'Smart Box' RFID Technology Urged by U.S. Customs Also Provides Economic Value for Global Shippers

A.T. Kearney finds major importers, exporters recognize substantial operational savings via networked RFID beyond simple tamper alerts

Sunnyvale, CA — January 31, 2005 — "Smart Box" container technology recently promoted by U.S. Customs and Border Protection (CBP) for special "green lane" clearance under the Customs-Trade Partnership Against Terrorism (C-TPAT) program also can deliver sizable investment returns for shippers when linked to a proven global asset management and security network, according to new research by A.T. Kearney, a management consulting firm.

Robert Bonner, CBP commissioner, announced during the recent Customs Trade Symposium in Washington, D.C., that he was ready to take the C-TPAT program to the next level, which he called "C-TPAT Plus." C-TPAT Plus would provide "no inspection upon arrival — immediate release" for low-risk shippers using technology that can detect and record whether tampering has occurred with a container seal after being affixed at the point of origin.

"U.S. Customs and Border Protection should be commended for its forward-looking recognition of 'Smart Box' technology in helping to further strengthen Homeland Security while also providing economic value for its users," said Omar Hijazi, an A.T. Kearney principal who oversaw the report, which was conducted for client Savi Technology, a provider of supply chain asset management and security solutions.

"Our study validated that logistics executives for major importers and exporters believe that a tracking and security solution using radio frequency identification (RFID) technologies linked to a networked platform that goes beyond simple tamper alerts can provide significant value," said Hijazi. "Based on a number of potential benefits, we calculated that users could realize net benefits averaging $1,200 per container shipment. This would be added on top of benefits received through fast-track Green Lane qualification, and could create major productivity gains that outweigh the costs of implementation."

From extensive interviews with logistics executives at 25 of the world's largest importers and exporters (Retail/Consumer Products Goods, Chemicals, Automotive and High Tech industries), the A.T. Kearney study found that container security and inventory management are among the most important issues facing the over-ocean supply chain.

Specifically, the A.T. Kearney study on synchronous and secure supply chain for global container shipments found that logistics executives believed smart box RFID technology going beyond simple "automated tampering alerts" can improve container security while also reducing inventory, reducing out-of-stocks, reducing lead-time variance, increasing manufacturing uptime, reducing administrative costs and fees, preventing theft, and preventing lost containers.

Mark Weidick, general manger of Savi's Collaborative Network Services group, said that the A.T. Kearney study reinforces findings from several other recent reports. For example, last year BearingPoint Inc., one of the world's largest business consulting and systems integration firms, on behalf of the U.S. Trade and Development Agency, analyzed results of a demonstration project between the Ports of Bangkok and Seattle of container shipments using RFID sensor tags. BearingPoint found that hundreds of dollars worth of net savings could be realized with an RFID solution by reducing Customs compliance costs, improving timely deliveries and customer service, and reducing stock-outs and theft.

Further, a Stanford University study found that RFID solutions deployed in the Smart and Secure Tradelanes industry-driven solution found similar benefits to shippers ranging from $400 to $1,800 per container trip.

A number of other recent government and industry policies have provided incentives to use RFID-related solutions. Last year, Wal-Mart, Target, the DoD, Federal Drug Administration and others issued policies requiring suppliers to use RFID to improve the visibility and authenticity of supply chain shipments.

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