How Deere Tracks a Million and a Half Containers

Whether you’re a farmer or an occasional weekend gardener, almost everyone recognizes the green and yellow colors associated with John Deere. The company is one of the world’s leading manufacturers of farm equipment, and produces and markets one of North America’s broadest lines of lawn and garden tractors, mowers, golf course equipment, and other outdoor power products.

Many John Deere products are large and heavy. Consequently moving service parts, components for manufacturing, and finished goods throughout the world is a daunting logistical challenge. Deere has manufacturing operations in Russia, China, India, Brazil and other countries, as well as over a dozen locations in the U.S. Reusable packaging is used primarily for manufacturing components, but also for service parts and small finished goods such as lawn and garden tractors.

Deere is one of the top 30 manufacturing companies in tonnage of global imports/exports. Because logistics is so critical to the enterprise and because global ambitions included expanding manufacturing to different parts of the world, the Department of Worldwide Logistics was organized in 1999 as a core competency of the company. Centralized management of reusable containers was part of the initial strategy. Today, Deere owns about 1,500,000 reusable containers that are used to ship everything from nuts and bolts to hoods and engines.

Deployment and Tracking

Deere defines “returnable” as a customized special-use container that must be returned to its point of origin, so obviously reverse logistics is critical. “Reusable” is defined as a generic container that, once emptied, has no defined return-to location. The challenge is to quickly and efficiently relocate the empty reusable to a nearby point of need. The goal is to minimize the distance to the next point of use without enduring too much dwell time waiting for a need to develop.

To effectively manage its reverse logistics, Deere developed a sophisticated and integrated tracking system throughout its global supply chain. Its 1,500,000 containers each have some sort of tracking tag affixed to them and are tracked through an Internet-based tracking system. An ability to track container assets is essential to effectively managing a global network where containers are constantly moving somewhere 24 hours a day.

Without a tracking system, the probability of shrinkage increases as geography expands, to the point that it undermines the financial viability of investing in reusable containers. An integrated tracking/management system provides the strongest and best value proposition by harvesting numerous benefits from the same infrastructure.

Deere’s returnable/reusable containers come in many forms. At the high-cost end, it uses $500 custom racks to transport high appearance parts such as tractor hoods that cannot have any contact with other parts or with packaging material, except for specific points of attachment.

Next, the company has standard generic bulk containers that contain permanently affixed customized dunnage, so these units must also be returned to their point of origin. Its greatest quantity of containers is generic, and might never travel the same route twice. The value of the container and the nature of its route determine the type of tracking tag used.

RFID’s Role

High-cost containers in multi-stop, long-distance loops warrant active RFID, featuring automated verification of arrival and periodic monitoring of dwell in each location. It is common to query active tags in each location every five minutes. Passive RFID is deployed on containers that naturally flow through a central location.

One example is containers sent to dealers from centralized part distribution centers. Another example is Enviro-crates, reusable, stackable, steel, fold-down containers used to ship lawn and garden tractors to dealers and to mass marketers such as Lowes and Home Depot. Passive RFID readers automatically verify that each container has returned to the DC from its latest deployment.

Manual scanning of bar codes is still the most common input into the company’s tracking system, especially for small inexpensive totes used for fasteners and fittings, but manual scanning is more labor intensive and less reliable than RFID. All bar-coded tags purchased in recent years also contain RFID chips, so over time the percentage of manual scans will diminish as the company’s RFID infrastructure is expanded.