Innovation Enables Smart Logistics for the Tobacco Industry

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By TobaccoChina Online

As the effect of China’s demographic dividend reaching its peak begins to subside, the logistics industry, which was relying on manpower, is shifting from being labor intensive to being technology intensive, from traditional models to smart logistics. With the rise of emerging technologies such as big data and cloud computing in recent years, the supply chain featuring intelligence, digitization, and visualization has grown to be the main track for the development of the logistics industry.

In recent years, China National Tobacco Corporation (CNTC) has tried to revolutionize the working mechanism by targeting the weaknesses in the supply chain and has taken various measures to build a more stable, efficient, and green tobacco logistics supply chain, offering strong support for the smooth development of the production and operation of the industry. This story will take China Tobacco (Zhejiang) Industrial Co. Ltd (CT Zhejiang) and China Tobacco (Beijing) Logistics Center as examples to detail how they enable the construction of smart logistics.

China Tobacco (Zhejiang) drives smart logistics construction

Logistics serve as an integral part of the tobacco industry. If we were to think of the industry as an organism, the logistics system that connects the agriculture, industry, commerce, and retail sectors of the tobacco industry is like the blood vessels flowing through the body. At present, various innovative elements and smart factors are being integrated into the industry organism.

CT Zhejiang, headquartered at the forefront of China’s economic development zone, is second to none as a cigarette manufacturing enterprise in terms of the efficiency of finished product logistics, responding to the market, follow-up demand, and customer service. Responding quickly to customers and improving services for customers has always been the primary goal of logistics work. With over 350 prefecture-level commercial enterprises across the country, the cigarette manufacturer is under great pressure to consider how to enhance its logistics system. In recent years, it has taken logistics informatization as an important part of its logistic work, gradually driving the transformation of traditional tobacco logistics into smart logistics.

As early as 8 years ago, CT Zhejiang set up a technical team by transferring staff from its information and logistics centers. The team relies on the company’s technology innovation platform to explore the connotations, technical nature, and technical characteristics of smart logistics and has built a digital warehousing system based on RFID technology in the Dongzhou warehouse at its finished products center, following a highly informative and moderately automated design concept.

Since the system was launched, Dongzhou warehouse has evolved from its traditional operation mode, and applied the internet of things technology and information means to identify the cigarette location, operation node, business information, and monitor the whole operation process, a move that not only doubles the efficiency of the warehouse, but also decreases the number of staff and improves production efficiency.

As CT Zhejiang embraced new developments and sales increased year by year, the output of the industrial park and warehouse capacity became the bottleneck restricting the efficiency of the entire operation. So, in the second half of 2017, the company launched the construction of an integrated digital warehousing system. Based off the original system, this project unifies the information about materials storage, including raw materials, auxiliary materials, spare parts, and finished goods storage, aiming to build a unified digital storage management system across the enterprise.

Two centers, the dispatch center and operation center, were set-up, and an operational efficiency evaluation system was set up through the optimization of key links and collaborative integration of various logistics and information resources.

Relevant CT Zhejiang personnel have found the system to be impressive and helpful, as they now only need to complete their daily work in this system. The most intuitive aspect is that the operation time is reduced by more than half. The launch of the new system will undoubtedly greatly reduce the operational intensity of personnel and improve the loading and unloading efficiency for Dongzhou Warehouse, which has an annual output of 8.4 million boxes and an average daily output of 25,000 to 30,000 boxes.

The data is most convincing. Compared with the past, Dongzhou warehouse’s hourly capacity has increased from 1,750 cases/hour to 3,300 cases/hour, up by 88.57%; inventory turnover rate increased by 72.70%, from 12.80 times/year to 22.10 times/year; the operation time for vehicles in and out of the park is down by 49.68%, shortened from an average of 2.45 hours to 1.43 hours.

Beijing tobacco logistics center upgraded

The modern logistics construction of China Tobacco (Beijing) is confronted with another situation. China Tobacco (Beijing) Logistics Center was established in 2006. It was once the largest logistics center in the industry for sorting and distribution, and the first logistics company to use automatic sorting lines. However, with the serious lack of sorting and storage capacity, and the aging of equipment, the center was in urgent need of transformation as such issues as low production efficiency, high costs, and many hidden dangers were becoming increasingly obvious.

So, the center made an online technical transformation. This meant means not only achieving technological innovation breakthroughs, equipment replacement, process optimization and upgrading, and overall improvement in production capacity, but also creating a modern tobacco commercial logistics system with core competitiveness, designed to establish a model for the industry logistics in online renovation and upgrading.

When the transformation was completed in 2018, the sorted cigarettes were packaged with membrane, loaded by the integrated trolleys which are generally stored in the turnover zone. Previously, the turnover area was a blind spot for information perception and management. Operators couldn’t effectively manage the inventory, status, and dispatching of trolleys, leading to such issues as difficulty in locating trolleys and low loading efficiency.

In order to improve this situation, the center has, since August 2018, applied RFID technology into the management of trolleys. The information is written into the RFID tags of each trolley in real time. They issue an RFID chip “identity card” for each trolley, and divide the turnover zone into 352 storage locations in four areas – A, B, C, and D, creating the shortest transportation route after the sorting line. The Center’s sorting line reaches 30,000 strips/hour.

However, they did meet with a challenge, which was how to achieve high-speed accurate reading and writing of the lower-end RFID tags. During trial operation of the project, technicians successfully realized the automatic binding between the lower-end sorting line and the RFID trolleys through repeated tests. Now the accuracy rate is over 99% and can be adjusted at any time on the system.

When the cigarette packs are off the line, the information binding with the trolley is automatically completed through the lower-end reader/writer, and the information such as the line, customer, product specification, and quantity is written into the RFID chip. Subsequently, the system automatically allocates the storage space, and the staff only needs to put the trolley to the predetermined storage location. The tallyman can see the storage guide information on the screen of the lower-end line. The manager can observe the occupancy of the storage area and the information in and out of the storage on the large screen of the ex-warehouse outlet. The deliveryman can find out the storage location of the trolley through smartphone.

In the distribution loading section, the deliveryman finds out the location of the trolley through their smartphone, arrives at the storage position, and pulls the trolley out of the turnover zone. Then, the RFID reader/writer at the ex-warehouse outlet automatically records the ex-warehouse information of the trolley. When the deliveryman completes the delivery and returns the empty trolley to the warehouse, the RFID reader/writer will automatically record that the trolley has been returned to the warehouse.

With RFID technology, China Tobacco (Beijing) Logistics Center has built a digital and visual operation platform for trolley management, making the turnover efficiency of the turnover zone increase by more than 60%.

Generally speaking, from “sweat logistics” to “scientific logistics”, technological innovation is constantly injecting a sense of the future into the traditional industry of logistics. The tide of technological revolution is coming, which more and more companies are choosing to embrace. The people working in the tobacco logistics industry take the initiative to keep up with the frontiers of logistics and information technology development, and strive to harness new technologies such as Internet of Things, cloud computing, big data, artificial intelligence, and drive tobacco logistics to transform into smart logistics.