When customers need fast, reliable parcel service, they tend to rely on the company they are most familiar working with. TNT Express understands their business is based on these repeat customers.
As John Malia, Chief Architect at TNT, says, "Being primarily a business-to-business focused company, we thrive on longstanding customer relationships."
Express delivery service is also a market segment under immense pressure right now, as fuel costs continue to fluctuate, businesses continue to expand globally and competition keeps pricing pretty close to the bone. That's why TNT, according to Malia, is "always seeking alternative ways of improving our customers' experience and differentiating ourselves from competitors."
And that is why the company is always on the lookout for ways to improve its customer-facing and internal operations.
One of the internal areas in which the company recognized a need for improvement was its cage management system. Parcels are grouped and transported in cages from one TNT depot or shipping hub to another before they are loaded onto the vehicle that will actually deliver packages to customers.
TNT had been using barcodes and scanners to track the cages but, as Malia explains, "When the barcode is scanned on the vehicle it tells us what has happened, instead of what should happen. And no matter how much we wanted the barcodes to be scanned 100% of the time, it's not always feasible to do so."
Managing 16,000 cages across 236 depots in 29 countries is quite a task, and TNT was finding that, based on different business cycles, they'd find a build ups of unused cages in one location and another location that would be completely out.
"When we reviewed our cage management system, we wanted a solution that required far less manual intervention." says Malia, "We are always looking for solutions that have real quantifiable business value."
An asset management system would help the company maximize use of its existing cages, could keep its parcel service at its peak efficiency and spare the cost of purchasing more cages. TNT Express was familiar with RFID, and thought that the technology might be a fit. The company had already invested in wireless infrastructure throughout its global hubs to facilitate many different operational processes.
When it began looking into different RFID solutions the company soon realized that an Active RFID solution would better fit its business case. "With a passive solution we'd have to invest in significant new wireless infrastructure at the depots," Malia explains. "That investment would have effectively negated any business case we had for implementing a new solution."
Working with an independent market research organization, TNT put out a call for proposals, finally narrowing the pool of potential vendors to two. TNT ran a proof-of-concept pilot project with each vendor and decided to work with AeroScout, deploying the company's Logistics RTLS (real-time location system) to automate its cage inventory management system.
AeroScout's Active RFID Tags are attached to each cage, and the company's MobileView software enables the tracking and management of carriers and parcels."Fundamentally, it was about the robustness of [AeroScout's] tags and that they required very little IT management," says Malia. AeroScout's solution did not require tags to be associated with the company's wireless network. If it had, then each one would have to be managed as an IT asset. "Having deployed 16,000 tags, it would be as if we added 16,000 wireless laptops for our IT department to manage," says Malia. For a business case based on cutting down on "required human intervention" the ease of managing 16,000 tags made the AeroScout solution an obvious fit. The ability of the tags to withstand the harsh environment and the constant vibration of the cages also presented a serious plus for AeroScout's solution.
"In an active RFID solution, the cost of the tags are much higher [than in a passive RFID solution]," explains Malia. "In terms of the total project cost, tags made up to 70% of the budget. The durability of those tags is essential."
In TNT and AeroScout's design of the solution, the tags are meant to last five years, meaning that IT attaches a tag to a cage and doesn't think about it again for five years. And Malia says for the most part that's how it's worked: "There've been minimal tag issues, but we've had a few. I'd say one of the most important things we learned is to have a process in place for identifying what to do when a tag is malfunctioning, or the battery life is degrading. Having a predefined plan of how to return equipment with malfunctioning tags to the right depot that is equipped to swap out the tags is pretty important."
TNT built the viability of this RFID deployment on a solid business case, which included specific ROI numbers and though the company was not able to share its exact numbers with us, Malia says that when they fleshed out the solution they expected ROI to take about six years.
Now that the solution has been completely deployed, TNT expects to achieve complete ROI in just two years. "Truth be told," says Malia, "this has really highlighted our ability to use existing investments rather than having to invest significantly in new solutions, which may not have been as effective in actually providing real-time visibility."