The Future of Tracking Technologies

 QR Code

Can you read this QR code?

Introduction

Customers now all expect all their letters and parcels to be tracked.  Tracking information has become a recognised part of the basic product – it is no longer a priced add on.  In many cases information can be more important than the physical product itself. For postal operators life has just got a whole lot more complicated and old tracking system infrastructure is not designed for sophisticated users who require new postal services and want to access these services through Apps and Social Media.

Tracking technology does not exist in isolation. There is a critical dependency on validated addressing data.  The work of the Global Addressing Data Association (GADA) is vital in this regard. An incorrectly addressed item will be misrouted and will fail – resulting in an operational service failure. Most existing international tracking systems disregard address validation. It is missing from most cross-border parcel and mail services.  This causes considerable rectification costs, service failures and customer dissatisfaction. In many cases the national address validation databases don’t exist or are not shared.

Mass serialisation is a major theme today as other sectors start to move towards individual item identification.  In the 1990’s I designed a postal system that barcode labeled over 1 million uniquely identified parcels every day. Postal expertise in mass serialisation was significant but we are not keeping up with the latest thinking in this field.

There are some big questions for a postal or express operator. What is the optimum tracking point logic and how do we get tracking to drive effective itemised billing, customer service and operational performance?  “Pay for Performance” is now expected by large customers and this requires dynamic, well-designed and fully integrated tracking systems.

Completely new business models are appearing

A new Harry Potter book was launched in Germany last year.  It was available for on-line purchase at midnight in Germany – a copy of the book had been prepositioned in every Pakstation automated box system. These pieces of street furniture are located within a couple of miles of every potential recipient in the country.  So each book was available for immediate collection at the time of ordering. The cost of providing the service is also really low.

In the UK “multi-carrier” systems like Metapack are being used by all the leading eCommerce vendors.  An eCommerce customer can choose a delivery service and a price when they order on line.  The parcel will then be despatched from the warehouse with the correct carrier documentation. Delivery performance of different carriers is being directly compared. The danger is that carriers are being reduced to a commodity service and are finding it very difficult to add value.

Hybrid Mail, Reverse Logistics, Downstream Access and Ad Hoc services are increasingly being handled outside the main distribution networks as core tracking systems and physical networks are poorly designed to cope with these types of products.

Organising for Change

Radically new products and tracking technologies will require considerable business change. Many organisations are struggling with dramatically “out of date” technologies and standards. The system standard for exchanging tracking information between international posts is now over 20 years old.  Global identifier standards exist but are not being complied with. Most international express operators are still using bespoke “non-standard” item identifiers.

Most senior postal executives think that they are in a “grid-lock” and can’t move but this is not the case.  New solutions can be added on a “plug and play” basis and the resulting solutions will definitely be cheaper and more flexible. The added management benefit could be extreme “real-time” visibility of the entire operation.

The Italian Post have a very good high visibility model and companies like Traak IT can provide Complex Event Processing models (CEP) with “real-time” pictorial representations.  The trick is to turn large volumes of tracking data into meaningful and highly valuable business information.

Tracking is no longer just the domain of just one internal department. Marketing must promote a technology augmented product. Sales must recognise the technology as the touch point for both Senders and Recipients. In many cases the customer experience is delivered though automated facilities. Operations depend on tracking information to drive sortation and realise operational efficiencies. The management of delivery fleets and the calculation of performance bonuses are also really important. Finance increasingly depends on sophisticated “Pay for Performance” schemes for customer billing. Tracking systems are the single most important source of information for the Customer Service department.

When it comes to International business the “knitting” has an extra degree of difficulty.  Integration of delivery partners, airlines and customs clearance into your business model in a completely seamless manner is very complex but it can be done.  Adoption of modern and open technical standards is also absolutely vital for this process to work effectively.

You must also keep a close eye on other industry sectors to see what they are doing to make sure that your business solutions are compatible.  Pharma, Healthcare, Packaging and Defence for example.  Not much point providing an express parcel service and then not being able to meet the stated requirements and mandates of the Pharma industry.

So where should responsibility for tracking technologies sit within a modern postal or express logistics operation?  A highly capable and trusted “Innovation Director” sitting alongside the CEO with a strong mandate from the other functional directors – it really is that important!  I have seen this approach adopted in leading postal organisations and it has delivered widespread innovation.

Any postal operator that has been forced to streamline its resources over recent years is unlikely to have relevant technology expertise of the new tracking technologies in-house.  It is therefore absolutely vital that the company adopts an Open Innovation model to move their strategy forward. That means engaging with non-traditional technology vendors, forming collaborations and joint ventures with specialist “knowledge based” micro businesses and stepping completely outside traditional procurement and tendering. Proof of concept trials start to become the important project milestone – not the tendering.

Unique Identification

In general postal products fall into 2 very broad categories.

  • Traditional tracked products where each item carries a serialised identity number embedded in a linear barcode. The number can be used for a track and trace enquiry but generally the barcodes are bespoke and cannot be used by a customer.
  • Letter products will normally be associated with a simple identifier which is derived from delivery point information. Normally this is captured by scanning the address image from the piece and then validating it against large Postal Address databases. You will probably have seen this information encoded on the piece as a long linear 2 state barcode or a series of phosphor dots.  Generally these codes are only used by sorting machines and are not even used by in-house customer service.

To start becoming useful a standardised and serialised item identifier must be used universally.  The standard that I would recommend is the ISO License Plate which guarantees absolute global uniqueness – not just in the postal world but in all industry sectors.  The Department of Defense and NATO IUD uses ISO License Plate standards for part identification and this is 100% compatible with the ISO Licence Plate standard managed by the UPU.

What is also really important is that the Item Identification number and its representation in an Auto ID technology should be kept completely separate. So a parcel could have an address label containing a barcode and an RFID tag.  The same unique serial number would be in both the Barcode and the RFID tag. So you need to choose the best Auto ID solutions for your business application – but always with an embedded ISO licence plate number.

Care must be taken to align internal services with customer products?  – Thus avoiding parcel and mail products becoming commoditised and the problems of mass customisation. Both of which can mean disaster for a postal organisation.  Augmented Mail and Parcel products also need to incorporate payment, electronic services and trust.

Choosing the Technology

Organisations need to understand what tracking technologies or combinations of technologies are most appropriate and how do you link physical tracked products with Social Media, Advanced Mobile Payments and Delivery Box solutions.

Barcodes including linear barcodes, smart two-dimensional codes and QR codes can be used with smartphones or tablets. To read the barcode you use the built in camera in the phone.

Near Field Communication (NFC) which is currently used on Payment Cards (like Barclaycard) or Travel Cards (like Oyster) is now being built into smart phones.  Google Wallet allows you to pay direct from your phone.  The NFC technology being built into phones can also be used for parcel tracking, Proof of Posting and Proof of Delivery. The reading distance is 2-3 cm.

Passive RFID can read though packages and unlike a Barcode doesn’t need to be line of site. Read distance is around 4m but is increasing to around 15m.  Indicative cost of this technology is 10 cents per tag.

Active RFID tags contain a battery that they use for transmission. The range was 1km but new versions of the standard are now reading to 3 km.  Price of a standardised tag is typically around $10.

Sensors linked to RFID tags can support multiple technology standards and business opportunities. CAEN has developed a passive RFID tag with a programmable temperature sensor.  If a pre-set temperature range is exceeded a replacement package can be sent.  There is a press to test function and full temperature logging.  Temperature Information is sent whenever the package passes a reader.

Wireless Sensor Networks (WSN) can track postal networks in real time. Premises, vehicles, rollcages and Collection Boxes can be managed in real time.  Post Denmark has made a national deployment of a Commotive WSN network.  Real Time Location Systems (RTLS) can be used to very accurately locate equipment or assets in three dimensions.

Printed RFID uses “dot matrix” style printers to spray on electronic components.  The tag will cost about 1 cent.  The postal industry depends heavily on the printing industry and adoption of printed RFID technologies will benefit both sectors.

I have described the Tagging that can be used.  Barcodes or RFID tags are only the tip of the iceberg. Readers, field optimisation, purpose built middleware and communication options are also required. Posts can innovate and use advanced technology to strip out significant costs.

Conclusion

The two dimensional barcode pictured at the top of this chapter was included as a simple user challenge.  Did you manage to read the code and understand the result that you got?  It is a “Quick Response” QR Code that when photographed by a smart phone or tablet will provide my Google+ Social Media profile.  The profile contains my name and a validated address. A letter or parcel with just this QR code on it could be delivered to me. No address would need to be written on the item.

If you would like some help in understanding QR Code technology and the opportunities I would highly recommend “QR Codes for the creative business person” by Dr. Chris Thomas. (ISBN 978-0-9562649-9-2)  I helped Chris write the book and it contains a lot of postal examples. Last year USPS ran a discount campaign for direct mailers that raised the use of QR codes on commercial mailings from 3% to 33.9%.

As posts streamline and downsize there is a real skills gap and lack of expertise in this whole area. Open Innovation and clever vendor pricing models need to be adopted by posts – maybe for the first time.  We are now in an era of scare capital. The “pay for use” models that are common for “with driver technology” must be extended into other areas. These revenue models need to be aligned to valid customer metrics.

If you are looking for an Innovation Director to drive forward this type of innovation in your own business – I am available.

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