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.