMS is to control the
movement and storage of materials within an operation and process the associated
transactions. Directed picking, directed replenishment, and directed putaway are the key
to WMS. The detailed setup and processing within a WMS can vary significantly from
one software vendor to another, however the basic logic will use a combination of item,
location, quantity, unit of measure, and order information to determine where to stock,
where to pick, and in what sequence to perform these operations.