RFID: Payback for Manufacturers, Part 2

Enterprise Resource Planning / Financial
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RFID can do some things better than existing barcode data capture, and it can do other things that barcodes could never do. Nevertheless, it is a foregone conclusion that barcoding and RFID complement each other and that they will coexist for a very long time.

This is good news for manufacturers with business processes that are supported by barcoding. Whatever may come of Wal-Mart-type mandates, Electronic Product Codes and Global Data Synchronization, RFID tags will remain--in some respects--much like an electronic barcode. Thus, companies with successful barcode utilization in place can also utilize RFID data by passing the data through existing pathways into the enterprise resource planning (ERP) system.. This leverages the existing technology infrastructure, while adding operational and economic benefits that are unique to RFID.

In Part 1 of this article, we looked at the benefits of employing RFID to improve an existing barcode-supported process. We'll do more of that in a moment, but first let's consider the question of "RFID readiness."

Qualifying Yourself for RFID

Are you a good candidate for RFID right now? Clearly, you don't have to be a current Wal-Mart or DoD supplier to take advantage of the opportunities that RFID brings to the table. But how close are you to achieving significant performance improvements from integrating RFID data? Most manufacturing companies can identify with one or more of these "qualifying" questions:

  • Do you have a legacy Automatic Data Capture (ADC) barcode system in place that would need to coexist with an RFID system?
  • Do you have an ADC system in place today in which the barcode label does not work very well because of the environment (dirty, poor lighting, etc.)?
  • Do the assets or items that you manufacture or distribute have a high underlying value?
  • Do you employ reusable containers, totes, pallets, etc. in your current processes?

...and, of course...

  • If not now, do you expect you will need to satisfy a customer's RFID mandate within the next three to five years?

If you do have comprehensive ERP-integrated barcode data capture today, a "yes" to any of these questions means you are well-positioned to utilize RFID data for business process improvements. If you have standalone barcode capability or if only a few barcode transactions are integrated to your ERP, you can still get some benefit out of RFID, but the cost and time required for an integration project will impact your ROI expectations. Alternatively, you could compare the value of acquiring a fully ERP-integrated ADC solution that can process both barcode and RFID transaction data.

Choosing Your RFID Target

There are many ways to blend the benefits of barcoding with the strengths of RFID technology in the manufacturing process. In our earlier example, RFID eliminated the need to track down variances between production reporting and finished goods. Here are four more in-plant RFID scenarios that solve problems and improve operating efficiency:

Picking for Shop Orders

Barcoding and RFID can work seamlessly together where materials to be staged on the shop floor for process or assembly are picked to a pallet, a cart, a tote, or a bin. To prepare for the changeover, reusable RFID "license plate" tags are applied to the containers, and the material handler is supplied with a portable handheld device that can read both barcodes and RFID tags. The picker starts the process by acknowledging the shop order that he is working on. Following the pick slip (or following directions from the device screen, in the case of a paperless pick application), the picker is directed around the warehouse to pick the components required to fill a shop order. As each component is picked, he then reads the RFID tag on the container. In doing so, the RFID tag is automatically associated with the shop order, the item number, the lot number, and the quantity for all components in the container.

Tracking Materials on the Shop Floor

Once components are being picked to RFID-tagged containers, it becomes easier to track them as material is moved from the warehouse to a location on the shop floor. Moving the containers through a portal (or reading the tags with a handheld device) maintains visibility of each RFID container, along with current information on its contents. A tag-bearing container for work-in-process (WIP) can solve a difficult problem that manufacturers have regarding WIP visibility. It is not uncommon for someone to have to go out on the shop floor just to locate the material. This is time-consuming and can become very expensive if the lack of visibility causes a production line to be idled while waiting for the material.

Identifying Returnable Containers

Some companies ship their products to their customers in reusable containers or racks. With RFID tags applied to each container, not only can you track the container internally, but you can also track it as it is shipped out the door, associating the data to the ERP customer transaction. You can track how many containers went to each customer and when (or if) the customer returned them.

When a container comes back empty, RFID data is captured by an RFID "portal" as the container passes through the receiving doors. This transaction can be set up to trigger follow-on procedures. The receiver may be directed to take the container to a cleaning and prep area, while a scheduler may be notified that returned containers are available for production planning.

Compare the above scenario to the common practice in which containers are returned and then allowed to sit in a yard or on a receiving dock indefinitely, waiting for someone to process the container back into the cycle. Manufacturers are likely buying many more containers than they actually need, yet there may still be periodic shortages of containers that are ready for reuse. If customers keep containers longer than they should, automatic notification can be sent out to remind them how many containers are outstanding.

And there are still more benefits: RFID tags can also automate life-cycle tracking and replenishment. The lifespan of a container may be based on how many times it was used, and a read/write tag on the container can log how many times it has been shipped, along with the most recent ship or return date.

Preventive Maintenance

When a machine breaks down during a production run, it is just as bad as running short of components for production. The delay can cascade through to shipping, causing customer-critical promise dates to be missed. In some cases, the production must be moved to another machine, adding tear-down and setup costs. Periodic preventive maintenance is usually scheduled, but sometimes a machine is put into service for a production run even though the scheduled maintenance may not have occurred.

If each machine is identified with a "fail-safe" RFID asset tag and the tag is encoded with data on the most-recent and next-required service, an operator or supervisor can use a handheld RFID reader to check the maintenance status of the machine before setting it up for production. If there is no centralized plant maintenance database application in use, the maintenance department could also do periodic checks of the machine tags to ensure that each machine is being maintained on schedule.

Pick the Best Strategy

Here is a key to success in extending data capture functionality to include RFID in your manufacturing environment: Rethink the "technology project" approach to automatic data capture. For decades, ADC has been a build-to-suit proposition. Over time, it has gotten somewhat easier, as more powerful software toolsets automate the development process. But it is long past the time for ADC for manufacturing to be deployable much the same as it is in retail: as a comprehensive, plug-and-play extension to the ERP application. Such products do exist, and now RFID gives you an excellent reason to seek them out. Once you have a barcode solution in place that is integrated to your ERP business logic and database, adding RFID to the mix is better, faster, and cheaper.

Anthony Etzel is Vice President of Data Capture Solutions at RTTX: RealTime Technologies, Inc. He has been designing and deploying automatic data capture solutions in manufacturing for over 20 years.