Global positioning system (GPS) technology has finally hit its stride as a mainstream tool for helping consumers better navigate their travels -- yet experts say the technology is still in limited use in the manufacturing supply chain,
While it's increasingly common to see GPS technology installed to help manufacturers keep tabs on trucks or to monitor the status of large containers in transit, for example, there are fewer instances of manufacturing GPS technology in use on the factory floor or in warehouse, according to supply chain and automatic identification and data capture (AIDC) experts. Some of the delay can be attributed to GPS' still significantly higher cost compared to other AIDC technologies such as RFID and bar codes, experts say, coupled with fact that the technology lacks the precision for locating items within an enclosed, inside space.
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"GPS is mostly used in transit and logistics," noted Simon Ellis, practice director of supply chain strategies for Framingham, Mass.-based IDC Manufacturing Insights. "What you find is that once you get inside a factory or a warehouse, GPS doesn't give enough precision to be terribly useful," he explained. "It's more appropriate to track the movement of vehicles and trucks in and out and for shipping containers to see where they came from and how long before they were loaded off the dock."
Manufacturing GPS for quick decision making
Using GPS as part of a logistics application to manage and track delivery truck fleets is one example where the technology can deliver real benefits and cost savings, maintains Jim Butler, senior vice president of TransTech Consulting, a supply chain and warehouse consulting company. Specifically, GPS technology can keep supply chain and manufacturing professionals in the loop on whether a truck is on course or whether it might be delayed due to inclement weather, using that intelligence to make the appropriate adjustments. "GPS allows companies to make on-the-fly decisions based on services times and in accordance with service-level requirements," Butler said.
In concert with other AIDC technologies -- such as RFID and bar codes used to catalog individual items and cases -- GPS can be used to track things at a broader level, Ellis added. Consider an example around inventory management. While bar codes provide intelligence into what inventory is on hand in the warehouse, the addition of manufacturing GPS delivers granular data as to where exactly a truck is in its delivery cycle. In that way, if the order is due to be picked in three days and the truck is two days out, the manufacturer can factor its contents in as part of the inventory on hand to fulfill that particular order, he explained. "Where this gets tricky is in having the level of precision in understanding exactly where the truck is and when it really is able to get there -- that's where GPS comes in," Ellis said.
GPS technology helps thwart product theft
Given the high cost of GPS technology, it's also more likely to be deployed to help manage and track higher cost items with a greater vulnerability for theft. Using GPS to tag high-value goods like artwork makes far more sense than trying to apply the technology to low-margin items like food or consumables, said Butler. "When you get into the day-to-day supply chain, margins become so tight, it's difficult to get any kind of investment so you need to see real improvement to justify it," he said.
That explains why GPS has garnered traction as a means to track containers at sea or to help locate inventory coming into ports, noted Tim Zimmerman, vice president, Network Infrastructure, Mobility & RFID, at Cambridge, Mass.-based Forrester Research Inc. If, for instance, an automotive plant is waiting on a delivery of parts for production on a particular car, any hold up could cost them as much as several thousand dollars a minute, he explained. "The ability to quickly locate the container at the port that has the parts so they can be routed to the manufacturing plant quickly has a real benefit," Zimmerman said, adding that GPS use to track containers that might be lost at sea is another compelling use case that justifies the expense. "It cost less to implement GPS than it would to lose the container."
In the end, companies aren't likely to choose between bar code, RFID, or GPS, but rather come up with an AIDC strategy that incorporates a mix of the technologies, depending when and where it makes sense. "What you find is that there is some overlap, but mainly these are very complementary technologies which will be used in different applications," as part of a broader tool kit, said Ellis.
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This was first published in December 2012