Logistics Beacons: Using Proximity As A Logistics Oversight Service (an Excerpt)

The global logistics industry generates $9.1 Trillion dollars in revenue. The global Third Party Logistics (3PL) industry generates $750 Billion in revenue as a part of that figure. Further, the U.S. trucking industry alone generates approximately $700 Billion in revenue. Air and sea cargo industries generate $62 Billion each. These are huge numbers that represent the movement of every good across the globe and the reason we are seeing the rise of Logistics Beacons as a way to increase logistics and supply chain visibility.

In the most simple of terms, any product that is produced – or the raw goods used to produce it, are moved through some sort of logistics network. There is no larger industry in the world than logistics. And there is not a more important industry to the world than logistics. Food, medicine, technology, fuel, building materials, waste – the very basic inputs and outputs of any modern society are dependent upon logistics.

Technology has always played a critical part within logistics. Over the past two decades, there have been several technologies that played an important role with respect to increased supply chain visibility. Two of those were bar codes and GPS. There were also technologies that over promised and under delivered, such as RFID.

Each of these technologies provided visibility of a single item flowing through a logistics network. GPS was and is a pro-active technology providing location of a truck, train, plane or container. Barcodes on the other hand, were reactive technologies and often operated at the product level. RFID technology can operate at both a reactive or proactive (passive versus active) manner, and can be paired at a transportation asset or product level.

But RFID fell short for a myriad of reasons, most of which could be detailed in a stand-alone research paper. For simplicity sake, let’s just state that RFID infrastructure (gates and readers) are expensive and cumbersome to deploy. This cost and difficulty became a natural antagonist to the desired ubiquity of the technology. In addition, the cost of active tags combined with the “dumb” (e.g. no power or memory) of passive tags further plagued adoption within logistics. Thus, RFID is now more synonymous with inventory management.

Today, we know roughly where a product is or has been in terms of single fixed points in time—two dimensions if you will (where and when). But, what logistics does not know today is what that asset or product was around, flowed through or handled by. You may know that a shipment arrived at a location. You may not know that it was moved through docking bay 7, handled by forklift 123, driven by employee ABC, and placed in location XYZ at 1:12 PM. Or, if you do, you have to cobble that information together from six different sources – many of which are not IoT-based in terms of data integration.

But much of this can and will change with the introduction of Bluetooth® Low Energy (BLE) technology in the form of Logistics Beacons. A beacon is an independent, low-cost device that is built upon the latest Bluetooth® standards. These devices are self-powered and require no data plan to provide proximity services. They broadcast their presence to other nearby devices, such as smart phones, tablets, computers, and sensors.


Cold Chain Shipping Loss in Pharmaceuticals – $35B per year and growing

In 2014, the pharmaceutical industry had sales of $790 Billion in non-cold-chain (77.8%) and $225 Billion in Cold-chain or controlled room temperature (22.2%) products. That totals $1.015 Trillion. If we estimate a 5% CAGR (compound annual growth rate) then by 2019, that number will be $1.36 Trillion.

The losses associated with temperature excursions in healthcare come to $35 Billion. That is broken down as follows:

  • $15.2B in Lost product cost
  • $8.6B in root cause analysis
  • $5.65B in clinical trial loss
  • $3.65B in replacement costs
  • $1B in wasted logistics costs

Within Clinical trials, the total loss of $5.65B is broken down further as follows*:

  • $1.3B in Opportunity labor costs
  • $2B in Direct labor costs
  • $2.34B in Trial product loss

Loss is present across the industry in high numbers, for example:

  • 25% of vaccines reach their destination degraded because of incorrect shipping.
  • 30% of scrapped pharmaceuticals can be attributed to logistics issues alone
  • 20% of temp-sensitive products are damaged during transport due to a broken cold chain.

A pallet of unprotected product on an airport tarmac with an ambient temperature of ~70°F (21°C) can quickly reach temperatures above ~130°F (55°C). At that temperature, you can fry an egg in 20 minutes.

So, what is a billion worth?

$16 Billion, which is the approximate costs incurred by the top ten pharma firms due to temperature excursions, is 20 times the average price to earnings ratio of big pharmaceutical firms.

$320 Billion, which is the total corporate value wasted due to temperature, is larger than the 2015 total market capitalization of Johnson & Johnson ($274 Billion).

Get the infographic here


* = Ray Geoff, Wyeth Vaccines—white paper entitled “Cold Chain to Clinical Site: The Shipping Excursions”, indeed website salary estimates
Other sources: World Health Organization (WHO); Parenteral Drug Associate(PDA); worldpharmaceuticals.net; other industry estimates.

Supply Chain Intelligence, The Internet Of Things (IoT) and it’s impact on healthcare logistics

Over $15Billion in product losses occur every year in the Pharmaceutical industry due to temperature excursions alone.

This figure does not include the costs associated with replacing those goods, the labor costs (direct / indirect) associated with the root cause analysis process, or other causes of product loss such as shock, humidity, etc. All accounted for, it is estimated that over $35B is lost each year.

When Cold Chain IQ surveyed pharmaceutical executives, it found that at least 10 percent of respondents recorded temperature deviations in more than 15 percent of their temperature-sensitive shipments. Twenty percent didn’t know whether excursions had occurred. According to a report on Cold Chain by ChainLink Research, conservative industry estimates cite 80M climate-sensitive shipments occur annually. More aggressive estimates suggest up to 130M shipments.

There are very specific industry statistics that have been quantified with respect to the loss that consistently occur within the healthcare space:

  • 25% of vaccines reach their destination degraded because of incorrect shipping
  • 5% of pharmaceutical sales are marked as scrap
  • 30% of scrapped pharmaceutical can be attributed to logistics issues alone
  • 20% of temp-sensitive products are damaged during transport due to a broken cold chain
  • The average costs of root cause analysis for each excursion can range from $3K to up to $10K
  • An average pharmaceutical organization spends 6% of its revenue on logistics requirements

Sources: World Health Organization (WHO), Parenteral Drug Association (PDA), Worldpharmaceuticals.net and other industry estimates

The costs associated with these types of losses in the pharmaceutical supply chain focus around expensive product replacement costs and wasted shipping costs. In addition, there are large operational costs due to the human capital required to manage the quality and control process when damage occurs. Damage can also be caused by environmental factors beyond temperature—such as shock, pressure, humidity and tilt events.

These losses not only occur in volume product shipments, they also occur in clinical trials. To that end, the average cost for shipping excursions of a single clinical study to a clinical site can well exceed $ 150,000 and commits over 2,300 staff hours for excursion resolution for an average cold chain related study (source: Ray Goff, Wyeth Vaccines – white paper titled Cold Chain to Clinical Site: The Shipping Excursion). This does not include another 1,500 hours of lost opportunity labor.

All the while, key regulatory pressures continue to grow. Regulatory compliance for healthcare companies revolves around various standards that are produced by government bodies like the Good Distribution Practices (GDP) in the EU and related standards published in the U.S. by the FDA.  Recently the EU added the following update to the GDP:

“it is the responsibility of the supplying wholesale distributor to protect medicinal products against breakage, adulteration and theft and to ensure that temperature conditions are maintained within acceptable limits during transport.”

Experts interpret this to require the wholesale distributor/ manufacturer to measure the temperature to ensure it’s properly maintained (data logging, etc.). But this is just one of many various regulations the impact the industry – from either the manufacturer side or the logistics provider attempting to resolve these issues on their behalf.

To learn more about the issues Bio-Pharma is facing, how technology can be use to address these issues, and how data can drive corrective and preventative action programs, read the white paper here.

How Do We know if Goods are Still Good?

As the need for temperature-controlled transportation rises, problems persist. According to The Loadstar article, “Unreliable Air Cargo Industry Loses Pharma Traffic While IATA Sleeps”, Kuehne + Nagel’s senior vice president for global air logistics products and services, Marcel Fujike, is quoted, “There was a lack of skills, training and standards throughout cool-chain logistics, with “no SOPs or working instructions in place overall”.

Furthermore, Mr. Fujike noted that vulnerable spots in the air transport chain included handling, loading, the tarmac phase, “which is considered the weakest link in the chain”, and customs clearance.

read more here

CargoSense Announced as a Winner of the 2015 Internet of Things (IoT) Evolution Asset Tracking Award

TMC, a global, integrated media company that helps clients build communities in print, in person and online, announced CargoSense was among the recipients awarded the 2015 Internet of Things (IoT) Evolution Asset Tracking Award.


CargoSense’s new “Black Box” cargo solution (http://cargosense.com/solution/) shared the stage with the likes of Cisco Systems, Savi, SkyBitz and Vodafone.