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LOGISTICS FIRM SMOOTHING TECHNOLOGICAL TRANSITION
Some Wal-Mart suppliers are hiring Ozburn-Hessey to
handle next generation bar codes – radio frequency
ID chips – to update shipping and inventory.
By Bush Bernard
Staff Writer For
The Tennessean
A Nashville warehouse company has installed a radio
frequency identification network in Dallas to help
clients involved in Wal-Mart’s new electronic
products code trials.
Ozburn-Hessey Logistics of
Nashville
is one of the first third-party logistics firms to
implement the radio frequency technology that
Wal-Mart will require of all of its major suppliers
eventually.
Ozburn-Hessey hopes to recoup the cost of the new
system by providing the service to several Wal-Mart
suppliers, but for now, it’s a way to keep customers
happy, said Bob Spieth, Ozburn-Hessey’s chief
information office.
Paul Reed, owner of
BRS,
a
Brentwood
business that sells bar code printers and scanners,
among other identification supplies, said
Ozburn-Hessey’s business model makes sense. There’s
room for large logistics firms between Wal-Mart and
its suppliers, many of whom are manufacturers leery
of the system.
“It’s too complicated,” for manufacturers, Reed said
of radio frequency ID tags. “The last thing they
want to do is spend a half million to set up to
comply with Wal-Mart. They just want to ship the
product and if Qzburn-Hessey charges them a little
bit extra to do it, they’re happy to pay it.”
Spieth declined to say how much Ozburn-Hessey has
invested in the system, other than it is in six
figures. The system is labor-intensive but will
help their client comply with Wal-Mart’s
requirements, he added.
The company has tied the radio frequency system into
its standard warehouse management software, so that
there’s no need to enter shipment information into
the computer system more than once, Spieth said.
Radio frequency identification technology isn’t new.
It involves a small chip encoded with identifying
information that responds to a radio signal. It is
found in newer model car keys, as well as in passes
used on toll roads. CarMax uses it to keep track of
inventory on their lots.
The system is relatively new for retailers. If left
on their own, most manufacturers wouldn’t use the
system because of the uncertainty of a return on the
investment is equipment, Reed said.
“They’re just doing it because Wal-Mart is forcing
them,” he said.
The system is designed to improve shipment accuracy
and keep Wal-Mart shelves stocked.
“When a customer goes into a store and finds an
empty shelf, it frustrates the customer and we lose
a sale,” Wal-Mart spokesman Gus Whitcomb said.
Wal-Mart will use the system to keep better track of
its shipments. Each pallet of items and its
individual shipping boxes will have a special tag
that lets the company know as soon as it is loaded
or unloaded at the warehouse or store. The system
can better track shipments and make sure the correct
box is at the right location.
The bar-code system is accurate 99% of the time, but
the company hopes to obtain 100% accuracy with radio
frequency tags.
“They sell so much product that the difference
between that 99% and 100% could really mean a huge
difference,” Reed said.
Spieth said the system’s cost is one of its main
drawbacks. Tags cost between 20 cents and 70 cents
apiece, with 40 cents being about average. The cost
of tags will have to drop to either 1 or 2 cents to
make the system affordable for manufacturers to use
routinely, he said.
For now, Ozburn-Hessey workers manually tag each box
and pallet and prepare them for shipment to three
Wal-Mart distribution centers in the Dallas area,
where Wal-Mart is testing 21 products at seven
stores.
“I think for (radio frequency ID) to be a successful
technology, (the tags) will have to be applied by
the manufacturer at the plants,” Spieth said. |
