ADC takes control

New survey shows that the largest plants and warehouses rely on bar codes, EDI, and RFDC.

By Gary Forger, Executive Editor -- Modern Materials Handling, 9/1/2000

Late last year, Modern Materials Handling asked you to pick the most important materials handling development of the 20th century. With everything on the table from conveyors and lift trucks to practices such as just-in-time, 76% picked bar codes #1. Your answer was the same whether you were in manufacturing or warehousing. In fact, bar codes beat out the next most often selected development, computer control, by 18 percentage points.

Or to put it another way, bar codes are now fundamental to supply chain efficiencies in both manufacturing and warehousing. With that in mind, we did a survey across the larger facilities of all major industries to find out exactly where bar codes and other forms of automatic data capture (ADC) technologies fit in your operations today. You also gave us a look into your plans for the future.

To begin, bar codes are the overwhelming first choice in ADC. Of locations using any of those technologies, 95% use bar codes. No great surprise there.

Perhaps more interesting is the appearance of electronic data interchange (EDI) in second place at 51% of locations. On the one hand, EDI's strong showing is not entirely unexpected given its strength in the largest industrial companies, the heart of our survey. On the other hand, EDI is unlikely to maintain that position for long especially as the Internet increasingly takes on the traditional role of conventional EDI.

The third most often used ADC technology is radio frequency data communication (RFDC). These wireless systems, used at 38% of locations surveyed, are in many ways the next logical step in building data capture systems in the plant and warehouse. As bar codes identify inventory, RFDC allows workers located anywhere in the facility to send that collected data to a central computer which can then send back work tasks, instructions, or other information. Meanwhile, the transmitted data can be used to build EDI transmissions to customers and suppliers.

At the bottom of the list are two promising ADC technologies, radio frequency identification (RFID) and biometrics. While both are technically established, the survey confirms that neither is widely used yet in industrial applications.

You also gave us a snapshot of your future plans for ADC. In the next 2 years, you plan to spend more on RFDC than any other single technology. In second place are bar codes followed by vision systems and then voice systems. As is the case today, RFID and biometrics bring up the rear when it comes to expected spending.

So, where is ADC used right now? Shipping is the leading department followed by receiving. The pecking order continues with manufacturing processes, picking, incoming materials storage, and finished goods storage. Then there is work-in-process, final assembly, and sortation.

But the fact that ADC is used in any particular department is only half the story. At least as important is what happens to the data once it has been collected. In other words, is it shared with other departments?

At 66% of respondents' facilities, the shipping department shares data with other departments, making it the leader. The next three departments that most actively share data are receiving, storage and orderpicking. The first two of those three share data at about 55% of facilities with orderpicking at 47%. The standings of additional departments are listed in the table.

Data sharing, by the way, doesn't stop within the four walls of your facilities. Almost two-thirds of you make data collected by ADC available to other locations at your company.

As a result, the data can be used by key managers at both your location and elsewhere in the company. And it is. While warehouse managers and plant/operations managers are the primary users, corporate managers also find the information essential to performing their jobs. Similarly, the information is used for many reasons ranging from daily operations such as tracking, scheduling, and order staging to billing and financial reporting.

Beyond helping with specific tasks, ADC is expected to deliver concrete benefits. The top five reasons for buying the technologies are: improve inventory management (36%); increase productivity (26%); improve customer service (17%); reduce labor (15%), and; increase access to data (14%).

That last item is as much a portent of the future as it is a gauge of current practices. In fact, the first four reasons for buying ADC are fairly traditional. However, the fifth - increase access to data - is a measure of the need to share data not just between departments but across the enterprise. And as e-commerce and supply chain software evolve, such access to data direct from the shop or warehouse floor is likely to be as common as are bar code labels on boxes today.

In fact, more than 40% of survey respondents already use some form of planning or execution software in their facilities now. Leading the pack is manufacturing resource planning (MRP II) at 41% followed by warehouse management systems at 38% and materials requirements planning (MRP) at 35%. Next in line are order management systems (31%), enterprise resource planning systems (28%), manufacturing systems (26%), transportation management systems (15%), and supply chain planning software (13%).

Looking to the future, these people plan to continue to upgrade software currently in place or buy systems they don't currently use. In fact, upgrades are in the cards for a quarter of all current software users across the board. Meanwhile, half of those without warehouse systems plan to buy with 30% looking at transportation systems for the future.

In short, ADC has already made its mark within the four walls of distribution and manufacturing facilities. But by all indications, that's not where its influence on supply chain efficiencies is likely to stop.