RFID AT THE DoD
RADIO TECHNOLOGY is enabling the Department of Defense to streamline and improve the world’s largest supply chain
When General Grant took command of union forces in the Eastern Theater during the Civil War, his first orders aimed to repair a malfunctioning system of supply lines. Historians credit Grant’s logistical expertise as crucial to his victory over Robert E. Lee’s army. Ever since, the U.S. military has been noted for its imposing logistical skills.
On January 1, the military supply chain will boost its logistical capabilities to a new level. It will switch to a new inventory management system that uses radio-frequency identification (RFID) technology.
More than 10 years in the making, the system will streamline and improve Department of Defense (DoD) logistics. “The goal is to implement what we call knowledge enabled logistics,” says Kathy Smith, special assistant for end-to-end customer support with the DoD. “We will use mature and emerging RFID technologies to optimize the supply chain. We are leveraging these technologies as well as our automated information systems to automate routine functions and to give us more accurate and timely in-transit visibility and in-storage and repair asset visibility with the least possible human intervention.”
In simple terms, RFID will replace barcodes with an automated intelligent information system. When fully operational, the new system will not need people to capture and record the inventory data that accompanies every product that moves through the DoD’s supply lines. RFID will not only reduce labor requirements, it will also improve accuracy and make it possible to query a computer to find out where any product in the DoD supply chain is at any given time.
The scope of the DoD’s logistics operations boggles the mind. With an annual budget of $343 billion, the DoD is one of the largest organizations in the world, larger than many countries. About one-third of the Department’s total budget, or $129 billion, currently pays for logistics. Every day, more than 2,000 separate legacy logistics systems manage 45,000 requisitions generated across DoD’s operations. Approximately 43,000 vendors fill those requisitions with parts and supplies for 300 ships, 15,000 aircraft, 30,000 combat vehicles, 330,000 ground vehicles and the 1.4 million men and women in uniform.
RFID will streamline the supply lines connecting all these people and equipment. The DoD has not projected the savings it expects from RFID implementation but relies instead on projections developed by private industry.
A study conducted by A. T. Kearney, a global management-consulting firm based in Reston, Va., concludes that Wal-Mart, with annual sales of $244 billion, will see a one-time cash savings of 5 percent of its total inventory when its RFID system comes on line. More important, the Kearney report estimates that RFID will reduce Wal-Mart’s in-store and warehouse labor expenses by 7.5 percent.
LogicaCMG, a European management consulting firm has studied the use of RFID in 50 organizations in six European countries and concluded that the technology could reduce per-pallet handling costs by 8.5 percent, not far off the Wal-Mart estimate.
The conclusions in both of these studies relied on 2003 costs for RFID tags, which were then running above 50 cents per tag. In the past year, however, tag costs have fallen. “Today, the market is roughly at 35 cents to 50 cents per tag,” says Tom Pounds, vice president for corporate development with Alien Technology Corp., a Morgan Hill, Calif., company that manufactures RFID tags. “So there has been a significant downward movement in tag costs this year.”
More cost reductions may be in the offing. A new tag manufacturing process developed by Alien promises to reduce tag costs as low as 5 cents by 2008. As the cost of RFID tags plummets, the percentage of labor savings for supply chains using RFID technology will rise.
How RFID works
RFID tags contain silicon chips with memories capable of storing data in binary code. The chips connect to antennas wound in concentric circles around the chips. There are two kinds of RFID tags: passive, which have no power source, and active, which do have a power source.
In a passive RFID tag, the chip and antenna assembly sits on a 3×5-inch piece of material with a peel-and-stick backing. Tag manufacturers write unique numbers onto the chips as they are produced. Passive tags will eventually be applied to DoD shipping pallets, the cartons sitting on the pallets, and the packaging of individual items inside the cartons. When a tagged pallet, carton or item moves through the distribution system, it will pass through portals or doorways equipped with scanners capable of reading the tags.
For example, a pallet coming off a truck and moving into a warehouse passes through a garage door, on which scanners are mounted. The scanners send radio signals that induce electrical currents in the passive tags and essentially wake the chips up. When activated, the chips send their unique numbers to the scanners, which, in turn, tell the inventory management system that this chip has arrived. Likewise, the scanners read any tags affixed to the cartons on the pallet and the item packaging and sends this data to the inventory management system.
Because they have no on-board power source, passive tags must be within three meters of a scanner to be read. Active RFID tags, on the other hand, do contain a power source, which enables scanners to read active tags from much greater distances — up to 300 yards.
Active tags are the size of a VHS tape cassette. They cost about $70, too much to tag tens of millions of pallets, cartons and items. Instead, active tags go onto large intermodal shipping containers, 40-foot square boxes. The uniform shape of shipping containers makes it easy to transfer freight from ships to trains to trucks and vice versa. Active tags use chips with larger memories and can store information about all of the items in the container as well as the unique numbers used by the warehouse management system.
RFID at DoD
During the first Gulf War, DoD often shipped duplicate materials to staging areas in Kuwait, says Pete Langworthy, senior program manager for the Northrop Grumman Automatic Identification Technology (AIT) and RFID Center in Williamsburg, Va. “People would requisition material, and it wouldn’t come,” he continues. “So they would requisition it again and perhaps again. Then it would all arrive.”
In the 1990s, DoD attacked the re-requisitioning problem by affixing active RFID tags to containers and tracking them. “Now an individual making a requisition could look at the in-transit visibility systems and see that the requisition had left the U.S., had moved past this point, and would arrive at its destination on this date,” Langworthy says. “When people got a sense that the cargo was moving toward them, they stopped re-requisitioning.”
The success of the active RFID program led to the current initiative that will eventually place passive RFID tags on all pallets and cartons and eventually on some individual items.
On January 1, 2005, when the first phase of the program kicks in, DoD vendors will be required to place passive RFID tags on pallets and cartons carrying certain commodities to two Defense Distribution Depots located in Susquehanna, Pa., and San Joaquin, Calif. The commodities included in phase-in include packaged rations, clothing, and spare parts for weapons systems. “These are the critical goods in the supply chain,” says DoD’s Smith.
Next January, DoD will expand the number of commodities that require RFID tags and turn on RFID inventory management systems in the rest of DoD’s distribution centers and some aerial ports and maintenance depots.
The schedule calls for the system to be fully implemented by January of 2007.
Technical challenges
RFID tags are the tip of the massive technical system being constructed across the DoD’s network of depots and ports. To use information on the RFID tags, it must travel from the RFID tags into DoD’s inventory management database.
So scanners must be installed at all receiving docks and warehouse storage areas. When a tagged pallet comes off a truck at a receiving dock, all the tags on the pallet and its cartons must be read, and the data must flow into the inventory management system. Usually, the pallets or the cartons on the pallet will spend time on shelves in the warehouses. Additional scanners must follow the movement of tagged goods throughout the warehouse to their storage positions — so someone can find the goods when a requisition is made.
As the goods come off the shelves and move onto trucks, ships, and planes, more scanners will tell the inventory management system which goods are moving to which destinations on which vehicles. Upon arrival at interim or final destinations, still more scanners will report those events.
DoD has installed scanners at the two main depots and is in the process of rolling the technology out across the entire network.
Solving problems
RFID poses some odd problems. For example, when an RFID tag passes a scanner, the scanner may read the tag up to 100 times. Special software must filter out the extra information to avoid clogging the inventory management database with extraneous data.
Once the data for the tag is pared down to one reading, another layer of software passes the data collected by readers into DoD’s inventory management system.
Another odd yet serious problem poses a security risk. Since it would be too expensive to encrypt the data on an RFID chip, anyone with a scanner can read an RFID tag. To protect weapons and other critical products moving through the DoD system, planners had to figure out how to apply RFID technology without broadcasting what products are moving where in the DoD world.
An innovative business procedure has solved this problem. “We’re not including any intelligence on the passive RFID tags,” says Vince Pontani, a senior functional analyst with SRA International Inc. of Fairfax, Va., a business services consultant that specializes in automatic identification technologies. “Think of the tag as a license plate number. It is unique. It can’t be repeated anywhere else. If anyone outside the system reads the tag all they will see is 96 bits of binary code — 0’s and 1’s — that record a number.”
Numbers on passive RFID tags don’t mean anything until they are correlated with the same number in the inventory management database behind DoD’s firewall. There, the number connects to a database entry that might say this is a pallet tag; these numbers represent the 24 carton tags on the pallet; and the cartons contain spare parts for a weapon system. The database will also note the vender, destination, cost and other information important to inventory management.
The correlating information in the database comes from vendors, who send advance shipping notifications directly to the firewall-protected DoD database. “The tags themselves don’t carry information that would tell someone that there is a military unit in a certain location repairing a certain kind of weapon,” adds George Henderson, a senior functional analyst with SRA.
Active tag security
Sometimes, large shipping containers stuffed with pallets and cartons flow directly to theaters of operations without interim stops at warehouses, which typically unload and sort the pallets and cartons inside containers.
Because an isolated staging area will not have a secure connection to the inventory management system, active tags carry data describing the materials inside containers. This makes it possible to set up temporary warehousing installations in combat theaters or other sensitive locations. Still, the system limits information on an active tag to material inventories. “Active tags do not include information about locations and units,” Henderson says.
Isn’t it possible for an enemy to read active tags from the side of the road as a convoy of trucks moves past? “No,” Henderson says. “Someone can read the unique number on the tag, but it takes several minutes to get the inventory data and an enemy won’t have enough time to do that as containers move past. It is helpful from a security point of view.”
More RFID tag ideas
During unrest in Haiti in the spring of 2004, the DoD tested another RFID concept. A number of military shipping containers sent to Haiti carried an active RFID tag connected to a sensor sealing the door of the container and a Global Positioning System (GPS) communications link. Limited by cost to use with only the most sensitive materials, this system can raise an alarm if unauthorized personnel open a shipping container.
Active RFID tags can also record medical treatments provided to wounded personal as they move from combat zones to hospitals.
“RFID technology enables us to collect information and make knowledge out of it,” says Henderson. “Then decision makers can make more informed decisions.”
In other words, collecting and managing supply line data improves logistical capabilities. “And you don’t win wars without superior logistics,” Pontani says.
