More attention is being paid to tracking vehicles in the outbound supply chain than ever before. Marcia MacLeod finds out what is really needed and asks who is willing to stump up the cash?
It may have taken a while for the vehicle logistics sector to catch up with other parts of the industry, but postproduction track-and-trace has, finally, emerged as the main topic of conversation amongst OEMs, logistics providers and IT suppliers. How can we track a vehicle from the end of the assembly line through to the dealer and why should we even think of doing so? Unsurprisingly, the answer comes down to money.
“If a car sits in a carrier’s yard, a port, a rail yard or wherever for two or three days, that car can’t be sold–and that becomes expensive,” points out Richard Barker, CEO at Sovereign Business Integration. “Someone is paying interest on that car while it sits. It might only be a couple of dollars a day, but multiply that by the number of cars affected and you’re into the multi-millions.”
Walter Lowe, manager North American vehicle logistics for Ford, puts it another way. “Even if our tracking process is 99% effective, that extra 1%, when you’re talking about 2m units, amounts to 20,000 vehicles. At an average of $20,000 per unit, that’s a significant amount of asset risk.” But tracking a vehicle from factory to dealership is not so simple. It involves numerous parts of the supply chain, equally numerous handovers and a range of transport modes. At the beginning, vehicles need to be traced in the OEM’s own yard. “We’ve helped OEM customers set up a tracking system to locate vehicles in large yards,” explains Subrahmanyan Akella at TCS, a consultancy. “OEMs need to identify cars that need re-work, those that are customised, or even just those that are due to be shipped.”
Lowe agrees: “We need to know the location of vehicles we want to prepare for shipping. They can be given a bay location but that only works if no one moves the car and forgets to tell us. But we also need to know when a vehicle goes on a truck or train, where the vehicle is during the journey and when it’s delivered.”
American Honda’s Dennis Manns, VP logistics, emphasises the need for more frequent status updates. American Honda recently updated a tracking system for imports as well as domestic production. In the past, Honda only received updates when the truck or railcar reached its destination or at the end of the day. Now it receives ongoing alerts from hauliers, some via GPS communication with the cab, when the vehicle is received, at the out gate and at the point of delivery. Rail wagons are fitted with a device which is read via a trigger on the rails themselves. The system allows Honda sales offices and dealers to use the information to monitor the progress of vehicles. “The system has a 99% degree of accuracy. The next phase in technology for this activity would be to use GPS [for all carriers] but we are not quite there yet,” he says. Honda isn’t the only company to expect this sort of track and trace. OEMs such as Volvo–through its Volvo Logistics subsidiary–and independent LSPs such as BLG Automobile Logistics rely on barcode scans and in-cab communication with truck drivers to maintain visibility.
The enduring barcode popularity
Barcodes are currently the most common way to track vehicles; although RFID may well take over, many are hesitant to go down this route. “We have a very effective barcode scanning system in place,” Lowe emphasises. “We know when a vehicle is on a truck or train, when the truck or train leaves one place and arrives at another etc. I’m not sure I’d gain enough added benefit from RFID to justify the extra expense.” BLG has a similar system. “Ninety-five per cent of vehicles come to us already barcoded,” points out Stefan Schoenbrunn, CIO of the automotive business unit. “We put our own barcodes on the other 5%. Barcode tracking even allows us to obtain a POD [proof of delivery] for some of our customers, who can then trigger an invoice for their customers. The problem is there is no standard barcode: our biggest depot, in Bremen, has to be able to read 100 different types of barcodes.” Standardisation is one of the barriers to RFID, too. “US companies use different RFID tags than European ones, which uses different tags than in Asia,” Schoenbrunn comments.
Until all OEMs use the same standards, it would be very complex and expensive to be able to read all the different kinds. Work on standardisation is being done, though. Odette is leading a project to create a standard RFID tag. “We’re working with colleagues in Europe, the US and Japan to work out what format to use, what data to include and how to put this in the RFID tag,” explains John Canvin, Odette’s MD. “There are too many proprietary systems out there.” He acknowledges it will take time and money to establish this standard, but believes the industry sees it as the way forward. “We are aiming to have nine pieces of data on the RFID tag,” says Canvin. “Where the vehicle is coming from and going to, its description, etc–with options for OEMs and logistics companies to add more. Once we’ve done that, with tag prices coming down and memory increasing, we should have a workable system.”
The RFID fanbase
RFID already has fans, though, particularly since not all OEMs have better alternatives in place. Even Ford is using RFID in Cologne at the end of the assembly line to manage vehicles in the factory yard. “Cologne didn’t have a good barcode scan and locate system like we do in the US,” Lowe explains. “So it put in RFID [more than three years ago] to help track units.” Others also do not have a barcode system. “We have tools to provide track and trace over the web,” says Christ de Baere, senior VP responsible for global distribution at Volvo Logistics. “But we have to ask our contractors to report in via EDI or the web when they have completed a task, such as delivering to a yard or putting cars on a truck. A lot of this is done via manual input: the truck driver keys in the relevant information.”
But de Baere sees a gap in the system. While it would be ideal to have online track-and-trace for every step in the supply chain, he questions how to achieve it. “RFID and GPS have advantages, but both have a lot of ‘buts’, too,” he says. “Barcodes and RFID won’t work very well with the high-andheavy part of the business. We deliver construction equipment to the work site, for example, and that can be in the middle of a forest, where there are no RFID readers and where construction workers don’t have barcode scanners.”
Some, like Richard Barker, still believe RFID is the only way to go. “Track and trace is essential,” he emphasises. “We launched a supply chain product, EML, in April 2009 with track and trace as one element. But if an OEM doesn’t have the correct infrastructure in place, it has to rely on humans reporting the vehicle’s whereabouts.”
Barker says that Sovereign has worked with Ford in Cologne on further pilots and he believes the system is proven. Readers now only cost a few dollars, while tags are as low as four cents when purchased in volume. “Tags can be read anywhere on the vehicle’s journey, starting at the end of the production line until they are removed by the dealer. Readers can be put in strategic places where cars are handed over, such as in the yard, at the truck loading bay, in the rail yard or at the port terminal,” he says.
But Sovereign’s system uses its own proprietary standard, one of the things to which OEMs and LSPs object. Barker admits that readers must be installed by experienced fitters to ensure tags can be read easily, since RFID is affected by metal. And, like barcodes, passive RFID tags–the ones currently used in vehicle tracking–still have to be read, just like barcodes. Active RFID tags emit signals telling people ‘I’m here’, but they have a very limited range and are more expensive.
What about the satellite solution?
GPS could offer alternatives. RMI, which provides a railway tracking system in the US, uses it to beam signals from the railcar, telling it where the wagon is at any time. But GPS also faces numerous barriers, not least of which is cost.
“RFID has to be read by every party in the supply chain,” points out Steve Jones, MD at Vehnet. “Readers have to be in place everywhere along route, requiring investment in infrastructure. GPS ‘calls home’, telling the user where the vehicle is without needing to be read. But it costs a lot more than RFID.”
Since OEMs are building cars with telematics already installed, couldn’t this be tweaked or extended to include GPS tracking? “To add an identifying unit and transmitter to a car already fitted with telematics would be easy,” believes Lowe. “If we all did it at the same time, the economies of scale would mean the cost would become negligible and could–and should–be included in the cost of the in-car technology.” However, for it to work, GPS tracking would have to be fitted in every car, which is not currently the case. Plus, as Jones points out, the tracking device would have to function when the main power of the car is switched off. Currently when cars are transported or stored, the battery is disconnected, so the GPS wouldn’t work. “A mobile phone system is the only network available for GPS, and I’ve yet to see any car with a built-in mobile phone system,” he says.
While some OEMs look to GPS as a way of tracking cars on ships at sea, it is unlikely a suitable satellite network would ever be developed at a cost the industry would be prepared to pay. “Satellite built into a vehicle would be ideal,” says Matthias Berlit, head of industrial solutions at software company Inform. “But for tracking cars onboard sea-going vessels, you would need antennae to reach 300km in the air and the price would be prohibitive.”
Also, asks de Baere, would GPS work on a vehicle below the water line in a metal-clad ship? “I think not,” he says, “and even if it were possible, I don’t see how any OEM would pay for it.” De Baere also points out that the GPS tracking device would have to be removed at the dealership if OEMs and dealers did not want to breach consumer privacy laws.
Even if GPS was considered a viable option, it creates another problem that few OEMs have thought about: information overload. As de Baere asks, what value does an OEM or dealer get from knowing where a vehicle is every minute of the day? “People want more in-depth visibility,” says Dan Vertachnik executive VP and chief commercial officer for RMI. “We’re meeting with OEMs and carriers to see what they want and how we can provide it. But once you have the visibility, you need to have event management: if you discover a shipment is delayed, how do you rectify the resulting shortfall?
“The key is collaboration by extending visibility throughout the supply chain. Give everyone in the supply chain access to the same data and give them the responsibility for event management. If you have a delay in your part of the supply chain, you have to decide what to do about it and make that decision available to everyone else.”
The amount of data already generated by barcodes–let alone RFID or GPS–make it hard to gain access to the right data. Exalead, which develops data search engines, has helped some automotive customers by laying its software on top of an existing data warehouse. “People get too much data,” says Morgan Zimmerman, VP business development. “Our software works in the same way Google or Yahoo does: it finds the relevant data required by an OEM or dealer more easily and quickly than if they tried to go direct into the data warehouse themselves.”
Data obtained from track-and-trace systems can in turn be used in planning and forecasting, but planning and production data can actually be used for track-andtrace purposes. For example, Quintiq, a software company specialising in planning and scheduling systems, generates shipping routes and allocates loads to carriers. But because it then needs to compare actuality to plan, it has the shipping and delivery information necessary to provide track and trace. “We get feeds from in-cab computers, RFID or other data collection methods,” explains Arjen Heeres, chief operating officer. “We need to know the estimated time of arrival and the actual time of arrival and compare these to service delivery promises. If there is a delay, we calculate what effect this will have on delivery promises and if we can make up any shortfall.”
The volume and type of data generated by many of today’s track-and-trace systems almost brings us full circle: how can we track a vehicle from the time it leaves the production line to the time it is delivered–and why bother? While OEMs may be screaming for faster, more frequent status updates, logistics companies and IT suppliers still question whether this is really necessary. And if it is, why aren’t the OEMs willing to pay for it?
“OEMs put up with what they’ve got because the cost of a better system is so great and it would take so long to develop,” says Jones. “If OEMs are serious about this, they have to take the responsibility and say ‘we think this is necessary but we want to use X standard and we’re not paying extra for the service’. This should be a condition of contract.” But is it reasonable to expect the logistics service provider to foot the whole bill? “OEMs have a lot of expectation until they see the price,” de Baere points out. “And different OEMs want different things. The only way to resolve this is for the OEMs, logistics companies and IT developers to get together and discuss the industry’s requirements, develop one standard for the entire industry, and then work out how to fund and implement the solution.”
And that might be the biggest ‘ask’ yet.