Document Sample
                                    Vic Halpin
               International ISO Group, Inc – Container TRACKER™


This article addresses the system considerations that apply to container management. It
explores the role of container tracking with the context of container management. A
container tracking system is discussed relative to a set of representative goals of a robust
tracking system.


Current trends are toward more use of reusable packaging. This increase in popularity is
the result of the specific advantages that reusable packaging offers including;
        !       Long term and continuous operating cost advantage
        !       reduced packaging material costs
        !       reduced handling and packaging related labor costs
        !       reduced packaging design for new products
        !       environmental concerns, including recycling, reduced material usage and
                reduced waste disposal
        !       logistics concerns including pooling, outsourcing, standard load sizes and
                reduced transportation costs
        !       meeting customer requirements relative to reusable containers.

Although the goals for reusable packaging systems are simple, taken as a set, they
sometimes lead to a maddening complexity that appears to defy management. Without
adequate container management your container assets may just be the most expensive
one-trip packaging you can buy.

1.1     What’s the Problem?

When you initiate a reusable container program you usually start with a customer demand
or a cost justification for assets that you will own. The cost justification assumes some
level of utilization and system performance. This performance is far from automatic and
it requires systemic management to achieve.


We create systems to establish control over people, activities and resources to achieve a
set of goals. The control we are going to exercise assures that we plan, execute and
evaluate the activities necessary to accomplish our goals. Our goals may seem obvious
for container management. They include things we have previously listed. But even if the
goals are obvious your container management system must be specifically designed to
accomplish the goals. It is important to realize that tracking returnable assets is only one
part of a container management system. Even if your tracking is perfect your container
management could still be inadequate.

2.1    Asset Tracking as Part of Container Management System

You may have noticed that some reusable packaging systems are not tracked and seem to
perform reasonably well while others are clearly out of control and the lack of tracking is
an obvious problem. This is possible because different systems have different tracking
needs. To determine whether tracking is important in a particular system we can borrow
some of the methods of quality control.

When we mention quality we often think its that magic stuff that quality people do. But
quality in the sense we are going to use it simply means meeting requirements. The other
part of the issue is control. Automated systems provide one measure of control but every
container management system involves people making decisions. We have to use the
right box, the right dunnage, the right label or chip, put it on the right truck, move
empties one way and full ones another way. This kind of control is called self-control.
Self-control requires three things of an individual;
    1. The individual must know what they are supposed to do.
    2. They must be able to evaluate what the actual conditions are; what’s really
    3. They must be able to act on the difference.

Asset tracking is part of number two above. After an individual(s) knows what they must
accomplish, a tracking system can tell them what is happening in the system. A tracking
system cannot determine what must be done and it has limited ability to act on the
difference. The important part to remember is that tracking by itself cannot manage and
control your containers as long as people are actively involved in the process.

A few examples may help to illustrate this point. One of our customers told us that most
of their reusable packaging has specific dunnage sets. There are many dunnage sets and
some are very similar in appearance. One of his vendors was taking a similar dunnage
and cutting it up to replace the correct item. This is an example of not knowing what to
do, number one above. In this case tracking won’t solve the problem.

Another customer uses specialty racks for packaging. These racks travel from warehouse,
to distributor, to customer, to a cross-docking facility to a manufacturing plant and back
to the warehouse. Sometimes these assets are shown as going to a customer and they fail
to return. When the customer is asked about the asset, they typically look for it but often
can not find it. If they cannot find it, nothing specific happens. This is a case of number
three above. Without the ability to act on the difference between what is supposed to
happen (the customer returns the rack) and the current circumstance (the customer hasn’t
returned the rack) there is no possibility of control or container management. Notice in
this circumstance that tracking was working; the system knew where the rack was.

The previous discussion was not meant to minimize the value of container tracking but
rather to put it in the proper context. It also gives a clue about why some reusable
container systems work ok without tracking. In a closed loop system where one entity
always has responsibility for the containers, tracking may not be necessary. When
responsibility is split between several departments, plants or companies, tracking is

2.2    Types of Tracking Systems

There are a wide variety of approaches to tracking containers including;
       !       Pencil and paper
       !       Standard computer programs like spreadsheets or databases
       !       Resource planning systems (MRP and ERP)
       !       Accounting systems
       !       Custom software for tracking
       !       Configurable tracking software

In today’s world, we sometimes assume that tracking systems always involve computers.
In simple situations that involve limited paths and limited items, it is possible to track
containers with a pencil and paper. If that works for you, it is most likely the right

The next most common approach is to use standard computer applications, spreadsheets
or databases, to record container movements. This is a variant of the pencil and paper
method. It also works in simple, static circumstances. One of our customers used a
spreadsheet to track their returnable containers before they purchased a container tracking
system. I asked the lady responsible for tracking why she needed a better tracking system.
She replied, “Other than the fact that I couldn’t keep up with the work and it was always
wrong, it was ok.” The proof is definitely in the pudding. If these methods work for you,
they may be adequate to meet your tracking needs. They do have one built in limitation,
however. These products work because they are user-configurable. Often the people
responsible for tracking containers do not have the skills to configure the application
when the system gains complexity.

Most large organizations have MRP, ERP and accounting system software that they use
as manufacturing or distribution management tools. As their name implies, they were
designed for resource planning and/or accounting. These are powerful packages that can
accommodate a considerable amount of application programming for specific needs.
Since we already have them, it would make sense to use them to track containers. But we
need to consider what they were designed to do and what impact that will have on our
needs. Remember our needs were determined by the combined requirements of our
vendors, our company and our customers.

MRP/ERP and accounting systems have structures designed to facilitate their primary
purpose. In manufacturing, the tracking or accounting is about the things in the box not
the boxes themselves. Furthermore, we expect the things in the boxes to make a one way
trip (with any luck) but we expect the boxes to make many cycles. MRP/ERP and
accounting systems expect only one transfer of responsibility and ownership. The
responsibility for our containers may change with every move, ownership typically does
not change. These tools often fit your tracking needs like a pair of wooden shoes. Often,
they require specialty programming which is expensive and hard to schedule.

When you review the opportunities the previous methods offer, you may think you need
to write a custom application for your tracking needs. Except for the cost and lead-time,
which can be staggering, there is one very real downfall. Your circumstances change!
When they change you may need features that were not in the original program. This
requires rewriting or scrapping the original effort. And there is no guarantee that your
circumstances won’t change again. The alternative to this is to write an application that
considers all possible features whether you need them or not. This is almost certainly
prohibitively expensive. If the expense wasn’t prohibitive there is still another problem.

Three years ago one of our customers asked us to develop a container management
software system for their business. We created one that met their needs. By the time we
were finished, their needs had changed. We decided to make a system that was flexible
enough to accommodate 95% of the changes that might come along. This required a total
rewrite and took two more years to add the flexibility and robustness required. We bore
these costs as the costs of developing a commercial product, but we have had to upgrade
our original client’s software eight times to accommodate the additional features. And the
feature set is still growing. Even if you could somehow afford to develop the software so
that it could adapt to your future needs, it is very unlikely that you could imagine what a
complete set of future needs would be.

The last possibility is to purchase a software product that was designed for this specific
task of container management and can be configured for your specific needs. If the
application is robust, it will be able to adapt to a great variety of container tracking
situations by reconfiguring the product. This greatly reduces the possibility of your future
needs causing you to abandon your software investment. If you can find software that;
        !       provides standard interface methods that allows it to work with existing
                systems (ERP/MRP, EIA/ASN, barcode, RFID) for automation
        !       supports user customization
        !       can trigger external events based on user definable rules
        !       allows access to all tracking information in your system for custom
you can build a system that meets your changing needs.
2.3      Systems, Tools and Technologies

Its often easy to forget that container management is a systemic activity. Systems are
defined by and evaluated in terms of the goals established for them. You, your customers
and vendors have set the goals. Your system should control activities and circumstances
to assure that the goals are accomplished. Tools and technologies should be selected after
you design your system. If you select the tools and technologies before you design the
system, the tools and technologies you select limit what the system can accomplish. In
fact they design the system for you. When they design the system for you, you are stuck
with goals the tool and technology creators selected instead of the ones that meet your

The following chart illustrates this relative to communication technologies that are
available to software programs.

   Software Communication                  Advantages                          Disadvantages
Stand alone computer.           Medium data security                 One user only.
                                Simple to install                    Does not provide access to network
                                Easy to administer                   services like backup.
                                Low cost                             No ability to interactively
                                                                     communicate with co-workers or
LAN computer                    High data security                   Installation may be complex
                                Powerful administration tools        Requires an administrator with
                                Ability to communicate throughout    specific technical competence.
                                the local area.                      Costs are based on # of users
                                Medium cost?                         Outages unrelated to the client can
                                Fast data transfer.                  stop the application
                                                                     Cannot directly communicate with
                                                                     external organizations.
WAN computer                    High data security                   Installation may be very complex
                                Powerful administration tools        Requires an administrator with even
                                Ability to communicate throughout    more specific technical competence
                                the organization                     Communication services
                                High cost                            (connections) are typically expensive
                                Relatively fast data transfer.       Local organization may not be able to
                                                                     assure service
                                                                     Cannot directly communicate with
                                                                     external organizations.
WEB based by service Provider   Best combination of extra-           Questionable data security
                                organization communication and low   Questionable application security and
                                cost                                 support
                                                                     Limited programming feature set
                                                                     Dependence on external org.
Organization hosted WEB site    Best external communication and      Very complex
                                data security combination.           Very expensive
                                                                     Requires additional technologies
                                                                  Significant maintenance burden

Notice that all of these technologies have their advantages, none of which would
necessarily meet your needs. Picking the technology, or the tool, without reference to
goals will limit the system, possibly in critical ways.


It is beyond the scope of this article to identify all the features that are essential to a good
tracking system. It would also be impossible without knowing your tracking system
goals. We are going to assume some things about your system so we can establish a
minimum features list. The following list of assumptions is the basis for the
recommendations that follow;
         !      your system is too complex to track with pencil and paper, spreadsheet or
                generic database
         !      the containers you manage are not always within your physical control
         !      you may not own all the containers in the system
         !      some items require serial numbers, some will be tracked by item type
         !      you intend to use barcode, RFID or existing data for items you track
         !      items associated with certain parts or customers are restricted from other
         !      you need a system that is easy to use and saves the operator(s) time
         !      some items are often combined (totes, dunnage and pallets, for example)
         !      you may need to track disposable packaging shipments
         !      you need management information like cycles, dwell time. repair details
         !      you believe that you may want special features at some time
         !      the scale of your application may change over time

We will discuss these items below under the heading from the bulleted list.

The containers you manage are not always within your physical control – Many
systems assume that all the parts of the system are simultaneously available.
Warehousing systems often make this assumption. In reality, your containers move
between your locations, your vendors, agents and customers. They are outside of your
local control for large periods of time. Your tracking system must be able to manage
inventory at places outside of your control.

When items are regularly at your vendors, service companies or customers, you are going
to need to communicate with these other interested parties. Your container tracking
system should support this effort by maintaining contact information, allowing other
interested parties to check inventories, logging communications and triggering recurring
communications based on events or schedules. It should allow you to fax, email and
transfer data. It should also allow web access and restrict web viewers from information
that does not concern them.
You may not own all the containers in the system – Your system must manage
responsibilities as well as assets. In pooled systems, you may not be aware of the total
number of pooled items. You are only concerned with the item for which you are
responsible. This number varies up and down with each shipment. When you own the
containers, the number you own doesn’t change very often, you only need to know where
the fixed number of assets are located at any one time. Your tracking system must be able
to manage both situations.

Some items require serial numbers, some will be tracked by item type – Some
containers need to be serialized, others can be tracked by the item type Fundamentally a
container tracking system is an asset tracking system. As you track increased asset types
you may need this flexibility. Serial numbered items, by their nature, may only be in one
place at a time. Non-serialized containers will naturally be at a variety of places. Your
tracking system should support both modes.

You intend to use barcode, RFID or existing data for items you track – As
technology improves, it is easy to imagine that we may be able to completely automate
our container tracking system. Some systems may achieve total automation but most will
require a variety of automation and manual methods to meet all circumstances. If you
own a container you may put a barcode label or RFID chip on the container. If it is
pooled or owned by your customer, there will be restrictions on what you may place on
the container. Even if there are no restrictions, in a pooled situation you may never see a
particular container again. Barcodes and chip identification schemes will not be feasible.

Many manufacturing situations require ASN’s (automatic shipping notifications) for
shipped product. This information is a viable source of information that can be used to
automate your container tracking. Often, however, systems only support ASN’s for
container movements when the containers are full. Other sources are required when
containers are returned. Your container tracking solution needs to accommodate multiple
sources of existing automation information as well as the ability to enter any particular
movement manually. Do what we can, there always seems to be some manual entry.

Items associated with certain parts or customers are restricted from other uses –
One of the primary functions of a container tracking system is to maintain accurate
inventories so that someone can act on that information. Containers get lost but there are
actually two ways to loose them. The first way is the old fashion way. An item is gone
and it is never coming back. A man that worked for a container manufacturer once told
me, “Never make a container that’s like a toolbox or a dog house. If you do they are
going to go away.”

The other type of loss is the most common. Things are in the wrong place but the place
they are in is a good place for other things. This is what happens when you send customer
“A” customer “B’s” container. The container tracking system you select should be able to
enforce rules that prevent the recording of an improper combination of items and
locations. These rules help prevent “administrative losses” and provide control and
instant feedback.

You need a system that is easy to use and saves the operator(s) time – Your tracking
system needs to be an easy to use tool for your operators. It should provide methods that
allow the user to remember repetitive movements and configure the system to reduce
required inputs. It also should enforce rules that prevent the operators from making data
entry and inappropriate movements.

Some items are often combined (totes, dunnage and pallets, for example) – It is often
useful to ship combinations of items as sets. This allows a single entry to move a number
of items. For example a standard packaging arrangement might include a pallet, 20 totes,
a lid and two strap kits. Moving this as a single item is very useful particularly in systems
that use barcode or RFID devices, as it reduces the number of scans or ID devices
needed. The system should also accommodate the return of these items individually to
your inventory. Sometimes things that go out as sets come back as pieces. Although this
represents a problem, you must accommodate it in your system because it is bound to

You may need to track disposable packaging shipments – If you or your vendors are
still using disposable packaging in systems where reusable packaging is available that’s a
problem. You need information about this occurrence to manage the problem. Your
system should provide it.

You need management information like cycles, dwell time, repair details – Your
system should provide the tools to manage sophisticated concepts relative to container
management. When things don’t come back on time you need to get information about
the length of time an item has remained at its various location. You may also need to
inspect, clean, repair or destroy items based on their age, a schedule or the number of
trips they have made.

A primary purpose of a container tracking system is to provide management information.
The system you select should provide a wide range of reports that are user-selectable. It
should also provide a method to allow you to define custom reports for complicated
selection criteria or report selections that are run often.

You believe that you may want special features at some time – As we discussed
before, you can’t always figure out what tomorrow may bring in terms of requirements.
Your container management system should accommodate changes without major
modification. It also should provide you with independence from the vendor for
programming tasks to customize your system. The system should provide methods to use
external data, make system data available to external manipulation, and initiate external
events from internal activities or schedules.
The scale of your application may change over time – Many times you solve the worst
local problem first. Other parts of the organization may also need tracking. Your
container management system needs to be scaleable. That means that your container
management solution should provide a migration path from a single local solution to a
corporate wide solution. You may also want to start with a manual system and automate
it later. Your tracking system needs to accommodate these requirements.
                           Automatic Data Collection
    The Future Begins With a Well-Managed Process and Infrastructure
                               Mr. Spencer Hoopes, CEO
                              Container And Pallet Services


•    Current focus on supply chain management and efficiencies
•    Knowing where things are in the system—critical to efficient management
•    The future in automatic data collection and transfer to the appropriate management
     information systems
•    Ideal situation-management information is available twenty four hours a day, seven
     days a week via the internet for easy code protect access


•    Non-production assets can be located (‘tracked’) with a well-managed process and
•    ‘Location Relevant’ data can be automated using today’s technology—Bar Codes,
     RFID, Telephony, GPS
•    Technology can read/write/associate contents with the ‘carrier’ using careful process
•     Relevant product data can be collected and transferred tot he appropriate
     management system

3.0 DATA

         3.1 Data Collection to Data Management
•    Data collection using RFID, Bar Code, Telephony, and GPS
•    Data Management using reports, which generate dwell time, inventory per location,
     daily account activity, accurate packaging costs, measurement of the shipping cycle
     and availability.

         3.2 Benefits
•    The more read-points you create, the more informative the information
•    The more automatic the process of data collection, the less costly the system

•   Technology’s rapid changes
•   Tech advances create annual 50% cost reductions
•   Benefits of adopting a flexible system which is adaptable to change
•   Goals in writing product information on carrier chips, and then associating the two
•   Infrastructures and accommodating innovation in chip technology


        5.1 Today
•   Three plants of non-production item tracking (engine racks)
•   RFID point location only
•   Data collection at two different locations per plant, reading in and out of the location
•   Information desired
•   Inventory by location, dwell time, transit time, etc.

        5.2 The Future
•   Write product information to carrier
•   Read product data from carrier
•   Send product data to appropriate information system
•   All plants, all material handling assets

• Good solid flexible infrastructure
• Embracing new innovations for collecting data
• Availability of information twenty four hours a day, seven days a week

                                     Tim Honaker
                           Vice President & General Manager
                                   Menasha Services

Here’s a new idea on how to reduce supply chain costs.

You need to measure the performance of an expensive asset like your returnable
packaging. Left unmanaged your returnable packaging costs will balloon without any
rational explanation.

The management of returnable packaging involves measuring and then improving three
important cost drivers: cost per use, returnable packaging asset utilization, and
average days in cycle.

Cost Per Use
The first cost driver, cost per use, is the most important cost to be measured. Its
components are asset depreciation, storage, handling, wash, repair, routine maintenance,
expendable substitution (stock outs of returnable packaging), lost packaging (failure to
have it returned), and back haul transportation costs.

The total cost per use metric represents the total cost accumulated from the activities
associated with picking up the empty packaging at the production line, to delivering it in
usable condition to the appropriate parties to be filled again with parts. This is the
packaging cost per shipment that a company will incur to use returnable packaging. It can
be easily compared to the expendable packaging or other returnable alternatives when
reported and measured this way. This cost metric should be actively managed and the
role of returnable packaging management should be to drive this metric as low as the
supply chain will allow.

Returnable Packaging Asset Utilization
The returnable packaging utilization cost driver relates to the amount of packaging
needed in the system and how productive it is in actual use. This is a measurement of the
amount of packaging that is at rest instead of productively conveying product.

Returnable packaging devalues with use and age. Like any asset a company purchases, a
utilization factor less than 100% means that investments were made in assets that are not
being productive. However, some of the costs in using plastic returnable packaging are
inversely related. For example, having excess returnable packaging can eliminate stock
outs and reduce the cost of using expendable packaging because no returnable packaging
was available.
If utilization is too high, the probability of stock outs or transportation inefficiencies is
increased. If the utilization is too low, the company has invested in assets that are
unproductive and unneeded. The role of returnable packaging management is to establish
the appropriate returnable packaging asset utilization and manage the metric inside the
established parameters.

Days in Cycle
The average days in cycle cost driver directly relates to total amount of returnable
packaging required for the supply chain. It is a measure of the amount of time that
elapses from the time that the packaging is emptied at the line, refilled with product at the
supplier, and emptied again.

Let’s use an example. Assume that a returnable bin carries one day’s supply of parts. The
days-in-cycle metric will determine the actual number of bins required. If it takes 8 days
for the packaging to move from the plant to the supplier, to be filled with parts, and then
shipped back to the line, 8 bins will be required to keep the line supplied. Any increase in
this elapsed time will require additional bins to keep the line supplied.

The role of returnable packaging management is to determine the appropriate days in
cycle metric and manage the days in cycle inside the established range. If it slips, then
corrective action can be taken to stop the need for additional bins. In addition, by
understanding the different circumstances that will naturally increase average days in
cycle, planning can be done proactively to use alternative sources to meet cyclical
demands for returnable packaging.