September 8, 2016

RFID technology has finally reached a level of maturity and accuracy that has resulted in an increased demand by manufacturers and logistics corporations around the world. RFID can be a cost-effective solution for the toughest problems many supply chains encounter. Because there is an initial hardware cost that may seem daunting, implementations of RFID projects generally begin with a pilot project and/or proof of concept to prove that the technology can be used to create an acceptable ROI (Return on Investment).

Loop Supply Systems has been given the opportunity to work with one of the largest automotive suppliers in the world. Utilizing loopTrack and proven hardware components, Loop Supply Systems has created a project plan for executing a successful RFID Pilot Project for the automotive supplier.

PROBLEM TO SOLVE

The automotive supplier delivers five different returnable container types to a large automotive OEM (Original Equipment Manufacturer). On average, approximately 500 total of these containers are shipped per day. The problem encountered is the following:

If the OEM has not returned enough containers needed for the start of production, expendables and other packaging will be required by the automotive supplier to ship the required parts. The OEM will pay for the expendable packaging and other needed packaging components if the automotive supplier notifies the OEM 24 hours in advance. Otherwise, the cost is passed onto the automotive supplier. The root of the problem is that the automotive supplier never knows if there are enough containers beforehand, so they are unable to notify the OEM early enough. The result is large packaging costs being incurred by the automotive supplier.

This is where RFID technology comes in.

RFID PILOT CONCEPT

The solution to this problem is tracking the returnable containers – and oftentimes the best solution for tracking containers is RFID technology. If the automotive supplier knows where all containers are located, then it can easily notify the OEM ahead of time. This in turn leads to huge savings for the automotive supplier in terms of preventing lost containers and passing on the expendable container costs to the OEM.

RFID PILOT IMPLEMENTATION

The basic process for shipping and tracking the returnable containers is the following (you can use Diagram 1 below to follow along):

First, RFID tags and labels are printed and securely placed onto all of the returnable containers in the loop. At each of the automotive supplier’s five dock doors, an RFID reader is placed strategically to make accurate reads as returnable containers pass through the dock doors. The readers and installed software have the ability to determine direction of part flow (inbound or outbound) through the dock doors. At the automotive supplier, parts are packed into the returnable containers and then shipped to the OEM through dock doors 1-4 where RFID reads are made. Once the full returnable containers are delivered to the OEM and the parts are unpacked, the empty containers should be quickly shipped back to the automotive supplier. The empty containers then arrive back at dock doors 1-4 of the automotive supplier, where RFID reads are again made. Next, all empty containers are immediately cross-docked to dock door 5 where the containers are read and then taken to a nearby container cleaning center where they are cleaned and maintained. After completion at the container cleaning center, they are immediately sent back to the automotive supplier and arrive back at dock door 5, where the RFID reads are made and logged to loopTrack for the final time in the container loop.

Diagram 1

SOFTWARE, KPIs, & ROI

Each RFID read is logged in loopTrack. In real time, it is possible to view the location of an individual container/container type or the count of each container type at each location. With demand of each part known and the locations/number of each container type also known, it can now be an automated process to notify the OEM when there aren’t enough returnable containers available to meet demand. It is also possible to setup an auto-notification for lost containers.

CONCLUSION

With this project still in its infancy, the project plan provides an example of how RFID technology can be used to solve a logistics problem. Additional blog posts will be written relating to what RFID hardware technology will be used and how utilizing Cognos Analytics to perform detailed KPI visualizations can lead to successful RFID projects.

To learn more about Loop Supply Systems and loopTrack, you can contact our Business Manager, Jon Pate (jonpate@loopsupplysystems.com) or give us a call at 205-444-1185.