Tuesday, November 6, 2012

Southwest to Monitor Temperature-Sensitive Cargo

            In a world where increased competition has made profit harder to come by, Southwest Airlines recently came up with an idea to improve sales: using RFID chips in its airplanes that provide information on the temperature of cargo.  Many goods, such as vaccines and other drugs, need a stable environment in order to arrive to their destination untarnished.  Southwest is using Intelleflex RFID sensors (made by Cold Chain Technologies) to monitor the temperature of the cargo and to ensure that the goods will be delivered in pristine condition.
            Cold Chain Technologies has embedded RFID chips inside insulated containers, allowing the temperature to be monitored.  This technology is successful because the embedded chip allows for the internal temperature of the container to be measured.  In test trials, water bottles were shipped inside a container, and when they arrived at the destination, the temperature could be measured without opening the container, due to the embedded chips.  This technology will prove to be beneficial to both Southwest and Cold Chain Technologies.
            Cold Chain Technologies should see a vast increase in the sales of its passive containers, which are insulated but do not control temperature.  While companies can use refrigerated containers to maintain the correct temperature, refrigerated containers are far more expensive and bulky.  Companies will save money by switching to passive containers, but will also be able to ship more easily, as the small, passive containers are easier to fit onto a standard airplane.  Refrigerated containers need a wide-body plane, whereas passive containers can easily fit in a standard Southwest 737 model.  Cold Chain Technologies will see an increase in sales due to its ability to provide reliable goods for a cheaper price. 
            Southwest should see an increase in shipments for two reasons: one, companies that had been using refrigeration containers will now be using passive containers.  Secondly, it now has a proven method in which temperature-sensitive goods can be tracked and shipped.  Companies can be sure that if they ship a good, it will arrive at the correct temperature.  In avoiding opening the containers upon arrival, companies will save time and the risk of tainting their goods.  This improved confidence should help Southwest see an increase in its top line.
            This type of technology is unprecedented in its use of measuring the temperature of airplane cargo, but will likely catch on quickly.  Because of this, Southwest will need to find a way to distinguish its product, so that when it does have competition, it can stay ahead of its competitors.  Similarly, Cold Chain Technologies will have to try to find ways to improve its product or produce it at a lower cost, so that it can stay ahead of the competition that will likely soon follow.  While each company must find a way to improve its product to ensure long-term success, I believe that Cold Chain Technologies has produced a top-notch product and Southwest has made an excellent decision in investing in Cold Chain Technology’s embedded RFID chips.


  1. I believe that using Intelleflex RFID sensors in airplanes to measure the temperature of cargo is an excellent example of implementing information technology into a business. Certain goods are on a time-restrained shipment and although the fastest way to ship long distance is by flight, this doesn’t necessarily mean the goods are safe. By reaching the shipping point on time, the goods could still be spoiled due the temperatures of the aircraft. This issue has been addressed by installing large refrigeration units in aircrafts, which takes up a lot of space and is expense to keep running through electricity. Intelleflex is a, “battery-assisted passive (BAP) RFID sensor.” This costs less money to maintain, there are a variety of packaging solutions where information it taken from the tag placed inside the box. In my opinion, these Intelleflex RFID sensors make the shipment of special care goods easier and more effective.

    It is true that Southwest Airlines must find a way to distinguish its product among other airlines that will soon follow this innovative step. Southwest Airlines currently offers Rapid Rewards to its customers as an incentive to keep their business. For each purchase they make through Southwest, they receive a certain amount of points. Over time these points add up and the customer can receive a free trip or flight. One idea that Southwest could consider would be to offer different types or sizes of packaging for sensitive cargo, using Cold Chain Technologies RFID tags, for different amounts of points earned. For example, if a customer earns 500 points they can receive a small package with an RFID tag; if they earn 1,000 points they can receive a larger RFID tagged package, or if they don’t want to use all of their points right away they can hold off on the packaging and save their points for a free flight. For those who ship sensitive goods frequently through Southwest, they can be offered a discount rate for the RFID packaging and can earn a free flight based on their frequent flying. These suggestions are basic and beginning ideas; however, it is important for Southwest to claim this product to continue to increase sales while other airlines around them are adopting this method.

    Cold Chain Technologies should also try to distinguish its collaboration with Intelleflex because Intelleflex is also being used in other businesses. Intelleflex is now working with Rehrig Pacific Co., which manufactures reusable pallets, crates and containers. Rehrig Pacific is now using Intelleflex tags to monitor its cold chain shipment. This company is looking to appeal to the food and pharmaceutical industries. They will be able to keep track of the temperature of perishable foods along the supply chain and to make changes for the ultimate freshness. One addition to Rehrig’s use of the Intelleflex tags that was not noted among Cold Chain Technologies is that notes about the product can be written and stored on its individual tag which provides information to the companies that produce and ship these products. Intelleflex RFID tags are now being implemented into businesses in many different ways. I believe they are effective and solely beneficial to the manufacturing and shipping processes.

    source: http://www.rfidjournal.com/article/view/10065/3

  2. Peter, this is a very intriguing article and analysis here. After reading your post, the first thing that came to mind was the fact that RFID chips are being brought up once again. In my first blog post, I analyzed an article that discussed the use of RFID chips in Walmart stores to help with things like inventory and monitoring shoplifting in their stores. Recently in the class we also discussed the use of RFID chips in the chips at casinos to prevent them from being duplicated. This also occurs with passports as well. Or how about a post I read concerning RFID chips in trashcans to monitor the amount of recycled items people are throwing away? My point here is that RFID technology is becoming more and more popular, and rightfully so as they provide an abundance of benefits.

    In this example, the RFID tags provide clear benefits. Despite already having a way to keep goods at a certain temperature (refrigerated containers), RFID tags are placed inside insulated containers that conserve time and space. And this is the great thing about technology—despite already having methods for certain tasks, evolving technology always produces a faster, better, and more efficient/convenient way to do something. From the article, it definitely seems like Cold Chain Technologies has achieved this more efficient/convenient method, which is a major reason why I think it will do so well. As I was doing some research, I came across an eye-opening situation that featured a company shipping organs for transplant and temperature-sensitive pharmaceutical products (found at following link:http://www.swacargo.com/swacargo/about-PressReleases-20120717.shtml).
    With shipments like this, it is vital that the temperature and timing of the shipment is precise as these aspects are crucial for the customer. One of Southwest’s initial trials dealt with Marie Vigliarolo, Vice President of Marketing for Quick International, who positively responded, “We work with Southwest because they not only provide us with a high level of visibility regarding the status of our shipments, but they also have next-flight-out alternatives that enable us to enact a plan-B, and even a plan-C if necessary." This is the kind of reputation that allows companies to thrive.

    In addition to this, assuming that Cold Chain Technologies is striving to be the leader in this industry, they are going to want to make sure that they are ahead of the game. In other words, other companies out there will become aware of the potential of this technology and try to one-up it, so Cold Chain Technologies needs to make sure they are continuously offering the best technology at the best prices. Similarly, Southwest needs to be aware that other companies will soon adopt a similar strategy, and once all the other airlines obtain the same RFID technology, how will they separate themselves from the pack? This is a problem that we see on a daily basis in the world of technology, specifically with companies like Apple and Samsung. Apple most likely came out with the iPhone5 so that they could stay above the new Samsung Galaxy. Similarly, once other airlines obtain this technology, Southwest will have to respond and create an “iPhone5” of this RFID technology in order to distinguish them from the rest of the pack.

    Overall, I would agree in saying that this was a great move by Southwest to partner with Cold Chain Technologies and add this special feature to the shipping sector of their business. I think this is brilliant due to the fact that there are not many things an airline can do to differentiate themselves from the rest, but I believe what Southwest has done here with the RFID technology may gain them a little separation. With Southwest’s new technology behind monitoring temperature-sensitive cargo, they don’t only not hate your bags, but now they don’t hate your cargo either!

  3. Peter, I completely agree that Southwest has made a very wise decision in investing in Cold Chain Technology’s passive containers. I don’t know how much business Southwest does in shipping, but a product like this one will definitely keep them ahead of competing airlines. With increases in sales, Southwest will not only be able to gain a competitive advantage in shipping, it may also be able to keep its travel prices low, enticing customers to use book their flights.

    With RFID continuing to be the new innovative technology in the corporate realm, the fact that both companies have found a productive use for it is such an advantage. Because this is such an advantage, many competitors of Cold Chain Technology and Southwest will probably jump on the bandwagon shortly. Now is a crucial time for both companies to start deciding the next step they want to take with this, by coming up with other uses for the technology as well as ways to improve it even further. This may be more difficult for Southwst as there are not many other ways to change and enhance airline shipping, but for Cold Chain Technology, the uses of such battery operated, temperature sensitive technology are endless.

    My uncle is a doctor in New York City. When Hurricane Sandy struck, he had a huge dilemma about what to do with all his medicine that is temperature sensitive. With the loss of electricity in the city, my uncle needed to find places to send these medicines so they would not be tainted and therefore be unsuitable for patient use. Cold Chain Technology’s passive containers with an embedded RFID chip would have been ideal in this situation because they are battery operated. If he had his hands on this technology, my uncle, and other doctors, might have been able to place the medications in these containers while they searched for a more permanent location for them. The RFID chip would have been able to tell them the exact temperature of the medicine at that time. Instead of staying in a refrigerator that is controlled my electricity and usually needs to be opened to gauge the temperature, the RFID technology could specify the exact temperature of the medicine. This may not be a use that Cold Chain was thinking of for their technology, but by modifying their containers for use outside of an airplane, they could become very useful.

    Once again, this example has shown that the possibilities that come from RFID technology are endless. The technology is not going away any time soon, so companies should start looking for ways to incorporate it into their products. Refrigerator companies have taken a similar approach to integrate RFID into their products. The result – smart refrigerators will soon become the new norm with their energy saving, food managing, maintenance scheduling, and even troubleshooting technology embedded within. An article on HH Gregg’s website shows how cool these refrigerators are. But for RFID to continue to be used, it has to be warmly accepted by the people who use these products. Southwest accepted the passive containers and now they are benefiting from this. It is really fascinating that a company like Cold Chain Technology can take this idea and use it to improve supply chain with regard to cargo shipping. What other new ways will RFID be used in the future?


  4. Peter, I found your article very interesting about Southwest Airline Company, leading to a competitive advantage. As you said this could be a breakthrough for Southwest. I feel that Southwest’s decision to invest in Cold Chain Technology’s embedded RFID chips, will not only help Southwest company overall but it will provide a more efficient way to ship perishable goods that need refrigeration at certain temperatures. If Cold Chain Technology of Intelleflex RFID sensors deems success other companies can rely on this more efficient way of air travel and can ship certain goods such as, yogurt, for instance across the country without the worry of it going bad. This way other food companies can spread their product successfully throughout the world and get their name out there. Consequently, if more and more companies rely on this means of shipment Southwest will be able to supply them with the service and increase their profitability in the long run.

    This type of new technology will not only help perishable foods from being spoiled but can also be used for vaccines and other drugs, that need to be stored in a controlled temperature space. Instead of wasting space on the plane with large refrigerators to keep the goods from being spoiled, they can instead be transported in small insulated containers. Who knows this may be the start for average costumers to take advantage of as well. People who may have dietary needs can use these containers to keep certain foods and medication refrigerated on the go. Cold Chain Technology can also partner with other companies such as, L.L. Bean, for instance to make their children’s lunch boxes or coolers paired up with these Intelleflex RFID sensors to control the specific temperature of food. If this is the case people will not have to deal with the hassle of melting ice and numerous ice packs. By the time lunchtime comes kids’ yogurt and cheese sticks can stay just as fresh as they were when they were first taken out of refrigerator.

    I did additional research on Cold Chain Technology’s new breakthrough of the Intelleflex RFID sensors, to see if they are truly successful in keeping foods fresh. In an article written by Nick Pacitti “Cold Chain Technology is More Than Temperature Monitoring” he advocates that Cold Chain Technology is not what they are cracked up to be. He states “over 100 billion pounds of food, or more than a quarter of the 400 billion pounds of edible food, is spoiled each year.” After reading this article my prediction that it will help Southwest Airline companies to a competitive advantage is therefore false. This is a good lesson to be learned that before a company makes decisions, especially ones that can affect their gross profit in the long run, the company should consider all research. If a company did not put in crucial research is not taken into account the company can suffer greatly. Even though Cold Chain Technology’s RFID sensors in containers to help moderate temperatures sounds like a good idea and can continue to be a good idea into the future but need to be tested properly first.


  5. Peter, I thought your blog was very enlightening. It is interesting how the implementation of one little piece of technology can improve two large companies in such a substantial way. I think it is another way that shows that IT does matter. While RFID's may be a commodity, Southwest was able to implement them in a way, with Cold Chain Technologies, to give them a competitive advantage. I wrote in my IT doesn't matter critique that it was not what pieces of IT you used which made it important, but instead how a company took all the pieces and put them together. The information side is just as, if not more important, than the technology side. Southwest and Cold Chain clearly took advantage of that here.

    Another usage for your RFID's that could be useful is if an RFID could inform the handler whether the container has been tampered with between ship and arrival. This follows along the same lines as the temperature controlled RFID. I wonder if the increased use of Southwest for shipping will decrease their shipping costs? Would they maybe increase them now that they have a competitive advantage? Overall, I think this is a really cool product that indirectly benefits us all. Hopefully, this product will ensure that our goods are being shipped to us with the quality that is necessary. In regards to Uncle Sully, this would be important for us shipping flowers as it would guarantee that our flowers would arrive at the temperature we specified, and if it was not then we would be notified and compensated.