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Managing RTIs - Returnable Transport Items - with RFID

Real-world RTI pool tracking projects with RFID are popping up like mushrooms in the forest. This text explains the technology and lets the reader in on useful hints before initializing an RFID project.

RTI or returnable transport item, as it stands for, refers to all kinds of transportation packing assets that are used for carrying and transferring goods throughout the supply chain, such as containers, bins, pallets, racks, crates and carts. They are reusable and circulate the supply chain until their end of life. To share costs and risks, and assure a sufficient RTI pool, a group of companies often share a common pool of RTIs, which is managed by an RTI pool operator. In other cases the RTI pool operator might be the pool owner, who rents its RTIs to its customers, but the pool owner can just as well be a manufacturer, supplier, retailer etc.

RTI pool owners have been using RFID for many years, primarily in closed loop systems and mostly with high-value RTIs, but RFID is starting to become popular in open loop systems and low-value, high-volume RTIs as well. As long as the system is future-proof and follows common standards, the pool owner, but also the other members in the supply chain, will experience smooth operation and increased efficiency in the movement of assets, with a fast ROI.  Reports on successful implementations and pilots in the real-world are galvanizing retailers and pool owners into action.

HOW ARE RTI POOL OWNERS LOOSING MONEY?

RTIs are reusable assets and thereby considered green and cost efficient compared to so called single-use or one-way assets, that work under the "ship and forget" principal. However, the difficulty in tracking reusable RTIs results in productivity, labor, cost and time inefficiencies.  With an average annual shrinkage rate of anywhere from 3-9% and a breakage rate of 9%, RTI pools can cause large expenses. To solve this, companies spend money requiring additional logistics assets and hiring adequate labor to manage them. 

Many pool owners without RFID are lacking insight in how large their RTI pools actually are, making it even harder to manage them and detect problems such as shrinkage and poor condition of the RTIs. The lack of visibility causes both pool owners and renters difficulties in adapting to new conditions, such as new routes-to-market, new customers and extending supply chains, changes in manual processes, and labor and time shortages. This causes errors and problems, such as unverified arrival and departure records, longer cycle times, shrinkage, hoarding, supply chain bottle necks, inefficient product recalls, delayed orders and inaccurate shipping. The loss of visibility and control, once the returnable assets leave the owner's facilities, is mortifying.

To avoid the problems mentioned above, pool owners are acquiring additional RTIs to make sure the pool is sufficient. They are increasing the time and resources spent on inventory, tracking and management of the RTIs, as well as hiring extra personnel to clean up the mess of inaccurate orders and delayed shipments. Summa summarum - they are spending a ton of money on double-proofing good customer service, without certainty that it will be sufficient.

RFID IN ACTION - HOW DOES IT WORK?

Since RTIs need to be tracked while they are in storage as well as when they are on the move, RFID readers should preferably be installed in all locations where the RTIs travel. This covers everything from storage areas to transportation vehicles. 

A short description of the system could sound something like this. When RTIs arrive with goods to the different locations of the supply chain, fixed (installed by gates and in storage areas) or mobile RFID readers (in the hands of employees) will scan the RFID tags on the RTIs. The information obtained by the readers could then be shared with the appropriate members of the supply chain according to the picture below*.

RTI Supply Chain _web -bigger More

KEY BENEFITS OF IMPLEMENTING RFID

An RTI pool can travel through the supply chain from suppliers to manufacturers to retailers etc. even all the way to the end-customer's doorstep. Implementing RFID in the supply chain will bring benefits to all interest groups involved. But, the most significant beneficiary of the RFID implementation will, in most cases, be the pool owner. 


First of all, the size of the RTI pool can often be shrunk significantly due to reduced shrinkage and optimized management. That alone brings pool owners huge cost savings. Secondly, there is a reduced risk of non-availability of RTIs, which in the worst case could stop production and cause customer losses. Thirdly, customers have reported that the individual RTIs tend to be taken better care of during their journey, once RFID has been implemented. The reason for this is because it is possible to pinpoint exactly what has happened to the RTI at what stop of the journey. Visibility and transparency and the possibility to track each item as a unique item, leads to increased responsibility, which results in less shrinkage and damages of the RTIs.    

Studies have shown that implementing RFID (on an average) will bring RTI pool owners the following benefits: 

  • ROI in less than 12 months
  • 5.5% cost reduction in asset investment
  • 14.1% reduction in overall RTI stock size


As stated earlier, all parties in the supply chain - not just the pool owner - will benefit from RFID tracking of RTIs. Throughout the supply chain, the pool owner and renters will experience:

  • Faster authentication and counting, since RFID does not require line of sight and multiple tags can be scanned simultaneously
  • Less human errors due to more accurate and automated processes
  • Transparency in operations
  • Cost reduction (e.g. premium freight, more compact RTI pool and/or emergency packaging)
  • Improved product recall
  • More accurate billing and improved customer service
  • Overall savings for the pool owner will allow a 22% cost reduction on trip fees for the retailers

RUNNING AN RFID PROJECT

Before initializing an RFID project it is important to analyze the tracking needs of the company, calculate the ROI of an RFID project, determine the budget available and in what time the RFID system needs to be in place. After deciding that RFID is worth investigating further, there are some decisions that need to be thought trough carefully before the project kicks off, such as who to do business with and what the requirements of the system are. 

1. CHOOSE PROVIDER(S) AND SYSTEM(S)

When implementing RFID there is a few crucial decisions that have to be made when it comes to choosing providers: 

  1. What tag manufacturer?
  2. What RFID reader manufacturer?
  3. What software developer?
  4. What system integrator?


These can all be different companies or the same one. Usually it is a good idea to choose providers that are partners between themselves and thereby familiar with each other's products.

Whoever is chosen, it is important to assure that the providers have standardized products that are suitable for all operations in question and all necessary geographical areas of business.

"Best practice recommendations" of RFID implementations in the supply chain packing management have been released by e.g. Odette, a standard setter of supply chain systems in the automotive industry. Check out more about the technical recommendations of Odette here. ISO/IEC committees have been involved in the making of the recommendations, ensuring that the recommendations are compliant with all relevant ISO/IEC standards. It is also recommended to look into other industry related recommendations such as EDI messaging for logistics and Global Transport Label to ensure compatibility with the systems. In the year 2011 a working group called "RTI Management Using GS1 Standards" was formed to standardize RTI processes, technology, identification schemes and infrastructure. 

By choosing an RFID system that follows standards, companies can expect a faster return on investment, possibly even within a few months. Standardized products tend to be more affordable due to larger production amounts and they are more likely to integrate easily with existing and coming applications and systems, both within the company and with the systems of present and future partners and customers.  The system also needs to be compatible with standard barcode systems and allow identification with barcode readers when needed. It is also preferable that the system is flexible enough to allow adopting RFID in other operations as well such as management of tools, industrial equipment, personnel, etc.

2. GO ACTIVE OR PASSIVE?

Asset tracking with RFID is usually the right choice when it comes to big and medium-sized companies and supply chains, but should you choose active or passive RFID tags? Active tags are equipped with an internal power source making them able to constantly send out real-time information and they allow reading from longer distances. Passive tags do not possess these qualities but cost about 25 times less than active tags. Then again, since active tags allow longer reading distance the total amount of readers needed can be smaller. When choosing between active and passive tags, ask yourself the following questions:

  • Is the company dependent on real-time visibility or is it enough that the RTIs are read only at certain reading points?
  • Are internal memory and sensory capabilities essential for your project now or might they be in the future?
  • Does the RTI type/material/construction or the environment in question require a certain kind of tags? Your system providers will be able to help you with this question.

RTIs are often scanned with both fixed and mobile RFID readers. For more information about creating an optimized reading environment - read these articles: "RFID gates - the technology behind them" by Sini Syrjälä and "Managing environmental issues related to RFID" by Jessica Säilä. Jessica discusses how to implement RFID in fitting rooms, but the text has some useful points for RTI supply chain implementations as well. 

3. CHOOSE SOFTWARE APPLICATIONS

What applications are needed depends hugely on the business and supply chain in question. Your system providers will be able to help you by suggesting applications that similar customers have found useful.

These are typical RFID implementation in RTI supply chain and on the shop floor of retailers:

RTI Applications Picture _web _bigger2

CONCLUSION

The complex supply chains of today are experiencing a pressure to deal with ever more demands for tracking information and fast and secure movement and storage of goods. The costs of RTIs are rising making it even increasingly important to ensure the whereabouts and the condition of the assets. A future-proof system that offers flexibility and smooth operations is more and more often achieved by implementing RFID.

Related articles:

Not to perish so fast by Jessica Säilä

It's beginning to look a lot like RFID Christmas by Sini Syrjälä

From Post-IT notes to RFID by Jessica Säilä

Did you know that there are in European market 3.5 million RFID tagged containers (flower and pot plant trolleys) in circulation? by Atte Kaskihalme

RFID gates - the technology behind them by Sini Syrjälä

Sources:

The value of RFID for RTI management, Alexander Ilic, Jason W.P.Ng, Paul Bowman, Thorsten Staake, 2009

A Return on Returnables: How RFID RTI Tracking & Management Provides Value, Fluensee, 2010

Odette Newsletter

Managing RTIs, RFID Journal

4 comments on “Managing RTIs - Returnable Transport Items - with RFID”

  1. Gravatar of Barry DayBarry Day
    Posted 14 January 2013 at 13:24:13

    Closed systems fine, but open systems require co-operation by all parties.
    Note issues with Container Centralen flower trolleys.

  2. Posted 21 January 2013 at 09:17:17

    Hello Barry,

    True, it does require a lot of co-operation between parties but we do have an excellent successfull example of that too.
    Check out the Norwegian case NLP:
    http://www.nordicid.com/eng/case_studies/norsk_lastbrer_pool_as_nlp/

    BR, Mirva

  3. Gravatar of Hanna ÖstmanHanna Östman
    Posted 23 January 2013 at 14:54:33

    Bill Hoffman, active in AIAG (Automotive Industry Group) and a member of the Joint Automotive Industry Forum, kindly pointed out that I should also have mentioned the recommendations released by JAIF in September 2010. The recommendation goes under the name "Joint Automotive Industry Forum (JAIF) Global Guideline for Returnable Transport Items (RTIs) Identification", and can be found at the websites of the organisations involved (JAIF; consisting of the standards groups AIAG [the America's], Odette [Europe], JAMA and JAPIA [Asia])

    More more information about the recommendations, take a look at this helpful article by RFID Journal: http://www.rfidjournal.com/article/view/7938

    Thanks Bill!

  4. Gravatar of Pim van LoosbroekPim van Loosbroek
    Posted 30 January 2013 at 16:09:51

    www.thetagfactory.com

    Advantage for TRI user is that no paperlabels (2-4 each RFT)are needed. All information/identification of the goods in/on the RTI can be coupled into the tag. Now we are talking "green" thanks to RFiD technology

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