The tiny RFID chip has revolutionized how UPS ships packages
UPS announced Tuesday that a major rollout of RFID technology is revolutionizing its U.S. network at an unprecedented scale.
Thanks to the shrinking cost of radio-frequency identification labels — featuring tiny antennae and microchips that now cost just a few cents — the company says every single U.S. package has an RFID label.
And crucially, they are being automatically tracked using RFID-sensing technology newly present in all UPS package delivery vehicles in the U.S., all 5,500 UPS Stores and each of its about 1,000 package facilities.
UPS, the Sandy Springs-based global logistics giant, is the first logistics provider to roll this out at this scale, Chief Commercial and Strategy Officer Matt Guffey told The Atlanta Journal-Constitution.
“I absolutely think this is the future,” he said.
FedEx told Supply Chain Dive this month it is testing RFID sensors on packages and working to scale development.
UPS’ news comes after decades of work and a more than $100 million investment; it has more than 30 patents on RFID technology dating to 2003. And the technology is already a part of the company’s high-end health care logistics solutions.
But Guffey said Tuesday’s news is “one of the most exciting days for us” because of all the different ways this has the potential to change the game.
‘Near real-time visibility’
To start, the technology eliminates nearly 20 million manual scans per day by UPS employees throughout the network, he said. “We are moving from scanning to sensing.”
It also cuts down immensely on the risk of human error.
Take a UPS package sorting facility, for example, where employees load package cars up for the day.
“As you can imagine, when you’re running shifts at (4 a.m.) or (9 p.m.) … you could have human error, where an individual will walk a package into the wrong car,” Guffey said.
“This now eliminates that, because once you walk it into that package car, it lets them know that that package is not in the right car.”
The technology has reduced these “misloads” by 70%, he said, which in turn reduces total miles driven because a mistakenly loaded package has to be driven back to the sorting facility and rerouted out.
And then there’s what this technology can do when it comes to moving a package through the logistics network. UPS can now give customers “near real-time visibility,” Guffey said.
Large shipping customers can track three or four touchpoints along the journey now, he said.
It also improves UPS’ ability to proactively reroute a shipment via ground or air to get around weather events. “It allows us to give much more predictability and precision to our customers,” he said.
Ingram Micro, a California-based UPS customer, has been piloting the new technology for more than 2½ years.
The company ships $52 billion worth of technology products through millions of orders across the globe each year for manufacturers like Lenovo, HP and Apple to resellers like Walmart and Amazon.
Bill Ross, Ingram Micro’s EVP of global operations and engineering in charge of its logistics network, said the technology “is really transformational.”
These are high-value and high-complexity orders, he said. Sometimes one order requires different parts and components shipped to one end-user.
Ingram Micro and its own customers have been using RFID in different ways for a while, but it was quite “fragmented,” he said.
“We were using RFID within our four walls to track products moving, but as soon as we put it on a carrier’s truck and it transferred into our network, they couldn’t consume our data and there were gaps.”
Now, as soon as an order is accepted by Ingram Micro and routed to UPS — which handles the “very high majority” of its shipments — a UPS RFID label is attached to it.
“We’ve all had those experiences where you’re looking and waiting for a package,” Ross said. “This RFID technology creates the platform around data for real-time visibility where we can track any package at any point within the supply chain.”
It also reduces manual tasks, lowers costs, cuts waste, boosts efficiency and improves customer service, he said.
‘More to come’
Ross is excited about the opportunities ahead with all the new end-to-end supply chain data they are collecting, including the possibility of skipping stops at delivery hubs.
“Every time you touch a product or a box, you incur risk. Risk of damage, risk of loss, the label falls off, the label gets scuffed. Transportation delays, road closures. How do you use that data to proactively take out touches?” he said.
Guffey at UPS is also excited about what this technology rollout unlocks going forward.
Customers, for example, later this year will have the option of integrating the RFID labels even higher up their supply chains at point of fulfillment to help manage inventory before they get to shipping, he said.
“So if you’re doing store replenishment, or if you’re moving it to a (distribution center), we can now enable that so they can see what garments or goods are in that package as well.”
Could end-user customers someday even geotrack their UPS drivers en route to their homes?
“I would say, more to come,” Guffey responded.
“We think there’s opportunities to really start to do some really exciting things both for our customers/our shippers and our receivers,” he said.
About the Author
As a business reporter, Emma Hurt leads coverage of the Atlanta airport, Delta Air Lines, UPS, Norfolk Southern and other travel and logistics companies. Prior to the Atlanta Journal-Constitution she worked as an editor and Atlanta reporter for Axios, a politics reporter for WABE News and a business reporter for the Arkansas Democrat-Gazette.
