Mention the use of radio frequency identification (RFID) in the supply chain and most thoughts turn to the well-publicized initiatives at Wal-Mart and other large retailers that require vendors to apply RFID tags bearing electronic product codes (EPC) to selected cases and pallets prior to shipping.
These programs may grab the headlines, but they represent only a small portion of the supply chain uses of RFID. Designed to improve productivity, track assets and boost security, these applications-some of which have been around for years-often use battery-powered active tags rather than the passive EPC tags employed in retail. And they frequently operate in closed-loop environments.
"If there is any silver lining to the hype around the compliance with RFID mandates, it is the attention that it has brought to the closed-loop side of the business," says Jim Stollberg, vice president of HK Systems, New Berlin, Wis. "It is driving people to think outside of the box in terms of other uses for RFID technology." HK provides solutions for materials handling and warehouse management.
As the name indicates, a closed-loop system is one where the tagged item remains under the control of a single company, eliminating compatibility issues with trading partners. Additionally, tags often are re-used in such applications, making it easier to show a return on investment, even with more expensive, active tags.
"I would argue that the most successful RFID applications so far have been closed-loop," says Matt Ream, senior manager for RFID solutions at Zebra Technologies, Vernon Hill, Ill. "We are seeing a lot of interest in these types of applications because a very compelling business case can usually be made."
A new development, however, is that companies are beginning to look at less expensive passive tags even for closed loops. "This is a change," says Kara Romanow, research director at AMR Research, Boston. "Companies are talking about using the same kinds of technology internally that the retail world has been implementing, which is much less expensive."
The automotive industry has long used active RFID to identify and sequence parts and to keep track of finished goods. A 2004 survey of vehicle manufacturers by AMR found that more than 35 percent use RFID technology for material management and more than 22 percent use it for tracking racks or totes.
HK Systems has implemented RFID-enabled vehicle sequencing at several Ford plants. As a car enters the production line, explains Stollberg, an RFID transponder identifies the car to ensure that the right color paint is applied or the right parts installed.
In some manufacturing applications, read/write tags are used. The tags keep track of the processes that have been completed, some of which may not be obvious to the eye.
A recent HK installation at a motorcycle assembly plant uses read/write tags in this way, Stollberg says. Each engine or transmission that goes on the line is tagged and its unique identifier is associated with a specific vehicle number. "As it goes through the assembly process, the tag not only identifies the engine or chassis, but also captures key information," says Stollberg. At one point, for example, an operator is supposed to torque a bolt to a certain foot pound. "We are able to get a read-out from that piece of equipment as to what it actually was tightened to and that information gets stored to the RFID tag," he says. At the end of the process, when the engine or chassis comes off the line, information stored in the tag is saved to a database that can be used for quality and warranty tracking. The tag is then reused. "This is a very practical application where RFID makes a lot of sense," says Stollberg.
A number of automotive plants, including BMW facilities in Europe, use a real-time locating system from WhereNet, Santa Clara, Calif., for tracking and managing the location of vehicles during and after production. "As units come down the assembly line, they can be pulled offline for repair purposes or quality related issues," says Matt Armanino, senior vice president at WhereNet. Visibility provided by active RFID tags "helps reduce dwell time at these offline work cells and increases the overall work flow," he says.
Additionally, the WhereNet system is used to provide location information once completed cars have been moved to a storage lot. "As a vehicle comes off the line, a barcode on the WhereNet tag is scanned along with the vehicle's VIN number," says Armanino. "From that point, BMW has unit-level visibility to that vehicle anywhere it goes in the facility, which saves a huge amount of time that was previously spent searching for specific assets."
When BMW first deployed the solution two years ago at a plant in Dingolfing, Germany, it had planned to roll it out to one new factory every 12 to 18 months. The company was so pleased with results, however, that it already has installed WhereNet at all of its major plants in Europe and is in the process of adding the technology to several mini-plants as well as to facilities in South Africa.
"This application is very similar to what we are doing for Ford, General Motors and other automotive OEMs around the globe," Armanino says.
The automotive industry also is starting to find uses for passive tags. Paccar's high-tech plant for Kenworth trucks in Renton, Wash., employs EPC-type tags to track the location of parts throughout its massive assembly building. Paccar reports that RFID has so far proven to be more reliable than the optical-based system it replaced.
Hewlett-Packard, Palo Alto, Calif., is an early adopter and innovative user of RFID technology. The leading manufacturer of computers and printers currently has 28 sites around the world that are RFID-capable. "The main driver for us was, and still is, supply chain efficiency," says Ian Robertson, RFID program director. "Originally we looked at warehouse applications but we now have gone much further than that."
At a inkjet printer factory in Brazil, for example, HP is 18 months into a trial using RFID within the manufacturing process. "We tag the printer base plate, which is the very first item that is picked up in the process of making the printer," Robertson says. HP uses passive EPC-compliant tags, but the tags have additional memory used to collect key information as the unit goes through assembly. "The printers go through several Quality Assurance stations," explains Robertson. "Before, an operator would have to scan the printer to capture its identity, conduct the tests and then key in quite a lot of information about the test results. Today, we don't have to do all that. The printer is identified automatically and the key results of the test are written back to the tag."
Once manufacturing is complete, a unit is put into inventory and then goes through a product completion process and typical distribution scenario. The tag can be used to track the unit throughout. "In the pilot in Brazil, our goal is to track the whole process, end to end, from manufacture all the way through to the customer," Robertson says. Once this goal has been reached, "we will start looking at having that part come in from our vendors already tagged."
HP sees RFID as being key to a concept it calls The Uninterrupted Supply Chain. "If you look at traditional supply chains, products spend a lot of time stopped, primarily so that we can identify them," says Robertson. "If we could identify them without stopping, it would save a lot of time."
This idea is demonstrated at an HP distribution center in Memphis, where pallets of inkjet printers are picked and shipped. Previously, picked pallets would be dropped at a preparation area where a worker would scan all of the contents, then print and affix a barcode label. A forklift driver would later move the pallet to outbound shipping. All of these steps involved varying amounts of wait time. Now printers and pallets have passive RFID tags. After picking a pallet the forklift driver is directed through a tunnel specifically designed to slow him down to a set speed, says Robertson. In the tunnel an RFID reader collects the tag information. "The reader picks up many tags, but we really only need to pick up one because we run pallet association," Robertson says. By the time the driver exits the tunnel, the shipping label has been affixed to the pallet and the driver can go directly to the outbound station. "This is an example of how RFID can improve an existing process," says Robertson. "We didn't eliminate or substantially change the process itself, but we took all that dwell time out."
International Paper, Stamford, Conn., also uses passive EPC tags in several internal programs, including at a 300,000-square-foot warehouse where it stores very large rolls of newly milled paper, stacked several rolls high. To reach specific rolls for picking, other rolls often have to be moved. "We deployed RFID in this facility to replace a barcoding system," says Alan Clark, general manager of IP's Smart-Packaging division. "For the barcoding system to work, the operator had to scan the product and the location every time he made a move. The advantage of RFID is that it picks up a move without the operator doing anything. We track the location of the equipment and the product it is carrying, and when he puts the product down, we know exactly where the product is."
IP places the tag on the inside of the roll where it is less susceptible to damage and the readers are on the forklift's roll clamp. The tag placement initially posed a problem because it required the reader to "see" through an entire roll, which can be as much as six feet in diameter. "Our team solved this problem early on and now we are able to read reliably all the way through the roll," says Clark.
Having the intelligence on the material handling equipment instead of at dock doors has two major advantages, Clark says. It reduces infrastructure costs since most operations have fewer pieces of handling equipment than dock doors, and it enables visibility to material while it is in the warehouse, not just when it is received or shipped out.
The Smart Packaging division is now working with other industries interested in applying a similar solution.
RFID-enabled forklifts also are a key part of the solution that Genco uses at the Atlanta returns center that it runs for Sears. Genco, Pittsburgh, is a third-party logistics provider specializing in returns management. "We were having some shipping errors at that facility," says Cary Cameron, vice president of strategic technologies. With a barcode-based system, she explains, there was no "stop" if an operator forgot to scan something, which resulted in an order shipping short. Also, pallets were sometimes loaded to the wrong destination. "We were not getting orders out complete and 100 percent accurate," she says. "So we asked ourselves how we could verify that we had the right pallet and make sure that we had all of them. The answer was to put RFID tags on pallets."
Genco uses EPC-compliant tags and readers from Intermec. When a forklift picks up a pallet, the reader verifies that it is the correct pallet. Each dock door also has an RFID tag, so as the driver goes through, the forklift reader verifies that it is at the right door. "Our system knows which tags are assigned to which doors," says Cameron. "So we now are able to verify that the operator has the right pallet for the particular order and that they are loading it at the right door."
Genco hopes to roll this system out to other centers once it has documented the benefits and risks for customers. "We do think the ROI is there, both in terms of error reduction and productivity," she says.
Provia, Grand Rapids, Mich., a provider of warehouse management software, also is working on ways to use RFID to improve the accuracy and efficiency of picking.
"Currently, the only way to validate that a picker is at the correct location is to use a barcode scan," says Brent Forden, alliances manager. Typically both the product and the location have a barcode. To save time, "most operations chose to just scan the location and then pick the specified quantity," he says. "Even if you ask workers to scan every item, they usually will pick the first one and scan it 40 times, or someone will start talking to them and they lose count."
Provia's plans are to add a portal to the forklift. The location and case will both have an RFID tag. "Interaction between the warehouse management system and the mobile portal would instruct the operator that he had arrived at the right location. Half way through picking 40 cases, if he grabs a case from the location next door, it will sound an alert." It also would alert if an incorrect quantity was picked.
Combining RFID with voice recognition technology would speed this process even more, says Don Lazzari, director of marketing at Vocollect, Pittsburgh. Today, with voice-directed picking, a worker speaks a check digit to confirm that he is in the right location, Lazzari explains. If an RFID reader were incorporated into a picker's wearable computer and the location had an RFID tag, "the individual wouldn't have to speak that check digit. If all RIFD did was replace the check digit, it would speed pick time and improve productivity," he says.
Yards and Assets
A well accepted and growing use of RFID is in yard management, to keep track of the hundreds or thousands of trailers and containers that come in and out for loading and unloading. AeroScout, San Mateo, Calif., provides such a system at a 60-acre cross-dock facility in Savannah, Ga., operated by American Port Services. "In a large yard, it is very common for trailers to get misplaced," says Joshua Slobin, AeroScout's marketing manager. "On average, it takes about half an hour to find a trailer that is not parked where it is supposed to be."
At the APS Savannah terminal, an active RFID tag is attached to a trailer or container as it enters the yard. The tag signals the trailer's location to within one parking slot and that information is relayed using standard 802.11 wireless communications. When the trailer is ready to be worked, readers at dock doors ensure that it gets to the right location.
Integrating yard management to dock doors is important because it means that the moment a trailer is positioned at a door, work on it can begin, says Marc Mitchell of Enterprise Information Solutions, Downers Grove, Ill. "In a manual setting, a dock supervisor has to physically see that a trailer has been spotted into a door and then interact with a system to start the process of unloading, which can take 10 to 15 minutes," he says. "With an RFID system, you are ready to start the instant it shows up at the dock door."
Asset tracking, in general, is an area where RFID has long demonstrated its value. Over 95 percent of rail cars in North America have for years carried two active RFID tags from TransCore, Harrisburg, Pa. These form the basis of a comprehensive rail car tracking system.
"Before the advent of Automatic Equipment Identification (AEI) in the rail industry, we relied on clerks to enter information on rail car movements, which was very labor intensive and error prone," says Paul Pascutti, vice president of marketing for RMI, Atlanta, which provides services to shortline and regional railroads. AEI provided better data quality and timeliness, he says, which improved fleet utilization. Recent rail congestion problems would likely have been much worse without this system, he adds.
Tracking of reuseable containers is another proven application of RFID technology. TrenStar, Denver, which owns and manages container pools for select industries, is one of the biggest consumers of RFID outside of the U.S. government. "By going after a narrowly focused set of industries that use common assets, we can combine our logistics expertise with a technology layer that allows sharing of containers among multiple customers," says David Adams, senior vice president of corporate strategy. "This results in a lot more efficient use of the assets."
This model has worked well in the brewing industry, among others. TrenStar now owns and tags about six million beer kegs. "We capture keg information from the moment an empty arrives at a plant," says Adams. Business rules are applied to determine if a container is fit for use or if it needs maintenance. Once released to a filling line, the read/write tag captures information like batch lot, brewery, use-by date, etc. The tag then is used to track the kegs into finished goods inventory. "As a keg is pulled out of inventory, we associate each individual beer keg to a customer order and then follow the order to delivery," Adams says. "In our next extension, we will use RFID information to feed an electronic proof-of-delivery system."
TrenStar's information management is as important as its asset management, Adams says. "You need a robust decision-support layer to handle the level of information that RFID generates," he says. "We have some networks that generate 20 gigs of data in a month."
RF Code, Mesa, Ariz., makes a low-cost active tag designed to track a variety of reuseable containers. "Unlike case-level EPC tagging, it is very easy to figure out the benefits of active tags on these containers," says Armando Viteri, RF Code's CEO. "They are simple to install, the infrastructure is low cost and they have a high degree of reliability."
It is not unusual for a large company to have 10,000 containers that move between its plants and vendors, Viteri says. "It's a nightmare to make sure the right number of these container are pre-positioned for outbound shipments," he says. "And you never get a really accurate count of what you have. This is a big deal, especially in a just-in-time environment."
Other mobile assets also are being tracked via RFID. Genco is piloting a program to apply active tags to track forklifts in a large warehouse. Its goal is to see how many miles per day the equipment travels with an eye toward improving productivity. "Tagging forklifts will also allow us to automate putaway," says Cameron. "I will know exactly where that operator stops and where he placed the pallet so there will no longer be any need for him to scan a barcode."
Unisys, Blue Bell, Pa., also is involved in numerous asset tracking programs using RFID. In one example, the company tracks refrigerated ocean containers that carry pharmaceuticals for a major 3PL from Puerto Rico to various destinations and back again. "RFID allows the company to get better utilization of its valuable assets and, at the same time, monitors the temperature of the products being shipped," says Peter Regen, partner-global visible commerce, at Unisys.
Sensors and Security
Sensor technology, which uses RFID to monitor and record such things as temperature, is still an emerging use of the technology. "There are some great sensor tags out there, but they tend to be expensive and based on active RFID," says Alan Melling, senior director of EPC Solutions, Symbol Technologies, Holtsville, NY. "The challenge is to take that type of technology and shrink it down to fit into the newer, passive tags. If we can marry those two, then we will really have a powerful combination with many applications. We think it is a market with a lot of potential."
Electronic cargo seals are a subset of sensor technology that is receiving serious attention from the Department of Transportation, U.S. Customs, and others. Before 9/11, potential users of electronic seals focused on low cost and simple devices for theft prevention. Now, the priority is on more robust seals with greater security capabilities.
Transcore has developed a seal with an RFID tag that "cannot be defeated," according to Jeremy Landt, chief scientist. The electronics are such that these tags know if a seal is tampered with or if it is cut and reattached, he explains. "It is not possible to defeat them."
The vision for the intermodal container industry, Landt says, is to use a traditional, less expensive RFID tag with fairly short range to identify the container itself, using a serial number and fixed information. After the container is loaded, a seal tag would be attached. These two pieces of RFID data would then be married to provide an extra layer of security.
Savi Technology, Sunnyvale, Calif., also has developed sensor-based security seals. It's latest version, SensorTag ST-646, is designed to secure ocean shipping containers. This tag, the company says, can detect both tampering and potential theft, as well as spoilage or damage of goods. The information is collected in real time so that alerts can be sent as soon as any discrepancies occur.
As RFID continues to develop and mature, many other applications for the supply chain will emerge. However, it will never be a simple, one-size-fits-all solution. "This is not a silver bullet approach where one technology works for all applications," says Cliff Horwitz, CEO of SAMSys, Durham, N.C., an RFID reader company. "You have to look at individual problem areas within the supply chain and see where RFID can be brought to bear and what type of RFID solution would work best," he says. "It will never be the cheapest solution. But if RFID is embraced and deployed for the unique functionality it offers, that is where the ROI lies."
|Pharma Moves Toward RFID-Enabled Pedigree|
|Pressure from the Federal Drug Administration and from several state governments is pushing the pharmaceutical industry to move rapidly ahead on development of an electronic pedigree for drugs moving through the supply chain. Primarily aimed at eliminating counterfeit drugs, RFID is viewed as the preferred technology to meet the goal of a "safe and secure" pharmaceutical supply chain.|
"FDA estimates that counterfeit and substandard product represents $32bn of the global pharmaceutical business," says Kara Romanow, research director at AMR Research, Boston. "So RFID for pharma represents an unique opportunity to address the counterfeit problem."
Accenture, Reston, Va., led a year-long "proof of concept" pilot in 2003-2004 involving a group of companies involved in moving pharmaceuticals from factory to consumer. Individual bottles were tagged with an EPC label. In addition to a unique identifier, the label also included information on lot, batch, expiration date and plant location. "Each of those EPCs at the item level were further associated with a particular packing case, so there was a parent/child relationship," says Accenture partner Jamie Hintlian. While many challenges remain, the final report concluded that RFID can be used to "create a safe and secure supply chain, streamline reverse logistics and increase the accuracy and efficiency of distribution and pharmacy operations."
Earlier this year, Purdue Pharma, Stamford, Connecticut, launched a pilot to track Purdue's OxyContin, a painkiller popular on the black market, from a factory to an H. D. Smith distribution center. Unisys, Blue Bell, Pa., is providing implementation services. The companies will use E-Pedigree software from SupplyScape, Cambridge, Mass.
"We are tagging every bottle of OxyContin produced at Purdue's manufacturing facility in Wilson, N.C.," says Peter Regen, partner-global visible commerce, at Unisys. "We track them through the facility and as they are shipped and received at H.D. Smith in New Jersey."
The movement of the goods through a dock door at Purdue triggers an electronic transaction to H.D. Smith, telling the distributor exactly which bottles are on the way. "This is like an advance ship notice (ASN), except that an ASN doesn't identify individual items," says Regen. This system allows Purdue to track exact bottles through the supply chain and to have a clear chain of custody throughout, he says.
Drug makers Pfizer and GlaxoSmithKline have announced that they also are preparing to launch RFID pilots.
A similar application may eventually be used in some areas of the food industry, which also needs to track batches, lots and expiration dates.
Sybase, Dublin, Calif., recently helped a major dried fruit company install an RFID-based system to track specific lots of fruit through processing and packaging. "In case of a contamination issue, they need to be able to identify which fruit came from which farms," says Chris Foley, director of RFID Solutions at Sybase.
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