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  • Why should you care? – Basics of the goods carrier tracking business case

    May 21, 2013

    K. Hartwall is currently piloting the management of RFID-enabled goods carriers (such as roll containers and dollies) with different retailers, pool owners and manufacturers. The aim of the pilots is to demonstrate the technical and financial feasibility of RFID-enabled goods carrier tracking and management.

    I have recently put a lot of thought and effort into figuring out the total cost of ownership related to the lifecycle of goods carriers (RTIs), for example roll containers, in their supply chain operations. The overwhelming result seems to be that there is a lot of room for improvement and development.

    From the perspective of a goods carrier solution provider, I strongly recommended that owners of large goods carrier fleets direct their attention to issues directly related to the following:

    •    direct capital investment size of carriers
    •    goods carrier theft
    •    misplaced carriers
    •    negligence and lack of visibility of carriers being mistreated
    •    operational costs of yearly fleet maintenance

    Goods carriers are in the heart of the supply chain operations from the supplier to the DC and to the shop. Therefore, additional emphasis should also be put on operational disturbances related to:
    •    countless hours of manual inventory of goods carriers
    •    out-of-stock situations in shops due to lack of transparency
    •    shipping errors in outbound operations

    Concrete reasons for tracking and tracing

    I want to shed light on why customers should care about these issues. Based on many interviews and statistics from our various customers, I'll try to put this into understandable figures. I call this "Basics for calculating ROI for your automated goods carrier tracking".

    Potential savings of RFID (€/year)

    The calculations below are based on the following assumptions and figures:
    Goods carrier fleet size 100 000 units
    Price per goods carrier 75 €

    Loss of goods carriers
    Case example: Western Postal Operator, 10% lost assets/year
    750 000
    Excessive fleet size
    Case example: Global asset pooler, 18% too large fleet size, assumption based on the value of fleet 1/2 of original price

    675 000
    Emergency goods carrier purchases
    Case example: Western European postal operator, emergency purchases of 2.6% of fleet size due to lack of tracebility of uneven distribution of carriers
    200 000
    Manual labor spent on roll container inventory count
    Case example: Western Postal Operator, manual labor spent to guarantee availability of roll containers
     187 000
    Operational disturbances
    Case example: Major retailer covering picking and delivery with pallets instead of roll containers
     448 000
    Other supply chain benefits automated ERP transations + process optimisation
    Industrial retailer: Automated outbound shipment verifivation eliminating shipment errors
    Other potential for retailers: elimination of out-of-stock situations, real-time inventory of shop floor, optimise fleet meintenance 

     TOTAL

     2 260 000

    If we add up all these figures, we come to a total of roughly 2.3 M€/year for a fleet size of 100k units that could be saved by implementing RFID tracking. And, this figure does not even include the potential savings that automated outbound verification, decreased out-of-stock situations at shops and minimized maintenance costs could add.

    My questions is, can you afford not to analyze your supply chain operations and not to ensure that such figures can be saved by tracking with RFID, keeping the return on investment in mind?

    What really needs to be understood, is that the investment in and the total cost of ownership of RFID-enabled goods carriers should be treated as more than just an initial investment in the goods carriers themselves. When you are ready for a transformation in your supply chain, I recommended that you contact experienced professionals in the field of goods carrier solutions that can help you:
    •    optimize your investment according to your needs
    •    make sure that the investment helps you streamline your supply chain operations
    •    increase sales

    Einar Toivonen, Logistics Solution Business Manager