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.