Compliance 2005: Withstanding Pain To Get the Gain

June 1, 2004
Other news briefs from the material handling industry.

Will the Wal-Mart radio frequency identification (RFID) adoption mandate leveled at its top 100 suppliers prove successful? Craig Harmon says Wal-Mart is condemned to success. He’s president of QED System, a consulting firm specializing in standards development, educational, advisory, and systems design services. Harmon was also instrumental in the development of ISO 18000 parts 5 and 6, an International Standards Organization document covering the "air interface," or the way readers communicate with tags to track items. Speaking at the spring meeting of the Material Handling Industry of America in Charlotte last month, Harmon said he believes adherence to competing EPCglobal interests will make successful implementation of RFID technology difficult, but that Wal-Mart’s success will come through some painful learnings.

The No. 1 unresolved issue, he says, is how to apply tags and labels. Cans of liquid and foil packages make successful reads difficult. Tag aggregation, singulation and deaggregation are also potential problem areas, especially for large-volume shippers.

"When you talk to FedEx and UPS, they want to be able to take a package off the truck and throw it onto a conveyor, without attention to tag orientation," Harmon said. "The point is, I want to be able to sort at 600 to 800 feet per minute. What kind of spacing do I need? How much data can I read? How do I focus the beam to be able to read that? There have to be guidelines."

Sue Hutchinson, product manager and facilitator of the Hardware Action Group at EPCglobal, says these guidelines are exactly what her organization is working on. The group is focused on hardware standards for electronic product code (EPC) technologies. Material Handling Management asked Hutchinson to comment on concerns voiced by Harmon at the MHIA meeting. Of particular concern to him are the differences between EPC standards and those being developed by the ISO.

"Standards are in place today that will allow companies to pilot, launch and learn about EPC technologies to meet current industry requirements," Hutchinson told MHM. "In addition, the EPCglobal community is working on the next generation of technology standards that will meet future needs. The technology continues to evolve and through our research partnership with MIT’s Auto-ID labs, we are learning more every day about guidelines for improving readability."

Current standards exist around Class 0 and Class 1 tags and readers that act as product license plates on cases and pallets of products. And the challenges of how radio signals interact with certain material such as liquids and metals are being addressed by researchers, Hutchinson adds.

"While there are some technology limitations now, organizations will still be able to gain a tremendous amount of new visibility into their supply chains," she believes. "We encourage companies to begin experimenting with pilots now to explore how RFID can benefit their business."

Current EPC standards are different from existing ISO standards, but Hutchinson maintains that the groups are committed to working together to benefit the end user.

"Our goal is to create a unified standard that meets stated end-user requirements," she explains. "We regularly share information between ISO and EPCglobal to help meet our community’s needs." The importance of a unified standard is particularly important for mandates such as the one from the U.S. Department of Defense.

According to Harmon, there are still unresolved safety issues, particularly in DoD applications. For example, what effect will electromagnetic radiation have on ordnance?

"Some of these fuses react very interestingly when you apply an RF signal to them," Harmon told his MHIA audience. "They explode. On top of that we need to know how fuels will react. There need to be guidelines that tell us what type of power levels are acceptable. These things have to be addressed before you cavalierly start implementing RFID."

Harmon added that he favors taking whatever it is that’s needed out of EPCglobal and applying it to ISO because it’s an existing standard. "However, it will take two years from the time EPC submits its proposals until it can deliver a standard," he stated. "Come January 2005, Wal-Mart will claim success, saying they’ve learned a whole lot and they’re ready to move forward."

Hutchinson says EPCglobal is working with the DoD and its suppliers, many of whom are also suppliers to Wal-Mart and other major retailers with similar mandates. And according to executives at EPCglobal, interoperability testing and tagged-unit testing will be available to subscribers later this year. "More complex issues will need to be addressed on an individual basis," Hutchinson admits. And that is one of the best parts of the EPCglobal community — identifying a need within the community and working collectively to solve the issue."

"This EPCglobal bake-off is just asking for difficulty," Harmon opined, referencing part of the proposed work plan for the UHF Generation 2 air interface protocol standard. That plan has various RFID vendors competing for prominence using the solutions they developed. "Will you be able to grandfather the EPC technology to your real live implementation strategy? No, but you will learn a lot between now and then about how this all works. The U.S. Department of Defense will write off close to $3.5 million in equipment it has purchased. If I were a small company right now, I would be learning, not rolling out. Nobody is out there presenting the product that either Wal-Mart or DoD is saying that they want. ISO will give them a way to extricate themselves from the blood bath."

For its part, EPCglobal states that end-user needs are its primary concern and priority. "We are working very closely with public and private organizations to address their needs, including a clear migration path to next-generation technologies," Hutchinson concludes. "Standards and the development of standards are truly an organic process. As we experienced with the bar code, it takes global community effort to organize and create standards that will evolve and grow with user needs. With more than 30 years of history and experience in developing the bar code, we believe we are well on the way to creating such an end-user-driven standard today for EPC technologies." — Tom Andel, chief editor

Nissan Names Top Dealerships

Six dealerships were recently honored as Gold Award winners in Nissan Forklift Corp.’s Service Excellence Program. The award is given to those dealerships that demonstrate excellence in service management, product service and factory-support training, service marketing, and service finance and administration.

Winners were New England Industrial Truck, Woburn, Massachusetts; Equipment Inc., Jackson, Mississippi; Forklifts Inc., Mechanicsburg, Pennsylvania; Liftec Inc., South Plainfield, New Jersey; M & L Industries Inc., Metairie, Louisiana, and Michigan Industrial Equipment Co. Inc., Wyoming, Michigan.

Rick Hurley of Forklifts Inc. was named National Service Manager of the Year; Steve Kent of M & L Industries was named National Parts Manager of the Year.

Logistics Institute Offers e-Courses

The Logistics Institute at Georgia Tech (TLI) presents the World-Class Warehousing and Material Handling eCourse. Developed by Edward H. Frazelle, Ph.D., one of the world’s top logistics experts, this comprehensive electronic course brings the resources and expertise of the logistics learning center directly to you and your management team in a self-paced, easy-to-navigate e-course.

E-courses are expanded and enhanced versions of the live short courses offered by Frazelle. Upcoming e-courses include:

o World-Class Logistics and Supply Chain Strategy;

o World-Class Transportation and Distribution;

o World-Class Inventory Planning and Management.

For more information, visit

Industrial Control Business Rebounds

Sales of industrial control products and systems, as tracked by NEMA’s Primary Industrial Control Index, rebounded in the first calendar quarter of 2004. Having been essentially stagnant for the previous five quarters, the index improved by nine percent from its fourth quarter 2003 level. Because the index has some seasonal characteristics, a more telling figure is that the index value of 77.8 is up by more than five percent from a year ago and is at the highest level since the second quarter of 2002.

The Primary Industrial Control and Adjustable Speed Drive Index also improved in the first quarter. The index value of 101.8 is the second highest level in the index’s short history and indicates a growth of eight percent over the fourth quarter 2003 level and seven percent compared to a year ago.

Manufacturing capacity utilization, after dipping below 73 percent last year, has risen to above 74 percent. Although the factory operating rate remains below its long-run average of approximately 80 percent, small improvements in the capacity utilization rate are correlated with gains in the industrial control business indices. The production of industrial machinery, which had declined on a year-over-year basis for 10 consecutive quarters, finally turned positive in the third quarter of 2003. Preliminary first quarter numbers indicate that industrial machinery production grew by more than six percent compared to the same period last year.

Survey Says U.S. Manufacturers Are Optimistic

Encouraged by a stronger U.S. economy and increased corporate spending, business leaders are optimistic about industry growth in 2004, according to a recent national survey of manufacturers sponsored by Siemens. Sixty-three percent of U.S. manufacturers have a positive outlook for the future and believe their industry will improve this year.

The survey also found investing in new technology to be a top priority for the majority of corporations.

Almost half (49 percent) of the business leaders polled said they are expanding their businesses this year, compared to 11 percent who said they are downsizing.

Respondents noted the biggest issues facing their industries are pricing pressures (18 percent) and cost cutting (16 percent).

Exel Senior VP Battista Dies

Ken Battista, senior vice president of business development, Exel, died May 12.

Throughout his 34 years in the supply chain industry, Battista worked for Procter & Gamble and several large third-party logistics providers before assuming the role of acting president of Power Logistics in 2000. In this position, he played an instrumental role in the company’s acquisition by Exel in October 2002.

Battista was also an active leader within many industry organizations, including the Warehousing Education and Research Council (WERC), Council of Logistics Management (CLM) and International Warehouse Logistics Association (IWLA). In addition to serving as president of WERC’s Board of Directors from 1995 to 1996, he served as a chairperson and presenter at multiple supply chain and warehousing events.

Esync Named Finalist for the 2004 Stevie Award

Esync is a finalist in the category of Best Overall Company for the second annual American Business Awards.

Hailed as "the business world’s own Oscars" by the New York Post, the American Business Awards are the first national business awards program honoring great performances in the workplace. More than 800 nominations from companies of all sizes and in virtually every industry were submitted for consideration in more than 40 categories, including Best Overall Company, Best Executive, Best New Product or Service and Best Support Staffer. ESYNC is one of 11 finalists in the Best Overall Company category for those companies under 100 employees.

The Stevie Awards are conferred in two programs: the American Business Awards and The International Business Awards. The Stevies recognize outstanding leadership, innovation, perseverance, creativity, teamwork and integrity through more than 40 categories.

Managers Making News

Psion Teklogix has named Constance L. Crosby vice president and general counsel. Crosby has acted as its external legal representative and has been a member of its board.

Cattron-Theimeg Inc. appointed Daniel J. Mihalcak vice president of sales for mining and material handling products throughout North and South America. He will report to James Kingerski, senior vice president, sales and marketing

TNT Logistics North America has promoted Steve M. Gundlach to general manager of its fast-moving consumer goods (FMCG) business sector in the U.S., Canada and Mexico.

William Harrison, chairman and CEO of Lift Technologies Inc., announced restructuring of his executive team. Brian Lamb will become president and chief operating officer for the American markets, Konrad Ostmeier will be managing director for Europe and David McBride will serve as chief financial officer and vice president of finance as well as vice president, information systems and human resources.

Dan Flowers has joined Exel Direct, the fulfillment business unit of Exel, as president. Flowers will be responsible for the development and implementation of structured processes and disciplines to expand the company’s network system.

Brad Bijonowski has joined Intelligrated as director of the Southwest regional office. Marty Augustyn will serve as its operations manager.