January 2008 | Case Studies | I.T. Toolkit

The Educated Pallet: How Sweet It Is

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Imperial Sugar spices up its supply chain by leasing pallets with the smarts to tell where they've been and where they're headed.

Like the man who sidled up to Dustin Hoffman in The Graduate, the folks at Intelligent Global Pooling Systems (iGPS) have one word of advice for you: "Plastics."

The Orlando, Fla.-based company claims that the plastic pallets it leases to shippers are lighter and more durable, reliable, and environmentally friendly than similar equipment made of wood.

Imperial Sugar had the virtues of plastic in mind when it signed on as an iGPS customer last fall. But the pallets also delivered a bonus: Each one comes equipped with four radio frequency identification (RFID) tags. Imperial Sugar is experimenting to determine how it can use this technology to better manage its supply chain.

"We've installed readers in several locations, and continue to move in that direction," says Greig DeBow, vice president of consumer sales and marketing at Imperial.

Based in Sugar Land, Texas, Imperial Sugar makes products under the Imperial Pure Cane Sugar, Dixie Crystals, and Holly labels. It operates refineries in Gramercy, La., and Savannah, Ga., and leases warehouses in Houston, Texas; Kenner, La.; and Garden City, Ga.

Those facilities ship packaged sugar primarily to retailers in Texas, Alabama, Florida, Georgia, and the Carolinas, as well as railcar loads to industrial customers across the United States.

Ripping Into Wood Pallets

When they decided to lease pallets from iGPS, Imperial Sugar officials weren't thinking about tracking their goods. They were thinking about how wooden pallets of varying sizes—booby-trapped with splinters and loose nails—can rip sugar bags and jam palletizing machines.

"The U.S. wooden pallet pool totals approximately 2.5 billion," DeBow says. Because wood pallets splinter over time, they constantly require repairs and replacement.

"And the quality has diminished in recent years because the manufacturers that sell these wooden pallets are trying to keep costs down," he adds.

iGPS entered the pallet pooling market in 2006 with a two-pronged proposition.

First, the company would create a fleet made up entirely of plastic pallets, each the same size and weight. Plastic pallets are 30 percent lighter than equivalent wood pallets. They are more durable, easier to sanitize, and kinder to the environment than wood pallets, as well as being fire-retardant and moisture-resistant, the company says.

Second, iGPS would embed RFID tags in each pallet, making them trackable.

A Chep off The Old Block

iGPS isn't the first pallet pooler to employ RFID. Several of the company's executives previously worked at CHEP, a pooling firm that started putting RFID tags on shipping conveyances in 2001.

CHEP's primary goal was to manage its own supply chain, keeping track of pallets as they moved from its facilities to customers and back again. iGPS has a similar motive for tagging pallets.

"We know their history—where they are and where they've been," says Jack Sparn, chief information officer at iGPS. "We can monitor their use and accurately invoice a retailer or customer for exactly the time they have the pallet."

In other words, RFID offers a way to meter the use of each pallet in a pool of billions.

Customers can use the pallet-tracking data to monitor the progress of their palletized goods. In addition to pinpointing the location of a pallet, shippers can track their cargo in more detail by installing RFID readers at additional locations. Few iGPS customers have done so, but they will someday, Sparn says.

"Shippers will want to know where their cargo has been, how it got there, who touched it - even the temperature during transit," he predicts.

When iGPS builds a pallet, it welds a passive RFID tag encoded with a Graphic Reusable Asset Identifier (GRAI)—a unique serial number—in each corner of the base. The four identical pallet tags provide redundancy. Each side of the pallet also contains a printed label, which represents the GRAI as a bar code and a human-readable serial number.

As the company releases a pallet to a shipper, a reader in the iGPS facility captures the GRAI, along with the date, time, and code representing the destination. Upon receipt of the pallet, the shipper also captures the GRAI, date, and time, and marries that data in an internal computer system with another code that uniquely identifies the product loaded on the pallet.

Data Times Two

Through an Internet link, iGPS imports this information to its own database. Now iGPS has two pieces of information about the pallet it sent to a customer - Imperial Sugar, for example.

"The first is that we shipped the pallet to Imperial," Sparn says. "The second is that Imperial shipped the loaded pallet to a grocery store.

"The grocery store receives the pallet, offloads the sugar, and sends that pallet back to us, or to our depot," he says. "In some instances, we pick it up from them."

When the pallet returns to iGPS, another reader captures the GRAI. "When the cycle is complete, we stop charging rent on that pallet and give credit to Imperial for returning the asset," Sparn says.

Most iGPS customers have installed RFID equipment so they can participate in this process. iGPS installs, manages, and maintains the antennas and readers and the portals that hold them.

Although Imperial Sugar is testing some RFID equipment, it has not yet made the technology part of its operation. "We're in the infant stages," DeBow says.

In the meantime, Imperial uses its own bar-code readers to scan the pallets as they enter and leave a facility. At companies operating without bar-code equipment, employees jot down the serial numbers.

Accurate and Precise

For iGPS's own operations, the primary advantages of tracking pallets via RFID are accuracy and precision. "We're able

to know not only the exact quantity but also the specific units that we ship to a customer such as Imperial," Sparn says.

The company also can bill the customer for the exact number of days a pallet is held, which is a benefit to both parties. "We don't bill based on averages or assumptions," Sparn notes. "We create invoices using specific data for each pallet."

Also, pallets with tags are less likely to get lost. If one does go astray, iGPS knows which customer to credit for the return when it resurfaces.

For a food manufacturer such as Imperial, the fact that iGPS tracks and traces its pallets also offers an extra measure of quality assurance.

"Each pallet has its own identifier, and the products shipped on those pallets are registered under that identifier," DeBow explains. "So you can see whether or not a raw meat product, for example, has ever been shipped on a particular pallet."

Eventually, the tagged pallets could help Imperial better manage its inventory, DeBow notes, although he isn't sure what the future holds for the use of RFID in retail distribution. "We'll sit back and see if it works for Wal-Mart in the long term," he says.

Sparn is more sanguine. He predicts a time when pallets will sport not only tags, but in some cases global positioning system (GPS) receivers to track their locations in real time, and sensors that record when a load is dropped, frozen, or over-heated.

Just as cell phones didn't hit big in the market until carriers built out their networks, RFID tags won't become ubiquitous until a network of readers covers the entire country.

"The biggest challenge is spreading RFID everywhere," Sparn says.

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