REUSABLE CONTAINER MANAGEMENT & TRACKING

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1 REUSABLE CONTAINER MANAGEMENT & TRACKING Implementing and Proving ROI (Part 2 of the CHEP Asset Tracking Whitepaper Series) As outlined in Part One of this Asset Management & Tracking White Paper Series, a well-orchestrated methodology for tracking and managing assets is critical for any healthy supply chain. In its most basic sense, this process should allow for the systematic tracking, evaluation and management of containers. The end goal then becomes avoiding unnecessary capital expenditure and reducing overhead, all while alleviating the common risks typically associated with managing, maintaining and owning those assets. Unfortunately when implementing a new system, the all-too-common misconception is that a successful asset tracking program begins and ends with the software and hardware implementation. In reality, this is one of the most erroneous myths associated with tracking. While choosing the right hardware and software is certainly a critical part of setting up the new process, true success lies in building a solid foundation before technology is even brought into the equation. Laying the Foundation for Your Asset Tracking Program The steps required to implement a container management tracking program require more than simply installing software and purchasing hardware. You must first begin by preparing and evaluating the backend of your current process. This critical step goes beyond the need to simply ensure that the right system is identified and implemented. When done correctly, preparation of the backend should result in having the metrics and Key Performance Indicators (KPIs) in place to define future success and measure ROI. Implementing a Tracking System and Preparing to Prove Return On Investment This whitepaper attempts to shed light on best practices for evaluating your current tracking system and measuring ROI for any future investments, From identifying the the steps, metrics and processes required for the successful implementation and ongoing optimization of an asset tracking program, you will glean guidance from the experts in the field of container tracking.

2 3 Steps for Successful Backend Implementation Step 1: Evaluating the Current Process How is the current tracking process performing? Can it even be measured? Understanding these metrics plays a critical role in evaluating the success, failure and ROI of any tracking process. Note: Carefully recording the performance of the current system to get a baseline will make it much easier when it comes time to measure the ROI of the new tracking program. In order to gain a qualitative picture of how the current process is performing, begin by considering the following questions: Are controls currently in place to identify metrics such as asset loss rate, cycle time and ROI? What is the current asset cycle time? What is the current asset loss rate? How do these metrics compare when measured against industry standards? Step 2: Understanding The Pros and Cons of Asset Management Systems At a high-level, there are two types of container tracking options available: Aggregate and Individual. Choosing the right one depends on the complexities and budget constraints of the supply chain, along with the level of bill-back accountability required. Aggregate Tracking vs. Individual Tracking Aggregate Asset Tracking: Typically a manual (i.e. pen and paper or excel spreadsheet) process, Aggregate Asset Tracking uses tribal knowledge and visual label tracking to determine the net in and out of assets in the supply chain. Pros: Ease of Implementation, Start-up Costs Cons: Not as Accurate, Frequent Reconciliations Individual Asset Tracking: Built to accommodate the intricacies of complex supply chains, Individual Asset Tracking relies on barcodes and RFID along with GPS data to track assets. Pros: Real-time Accuracy, Item-level Dwell Times Cons: Time Intensive Implementation, Higher Level of Change Management Required Step 3: Preparing for Stakeholder Alignment When implementing any asset tracking program, success is often dependent on gaining both top-down and bottom-up buy-in from stakeholders, particularly the people at the plant level who will be responsible for compliance with the system. In order to achieve this level of alignment, it is necessary to have the KPIs in place that each stakeholder truly values. Beyond ROI, Valuable KPIs Include: The ability to identify and eliminate bottlenecks The ability to assign accountability for container damages (bill-back accountability) Money saved on assets that would otherwise have been lost (reduced CAPEX) Meeting regulation compliance (e.g. HACCP plans under FSMA) The ability to track each product s state and location along with the container

3 Defining and Implementing the Asset Tracking System After the backend prep work has been done, the KPIs have been defined and the best tracking type has been identified, the next step becomes defining the critical components that combine to create the entire process. Remember, an asset tracking program is only as strong as each of the individual moving parts supporting it. The Five Critical Components to Implementing Asset Tracking Component #1: Asset Identification From choosing the tag material to serialization and encoding, it is important to define how each individual asset will be tagged and identified. Asset Identification Considerations: Tag Material: What materials provide the best performance in the field with the lowest price tag? Tag Placement and Orientation: Are the tags reachable, identifiable and scan-able? Size & Read Range: At what distance can the tag be scanned or read? Birthing Process: How will the tags be affixed to both new and existing assets? Component #2: Defining Every Transaction Simply defined, a transaction includes any time, event or occasion that requires an asset to be scanned and tracked. While shipping and receiving are among the most obvious events, there are a number of additional transactions to consider. Additional Transaction to Consider Include: Inspection Cleaning Content Damage Repair Note: Defining each point of data capture and estimating how frequently they occur is critical to ensuring total visibility as assets make their way throughout the supply chain. Component #3: Choosing the Capture Method Will the scanner go to the container/tag, or will the container/tag come to the scanner? Understanding these requirements helps to determine whether or not a mobile solution (i.e. hand-held scanning and data capture equipment) is needed. If not, a stationary set up, such as a RFID portal is the ideal choice. Additionally, the way in which the team will input data and interact with the scanning interface needs to be carefully evaluated. Keep in mind, some devices still use keyboards/keypads, while others rely on touchscreen interfaces (e.g. tablets and mobile devices).

4 Component #4: Defining the Exception Management Process What happens when things go wrong, or don t work properly? No system is 100% failsafe, and things such as missed scans, bad reads and duplicate data are inevitable. The key becomes creating a process that allows for any possible errors to be readily identified, tracked, reported and corrected. Exception Management Processes to Consider Include: Resolving excess data, duplicates or bad data issues Reporting and flagging issues Identifying and reporting damaged asset tags or faulty scanning equipment Manually updating the asset tracking system Component #5: Creating Reporting Effective, clear, accurate reports not only work to ensure the continued efficiency of the asset tracking program, but when it comes time to cement stakeholder alignment and prove ROI, having the right reports in place will make it easier to showcase the asset tracking system s overall value. Reporting Criteria to Consider: Web-based: A web-based reporting system ensures reporting access and supply chain visibility across separate systems, databases and hardware Daily, Weekly, Monthly: Regularly scheduled reporting ensures that opportunities for improvement and inefficiency are quickly and easily identified Stakeholder Alignment: High-level stakeholder reporting takes the guesswork out of proving value Compliance: Make sure the system is equipped to handle the compliance and regulatory demands of the industry it serves

5 Evaluating Value & Proving ROI Measuring, managing and monitoring the performance of the new tracking system begins by first having a clearly defined set of KPIs. When mapped directly to the metrics evaluated during the backend preparation process, these analytics will not only shed light on how the new system compares to previous processes, they will also play a large role in refining the new process, while continuing to replicate past successes. Criteria to Consider When Evaluating ROI Reduced Physical Inventory Improved Inventory Accuracy Reduced Asset Loss Rate Reduced Labor Cost Improved Quality Control Increased Supply Chain Visibility With these KPI s clearly in place, measuring and proving ROI comes down to simply comparing each metric against the performance prior to implementation. Outsourcing Your Asset Tracking System For organizations without the in-house expertise required to build, implement and manage a proprietary asset tracking system, seeking an outside provider is a viable option. Not only are outside tracking system providers often able to reduce any initial installation expenditures, they also offer the expertise and resources necessary to ensure that the new system is able to stand up to the challenges of evolving supply chain visibility demands. For example, the team at CHEP provides comprehensive setup, support and consultation to ensure the successful implementation of the container tracking system. From choosing the right technology to tracking and reporting, common advantages of partnering with CHEP include: Individually barcoded assets for scanning 4-in-1 tags available for added RFID capability Secure cloud environment for data storage and reporting 24/7 supply chain visibility from any internet-accessible computer About CHEP At CHEP, we understand that implementing an asset tracking system is a daunting venture. Our innovative container tracking software, CHEP-TRAC, allows us to provide complete container management for virtually any reusable containers. Simply pack, scan and ship.; then CHEP delivers the tools, hardware and software needed to optimize your supply chain, eliminate underutilized inventory, reduce shipping expenses and ensure your assets are where they need to be.