GPS in supply chain offers manufacturers visibility outside warehouse

Manufacturers can use GPS technology to track shipments and containers well beyond the walls of the warehouse.

Global positioning system (GPS) software is far from a new technology, having been in use for years in  government and business.

But in manufacturing -- an industry that is notoriously slow to adopt new technology -- the benefits of GPS are just starting to become clear. In particular, incorporating GPS in the supply chain can provide crucial visibility into logistics by helping to track the location of trucks and containers. When combined with other sensor technologies such as barcodes and radio frequency identification (RFID), GPS can be an even more powerful tool.

Manufacturers should approach GPS not as an alternative for RFID and barcodes, but as a supplement, according to Simon Ellis, practice director for supply chain strategies at IDC Manufacturing Insights, a research firm based in Framingham, Mass. “I tend to think of these sensor technologies from the perspective of tools in the toolbox, rather than individually,” Ellis said. “There’s absolutely a place for GPS and these other technologies in the supply chain, but I think it depends on what the use case is.”

Dwight Klappich, research vice president at the Stamford, Conn.-based analyst firm Gartner Inc., agreed that GPS works best when used with barcodes and RFID. GPS is limited on the shop floor and in the warehouse, Klappich said, because it usually isn’t precise enough to locate an item in an enclosed space. “GPS isn’t that granular,” he said. “It can see that something is inside the building, but not exactly where it is.”

Klappich recommends a “small, medium and large” approach to deciding which sensor technology will work best in a given environment. GPS can be useful for locating bins and containers in a very large factory, but it is most commonly used outside to locate shipments and trucks on the road. RFID, sometimes paired with Wi-Fi, can be used inside a building -- a “medium-sized” location -- to find out which area or room an item is in. Barcodes are the most exact option and can locate items in a small area, such as on a pallet or in a box.

“I would say that manufacturers need to be prepared to support multiple tracking systems,” Klappich said. “It would be easier on IT to have only one, but you need to think about the fact that in the plant and the warehouse, you might want barcodes in boxes, RFID in pallets and trucks that have GPS.”

While he’s primarily seen GPS in use outside of the warehouse, Klappich said internal uses that combine the three main technologies may also be possible. “[GPS] could be used at the shipping-container level, to track those containers down.”

GPS can seem pricey at first but ultimately shouldn’t cost more than RFID, according to Ellis. “Inherently, the GPS tags are more expensive than RFID tags, but you’re putting them on bigger things, like shipping containers and trucks,” he said. “With RFID tags, you’re talking about putting many of them on a large number of things.”

GPS users also face fewer equipment compatibility issues than RFID users. “GPS has the advantage from a standards perspective, since it started out as an inter-company, inter-process technology and had to have standards to move between entities,” Ellis said. “RFID started as more of a four-walls, internal, captive technology within individual companies.”

GPS adoption boosted by mobile computing, but faces some barriers

Mobile computing technology -- the smartphones and tablets that dominate today’s tech news -- have brought GPS into the hands of more consumers. That trend is converging with the ability to locate and track a package through the shipping process, according to Ellis.

“One of the trends that we’re seeing is this evolution of self-help and self-service,” he said. “If I’ve got a shipment coming by FedEx or UPS, it’s easier to go online and track it myself than try to call customer service to find it. Mobile computing is definitely increasing self-service. With mobility, it’s not only about where the thing I’m looking for is -- it’s also where I am in relation to it.”

The decision to implement GPS into shipping and logistics is typically made by trucking companies and third-party logistics (3PL) shipping services, since most manufacturers don’t own their own trucks, according to Klappich.

“Smaller fleets haven’t until now seen that they can afford GPS to track trucks,” he said, but new options in onboard computers from vendors such as PeopleNet and LogiBoxx have made GPS truck tracking more viable for many fleets. For example, international logistics firm BLG Logistics recently began tracking its roll trailers by using a combination of GPS and passive RFID tags at its Bremerhaven, Germany, seaport terminal.

Even when cost isn’t an issue, trucking companies can face other barriers to GPS adoption. Klappich points to mistrust of technology as a common issue. “A lot of the people who drive the trucks are blue-collar guys and resistant to new technology. The unions sometimes feel like GPS is a form of Big Brother watching what truck drivers are doing,” with legislation in the works to use GPS to track driver safety, he said.

Reluctance to adopt the technology may also be a generational issue, as many younger drivers already use smartphones and GPS systems in their personal lives and are less bothered by privacy concerns, Klappich said. “We call this consumerization of IT,” he said. 

Future directions for GPS in the supply chain

Ellis predicts GPS adoption will start to pick up as manufacturing emerges from the recession. “One of the consequences of 2008 to 2009 was that people cut expenses, and I would think GPS felt that pain just like any other technology did,” he said. “Companies went into capital preservation mode. I don’t think that [lack of IT spending] speaks at all to GPS’s importance.”

Ellis sees GPS becoming more common and ingrained in supply chains. “I think five to 10 years from now, we’re going to have a dramatically better level of visibility into the supply chain,” he said. “GPS can provide this visibility, especially when it comes to the movement of assets through the supply chain.”

For manufacturers looking to adopt GPS or hire a trucking company or 3PL with GPS onboard, Ellis stresses the importance of understanding goals before making any decisions.

“The advice we give to companies adopting sensor technology is to start with the business case,” he said. “Too often, companies take the Field of Dreams approach -- they put it in and then figure out what to do with it. Figure out the problems that need to be solved and the benefits you want ahead of time. Then figure out whether GPS, barcodes or RFID is right for you.”

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