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Technology & Logistics

Empowering the New Business Model

by Gordon Travers

Watching television one would be led to believe that the newly evolving business model is based on a mobile phone that can receive e-mails and browse the Web. The question we need to ask ourselves is, do we really think a simple messaging device with a small screen, twelve keys and no processing power can be the engine to enable the next industrial revolution? While it makes great commercials and may have overall general consumer applications, I think, from the business perspective, the answer clearly is: no.

Today, the network drives business and in most cases this network is limited to the office and the wired world. However, the reality of today’s business includes components, depending upon the organization, of a warehouse or distribution centre, a manufacturing facility, often a large yard for staging of inbound and outbound orders, a retail outlet and a mobile work force. To meet the challenge of “E,” and the demand of customers both internal and external, you must extend your network to the Point of Activity.

The growth hormone for e-commerce is the convergence of wired and wireless data. In fact, this can be taken one step further to say it is the convergence of wired, local-area wireless and wide-area wireless data.

The business campus itself is the first place this convergence can impact an organization. Today, most businesses have invested in Enterprise Resource Planning (ERP) to manage the enterprise and these applications are supported by a strong-wired network infrastructure. As a company’s focus shifts from the front office to the supply chain and distribution network they have begun to invest in Execution Level Systems, such as warehouse or yard management. Execution Level Systems need to be able to communicate and collect data at the point of activity. To accomplish these tasks they need to be supported by a “wireless local area network” (WLAN also known as RF for radio frequency).

A WLAN is a flexible data communication system implemented as an extension to, or as an alternative for, a wired LAN within a building or campus. Using electromagnetic waves, a WLAN transmits and receives data over the air. A WLAN combines data connectivity with a mobile worker with a powerful result: the ability to communicate and collect data at the point of activity.

Adaptation of wireless local area networks is growing as a result of a number of factors. First, the Institute of Electrical and Electronic Engineers (IEEE), the same group that established the wired network standards, approved a WLAN industry-wide, vendor-independent standard. Related to this, in July 1997 ISO adopted the IEEE 802.11 as a world-wide standard. The standard assures users of stable technology and more competitive bidding.

Second, the Wireless Ethernet Compatibility Alliance (WECA) has a certified interoperability standard called Wi-Fi™. The goal of WECA is to ensure interoperability among a wide variety of wireless systems and products and to promote Wi-Fi™ as the global WLAN standard across all market segments.

Third, WLAN infrastructure prices have decreased dramatically over the past year.

Fourth, we are seeing a shift to mobile computing platforms by both corporations and individuals. Workers and consumers are using notebook computers and PDAs as their primary computers and handheld platforms are gaining popularity in the workplace. As well, companies such as Symbol Technologies are making mobile platforms robust and rugged and offering a wide range of form factors and operating systems for the use of workers in the warehouse, distribution centre or yard.

Fifth, new applications tools such as Wavelink from Symbol Technologies are continually being developed to empower WLAN use by providing comprehensive development platforms. As well, many existing ERP applications such as SAP and BaaN have added a RF tool kit to extend the use of these solutions beyond the wired network.

Finally, many firms are evaluating the use of a WLAN for Internet and Intranet access for employees requiring real-time access to information. These applications share the benefits of improved productivity, or efficiency that comes from providing individuals with the flexibility to move freely within their work environment, while maintaining the ability to send or retrieve information.

In the warehouse, distribution centre or yard, WLAN-based networks are not a case of keeping up with the latest technology. They are becoming a necessity in terms of asset and inventory management, improved operations efficiencies such as the picking and delivery processes and, perhaps most important, in ensuring a consistent level of quality data capture and processing to assist in retaining and winning ever more demanding customers.

Knowing accurate stock levels and locations, confirming online and in real-time your ability to deliver, and improve productivity at the same time, have rapidly become the benchmark for a more profitable operation.

Bar coding has also become ubiquitous across most forms of product delivery. Bar coding follows international standards in structuring the content of information held in the bar code, enabling worldwide supply chain automation to become simplified. As well, it is a tool to help consumers over a key barrier to online shopping - order complexity. Scanning product codes makes it simple, quick and frictionless.

In terms of operational effectiveness within your warehouse, WLAN allows for the synchronisation of information and merchandise flow with the following results: reduction in errors as a result of bar code scanning; reduction in safety stocks; reduction in stock counts; reduction in physical inventory; fewer lost sales as a result of missed shipments, short shipments and back orders; less time in reconciliation with suppliers and customers; lower inventory write-off; immediate stock on hand information; ability to prioritise order picking and fulfilment online.

The real benefit to these operational improvements is an increased ability to meet customer expectations and demand.

Another major factor in a return on investment will come from inventory turn over, equipment and facility utilization. As well, you can expect a reduction in labor overhead as a result of the elimination of paper-based task assignments and the ability to have system-driven task optimization.

The benefits are real and documented by outside consultants and independent advisers. For example, the Wireless Local Area Network Alliance conducted a study in 1999 to review the return on investment as a result of the implementation on a WLAN. This study discovered that across all industries, the WLAN paid for itself within 12 months. This is with all economic benefits considered. The payback period of this investment is the period of time required for the cumulative cash flows due to increased productivity, organisational efficiency and extra revenue/profit gain to equal the initial investment.

Source WLAN

According to the IDC, the number of mobile workers – those who work outside the business campus - will grow at a compounded annual rate of 9 percent and reach a total of 55 million people by 2004. This is a significant portion of the overall workforce and presents both a challenge and an opportunity - a challenge to provide these workers access to the network as required, and an opportunity to improve process by streamlining process and capturing information at the point of activity. A simple example we can all relate to would be the capture of proof of delivery information at the customer site and transmitting this back to the host system in real time. This information could be used immediately for invoicing, reducing the payables cycle, and could be posted to a Web site for customer track and trace.

When we move beyond the business campus, we move from a wireless local area network to the realm of wireless wide area networks (WWAN). A WWAN presents some challenges that we did not have to face with WLAN. I posed a question at the start of this article about the use of mobile phones. This question can also be expanded to included interactive pagers, to meet the needs of wireless data communication and management. While both these devices are great for messaging, they offer little in the way of business applications and real-time data management.

Some people see mobile phones as a method to transfer data between a mobile computing platform and host network. This presents a major data management issue – ensuring delivery of the information. One need only think of the number of times that you have had a cellular call cut out to begin to understand the scope of this problem. How do you ensure that the information is delivered, or that the entire content was received?

The use of data networks meets this challenge. Data networks have the tools to ensure the complete transfer of data. These networks charge based on data, not on connection time, and they can support multiple simultaneous connections. While data networks present the best way to manage the transfer of data, they do have some issues we need to be aware of when planning our solution.

Standards are a major factor, unlike in Europe, which settled on GSM. We have no single standard in North America. We have several networks to select from, including, for example, Mobitix, ARDIS and CDPD.

A related, and very important issue, is coverage. While we can ensure complete coverage in a WLAN environment, the same is not true in the WWAN. Terrestrial-based wireless data networks offer only limited coverage in major centres, and in some cases the service is not offered even in major business centres. For example, CDPD has no coverage in Toronto, Ontario, or Atlanta, Georgia.

An alternative to terrestrial-based WWAN would be a satellite network, like TMI. Satellites will provide ubiquitous coverage in terms of geography, but it is subject to a key-limiting factor – line of sight. What this means is that we will not have coverage indoors or, often, in the core business district of a major metropolitan centre because of the height of the buildings.

How can we overcome these and other WWAN concerns? The answer is by using middleware, which has a strong value proposition because it allows data to cross information domains. It creates a very reliable infrastructure to ensure the guaranteed delivery of transactions, and enables the support of a variety of hardware, network and software platforms.

The effective use of WWAN will empower and streamline the processes for corporations, their mobile workforce and consumers in the areas of route delivery such as home grocery, field service such as cable, phones, etc. and direct-store delivery as well as retail presales, to name just a few.

To summarize, bar-code scanning enables accurate product identification, selection and ordering. Wireless local and wide area networks allow you to extend your network, and thus your information management, to the point of activity. And the Internet is a medium for messaging and information access. The overall win to the business community and its customers enabling the “E” revolution is the convergence of wireless data, bar codes, the Internet and the existing wired enterprise network.