April 1, 2004
by Lynn Petrak
RFID emerges as the new frontier as processors shop for logistics systems.
It’s one thing to process and package dairy products, which is almost always done under one roof. It’s quite another to move those products from Point A to Point B, and perhaps on to Points C and D, with limited in-house control over logistics and distribution.
During the time products are stored, taken to the loading dock and delivered to their destination, there any many points along the way where things could go wrong, resulting in decreased employee productivity, inventory loss, spoiled products and dissatisfied customers with incorrect orders.
To ensure systems run as smoothly as possible, dairy processors can choose from an array of software programs and services that automate, regulate and verify inventory control and order fulfillment, among other functions.
As the dairy industry has evolved, the need for higher-tech management of logistics and distribution has become apparent. Thanks to ever-improving software and hardware capabilities, such systems are readily available.
Many software suppliers cite the dairy industry as a dynamic one with great potential. “Forty years ago, a guy filled the truck and went to the store and delivered it. Dairies have moved from a milkman business to a delivery execution business and, certainly, technology has been critical in that evolution,” says Robert Hochberg, chief executive officer of Numeric Computer Systems Inc. (NCS), Hauppauge, N.Y.
Patrick Pilz, president of San Diego-based CSB-System International, agrees there is an untapped market for innovative software systems in the dairy supply chain. “In dairy, you find a lot of home-grown systems that have old technology that are going to be replaced,” he says. “Dairy right now in our segment is the second most active market — it’s more active than bakery, processed food and fruits and vegetables.”
The movement — however rapid or slow — toward upgrading software systems represents a major change in how things are done on the warehousing and distribution side of the business. “Many of these legacy systems are paper based,” says Pilz. “But that’s now going to change, as processors look at the overall picture and overall solution.”
Hochberg, too, believes that various factors are falling into place allowing dairies to improve their software-based capabilities. “Everyone is realizing they have to work on their back-end distribution system. They may have upgraded their manufacturing system, and now we are beginning to see people understanding that they have to deliver Web solutions to connect to their clients in the fulfillment process,” he explains. “With the consolidation of suppliers and retailers, the push is to drive cost out of the systems, meaning fewer people need to be involved. How do you do that? You do it with technology.”
Track and Field
Software systems are designed to perform a host of functions, but one of their central applications for the proverbial back end of the dairy business is product logging and tracking.
That capability is needed more in today’s production climate than ever before, says Pilz. “The number of SKUs that they (dairies) have to organize on the truck is much larger. The organization of the truck and the loading needs to be more reliable,” he says.
Hochberg agrees. “It all happens so fast, the pace of it. If you’ve been on the back of a truck, it’s such a hectic place, especially as bigger deliveries are being done and customer satisfaction and service are so important,” he says.
Different software companies specialize in particular software systems, including several aimed at improving logging and tracking, beginning in the warehouse and loading dock of a plant. Ontario-based Radcliffe Systems Inc., for example, produces supply chain browser-based logistics software and consulting services for many dairy manufacturers who are often overwhelmed by pressure to reduce supply chain costs while providing higher service levels.
According to company president Fred Radcliffe, the firm’s extensive experience with dairy clients has helped it develop software that takes into account the industry’s needs. “We’ve done work over the years with fluid dairy, cheese, yogurt, spreads, butter and ice cream. Because of that, we have a warehouse management system that we’ve actually enhanced to address a number of their functional requirements,” he explains. “In dairy, especially in fluid dairy, how they pick cases onto a conveyor line takes some unusual functionality to manage. Also, you have a lot of cross-docking, moving products from production directly to a trailer.”
Beyond warehouse management, transportation management is a key issue in software used for supply chain management. Among other functions, software from CSB-System helps dairy processors in logging and tracking on the road. “On trucks, they can use route accounting software so people can track the time of delivery. The drivers can work all day, come back to the plant and, within a radius of 100 feet, they can synchronize their sales on a computer and upload all the information they got on that route,” says Pilz.
Hand-held scanners on the route, he says, allow drivers to get real-time information that works with the company’s various software programs. “You see what was loaded on the truck and can account for what was loaded on the truck versus what was sold,” says Pilz.
Currently, CSB-System offers a series of software solutions for applications ranging from warehouse to transportation management, including the Navision edition of Microsoft Business Solutions, a fully integrated business software package for medium-sized organization that includes supply chain collaboration and customer relationship management (CRM). The company also supplies SYSPRO software and Microsoft CRM, specifically for CRM applications.
In addition to gathering and tracking data, CSB’s systems also help improve efficiency, says Pilz. “Say you have any agreement with a customer that he needs to place an order by 8 a.m. If he doesn’t call by 8:01, a message will come up that the customer hasn’t placed it, so someone can call them back. It makes sure as soon as something out-of-schedule happens that they get automatically notified and can act accordingly,” he says.
NCS, meanwhile, specializes on the execution side of supply chain management, working with companies that employ a direct store delivery (DSD) sales team to sell, deliver and service products. The company helps integrate a customer’s back office system to its Internet-enabled route accounting application; NCS’s software suite of mobile applications then takes the data through the delivery point.
NCS’s software works on wireless systems and Web services that enable a dairy driver or delivery person to reliably and consistently synchronize and exchange information. “We basically automate the last mile (of the supply chain), from the warehouse to shelf. It’s connectivity in a real sense that you can actually get data from the air — you can walk in a store and find out where the stock room is, what the inventory is,” Hochberg says. “It’s about having their machine talk to yours and tell you that they have 500 gallons on the shelf and to bring in X number of gallons to the back.”
Tied into transportation and delivery logistics, of course, is productivity. On the warehouse side of the business, Radcliffe recently purchased a company that specializes in labor standards software. “Basically, you send an industrial engineer in a warehouse for six weeks and he or she creates labor standards for each location in the warehouse. Later, when you are order picking, the software can calculate how much time it should take to pick that order and you track the employee’s actual time against the target time,” Radcliffe says. “The productivity goes up when people know they are being tracked objectively, and they work faster.”
Software is available for transportation productivity issue as well. CSB-System has worked with companies that have invested in sophisticated setups on their trucks and trailers. “Most modern trucks now allow the capture from the engine certain information from the computer — it can capture the time when the truck was running and going. If someone makes an unexpected stop and the engine is shut down for more than 10 minutes, they’ll know,” Pilz says. “That gets much tighter control for drivers.”
While the dairy industry and its retail counterpart have undergone major transformations in the last decade, the pace of technological improvements during that same period has been nothing short of remarkable. “The dairy industry hasn’t changed as much as the computer industry has changed,” says Hochberg.
To that end, the growth of wireless technology is helping make software that much more efficient and reliable. “Our solutions deliver instant infrastructure. The whole idea of having solutions based on the technology of the Internet will give consistent product and user interfaces,” says Hochberg.
Pilz, too, cites the expansion of general Internet and communications technology as key to software improvements. “You can use standard wireless technology in hand-helds (scanners) that have a huge capacity — they can have up to 250 megabytes now. You are talking networking speed, and there is no limitation in terms of what you can do,” he says.
In addition to wireless technology, Radcliffe believes activated voice technology is another important development with implications for dairy logistics management and distribution. A few months ago, Radcliffe developed a reseller relationship with a company that manufactures voice equipment, and is now working on a pilot program. “You have a headset on a person in the warehouse and the voice tells them what location to go to and how many to pick. It’s hands free — you get a productivity gain with very high accuracy,” says Radcliffe.
Much of the current buzz in logistics and distribution is centered on the use of radio frequency identification, or RFID. That technology, increasingly viewed as a solution over bar-code scanning, utilizes electromagnetic or electrostatic coupling in the radio frequency portion of the electromagnetic spectrum to uniquely identify an item and enable users to store and retrieve data. RFID tags are affixed to a product or pallet and then read and monitored.
Although discount store giant Wal-Mart is already using RFID technology and requiring it of its suppliers, software experts seem to agree that it will affect the dairy industry later rather than sooner. “When RFID first got talked about, it was assumed that eventually we would have the ’penny tag,’ which is far from where we are and even if reached could still be too much money to tag a consumable item,” says Hochberg. “So it moved from being a product-level solution to a container-level solution.”
At NCS, Hochberg says the question is, where do we start with RFID? “The answer we came up with is the load confirmation process,” he says. “If we light up a loading dock door and each pallet or case, for example, we can have a monitor show exactly what is on that truck and what is expected to be on that truck and the variance of real time. That is the vision we are executing right now.”
Pilz agrees the price has kept the technology prohibitive, at least for now. “It is a significant expense to do that. While the cost of the chips is low, the cost of the equipment is high,” he says.
In addition to the expense of RFID, the technology has other hurdles for dairy manufacturers. “RF technology gets absorbed by liquids and therefore cannot be read through or even near liquids,” says Hochberg.
Enterprising RFID tag and software suppliers are already trying to figure out ways to update the technology to work with liquid products. Radcliffe, for his part, says it’s only a matter of time before the technology is adapted in a broad way. “I don’t think it will hit dairy for at least five years, but once it does, it will require new software or equipment,” he says.
One company is already using RFID technology for dairy products for at least one function. Montreal-based Syscan International has developed an RFID-based tracking system called Tempasure™ that provides a permanent record of a product’s temperature history during and after shipment.
Currently targeted to meat and poultry processors for food safety-related traceability purposes, the Tempasure system also has applications for perishable dairy products. “We are using RFID temperature records, which enable members of the cold chain to get real live data at any stage in the game. We monitor real-time, real-temperature stamps and communicate that in real time, all the time,” says Syscan president Axel Striefler. “Should anything go wrong, there will be an immediate message that will be broadcast to respective members in the chain.”
Other temperature control systems linked to software logistics programs are available for dairy processors as well. For example, the Stamford, Conn.-based Dresser Instrument Division of global firm Ebro has linked Winlog 2000 software, compliant to 15 languages, to its series of hand-held EBI series transportation loggers. “A lot of customers were asking to identify the temperature of transportation items to be able to monitor whether or not the products went out of specs during transport, storage or warehousing,” says Benjamin D’Acounto, North American sales and marketing manager at Dresser. “With these loggers, you can pre-program them to monitor temperature ranges and set an alarm for certain conditions.”
Lynn Petrak is a freelance journalist based in the Chicago area.$OMN_arttitle="Software Solutions";?>