To track 250M pieces, Chep turns to tech

ORLANDO - In 1999, pallet rental company CHEP began experimenting with radio devices to collect information on its pallets while they were being moved from place to place.

This week, Chep turned its in-house radio frequency experiment into a service for its shipping and receiving clients.

Chep rents about 250 million pallets and plastic shipping containers to companies on every continent, says Chep President Victor Mendes.

For customers on the manufacturing and distribution sides of the business, detailed data on their supply chain holds deep value.

Radio frequency identification uses microchips and specialized radio antennas to send and receive information.

That's how Chep is using the technology, but that's not where the company started.

Chep experimented with RFID microchips, or tags, to track temperatures, vibrations and other things that happen to pallets as they move from warehouse to warehouse.

After applying business acumen to the RFID project, Chep simplified it.

Instead of tracking thousands of data points, the company zeroed in on setting up radio-activated portals to track where its pallets have been.

Two years ago, Chep conducted a RFID pilot project in Florida, involving 250,000 pallets, 384 customers and six of its regional service centers.

Usind RFID is not that simple in an industrial world.

At first, the company's pallets didn't take well to radio signals. A Chep pallet can have up to 100 nails. Those metal nails deflect radio signals.

Chep, a global company with 7,700 employees in 42 countries, then put its 300-plus software developers to work troubleshouting and cleaning up the data collected from those 250,000 pallets.

When Chep first began looking into selling its RFID expertise, it looked first to Wal-Mart.

At that time, Wal-Mart appeared to be a likely first customer for Chep's RFID products, Mendes says. The world's largest retailer told its suppliers last summer that ot would require RFID.

It is expected to be a significant market. Research firm IDC said earlier this year it expects spending on RFID to grow from $ 91.5 million in 2003 to almost $ 1.3 billion in 2008.

There are hurdles. The first is setting standards. In the same way bar codes gained acceptance through universal product codes, the RFID also needs an agreed-upon set of standards.

Privacy concerns form a more hazy challenge. That concern follows a science fiction logic that would see radio tags embedded in clothing, grocery packages, automobiles and just about everywhere imaginable.

"If you extend that kind of scary fiction, they can track you everywhere", Mendes says.

But the scary fiction also bolsters Chep's pitch for tracking departure and arrival times of particular pallets, not consumer goods.

The new technology has already led to growth for the company. Even before RFID, the company already collected tons of data, more than 40 terabytes worth. Chep recently expanded to lease practically all of the south Orlando office building it's in, so that its data center operations can handle collecting all the additional RFID data.

Source: Taken from Business Journal