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Fueling the need for RFID technology

Years of industry experience paid off for three partners who were able to avoid the pitfalls hit by many upstarts and build a successful business around radio frequency identification

Having spent 18 years in the transport and logistics industries, Dino De Luca was aware that companies needed new solutions and technologies to manage their warehouse, inventory and delivery systems.

Fueled by the idea of developing innovative concepts for companies in these sectors, De Luca, along with two partners, formed Ship2Save.

Now in its third year, the Montreal-based solution provider offers products, services and a consulting practice focused on radio frequency identification (RFID) technology for transportation, manufacturing, warehousing and sea freight firms.

“We sought out emerging technologies and what we deemed to be something viable for at least the next 10 years,” said De Luca, the company’s president and chief executive.

“RFID came up, something that had been around for decades but was not being tapped into more seriously.”

The three partners went to work and hired “a few elite software developers from various companies in Canada who shared our vision for the future.”

They spent the first two and a half years developing and testing products, which cost them $4 million.

“The best thing we did was use our own money to develop this,” he said. “We knew it was going to be a problem to get financing so we decided to take a deep breath, dip into our own pockets and make this work.”

One of the products Ship2Save developed is an operation management system, middleware that extracts data from RFID devices, filters the information and pushes relevant data into other applications for additional analysis.

The software is available in various vertical specific models tailored to suit different application environments.

In addition, Ship2Save offers a unit in transit system, which provides uninterrupted real-time monitoring of items in transit.

Through RFID technology, users can locate and monitor goods on an interactive map.

The solution provider also has a consultation practice for companies looking to adopt RFID by helping define technology roadmaps, strategies, best practices and return on investment.

The ABCs of RFID

Although RFID is growing in popularity, De Luca said the technology is still in its infant stage in Canada.

“In the next five years, at least 40 to 50 per cent of companies in Canada will be adopting it in one form or another,” he said. “And within 10 years, everybody will be using RFID.”

In an effort to increase its adoption, last spring Ship2Save opened an RFID learning centre to help businesses understand the best ways to leverage the technology to improve their efficiency and productivity.

“We’re confident that once people see how it works and how much money it can save them, we will have great success,” said De Luca.

The RFID lab, which is part of the company’s 50,000 sq.ft. facility in Quebec, allows companies to perform integration and pre-deployment testing as well as simulations.

Depending on the size and intensity of the deployment, De Luca said Ship2Save’s systems cost anywhere from $20,000 up to $2 million.

The company’s revenue goal for 2006 is $5 million but according to De Luca, Ship2Save is in talks with several high profile companies, including some Crown corporations, which, he said, could elevate that revenue ten-fold.

“My goals on paper would be $5 million, but I can sign a deal next week that takes me to $50 million. That’s something that could happen so we have to be ready.”

He added that Ship2Save is looking at launching a public offering by the end of the year in anticipation of a growing number of deals worth “tens of millions of dollars, which may put us in a position where we’ll need a lot more money.”

Some of Ship2Save’s clients include Atlas Cold Storage Inc. and Integris Metals Inc., a metals distributor.

De Luca attributes the success of the company to three rules that make up Ship2Save’s philosophy:

Keep the mind open to innovative and fresh concepts, never get comfortable with what you think you’ve achieved and simplify the complexities of your efforts by making them as accessible as possible to users.