Information for Members of the
Warehousing Education and Research Council
B ack in the late ’90s, a great deal of attention was focused on a proposed OSHA ergonomics standard. Companies took close looks at their internal approach to ergonomics in anticipation of such a standard.
When it didn’t pass, many companies relaxed and let ergonomics take a back seat.
Now there are some quiet rumblings that
OSHA may want to try again with an ergo- nomics standard. While that’s a good reason to reexamine your ergonomics practices, doing it for the sake of reduction in work-related musculoskeletal disorders should be incentive enough.
There’s also a lot of evidence that a good ergonomics program makes good economic sense (see Sidebar, page 3). When ergonomics are front and center in the way employees work, injuries go down, and with them, so does absenteeism and attrition. When employees are healthy and at work, they are more productive—all of which leads to an improved bottom line.
“If you want to be profitable, it’s important to consider an ergonomics program in your DC,” says Steven Lavender,
PhD, associate professor of integrated systems engineering at The Ohio State
University (O.S.U.). “Companies are beginning to realize that ergonomics is good for business.”
January/February 2011
In this issue...
Consumer Commodities Contained
Aggressive proactive initiatives changing culture and returning results for OHL.
No Progress
2010 Logistics Cost and Service Report
At WERC
Member news and events.
RFID usage is increasing sharply across all vertical markets and supply chain environments. “RFID technology is supporting both traditional/historical and modernizing/emerging applications,” according to
Michael J. Liard, research director, RFID and barcode, ABI
Research, Oyster Bay, N.Y. “As new solutions become available, RFID, RTLS, and complementary technologies
(environmental sensors) are expected to enable a growing number of automatic identification, location, and sensing applications across industries.”
“There is no question that RFID holds enormous potential for improving consumer access to the products they need when they need them, from improving the speed of delivery and reducing delivery costs, to
6
8
13

2222
P e O P L e
Lavender should know. His team at O.S.U. has studied the role of ergonomics in the DC environment, looking into a variety of factors: How does the DC environment differ from a manufacturing environment when it comes to ergonomics? What ergonomics approaches are most effective in the DC? What new techniques might be applied in the DC?
“Back in the ‘90s, approaches to ergonomics were more focused on
safety,” says Lavender. “Today we’re more familiar with it and companies are trying to integrate ergonomics into their operations.”
Lavender says that ergonomics is a win-win for both employer and employee. “It’s good for employees because they can keep working,” he says. “It’s good for companies because, when the work is easier, it makes the staff more productive; they can give more to the employer. everyone wins.”
Ray Niemeyer, managing executive of the eASe council (ergonomics Assist Systems and equipment) of the Material Handling Industry Association (MHIA), says that, for most companies, it’s the productivity improvements garnered by an ergonomics program that becomes the selling point. “Often you get insurance companies or state run bureau of worker’s comp organizations going into companies to point out their worker’s comp issues,” he says. “They look at the issues and try to
WERCSheet ® (USPS # 014998) is published bi-monthly by the
Warehousing Education and Research Council, 1100 Jorie Blvd.,
Ste. 170, Oak Brook, IL 60523-3016.
Phone: (630) 990-0001 Fax: (630) 990-0256
E-mail: wercoffice@werc.org Website: www.werc.org
Annual membership dues are $275, including $80.00 for an annual subscription to WERCSheet.
Periodicals postage rates paid at Oak Brook, IL (Vol. 34, No. 1)
POSTMASTER: Send address changes to WERCSheet,
1100 Jorie Blvd., Ste. 170, Oak Brook, IL 60523-3016.
WERC assumes no responsibility for unsolicited manuscripts or other materials submitted for review.
Editor: Rita Coleman
Copyright © 2011 by the Warehousing Education and Research
Council. All rights reserved.
Reproduction in whole or part without written permission is prohibited. Internet inquiries: www.werc.org.
Writers: Amanda Loudin and Joseph Mazel find solutions. Once they do, and a company can work out an ROI, then the companies understand what they can gain from an ergonomics program and are sold.”
One thing that must be kept front and center with an ergonomics program is the fact that ergonomics in the
DC is an entirely different animal than in a manufacturing setting. “In a manufacturing environment, you have people doing the same actions, with the same materials, and in the same place all day,” says Lavender. “A DC can be completely different.”
Take the average grocery DC, for instance. “If you’re picking up to 6,000 items in a grocery DC, you’re going to have a lot of manual material handling,” says Lavender.
“You move around the DC with different materials of all shapes, sizes and weights. You also move to different locations. It makes it a tough nut to crack.”
Niemeyer agrees. “You may be moving dozens of pallet loads at a time, or breaking those pallets and putting them away,” he says. “In a DC, you handle such a wide variety of tasks, and it makes it challenging to find a way to do all the jobs safely.”
How much or how little automation you have, or can invest in, plays a role in this plan. “Some DCs have automation that allows them to keep folks in designated areas, which can lessen the impact of the movements,” says Niemeyer. “But others may have manual pick lists they need to carry all over the facility, picking and pulling various shapes of boxes. Then they might move onto the shrink wrap area and potentially face manual shrink wrapping. It all adds up.”
The goal, says Lavender, should be to minimize, as much as possible, the number of times people are lifting heavy objects and/or reaching and bending to lift objects from physically challenging locations—those that are too high, too low, or too far away. “There’s no golden bullet,” he says, “but every company should try to come up with intervention concepts that reduce exposure to injuries. The reduction of things like overuse injuries to shoulders or backs should be at the forefront.”
How you go about that will vary from one operation to the next. Likely it’s a combination of approaches that will offer the best solution. “You can both change the way an employee performs a task and change the equipment they use for injury reduction,” says Lavender.
For many companies, the approach has always been things like providing back belts, or training their staff on how to properly lift things. “But that’s not ergonomics,”
/ JANUARY–FeBRUARY 2011

says Lavender. “It may help prevent injuries, yes, but it’s not designing the work process to help.”
Instead, he recommends, you need to change the work flow, the type of equipment used, the tools provided to assist people, or the layout of the work to lessen the physical impact of the work on the people doing it.
Before you can design a plan of action to improve ergonomics in your DC, you need to assess your organization’s existing situation. “Look at OSHA 300s and see what problems you have,” suggests Lavender. “For instance, if you see that you have a high rate of repetitive use injuries, that’s a red flag. Also look at your first aid logs. Do you have a lot of sore backs or shoulders? What’s behind that?”
Another option is to use a consultant who specializes in ergonomics. Also consider local universities as a resource. Many industrial engineering programs offer capstone courses that are looking for projects, including ergonomics projects that their senior students can work on. “Reach out to professors or students of ergonomics to have them come in and assess your situation,” suggests Niemeyer.
There are books that can help as well, although Lavender cautions that many are manufacturing focused. “When some of these books or assessment tools were designed, they were done so with manufacturing in mind,” he says.
“You can use these tools, but you need to know what you’re doing. That’s where a consultant can help.”
The eASe council of MHIA, along with NIOSH, CAL/
OSHA and CNA Insurance, has designed a book titled
Ergonomic Guidelines for Manual Material Handling for companies with budget restraints in mind. “The book is an excellent resource for managers and companies to use to help improve their manual material handling issues.”
Workers comp claims are another way to analyze your situation. What types pop up over and over? The answers may provide clues to what’s going on, as well as give you material to get senior management buy-in.
From his studies on ergonomics in the DC, Lavender has concluded that “quick and dirty” approaches don’t work. “You need to look at the work and the work processes and determine if it’s something a person can do continually for a long time,” he says. “If not, figure out a way to ensure that it is.”
SIDeBAR:
Cornell University is a big proponent of ergonomics programs. According to CU’s ergonomics Web, ergonomics is a benefit for companies, not a cost.
“An ergonomics program takes a basic, systematic approach and offers businesses a common-sense strategy for eliminating unnecessary musculoskeletal disorders from the workplace.”
The university points to these reasons for why ergonomics makes sense:
Workers are the main cost for modern businesses, and businesses need to attract and retain the best talent. You don’t want to hire then inadvertently injure workers—that benefits no one. ergonomics prevent this.
Musculoskeletal disorders are entirely preventable and quite unnecessary injuries that cost the U.S. economy billions of dollars and inflict misery and suffering on affected workers.
When ergonomics is an integral part of basic job and workplace design, not an afterthought, it’s no more expensive to choose a good ergonomic design for a workplace than to choose a bad design—the difference isn’t economics, it’s education.
Good ergonomics programs focus on ways to reduce costs to companies by reducing injuries, reducing absenteeism, reducing errors and maximizing productivity.
Good ergonomics programs are always cost-effective—they save more than they cost.
Many studies have shown this.
For further proof, Cornell offers cost justification worksheets to companies. One is geared towards those with cost data available, one for those with estimated cost data, and one for those with no cost data available. They can be found at: www.ergo. human.cornell.edu.
The goal, says Lavender, is to reduce injuries and increase retention. Niemeyer says that by assessing the overall job and throughput, companies can get a picture of how ergonomics can turn things around. “If all the parts are married in, you’re going to reduce injuries,” he says. “It may take a multi-pronged approach, changing the equipment and the process.”
/ JANUARY–FeBRUARY 2011
3

4
Lavender says that often it’s simple changes that make a difference. “In the grocery industry, for instance, where items are only stacked a few layers high, you can decrease the amount of reaching and bending someone has to do by putting empty pallets below the skid containing the product,” he explains. “In many distribution operations, there are often quite a few items you can do this with.”
Lavender points out that simple pick hooks can also be beneficial. These can be fabricated out of inexpensive
PVC materials and make it easier for employees to reach for items sitting on the back half of a pallet. This is particularly useful with two-tiered slots found in many DCs.
This simple tool also facilitates the practice of picking by layers. This “best-practice” enables workers picking from full or lower tier slots to slide cases close prior to lifting, therein substantially reducing the biomechanical loads experienced by the spine.
Other things that can make a difference: Slotting.
“There’s a greater awareness now about how where you slot things can make it easier to get at items,” says Lavender. “Consider also the congestion in your DC that may be caused by how you have slotted items. This can lead to extra work and movement that employees don’t need to do as they attempt to overcome these barriers to their productivity.”
Lavender’s research, which was sponsored by MHIA, also indicated interest by both employees and management in pallet jacks that raise to waist level, lift assists integrated into pallet jack equipment, means for rotating pallets in slots that don’t require a fork lift, and lift assists integrated with extendable conveyor units used in apparel and general merchandise shipping and receiving operations. Many of these concepts were identified by operations and safety managers during focus group sessions at O.S.U. and supported during review sessions with DC employees.
Overall, both Lavender and Niemeyer say they are optimistic about the future of ergonomics in the DC. “It has a long way to go, like any process, but it’s improving,” says Niemeyer. “Success occurs when employees are heard and management uses their feedback to implement solutions. Then everyone wins.”
“When you look at where we were 10 years ago, there are increased levels of awareness at all levels of management,” says Lavender. “Things are looking good for the future.”
For a free download of the Ergonomic Guidelines
for Manual Material Handling, go to www.mhia.org/ ergoguidelines
Steven Lavender, PhD, The Ohio State University
Ray Niemeyer, EASE council (Ergonomics Assist Systems and
Equipment) of the Material Handling Industry Association
(MHIA)
SIDeBAR:
EHS Today , the magazine of environment, health and safety, along with James Mallon, vice president at
Humantech, conducted a benchmarking study over
2009/2010 that focused on Fortune 500 companies and their ergonomics practices. Thirteen companies, from a wide variety of industries, participated in the study.
The study found that all of the companies were successful in reducing work-related musculoskeletal disorder (WMSD) injuries. Four of the companies, however, stood out with markedly better results. eHS drilled down to identify the practices that made these companies a notch above:
Planning: All of the top four organizations managed ergonomics as an improvement process, aligned with or modeled after continuous improvement.
Implementation and operation: All of the top four invested in training their leadership on how to manage the strategic elements of the ergonomics process. They also provided training on the application of a common set of tools for measuring WMSD risk.
Checking and corrective action: All of the leading companies stayed on top of the effectiveness of individual workstation improvements through follow-up assessments.
Management review: Additionally, the companies reviewed the effectiveness of their ergonomics programs at the top level.
Additionally, Mallon dissected 69 case studies by
Fortune 500 companies that focused on ergonomics initiatives. According to his findings, as presented in EHS
Today , these companies demonstrated that:
WMSD lost days are down 80 percent overall
WMSD rates are down 81 percent overall
Workers’ comp costs are down 70 percent
Incidence rates are down 55 percent
Productivity is up 62 percent
Cycle time is down 44 percent
Cost of quality is down $942,805
Source: EHS Today
/ JANUARY–FeBRUARY 2011

ontact Gary Master at 719.495.5050 or
Jim Indelicato at 630.521.9033.
MAY 15-16

F A C I L I T I e S
6
O ne of the more complex and challenging issues confronting the DC community is products classified as consumer commodity/ORM-D. A consumer commodity (see Sidebar, page 7) is a hazardous material that is packaged for retail sale, typically in smaller quantities. Many of these products
are regulated materials when carried in larger or bulk quantities, but when classified as a consumer commodity they are not subject to hazmat requirements. Therein lies the cause for potential problems within DCs.
“DC personnel may be inclined to treat consumer commodities the same as any typical, unregulated items and prepare them for shipment using normal, traditional means and modes,” says erin Gaul, hazardous materials compliance manager,
OHL, Madison, Ill. “Many times DC personnel don’t understand that these products are still a hazardous material and have some requirements to meet when prepared for shipping.”
For example, by simply placing one consumer commodity product in a container among many unregulated products, that container becomes a “regulated” container and must be identified with a consumer commodity/
ORM-D mark. This, too, is an area of potential concern as there is nothing outstanding about the ORM-D mark itself. “Many times the ORM-D mark can blend in with other graphics on the package and if the DC employee doesn’t have a ‘trained eye,’ its significance is lost and these specific boxes, cases, and/or pallets may not be recognized as regulated materials,” explains Terry
Drengwitz, OHL’s director of safety.
Another root cause of error is directed at the product
/ JANUARY–FeBRUARY 2011 manufacturer. “We’re dependent upon the manufacturers, suppliers and vendors of that product to identify what they’re shipping to us, whether it’s labeling a fully regulated hazardous material delivery, or marking a consumer commodity shipment,” he declares. “If it comes in marked appropriately, it helps our internal process. If not, then our DC employees must be aware to question the contents when in doubt.”
OHL has taken a decidedly proactive approach to the handling, storing and shipping operations of the consumer commodities/ORM-D it receives. The company has established an education/training program that aims to familiarize all employees with hazardous materials labels and markings. The initial focus of the initiative is at the facilities and campuses that are known to receive/ ship hazardous materials or consumer commodities. The program will extend to all the other facilities as well.
“In the OHL culture, we are on a full assault campaign to raise the awareness companywide, and that means educating every employee, from the CeO right on down to the newest entry level DC employee,” emphasizes Gaul.
For example, upper management, along with the regional vice presidents, managers and supervisors, are required to attend a two-hour consumer commodity general awareness course. The objective is to acquaint them with consumer commodities, the regulations affecting these products, and the potentially costly penalties that can be incurred for not following the regulations.
“The introductory course has been effective in getting management’s active endorsement and commitment to the overall consumer commodity initiative,” says
Drengwitz.
New hires receive a basic introduction to hazardous materials as part of their safety training within their first five days of being on the job. “Our operations employees

need to be informed enough to recognize if a container includes a consumer commodity mark to contact the appropriate person and ask, ‘What do I do now?’” says Gaul.
More intense, detailed training is provided to all managers and employees who are directly or indirectly handling consumer commodities. The program also includes training based on U.S. Department of
Transportation materials for function-specific training, general awareness training and safety training. employees involved with shipping consumer commodities must be re-trained every three years, if shipping by ground or ocean, and every two years if by air, according to Federal law.
The awareness and education process actually begins much earlier in the business cycle. It starts during the business development phase when a potential customer is being solicited. “Our business development people must know what the customer has in their product line that they want us to warehouse for them,” according to Drengwitz. “They specifically ask the customer whether they have any hazardous materials, which then triggers our internal awareness and education processes. Basically, everyone from the business development person down to the employee picking or shipping the product needs to be able to recognize hazmat marking and labels.”
Beyond the training and education of its employees,
OHL relies on a series of “reminders” to reinforce hazardous materials training, especially about consumer commodities. One of the more effective practices is to know the customer. “You have to understand what their products include, familiarize yourself with each specific product (i.e., aerosol vs. non-aerosol) to be shipped
SIDeBAR 1:
The Department of Transportation’s Hazardous Materials
Regulations defines a Consumer Commodity as “a material that is packaged and distributed in a form intended or suitable for sale through retail sales agencies or instrumentalities for consumption by individuals for purposes of personal care or household use.”
It also includes “drugs and medicines” in the definition.
Although Consumer Commodities are subject to less stringent regulations, those regulations still require that each non-bulk packaging containing a consumer commodity must be marked on at least one side or end with the ORM-D marking, which must be below or following the proper shipping name (e.g., “Consumer
Commodity”). The ORM-D (Other Regulated Materials-Domestic) marking can be either in the form of a sticker or stencil. Consumer
Commodities must also meet minimal packaging requirements
“One of the greatest difficulties is the realization that even though a hazardous material defined by the U.S. Department of
Transportation as a Consumer Commodity is subject to less onerous requirements, it nonetheless remains a hazardous material that must be in compliance with certain regulations,” explains Terry Drengwitz, Director of Safety, OHL, Madison, Ill.
Another is to recognize that the rectangular-shaped ORM-D
Consumer Commodity Mark on a package or container signifies a shipment that contains a hazardous material, even though the shipment may present only a limited risk of hazard during transportation due to its form, quantity, and packaging.
employees should not assume that a material is not regulated as a hazardous material just because it is a common household good. erin Gaul, OHL Hazardous Materials Compliance Manager, notes, “DOT regulations offer shippers relief from shipping products as fully regulated hazardous materials when packaged in relatively small-sized containers, referred to as ‘inner packagings,’ as well as a low hazard risk associated with the materials. However, not all materials can be renamed as Consumer Commodities since the DOT deems them too dangerous to be shipped under the provisions.”
Only certain materials are eligible for the exceptions. The materials that can receive the ORM-D classification as Consumer
Commodities may include: compressed gases; flammable and combustible liquids; certain flammable solids and dangerous when wet materials; certain oxidizers and organic peroxides; certain poisonous materials; and corrosive materials.
Among the common products that are normally fully- regulated hazardous materials that may be subject to less onerous regulatory requirements when properly renamed as Consumer
Commodities are: aftershave lotion, rubbing alcohol (isopropyl alcohol), paint, shaving cream, orange degreaser, toilet bowl cleaner, blue glass cleaner, batteries, matches, hair spray, spray deodorant, spray paint, finger nail polish remover (acetone), reed diffusers, air fresheners, drain cleaner, fire extinguishers, medical or cleaning supplies, and perfume, etc.
/ JANUARY–FeBRUARY 2011
7

8
M e T R I C S
F or the second year in a row, logistics companies have faced rising costs. Making matters worse, sales have not risen with costs. This lack of progress is the
The total costs in dollars per hundred weight has increased only 1 percent, and the product value has decreased by .5 percent. big takeaway from the “2010 Logistics Cost and Service
Report,” compiled by Fort Lee, N.J.-based establish, Inc.
According to the report, the average company in the database incurred cost increases in almost every cost category except administration and oversight. This follows the trend established in 2009,
where costs were also high, and the historical trend that shows costs jump during slow economic times. Still, that does little to comfort logisticians, who must somehow figure out a way to buck the trend.
“Overall, the past year has not
been a good one for logistics costs and service,” says the report. “Many companies are experiencing extreme fluctuations in demand, making capacity planning and forecasting even more difficult.”
Jason Pankowski, senior consultant at establish, views the 2010 report as very much a repeat of last year’s.
“Companies have continued in survival mode, rather than growth mode,” he says.
For the average company in the 2010 database, overall logistics costs have gone up by 6.5 percent of total sales, and 6.5 percent per hundred weight (See Figure 1).
That amounts to a total cost of 8.28 percent of sales.
At the same time, sales have decreased by about 5 percent, as has the amount of weight shipped in 2010.
Interestingly, while costs have increased from 2009 to 2010, the largest of those expenses—transportation— has remained relatively flat, increasing just .8 percent of sales to 4.08 percent, and .4 percent of hundred weight to $34.15 (See Figures 1 and 2).
Some of the reason behind this likely has to do with the fact that many companies have put a great deal of effort on reducing their transportation spend as for most, it remains about 50 percent of overall costs. “Many companies are focusing their efforts on the single, largest expense,” says the report.
How have companies focused these efforts? One is through carrier negotiations. “Carrier negotiations have an almost immediate payback,” says the report. Here’s how they go about it:
Companies are trying to leverage all of the spends to obtain the lowest possible rates (companies with multiple business units are now being forced to work together).
Companies are taking a hard look at their internal procedures, the way they pack and tender freight, and are in more of a selling mode to the carriers.
Several carriers are experiencing significant growth in special areas and are pricing freight high as a means of turning it down.
UPS and Fedex are taking a hard stance against using any outside assistance when negotiating small parcel rates.
Figure 1
Transportation
Warehousing
Order entry / Customer Service
Administration
% of Sales $/CWT
+ 0.8% + 0.4%
+ 6.2
+ 7.7
– 8.1
+ 5.5
+ 6.8
– 8.7
Inventory Carrying
Total Logistics Costs
+ 21.1
+ 6.5%
20.2
+ 6.5%
Figure 2
Cost in ...
Transportation
Warehousing
Order entry / Customer Service
Administration
Inventory Carrying
Total Logistics Costs
% of Sales $/CWT
4.08% $34.15
1.75
.43
.23
12.90
4.51
1.78
1.79
8.28%
14.63
$67.97
/ JANUARY–FeBRUARY 2011

Other ways in which companies are trying to reduce costs as well, according to the report include:
– Improving internal product and information
flows to achieve quick wins.
– Benchmarking costs and practices to help
identify areas for improvement.
– Focusing on tactical projects as companies are
still trying to survive.
To get a better picture of how the average hypothetical company in the establish database has been effected over the past year, the report offered an example.
Annual sales (millions)
Weight shipped (million lbs.)
Product value
Logistics costs in $ (millions)
Logistics costs as % of sales
Logistics costs per CWT
2009 2010 % change
$2,000 $1,895
500 475
$4.00
$200
$3.98
$202
– 5.0%
– 5.0%
– 0.5%
+1.0%
10.0% 10.6%
$40.00
$42.53
+6.5%
+6.5%
There are several factors contributing to the rise in costs, according to the report.
More companies are shifting to include more direct-to-consumer order fulfillment, adding to the single SKU, single item orders.
Increases in inventory are easier to justify with a lower cost of capital and capacity constraints in importing products. With lower returns investing elsewhere, companies are “betting” on themselves.
The report points out that not all increases are necessarily negative, and uses the warehousing industry as an example. Warehousing costs increased by 6.2 percent in 2010.
“There has been an uptick in warehouse technology improvements in both internal and external operations,” it says. “These are physical assets and have a capacity based on size and technology. During periods of slower demand, it is easier to justify a disruption to improve operations.”
Looking at customer service data, there has actually been a bit of an improvement among the average company in the database. Last year total cycle time came in at 8 days, while in 2010 in was just 7 days. establish defines customer service as the “prompt and complete delivery of goods ordered.” Based on that definition, the measurements looked like this:
Prompt—7.0 days total order cycle time
Complete—Orders—92 percent
Lines—95 percent
Units—95 percent
All of the measurements were improvements over last year and in fact, stand out as the best customer service results since establish began tracking them in
2001. Still, it’s not cause for celebration, says Pankowski.
“Basically, customer service improved because companies are holding on to more inventory right now,” he says. “It really had nothing to do with companies taking steps to improve their customer service.”
Companies are holding onto the inventory for a variety or reasons. One is the fluctuations in customer demand, making it tough to plan for the right amount of inventory. Another is capacity constraints and still another, the high cost of capital. Some other key findings of the report:
Many companies are still in a “wait and see” mode and are focusing on cost cutting.
Many third-party providers are seeking longer commitments from clients to justify the needed improvements in technology, as well as address deferred maintenance.
Purchasing functions appear to be
the drivers in making decisions about
supply-chain changes.
Looking towards 2011 and where logistics costs are headed is a crap shoot. Some economic indicators would suggest better days ahead, but still others point to another stagnant year. Pankowski says: “everyone needs to move into a growth mode rather than survival mode— we need to see some improvements eventually.”
Those companies that will emerge on top are those that make the most of this time. “It’s tough to make improvements in position in down times,” says Pankowski.
“But when demand comes back up, it’s going to be those companies that made strategic cuts, rather than just knee-jerk reaction cuts, that will be positioned for success.”
Copyright©2010, WERC. All rights reserved.
Establish Inc. (www.establishinc.com ) has been publishing its
“Logistics Costs and Services Report” for over 30 years.
/ JANUARY–FeBRUARY 2011
9

S Y S T e M S
spotting counterfeits, to monitoring storage and shelf content and automatically triggering replenishment alerts,” explains John M. Hill, vice president, TranSystems,
Watsonville, Calif. “RFID will continue to evolve to better enable the warehouse to ensure that the right products in the right condition are picked, packed and delivered to the right place at the right time.”
“Warehouses and DCs will serve as the crossroads where retailers and suppliers converge and drive great benefits from RFID-based processes,” maintains Chris
Schaefer, director, global RFID market development,
Motorola Solutions, Rockville, Md. “RFID is one of the only technologies that can truly transform supply chain processes to substantially impact their primary goals of accuracy, speed and visibility.” As an example, he cites the capability of RFID ensuring real-time visibility into inventory amounts and locations.
ABI Research forecasts a total market size of about
$4.6-billion by the end of 2010 for RFID systems (hardware, software, and services). By the end of 2011, global
RFID systems markets (excluding automobile immobilization) are expected to amount to almost $5.3-billion, a year-over-year growth in excess of 16 percent.
RFID is primarily adopted in closed loop applications in warehousing and supply chains, observes Raghu Das,
CeO, IDTechex, Cambridge, Mass. “The largest supply chain application, in terms of tags
per one customer, is for retail apparel,” he notes, “Here, RFID is used for supply chain measures and monitoring shelf stockouts.” In retail, according to an IDTechex forecast, the apparel tagging application alone demanded 300 million RFID labels last year.
Schaefer concurs that the primary driver this year will be the increasing momentum in the
adoption of RFID in the retail apparel sector (see Sidebar 2, page 12). However, he also notes “the food chain space is another area that can clearly benefit from real-time
RFID data, verifying that produce and medical supplies are transported at the appropriate temperatures, making real-time decisions at the point-of-receipt to improve public safety and product freshness, and providing an audit trail of a product from ‘farm-to-fork’ to improve recalls.”
“What we’ve seen has been a more measured approach to the promulgation of standards and deployment of RFID technology where it works to fund the continuing R&D necessary to take it to the next level,” says Hill. The RFID drivers that will continue to evolve include:
Network-wide real-time visibility
Traceability, particularly in the food and pharmaceutical sectors
Counterfeit detection (consumer goods, drugs, etc.)
Warehouse labor availability and cost (reliable, hands-free product identification can cut costs dramatically)
RFID as a capability is increasingly finding its way into new and different form factors (handheld readers, lift truck readers, etc.) that integrate a wider variety of technologies (see Sidebar 1, page 11). “For RFID adoption to grow, RFID needs to be easy to use and fit comfortably into the way people and companies work,” explains
Motorola’s Schaefer. In the warehouse/DC space, he notes, “that means integrating RFID into existing products and processes that integrate other capabilities like locationing, or even implementing RFID in such a way that it becomes invisible to the end-user.”
“Growth also continues in the access control and other security-enabled application markets such as government e-ID (RFID-enabled ID documents), cargo tracking, yard management, and others,” mentions Liard.
“This growth is due to ongoing global terrorism and defense tensions, border issues, and elevated safety and security concerns.”
Concerning specifics in technology, TranSystems’
Hill notes the growing use of RFID-enabled lift trucks coupled with WMS to manage pallet, movable rack and container movement throughout a warehouse or DC.
Other technology developments he highlights include:
The Department of Defense, as part of MIL-STD-129P, requires RFID labels on supplier shipments of containers, shipping containers and pallets. The mandate allows shippers to use either ePCGlobal tag encoding standards, or the DoD’s royalty free GRAI
(Global Reusable Asset Identifier) standard. In either case the advice is to make sure that you’re up-to-date on requirements for any shipments to the military.
In the private sector, an increasing number of captive and leased returnable containers and pallets are using embedded RFID license plates conforming to GS1
/ JANUARY–FeBRUARY 2011

ePCGlobal standards to facilitate shipment tracking, improve asset utilization, and reduce shrinkage.
Antennae design advances broaden the viability of lower-cost RFID for identification of “problem” products whose physical characteristics have produced unacceptable read rates in the past.
Innovations in “smart antenna” technology and associated signal processing algorithms permit automatic real-time location and tracking of passive
UHF RFID tags affixed to assets, containers and pallets in three-dimensional space (a specific slot in a multi-tiered, multi-aisle rack storage system). Until recently, this was only possible with battery-aboard active tags.
Shipping container condition and status monitoring via RFID tags carrying lot codes and expiration dates with embedded sensors for temperature and humidity monitoring. Though not inexpensive, they will provide the alerts necessary to reduce food losses due to spoilage.
Benefit of RFID in supply chains is varied. “In some sectors there is little or no payback,” according to Das.
“For others, there can be tremendous payback. In the main, for applications such as asset tracking, ROI payback can be 12 to 24 months.”
ROI is also achieved through the capability to use
RFID-generated data/information to improve business processes, says Liard. “We consistently hear that both users and providers of RFID solutions are seeing strong
ROIs across application areas, with ROI ‘expected’ and
‘realized’ timeframes of less than 18 months,” he explains.
“Most responses are concentrated in timeframes of less than 12 months.”
Liard expects this trend to continue and timeframes to shorten as the price of the technology continues to decline, sales cycles and deployment times are shortened, and more and more users capture additional value propositions. One such value proposition he describes is
SIDeBAR 1:
The hype around the promise of RFID in the supply chain during the past five years has been tempered by a growing understanding of the increasing capabilities of the technology and the real benefits that it can provide. “The ambitious goals of many early RFID projects were often years ahead of what the technology and vendor community could realistically accomplish, and the cost/benefit equation at that time made RFID deployments difficult to justify,” explains Chris
Schaefer, director, global RFID market development, Motorola Solutions, Rockville, Md.
The market for RFID solutions has changed greatly, he continues,
“due to numerous developments that have made RFID more economical and practical.” Among these advancements Schaefer highlights the following:
Gen 2. The Generation 2 standard, adopted by the industry in 2006, has reduced concerns about proprietary solutions and interoperability.
Form Factors. Increased form factors, such as handheld readers, forklift readers, fixed readers, and others, are now available and make RFID more flexible in how it can be applied to business problems.
Performance. The technology is proven. An increasing number of public deployments have clearly demonstrated that the technology works. New variations of RFID technology, like Class 3 batteryassisted passive technology, are extending the limit of performance.
Application growth. There are many more RFID-based business applications for specific use cases. Among them: software apps for yard management; inventory management; load and shipment verification; order pick guidance and verification; tracking of returnable transport items (pallets, totes, trailers, etc.).
Convergence of technologies. RFID solutions and equipment now incorporate and/or integrate with a variety of other technologies and capabilities that make RFID more flexible and a more reasonable investment. These include such items like barcode scanning, wireless communication, Bluetooth, GPS, etc.
Ease-of-use. RFID readers are more efficient, smaller and more flexible. Tags are more sensitive and come in an increasing variety of forms that are made for specific use cases. Further, RFID applications, equipment and solutions are easier to deploy and more intuitive to use.
Hybrid solutions. RFID is no longer “one size fits all,” where only one type of RFID technology dictates the solution. There now are a variety of technologies which serve to architect a solution. Today more solutions combine a variety of technologies in an integrated fashion.
ROI. As the market increases in size and technology evolves and improves, costs for all aspects of RFID solutions decrease. This general trend toward more cost-efficient solutions has increased ROI on
RFID investments.
/ JANUARY–FeBRUARY 2011
11

the integration of front-end data collection systems with back-end business systems like asset management, eRP, or existing financial systems.
“The most effective way to successfully adopt the technology is via focused solutions, starting in specific areas where ROI will be highest,” advises Schaefer. “Any company that wishes to benefit from RFID should have a phased strategy for deployment across specific use cases.
As the breadth of deployment increases, the ability to extend RFID into new areas becomes easier until eventually, RFID becomes an integrated information system.”
Hill maintains: “There are plenty of applications opportunities for successful RFID deployment today. I don’t see any major issues if prospective users do their homework, pick the right applications, and extensively test pilot before moving forward. If the proven performance of the
RFID solution and the value of the data captured and its use offset the cost, go for it!” he encourages.
Similarly, Liard notes, “ABI Research’s RFID analysis continues to indicate that the market is maturing and moving from hype to deployment.”
“From yard management, to asset tracking, to inventory management, to shipment tracking, RFID is an advanced data capture tool that can vastly improve process time across a variety of use cases,” explains Schaefer.
“The challenge is to do the proper work up front to put together an intelligent, phased strategy for deployment that maximizes ROI and ensures success.”
John M. Hill, TranSystems, www.transystems.com
Michael J. Liard, ABI Research, www.abiresearch.com
Chris Schaefer, Motorola Solutions, www.motorolasolutions.com
Raghu Das, CEO, IDTechEx, www.idtechex.com
SIDeBAR 2:
RFID is not a new technology, although it is a
“disruptive” technology from a game-changing standpoint, according to Michael J. Liard, research director, RFID & barcode, ABI Research, Oyster Bay,
NY. “Moreover,” he says, “RFID is experiencing a normal technological evolution path with steady, on-going market growth.” Among the key RFID trends he anticipates moving into prominence during this year are the following:
Item-level apparel tracking (supply chain
management) is probably the biggest area to watch in 2010–2011, especially due to Wal-Mart’s jeans and underwear announcement (2.5 billion tags and up to 20,000 handheld readers), and projects underway at JCPenney (two store pilots complete), Marks & Spenser (now transitioning from passive UHF IPX to Gen2//ISO 18000-6C tags), and American Apparel, among others.
Food safety and traceability is getting a lot
of attention. The idea of food traceability “from farm to fork” using RFID technology is becoming more top-of-mind as food recall announcements seemingly become more regular these days, especially in the U.S.
Prime application areas. Some of the “hot applications” include item-level tracking for apparel, footwear and luxury goods; returnable transport items; IT asset management; contactless ticketing; e-ID documents; electronic vehicle registration; and applications related to baggage tagging, health care, food traceability, aerospace, transportation and other areas.
Asset tracking and management. Asset tracking and management across verticals will remain hot for years ahead, with multiple flavors continuing to evolve based on both active and passive
RFID technology, including RTLS solutions. The
“hot apps” to watch are: IT asset tracking, WIP manufacturing, RFID-enabled forklifts in warehouses and yards, MRO tracking, and locating people and high-value assets in manufacturing shop floor environments, transportation depots, port facilities, and so on.
Partnering. Another recurrent theme is the need for partnering to provide a combination of technologies—hardware (tags, readers, etc.), software and services—to enable end-to-end solutions to address specific business problems.
/ JANUARY–FeBRUARY 2011

At WERC
Here are some things to keep you up-to-date on what’s happening at WERC
Patrick Dockins has joined the WeRC staff as the Member and Chapter Relations Manager. Patrick comes to
WeRC from the Water Quality Association where he served as a Product Certification Coordinator and prior to that he managed the Association of Rotational Molders International at CM Services, Inc., an association management firm. Patrick’s well-rounded experiences with volunteers and “customer service” focus made him the perfect candidate for the newly created position. You can reach him at pdockins@werc.org or 630.320.5807.
CHiCagolaNd February 9
WERCouncil Tour of Peapod
CHiCagolaNd February 27
CSCMP Invite to
Blackhawks Presentation & Game
PHiladElPHia/ april 12 dElaWaRE Dinner and Tour at
VallEy Lehigh Career and Technical Institute
The WeRC Certification program offers a qualitative review that focuses on how work is done. It’s a voluntary program that certifies an individual warehouse facility’s capabilities and its ability to perform core warehousing functions receiving, slotting, storage, picking, etc.
The program provides an industry standard grading methodology that includes facility inspections and process assessments by independent third parties.
Auditors benchmark and grade warehouse operations against a 5-point scale that’s outlined in the publication
Warehousing & Fulfillment Process Benchmark & Best
Practices Guide.
Want to join the growing list of certified facilities?
Call or email Chad Pilbeam at cpilbeam@werc.org or
281.746.0449.
Corporate membership includes full WeRC memberships, special rates for conference and other perqs. Get the VIP treatment! Call or email Chad Pilbeam at cpilbeam@werc.
org or 281.746.0449.
Collecting metrics for your operation is great; but the real challenge is in using them to affect performance.
This seminar will help you get the results you need by teaching you the RIGHT way to implement metrics for your organization. This interactive, hands-on session will focus on internally-applied performance metrics and on how to use metrics beyond the four walls in your facility.
Check it out at www.werc.org
– Alexander the Great
/ JANUARY–FeBRUARY 2011
13

14
to the DC, and identify the customer’s end-user,” maintains Gaul.
For example, where the end-user is an institution which requires large quantities of a multipurpose cleaning agent, the packaging will most likely be larger
(a five gallon bucket) and labeled as a hazardous material. However, that same product destined for a retail outlet will be in much smaller packages and will be in all likelihood designated a consumer commodity.
“We’ve developed a spreadsheet that our managers must fill out on each customer in their building. In this manner they get to know their customer a lot better and whether they have hazardous materials or not, which they can share with their employee team,” explains Drengwitz.
To augment this, OHL has signage hanging throughout every one of its facilities, whether it handles hazardous materials or not. The message is: If you see any of
these items or labels or marks on any containers, alert your supervisor who can then contact the appropriate manager or safety or hazmat representative for the necessary follow-up.
Gaul also recommends conducting a periodic “walk-through” of the facilities. At OHL, her goal is to visit each facility at least twice a year as a means of assuring visibility to the workforce to
emphasize the corporate commitment to the program. This also makes her available to answer employee questions or concerns. “During the walkthrough I also make it a practice to interview the employees, monitoring what they’re doing and to have them show me how they’re performing their tasks,” she says.
But the walk-through serves another purpose. “It enables me to know what products are inside each facility and to understand what each operation does,” she explains. During her tour she also asks questions, such as: How does the product move through this DC? Is it a pick-and-pack operation, or a full case or full pallet operation? What are the modes of transportation that are used out of this facility? Does everything go by ground?
Do we utilize air? What’s the final destination for shipment(s)?
“If, for example, the facility ships to Hawaii, Puerto
Rico, or Alaska, these destinations can be reached only by air or water, which may require a much different pack-
SIDeBAR 2:
When consolidating a pallet that contains a large number of unregulated boxes and only a few carrying consumer commodities, the shrinkwrapped pallet must be marked. Not only must the boxes with the consumer commodities have a visible mark, but the pallet itself also must show the “Consumer Commodity-ORM-D Overpack,” statement.
“In the event the package markings cannot be seen through the shrink wrap they must be replicated on the outside of the overpack in addition to the ‘Overpack’ marking,” says Gaul. “The overpack marking doesn’t substitute for the shipping name,
‘Consumer Commodity’ and hazard class information (the ORM-D marking.)”
“Where you have an ORM-D box on the pallet and the carrier can clearly read the ORM-D mark through the shrink wrap, the Overpack statement is not required,” says Drengwitz. “To keep consistency at all OHL locations we have implemented the placement of the Overpack statement on every pallet that has an ORM-D item that leaves our warehouse. This SOP has been implemented whether or not the ORM-D mark is visible to the carrier.” aging and marking requirement for products classified as consumer commodities,” says Gaul. “We want to ensure that we are moving and marking those products correctly and within the appropriate regulations.”
every facility and campus should have a “go-to” person on-site who can recognize products and materials classified as hazardous materials and identified as consumer commodities, answer employee and management questions, and know where to go and whom to contact for the appropriate answers and follow-up. “Beyond training our shippers, packers, auditors, and customer service representatives, our goal is to identify and train at least two or three people on each campus at the next level to be a more knowledgeable source of information about the facility’s products, and available at the site for the managers, employees and customers to contact about hazardous materials and consumer commodities,” explains Drengwitz.
OHL audits each facility that either has consumer commodities or fully-regulated hazardous materials.
“We do a full DOT audit annually that provides us with feedback about whether our paperwork is in compliance,
/ JANUARY–FeBRUARY 2011

whether our procedures are being correctly executed, and whether our employees are following our processes,” according to Gaul.
OHL also maintains constant communication with its carriers. “We work together with them to improve our paperwork — especially where it involves hazardous materials and consumer commodities,” she explains.
“We’ve also set a goal of identifying every consumer commodity that we have and where each is located throughout the country.”
“We’re noticing a change in our culture, and in the improved level of awareness,” states Drengwitz. He cites
IT professionals who are loading master data into the eRP for new customers now making inquiries and questioning some of the information they have. And transportation employees sharing information about shipments, modes, and destinations, or seeking guidance about procedures and processes.
The goal is to eventually have every OHL employee partake of this specialized training and education program. As Drengwitz explains, “It’s the warehouse that’s never seen a consumer commodity before and doesn’t know what it is that becomes the hidden danger financially and otherwise to the corporation.”
Erin Gaul, OHL
Terry Drengwitz, OHL
75 FR 1302 – NPRM, Jan 11, 2010
PHMSA-2009-0095 (HM-224F); Transportation of
Lithium Batteries, NPRM
PHMSA, in consultation with the Federal Aviation Administration (FAA), is proposing to amend requirements in the Hazardous Materials Regulations (HMR) on the transportation of lithium cells and batteries, including lithium cells and batteries packed with or contained in equipment. The proposed changes are intended to enhance safety by ensuring that all lithium batteries are designed to withstand normal transportation conditions. This would include provisions to ensure all lithium batteries are packaged to reduce the possibility of damage that could lead to a catastrophic incident, and minimize the consequences of an incident. In addition, lithium batteries would be accompanied by hazard communication that ensures appropriate and careful handling by air carrier personnel, including the flight crew, and informs both transport workers and emergency response personnel of actions to be taken in an emergency. www.phmsa.dot.gov
Read about the different kinds of benchmarking, why it’s important to benchmark, how to choose the right metrics, how to analyze your company’s performance, and techniques for communicating to get the results you need. 2nd edition, 2010
This Guide outlines the elements of a piece-pick system, explains equipment choices and possible picking methods and provides a step-by-step approach to determine the best option for your application. The Guide is rich with photos, illustrations, explanations, detailed pros and cons and pricing ranges.
Learn about qualitative warehousing best practices. It helps identify process strengths and weaknesses in an organization so a roadmap for improvement efforts can be crafted.
emails requesting participation in this annual study have gone out. Hope you can add your metrics to the survey.
The report will be available in May.
/ JANUARY–FeBRUARY 2011
15

MAY 15-16
Two years ago, WERC had the privilege of having randy Lewis on our main stage at Conference 2008. Telling his story of putting the “able” into “disabled” inspired and moved our audience and was a powerful message about the heart of our industry and how small changes can lead to BIG results.
This year, randy will be with us again to update us on Walgreens initiative to hire people with disabilities.
“We’d be glad to share what we’ve learned from the human resources side with anybody. A lot of people have taught us a lot of things, and we’ll be glad to share what we learned.
I’m very interested in talking to my peers at the WERC Conference who want to do something like this.
It’s not as hard as they think, and it makes a big difference.“
J. Randolph Lewis
Sr VP, Distribution & Logistics
Walgreens Company
SM