The newly established Shanghai Jinshan Petrochemical Logistics Co., Ltd.(hereinafter referred to as Jinshan Petrochemical Logistics), located at chemical industrial zone, Caojing, Jinshan District, Shanghai Municipality, is a third party logistic enterprise relying on its industry background and aiming at providing logistic service for the enormous petrochemical industry in Shanghai. The current main business is to offer group purchase, storage and devanning services for Sinopec, SPC and enterprises within the chemical industrial zone in Shanghai, and its elementary construction occupies the logistic base of 100 mu.

At the beginning of the company’s establishment, the capital construction was under orderly and systematic processing, and WMS type selection went on wheels. Nevertheless, on-the-spot data collection and material mark had not been well settled.

Pei Feng, having worked at a host of posts of SPC, said that a number of shortcomings exist in the material management of SPC using bar code in line with the current need.

“Sometimes the tag falls off, and after wetting, some tags are hard to read. Repetitious tag printing, affixing, reading consume manpower. We need a kind of mark system suitable for all-weather operation, as we consider not only the management of finished products, but also the management of part and fitting standby. The fact is that some equipments are stored in the open air, where the bar code has a inborn disadvantage. At that time we want to find a new technique to displace bar code mark. If we can’t take effective charge of materials, logistics is impossible.” Pei Feng explained further.

How to well settle on-the-spot data collection problem is the basic prerequisite for the overall logistics management system operation of Jinshan Petrochemical Logistics.

By accident, Pei Feng contacted RFID technique. “Now that Wall-Mart has employed RFID technique, then it can definitely be found in Shanghai. So I let them to go for it.” Pei Feng smiled and said.

Zhou Jianfeng, Systematic Director of Storage and Transportation Department of Jinshan Petrochemical Logistics, introduced that this technique concerned two main considerations. One was whether the scheme is formed or not, and the other was the price. The primary difficulty then was that no successful case for reference could be found.

At that critical moment, Shanghai RFID System Technology Co., Ltd. (hereinafter referred to as Shanghai RFID) gradually entered into their vision.

Shanghai RFID System Technology Co., Ltd. (hereinafter referred to as Shanghai RFID. The name of the company reveals its main business orientation.) is jointly invested and built by Shanghai Beiling Co., Ltd. and Shanghai NEWTOUCH Software Co. Ltd. Shanghai Beiling Co., Ltd. is the first listed company in microelectronics industry within the country, whose main business is to deal in circuit design and manufacturing, and moreover, IC Research Technology Center of the company is regarded as country-level enterprise technology center.

Deeply attracted by its strong technical background, independent research capacity and intellectual property in the field of RFID chip, with full recognition for Chen Manqing, General Manager of Shanghai RFID, Pei Feng finally confimed the cooperation with Shanghai RFID. Pei Feng appraised that “General Manager Chen is real working person.” Pei Feng also thought that the investment combination of Shanghai Beiling Co., Ltd. and Shanghai NEWTOUCH Software Co. Ltd. was comparatively good.

Shanghai RFID has offered RFID technical solutions for many industries and made certain progress. However, the item of Jinshan Petrochemical Logistics was its first commercial item in logistics industry and was of great significance.

The first period warehouse covering 8,000 square meters of Jinshan Petrochemical Logistics is equipped with several thousands of plastic trays and a few engine powered fork lift trucks. The need of Jinshan Petrochemical Logistics was quite clear, namely, the realization of the automatization of information collection for merchandises coming in and out of logistics center, thus actualizing the alete connection with Jinshan Petrochemical Logistics WMS.

According to Pei Feng’s understanding, logistics was to simplify complex operation, for logistics was to offer service and simplify all things, and the warehouse should become a channel for high speed circulation of client materials. The warehouse was therefore designed elaborately. The lines coming in and out of the warehouse and the arrangement of coming out of the warehouse gate were all taken into consideration. Thus fast operation was totally possible.

In line with client need, Shanghai RFID put forward the corresponding solution.

In the implementation of the first period logistics system item, RFID technical advantage is mainly utilized to accomplish the automatic fixing of merchandises coming in and out of the warehouse, and improve the correctness, timeliness and visibility of coming in and out of the warehouse, devanning, splicing, store shift and inventory taking. By sticking RFID tag on each merchandise tray, the relevant information of merchandise was stored in the tag; when coming in and out of designated identifying and reading place, by connecting with logistics management system through RFID reading and writing equipment and RFID middleware, the relevant information of all merchandises coming in and out of the warehouse was recorded timely; also, the wireless operation through smart RFID terminal satisfied the mobility of calculation. In this way, logistics management center could obtain a real-time knowledge of the quantity of goods coming in and out of the warehouse, match automatically the bills of document, and actualize error alarm.

At the same time, the RFID technical advantage could also locate the good position conveniently and swiftly, and effectively solve the management of goods moving or static information in the warehouse by adopting RFID tag to carry out good position management, assuring the correctness of good management in the warehouse. It not only well satisfied the upriver clients’ need to know about the good record coming in and out of the warehouse and current storage of various goods under processing each day, but also monitored all operation and control information of these goods, thus achieving the transparency and controllability of logistics process and effectively cutting the complexity and error rate of hand operation.

RFID’s application in warehouse management can also extend to distribution and delivery taches in future and correctly feed back the process and result of distribution and delivery.

This seemly simple operation process was far beyond the anticipation of the author. Driven by Wall-Mart and Department of Defense of the US, the characteristic RFID technique identifying by wireless radio frequency surged raging waves within the industry, and after unlimited extending of RFID application, a lot of enterprises encountered a variety of problems such as tag cost, application layer, frequency standard, and even the privacy protection of consumers. Whereas in the item of Jinshan Petrochemical Logistics, RFID technique occupied only a section of logistic operation, namely, storage operation. The effect of this seemly simple application was far beyond the advanced assumption. The RFID application in logistic operation strides an inspiring step.

“Our start point is quite simple; on the contrary, if we consider complexly, it can’t be done now. What’s more, we lay great emphasis on the wholeness and details in the implementation process for the purpose of dodging risks to the largest extent. Now the fact proves that we have done it.” Pei Feng smiled and said. Although the application was quite simple, some problems of actual application demanded groping step by step.

First of all, signal interference problem. Wang Yang, the vice general manager of Shanghai RFID, said: “as for RFID signal interference, we mainly take theories as reference and do many experiments pertaining to different materials. We find that metal definitely interferes with RFID, and we also find that plastics and lumber interfere signal. Hence we made a lot of environmental tests and adopted some shielding measures.” Therefore, Peng Weichu in charge of this item obtained a mould specially, not only shielding between tag and tray, but also solving the problem of tag fixed on the tray.

Peng Weichu introduced that in the aspect of manufacturing technique, pertaining to signal interference of RFID tag, some pertinent solutions were available currently. However, in the consideration of clients, we need to select the best solution, and this method was seemingly effective at present.

The choice of frequency and the standard of RFID frequency was the main obstacle restricting the application of the technique. In Wang Yang’s point of view, an appropriate standard for a technique could only be found in application, and the standard needed to be driven by powerful enterprises, which demanded time. The standard of the industry needs time, and neither drift nor stagnancy is permitted. Stagnancy means the loss of opportunity. Here Wall-Mart was taken as a wind vane for promoting RFID technique. Certain mistakes existed in this confirmation. However, in the application of Jinshan Petrochemical Logistics, RFID was certainly a comparatively good technique, and the application risks were controllable.

What came next was the tag cost.

In the application of this item, as the tag was recallable, the utilization cost pf RFID in actual application was readily solved. In another aspect, the application layer of tag in this item took tray as unit, and compared with the goods valuing nearly RMB10,000 Yuan of each tray, the price to performance ratio of tag after usage many times was still high, even if the actual application couldn’t reach the theoretic 100,000 times. At the same time, with the positive cooperation of both parties, the deploying fees of the whole item were within bearable range.

Upon adoption of RFID technique, Pei Feng and his group owned the courage of “being the first to rise in revolution”; actually, just as Pei Feng stated afterward, this was in fact a process that success would come when conditions were ripe.

In October 2002, several research institutes from Shanghai Jiaotong University and Shanghai Maritime University came to SPC to constitute the strategic layout of logistic development for SPC. In May 2003, after a series of discussions, this layout reached consensus, and personnel from top to bottom obtained a full recognition of the logistic development orientation of SPC. From 2003, SPC invited Shanghai Jiaotong University and Shanghai Maritime University to carry out systematic training for employees at all levels within the company.

Along with the growth of chemical industrial zone in Shanghai, Jinshan Petrochemical Logistics set about preparing and participating in relevant business. One was material purchase, and the other was storage distribution and delivery.

“The requirement of the leading men to us is that Jinshan Petrochemical Logistics is a newly established enterprise and should be constructed and operated in accordance with advanced logistic principles. So our hardware is the best. Steel structure warehouse, fork-lift truck and other equipments are generally made in line with the best standards. We have selected a company excelling at logistic software to develop WMS, so our warehouse is to be managed by system.” Pei Feng gained a more particular understanding of system: “a multitude of international enterprises don’t rely on human management completely. Exactly speaking, they don’t believe that humans can manage work well; instead, they trust system and make system to manage their enterprises. In their opinion, human is too “flexible”, while system is a down-to-earth process, thus dodging the interference caused by subjective factors.”

When receiving the contract containing 209 pages from the client, Pei Feng felt rather exciting! “This contract, offering detailed commercial contract and technical accessories, is also actually a fine management handbook. On the strength of our training, sound layout, systematic construction and new technique application before, we have full confidence in taking in this order. The RFID technique is a process that success would come when conditions were ripe, for we are considering this matter all the time.” “The actual application effect of the new RFID system exceeds our expectation far, and provides us a “flashing point” or a “selling proposition” in the fierce market competitions. The feedbacks of relevant clients are also satisfactory, and those clients speak highly of it. It is an undisputed fact that we will occupy a more favorable position in future fierce market competition.”

At present, in the warehouse covering 8,000 square meters of Jinshan Petrochemical logistics, there are only 11 workers in operation personnel of each shift, containing 4 supervisors respectively in charge of warehouse operation, system monitoring, service quality supervision, etc., 2 workers in charge of on-the-spot dispatching, 4 drivers of fork-lift truck and 1 worker in charge of account processing. The working efficiency is several times than similar enterprises in petrochemical industry.

“Our usage conditions in the recent 3 months reveal high correctness rate, which is indeed beyond our expectation.” Zhou Jianfeng introduced, “the adoption of RFID also cut demand for humans. Generally, new employees can grasp the skill within 2 months. Of course the system is managed by high-quality employees.”

“I check only 2 bills of document in the end of each month. One is business amount, which is used for settlement; the other is expenditure of various fees, which is taken to check worker performance so as to pay salaries. Also, our clients know that we are using this technique, and they support us fully. I will invite them to see to it in a few days.” It was obvious that the original decision of Pei Feng already achieved effect.

RFID application mode is still rare in China. Those who are sensitive to the new technique and take it into practice in China are probably foreign enterprises. Among logistic enterprises, according to disclosed materials, application of such a scale in Jinshan Petrochemical logistics is the first in the domestic China. Chen Manqing, the General Manager of Shanghai RFID, made the following comment: the way of putting RFID technique into practice decidedly reveals a company’s pioneering spirit of daring to innovate and apply advanced techniques. Although the upriver and downriver of the current supply chain haven’t realized systematic connection, it owns great potential. The way and effect of Jinshan Petrochemical Logistics prove all that. “applying while experimenting. In case that problems arise, amendment is carried out. The application of the technique is promoted in constant improvement.”

Pei Feng reckons that the RFID technique owns successful practical application in Wall-Mart and American armed forces. In China, a lot of enterprises are still looking on, doubting what application level or effect it can reach. The root cause is the attitude towards RFID utilization. If RFID is regarded as a high-tech technique, it indeed contains high risks in utilization and leads to a lot of scruples. It is also restricted by personnel quality and management level.

The successfulness of Jinshan Petrochemical Logistics item lies in the advanced principles and reasonable proper techniques, which didn’t cover all aspects of the company operation but pertained to the core business and operation of the company, thus cutting manpower, improving efficiency and decreasing error rate. They took RFID as a tool for management, and RFID is indeed a revolutionary technique. It is not appropriate to set too high an orientation. In the application of RFID, enterprises should have a full recognition of the technique and then find out the correct orientation.