Despite the promise of more efficient warehouse management, radio frequency identification (RFID) is often considered too costly for those wishing to optimise supply chain operations. But with big retailers starting to demand RFID compliance, it may be something you can’t afford to overlook. Brian Davis explores.
While RFID has already made significant inroads at the retail end of the supply chain, most manufacturers still prefer to stick with traditional manual scanning of bar codes for goods in and out. However, big retailers like Wal-Mart and Tesco are now beginning to demand RFID compliance from main suppliers. The US Department of Defense has mandated RFID compliance from multinational suppliers for several years, including Airbus’ A380/350 and the Boeing Dreamliner project, Honda and Toyota, among many others.
Radio tag technology has been around since World War II. The main issue is not technology, and while cost proved problematic in the early noughties, ensuring the right business processes are in place is the current concern. Return on investment is also difficult to calculate outside closed-loop applications.
But there are benefits in terms of more accurate tracking of stock movements, warehouse staff reduction, and better grasp of on-shelf availability.
This reduces mistakes, the need for rescanning and improves logistic costs.
The recession has been a good excuse to avoid RFID investment. Neil Bennett, managing director of Optima Warehouse Solutions maintains: “We’ve looked at RFID since the late 1990s and can integrate RFID within Optimiser WMS but simply haven’t come across a project that justifies the cost.” “There was a huge amount of hype about RFID and much of it has been unfulfilled,” says Alan Braithwaite, chairman of LCP Consulting and a visiting professor of supply chain logistics at Cranfield University. “Even big retailers like Morrisons and AS Watson are limiting use of RFID to tracking pallets and unit loads rather than individual items. However, there’s a real opportunity to use tags to track high-end fashion goods and high-tech products.” System integrator Red Ledge is deploying a bespoke WMS system incorporating RFID for an upmarket cloth manufacturer in Yorkshire. Each roll is to be tagged with a UHF EPC2 paper tag equipped with a UHF antenna embedded in the label. When an order is received, cloth is removed from stock, inspected, 20 or so metres cut, packaged and placed on a pallet. Then, another RFID tag attached and the original cloth is returned to stock.
The loading bay is equipped with an RFID portal with Invengo readers, which checks the tag automatically to match the cloth to the order via a mobile pc. The tags are 15p per label but the real cost comes in the infrastructure. The bespoke WMS software costs £15000, and the RFID reader and four antennae were £2,500 per portal, with readers located at the door from the warehouse to the cutting area, in the designated loading bay and the unloading bay, for use with three mobile computers with built-in RFID readers. The LXE wrist terminal has an integrated scanner which allows the operator to keep hands-free. “The system offers better integrity with the company’s AS400 ERP system, security cost savings and guarantees that that shipments are correct,” says Andy O’Donnell, director of Red Ledge.
Red Ledge also supplied an RFID-based WMS system to a Mediterranean distributor of frozen foods, because barcoded labels on pallets stored at -35oC couldn’t be scanned as the labels iced up and the operators wear thick thermal gloves, so they couldn’t press any buttons.
“Our challenge was to develop a WMS system which would operate automatically in real-time.
The forklift trucks were equipped with in-line RFID readers from Intermec and antennae. Paperbased RFID labels were attached to each pallet to keep costs down. Pallets are read by the forklift reader, and the appropriate location on the racks identified. Information on each pallet is relayed automatically to the WMS system then integrated with the ERP system.
O’Donnell comments: “People think RFID is wonderful but baulk at the price compared to conventional barcoding. I wouldn’t recommend it in a normal warehouse environment where it is easy to see and track labels, but RFID is a good option for tracking expensive items. However, you have to be careful where the antenna is placed as metal or people can distort the signal.” Many automotive companies have implemented RFID for parts tracking, capital asset management or vehicle related applications. IBM and German business partner IBS AG designed and implemented an open, secure parts tracking solution under the LAENDmarKS project to help make automobile supply chains smarter and more proactive.
IBM deployed a service-oriented architecture so supply chain data can be tapped for secure but global traceability, based on the IBM InfoSphere Traceability Server. RFID was used to track reuseable containers moving through the supply chain.
“Given the size of the container pool it is vital to find where shrinkage occurs,” explains Giles Norman, leader for North Europe, IBM sensor solutions. Under the now renamed RAN, RFID Automotive Network project, containers can be tracked throughout the automotive supply chain. A leading German automotive manufacturer was losing 10% of its container pool annually, and is projected to save 30-40% on a $400m container pool through more sensible container management.
IBM also designed a re-useable asset management system for a European flower and plant distributor, Container Centralen, using passive RFID tags to track and authenticate containers. The CC system uses Nordic-ID hand-held readers, with Intermec RFID portals and Confidex passive tags to identify and authenticate containers at various stages.
RFID has also been deployed to track returnable containers in the A380 Airbus hub-and-spoke supply chain, improving efficiency and avoiding the need to build two new fabrication plants. A combination of passive tags and doorway readers help track containers. The system triggers a traffic light arrangement and highlights exceptions automatically.
“Traceability is vital for streamlining manufacturing operations involving sub-assemblies, so you know exactly where parts are located and can identify where problems arise,” says Norman.
“But if you are tracking problem batches it doesn’t matter what technology is used, whether barcoding or RFID so long as the part is clearly serialised.” Pascal Durdu, director responsible of innovation at system integrator Zetes also recognises that the benefits of RFID must be carefully balanced against traditional bar coding or vision technology. “We also see the main use of RFID implementations as for tagging returnable assets.” Zetes designed a system for tracking re-useable crates for retailer Delhaizt in Belgium, putting RFID tags inside containers for fresh goods and sticking barcodes outside pallets for growers who don’t use RFID and voice technology.
A proof of concept RFID project was also carried out with Carrefour in France, comparing RFID with barcodes and vision technology. Durdu insists that a combination is required, “as RFID readings can be adversely affected if products contain too much water or metal. Positioning the RFID is also important.” Alexandra Brintrup, senior research fellow at the SAID Business School, Oxford, participated in an EU-funded Bridge Project with Nestle UK to track manufacture of Quality Street sweets.
Containers were tagged bringing sweets from one manufacturing line to another. Previously, operators manually scanned a barcode on the container and on the truck to identify products and location.
But errors occurred particularly at high season like Easter. Passive UHF Gen2 tags were used to automate the container tracking process. “This proved helpful, as losing track of a container could mean dumping perishable goods,” said Brintrup.
A variety of tags were tested, because the sweets are wrapped in aluminium foil which affects the electromagnetic signal. Readers were installed on forklift trucks and at certain locations on the production line, and tags attached to containers. The RFID system reduced scrappage, reduced the need for rescanning and labour time, and improved stock control accuracy and tracking at each stage of production.
Though RFID promises to streamline business processes, it carries a big cost in terms of infrastructure and performance challenges which will probably continue to deter widespread deployment for warehousing operations, compared to traditional barcode scanners. In a tight economic environment, however, there is also a premium for reducing shrinkage of valuable re-useable assets.