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Application of RFID technology in FedEx

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Contents
1.0 RFID in supply chain and logistics 2
1.1 FedEx Supply Chain 3
2.0 RFID in FedEx 4
2.1 FedEx application in cargo and shipment tracking 4
2.2 FedEx application of RFID for logistics security and convenience of couriers 6
2.3 Development of RFID 7
2.4 Features of the RFID 8
3.0 Importance of RFID to supply chain (FedEx) 9
3.1 Cost reduction 9
3.2 Improving product safety 10
3.3 Improve real-time tracking and supply chain visibility 10
3.4 To improve discrepancy in inventory 11
References 13
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1.0 RFID in supply chain and logistics

RFID technology has made airwaves the most influential technologies to watch for in

recent years in supply chain and logistics. The main application of RFID is to track and monitor

goods and packages throughout the transition process, either from location or transformation.

RFID has been lucrative and appealing due to its technological ability to effectively manage

inventory, improve and fasten tracking, and smooth transition (Rahman et al., 2010). The RFID

has enhanced the visibility of goods and improved cycle time and monitoring. The most common

application of RFID is managing obsolete and stock-out inventory.

The RFID system is composed of a tag, a reader, and an enterprise system. The tag is a

small microchip with an antenna embedded on objects in the supply chain, and it's embedded on

the individualized items, packaging, or pallet (Maticevic et al. 2011). The tag can always be

active or passive and is activated by an RFID reader through electromagnetic frequencies that

can identify and read the data embedded in the tag. Once in proximity with RFID tags, the RFID

reader obtains the information and encodes it onto an enterprise system or computer for

interpretation (Maticevic et al. 2011). Often, the RFID system deals with large enterprises with a

lot of information; therefore, it calls for the need for a processing and filtering system applicable

for businesses. Therefore, enterprise applications can be used to decode the information, which is

the Customer Relationship Management (CRM), Enterprise Resource Planning (EPR), and

Supply Chain Management (SCM) (Maticevic et al. 2011).

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Figure 1 Components of an RFID system (Maticevic et al. 2011)

1.1 FedEx Supply Chain

FedEx is an experienced third-party logistics company that deals with all supply chain

components, starting from transportation to storage and procurement. FedEx supply chain

solutions for small businesses are designed to provide solutions for SMEs, Enterprises, and

transport. In addition, FedEx offers services for reverse logistics such as recalls, returns,

unsalable, and recommence. In addition, FedEx offers services in Transportation through

Freight, Procurement, and Transport management (FedEx, 2021). The corporation provides

commerce enablement through its FedEx Fulfillment by providing Value Addition Services.

Finally, its Supply Chain Solutions deal with warehousing, Technology, and Engineering.
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Figure 1 FedEx Supply Chain (FedEx, 2021)

2.0 RFID in FedEx

2.1 FedEx application in cargo and shipment tracking

FedEx employs the use of RFID tracking in its cargo and shipping ventures. As part of its

logistics responsibility, FedEx engages RFID scanners and RFID tags on its goods, especially in

the customs clearing and forwarding activities, to check the status of its cleared cargo or

shipments (Rfidcard 2020). The RFID readers installed along the supply chain can track the

goods with tags. The radio waves emitted by RFID tags are applicable in identifying

commodities by assigning unique serial numbers readable by the reader. FedEx provides the

unique reference number of the goods to customers. The customers can input the unique

reference number on the front-end of the FedEx online tracking system to pinpoint the exact

location of the commodities.

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Around the world, FedEx exploits RFID tags the supply chain transaction, especially in

providing visibility of the transported goods (Hopeland 2018). Moreover, RFID tags assist the

government and companies track custom duties and taxes on international shipments, thus

providing visibility and transparency (Mearian 2019). Importantly, they are critical to

eliminating the transportation of counterfeit goods or any other dangerous cargo without proper

authorization or monitoring.

Figure 2 The Modern Tags used by FedEx with precise locations and other capabilities such as
temperature control (FedEx, 2021)
The RFID can be used in tracking to pinpoint the exact location of goods on transit.

FedEx uses the technology in its express delivery services. The RFID tags are attached to express

cargo and shipments, then an Android RFID reader is attached to the products and uses GPS

technology to locate the location of the goods in real-time (Hopeland 2018). The location can

then be accessed by both the receiver and sender through the internet to track the commodity,

thus providing a better experience for users. The RFID tags make tracking of the commodities

simpler since they can identify the cargo and convey signals on a fixed reader that is analyzed to

determine the authentication of the product for transportation or not.

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Figure 3 Complete logistic transmission of information using RFID (Spectors)

2.2 FedEx application of RFID for logistics security and convenience of couriers

FedEx handles a very large volume of cargo and shipments since it transports over 3.2

million parcels daily and owns and manages over 42,500 fleets of vehicles, ships, and air

transport worldwide. The integrity of transported goods is as important as the company’s

reputation. One of the main concerns during transportation and management of vehicle fleets is

security during supply chain and logistics. FedEx drivers perform long haulage, and they were

bound to take breaks within the journey for restroom breaks, feeding breaks, or delivery. One of

their main concerns is losing their keys and compromising the security of transported goods or,

worse still, locking themselves out of their vehicles. In addition, often, the drivers waste a lot of

time looking for misplaced keys or searching through the bunch of keys to unlock the multiple

layers of security doors during haulage. FedEx found a keyless solution for its couriers using

RFID technology. The courier's automobiles have automatic keyless entry and ignition system

that only requires its driver to have a Velcro wristband transponder developed utilizing the RFID

technology. Consistent with Kamoun's (2008) literature on rethinking the RFID model in
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business that requires that new RFID technology is tested through a three-phased adoption

model, FedEx tested the technology on 200 courier vehicles.

The keyless solution was a perfect match for the conglomerate's streamlining supply

chains and logistic systems. Moreover, FedEx issues the key to the driver, and in case of

misplacement or loss, the courier had to rely on the spare key transported from the FedEx station.

In addition, unrecovered keys required the re-keying of the vehicles, which set back the company

$200 per incident. FedEx solution used a keyless system which was facilitated by RFID

technology.

2.3 Development of RFID

FedEx contacted a Milwaukee-based company Strattec Security Corp specializing in

vehicle locks and radio frequency identification systems, to solve the key problem. The Strattec

Corp then partnered with a Wakarusa Company, Utilimaster Corp., to develop special vehicles,

custom-built keyless entry, and ignition systems for the FedEx company. The genius invention

borrowed the RFID transponders manufactured by Texas Instruments. It incorporated them into

Velcro wristbands that the couriers could wear and use to gain entry into their vehicles and ignite

it (Schell 2020). In addition, the genius invention employed low-frequency radio waves of 134.2

Kilohertz Frequency to avoid interference from other radio waves. Since its inception, the

technology has been implemented in over 1,100 FedEx courier automobiles.

FedEx courier is saved from carrying keys around while carrying packages to customers,

thus increasing productivity and reduced instances of critical loss that result in loss of time if

they are misplaced (Supply Chain Market [no date]). In addition, the RFID technology has

bought a lasting solution because even in the event a courier loses the wristband, a new code can
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be generated and sent to the driver to purge the system and finish reprogramming for the driver

to continue with his services in a matter of seconds when the wristband is lost (Schell 2020).

Figure 4 Velcro wristband embedded with RFID tag

2.4 Features of the RFID

The features of the RFID system entail the ability to release exterior door locks from the

inside using buttons located on the inside. The transponders and readers are located on the doors

of the delivery vehicle. Once the courier with the Velcro wristband comes within six inches of

the readers, the code is compared against the preset code. If it's a match, the door opens

automatically for five seconds, and the driver can yank open the door while the rest of the doors

remain locked. In case of an electric failure, the rear roll-up doors have a fail-safe keyed lock

that the courier can use to access the contents. Moreover, the systems also provide a security

feature with anti-theft properties. The lock system has motion detectors on the cargo sections and

the driver's wristband. The vehicle cannot be ignited unless all the doors are closed and locked

(Supply Chain Market [no date]). In addition, add doors have a fail-safe locking mechanism that

triggers automatic locking of all doors within when the doors are opened for some time.

The application of RFID on logistics security and convenience has increased the

productivity of couriers. The wristbands don't have to be removed en-route couriers reducing the
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likelihood of misplacement of the wristband. The couriers can do their jobs effectively since a

wristband only costs $20, and they can focus on delivery rather than security or lost keys.

3.0 Importance of RFID to supply chain (FedEx)

RFID has key benefits in the supply chain that appease customers and corporations. Some

of the important benefits of RFID implementation are reducing costs, providing real-time

monitoring, increasing product safety, and increasing visibility in the supply chain. According to

the FedEx CIO, Rob Carter, the RFID tags are an underestimated IT tool with massive potential.

He says in an interview, “the first two years there's tremendous hype and enthusiasm, and it's not

what it's cracked up to be, and people get disillusioned and turn away from it. And then ten years

later you look back, and you cannot believe how much the world has changed based on the

maturing of that technology” (Post & Parcel 2006).

3.1 Cost reduction

RFIDs second-best applications streamline the supply chain to reduce the cost. The RFID

monitors inventory and produces an alarm to prevent sending goods to the wrong locations, thus

preventing stock-out costs (Chanchaichujit et al. 2020). Moreover, RFID, as employed by FedEx

around other parts of the world in their operations to monitor goods at customs clearance and

forwarding, eliminates the labor of workers who would otherwise scan and check the goods

physically before updating them in the system (Hopeland 2018). Before, FedEx heavily invested

in human labor for manual scanning of shipments. Still, the RFID has the capacity for high

velocity, thus reducing up to 40% of labor costs in the scanning of packages (Advanced Mobile

2014). RFID tags used worldwide are proven for automated scanning, thus eliminating labor

intervention.
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3.2 Improving product safety

One of the main reasons for the evolution of RFID is supplies are for product safety and

quality. RFID has been appliable in the supply chain, especially by FedEx, to ensure the safety of

goods during transportation (Chanchaichujit et al. 2020). For example, FedEx’s keyless ignition

and locking mechanism provide proper security and good safety during haulage; moreover,

couriers aren’t concerned about compromising product quality by juggling between holding the

keys and carrying the packages to the customer’s doors steps that may lead to tripping or

accidental dropping of packages (Supply Chain Market [no date]). Previously, product safety

during transportation was low,, but with RFID at the keyless and automated locking systems of

courier doors, the safety of goods has greatly improved.

3.3 Improve real-time tracking and supply chain visibility

RFID tags have been used together with android RFID readers to enhance information

sharing and synchronization in real-time. For example, tracing products on transit can be

achieved in real-time to streamline business such that the receiver can plan when to pick their

goods. Real-time tracking provides business managers with more information, thus better

decision-making (Chanchaichujit et al. 2020). Alternatively, RFID implementation on the supply

chain improves visibility by identifying goods transported. The visibility allows early detection

of errors or contrabands, thus increasing the customer’s trust in the company processes

(Chanchaichujit et al. 2020). FedEx application of RFID on customers worldwide provides the

company visibility and accountability while tracking goods in real-time. According to FedEx

CIO, “Package tracking and visibility are more important…as businesses have become

increasingly reliant on timely deliveries…designed to give our customers the precise level of
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tracking they’ve been looking for, enabling them to optimize their supply chains and make any

necessary adjustments during the journey of their shipments.” (FedEx 2020)

3.4 To improve discrepancy in inventory

Despite the automation of the supply chain system, inventory control remains the most

significant challenge. Inventory challenges in the supply chain arising from the difference in the

on-hand inventory and those recorded on the IT system. Often, difficulties in balancing inventory

trans; related to business losses through overstocking, loss of customer confidence, or missing

goods (Chanchaichujit et al. 2020). The errors experienced in the FedEx supply chain, such as

inaccessibility and transaction errors, are avoided significantly. According to Spot See (2020),

RFID tags utilized by FedEx can mitigate diversion and damages. The use of RFID tags from

ShockWatch can reduce damage on goods by 40-60% when embedded on the crates or pallets.

The RFID indicators can detect mishandling or hidden damages on transported products.

A table of before and after FedEx implementing RFID on their security and logistics
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Before RFID After RFID

Lost Key Replacement $200 $20

Lost time for replacement Hours-Days Seconds

Courier automobiles with Zero 1,100

advanced security

Cost on Labor Significant Low [improved by 40%]

Product Security Low High

Lost goods at clearance Significant Low

Product Traceability Poor High

Damages to Goods [High] [improved by 40-60%]

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References

Advanced Mobile. 2014. 40% Warehouse Labor Costs Reductions With RFID.

https://www.advancedmobilegroup.com/blog/how-does-modern-rfid-technology-

improve-warehouse-performance

Chanchaichujit, et al. 2020. A systematic literature review on the benefit-drivers of RFID

implementation in supply chains and its impact on organizational competitive

advantage. Cogent Business & Management, 7(1), doi: 10.1080/23311975.2020.1818408

FedEx. 2020. FedEx to Transform Package Tracking with SenseAware ID, the Latest Innovation

in FedEx Sensor Technology. https://newsroom.fedex.com/newsroom/senseaware-id/

FedEx. 2021. Supply chain solutions from a third-party logistics provider that understands your

business. Retrieved from https://supplychain.fedex.com/

Hopeland. 2018. RFID technology in the express delivery industry-www.hopelandrfid.com.

Hopeland Technologies. https://www.hopelandrfid.com/blog/rfid-technology-in-the-

express-delivery-industry_b92

Kamoun, F. 2008. Rethinking the business model with RFID. Communications of the

Association for Information Systems, 22(1), 35. doi: 10.17705/1CAIS.02235

Maticevic, G. et al. 2011. RFID and supply chain management for manufacturing digital

enterprise. In Supply Chain Management-New Perspectives. Intech Open. doi:

10.5772/18625

Mearian, L. 2019. FedEx CIO: It’s time to mandate blockchain for international shipping.

Computerworld. https://www.computerworld.com/article/3391070/fedex-cio-its-time-to-

mandate-blockchain-for-international-shipping.html
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Post & Parcel. 2006. The FedEx edge – interview with CIO

https://postandparcel.info/14581/news/the-fedex-edge-interview-with-cio/

Rahman, M. et al. 2020. Application of RFID in Supply Chain System. International

Conference on Industrial Engineering and Operations Management Dhaka, Bangladesh,

January 9 – 10, 2010. https://citeseerx.ist.psu.edu/viewdoc/download?

doi=10.1.1.397.7831&rep=rep1&type=pdf

Rfidcard. 2020. RFID technology is applied to the Daily operations of FedEx express. RFID

Card ™. https://rfidcard.com/rfid-technology-is-applied-to-the-daily-operations-of-fedex-

express/

Supply Chain Market. The cutting edge of RFID technology and applications for manufacturing

and distribution. Supply Chain Solutions

Market. https://www.supplychainmarket.com/doc/the-cutting-edge-of-rfid-technology-

and-appli-0001