Industrial Engineer By Mohsen Attaran 11/18/06 - The decision about whether to go with RFID is one that many companies may have to make eventually. RFID tagging requires a significant investment of time and resources, and is a technology full of promises and potential pitfalls. It would be a mistake to implement RFID without fully exploring the initiative specific to a company's environment.

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Mandates from powerhouses such as Wal-Mart, Metro Group, Target, and the U.S. Department of Defense have led RFID to take an increasingly high profile. While there are signs that the RFID initiative is beginning to pay off for companies such as Wal-Mart, recent studies suggest that manufacturers in a number of industries are still struggling to justify investing in broad production rollouts of RFID. Many manufacturers are still evaluating the technology while they engage in small pilot projects. It looks as if RFID is going to progress gradually in many industries.

Despite RFID's high-profile backing and indisputable benefits, there are still many obstacles, misconceptions and issues related to it yet to be resolved.

Various Applications
The greatest promise of RFID lies in its application versatility. Smart tags can be affixed to individual products or to pallets containing multiple units, and they can be read through most materials. RFID readers can scan multiple items at one time, making them functionally superior to traditional bar code scanners. Data generated by RFID technology can improve supply chain efficiencies across industries such as retail, manufacturing, distribution, healthcare and government.

Examples of industries and functions that can benefit from RFID include:

Supply chain management. Supply chain automation is the key early driver for development and implementation of the technology. RFID is being used for tracking assets in offices, labs, warehouses, pallets and containers in the supply chain. RFID enables suppliers to determine the location of a pallet, to track its journey through the supply chain, and to make instantaneous routing decisions.
Manufacturing and warehousing. This sector has been finding different ways to derive value from RFID, including tracking parts during manufacture and tracking assembled items. For example, to ensure accuracy, parts can be individually tagged and tracked throughout the manufacturing process. This helps manufacturers with their carefully scheduled just-in-time assembly lines. Tags containing equipment specifications can be attached to enable easy upgrading. Similarly, tags can be used to keep track of usage, availability, location and maintenance of material handling equipment.
Retail operations. Mandates by global retailers such as Wal-Mart and Albertsons in the United States, Metro in Germany and Carrefour in France have pushed RFID into retailing. Many retailers have benefited from implementing RFID in their organizations. Increased tracking and faster inventory turnovers, more accurate shipments, improved fulfillment, and faster unload times are often cited as major factors influencing RFID adoption.

Many experts do not expect item-level RFID tagging of low-cost consumer goods to occur for five or more years. However, retailers can link information obtained by RFID technology -- such as the contents of a crate, sell-by date, and manufacturers -- to their inventory management systems to ensure that goods are moved to the shelves and to reduce spoilage and out-of-stocks. The technology not only helps retailers reduce labor and manual costs, but it also curbs shoplifting and boosts store productivity.

Food industry. Increased government regulations of food traceability in the United States and the European Union have pushed RFID technology into food sourcing. In addition to offering traceability, RFID technology can reduce recall costs by increasing the ability of manufacturers to identify and recall only affected items.
Livestock. RFID technology is used to secure identification of cattle through implanted tags that track animals' food and location. A few states are testing RFID tags as one way to help protect elk herds from contagious disease by allowing agriculture officials to track animal movements.
Healthcare. RFID can be used in healthcare industries to improve quality and reliability. RFID is being used for linking patients with key drugs, with the personnel who are giving the drugs, and with biometric measurements. RFID tags, embedded in wristbands, are used to identify patients and update their status automatically. RFID tags are also used to match blood samples to patients. Medical centers are using RFID technology to track and manage assets such as medical devices and wheelchairs.
Security tracking. RFID is moving quietly into the people-tracking realm. It is in use for security tracking in entrance management at offices, contact management at events, patient and baby tracking in hospitals, guests tracking in amusement parks and for law enforcement applications.

Radio tags can be implanted in the major metal parts of bicycles or engineered into the engine castings of vehicles to allow law enforcement personnel to identify stolen items and prosecute thieves. RFID tags incorporated into garments at the manufacturing plant can be a valuable tool for brand owners, separating authentic from counterfeited apparel. The Department of Homeland Security is planning to test passports embedded with RFID chips at several airports.

Parcel and parts monitoring. RFID tags enable improved item tracking during postal sorting and delivery processes. Shipping company DHL announced recently that by 2015 it will place RFID tags on all of the more than 1 billion packages it ships annually. The Navy uses RFID tags for weapon management and maintains a reading range of less than 6 inches to protect sensitive data. The Department of Defense is requiring suppliers to deploy RFID tags on cases and pallets delivered to the department. Similarly, RFID can be used for baggage handling in the air transport environment.
Pharmaceutical industry. RFID provides the most promising approach for reliably tracking, tracing and authenticating pharmaceutical products. The drug industry uses RFID to police theft and counterfeiting. Pfizer is putting tags on bottles of its widely counterfeited drug Viagra, for example. The U.S. Food and Drug Administration is requiring the drug industry to deploy RFID labels by 2007.
Gaming industry. Las Vegas casinos are using radio tags on betting chips to deter counterfeiting, card counting and other undesirable behavior. Casino executives envision RFID transforming the way they operate table games. The casinos are installing RFID readers and PCs at tables. In addition to monitoring wagers, the technology allows dealers and cashiers to see when the value of the chips in front of them do not match scanners' tallies. The casino industry is also planning to use the technology to help casinos keep tabs on how much players bet and how long or how often they play.
Libraries. Inventory control has been a time-consuming operation for libraries. RFID technology can be used to automate the issue and return of books and other materials, and to give real-time inventory visibility. The tags provide a much higher degree of accuracy in inventory management and can reduce the need for personnel.

Success Stories
It is going to take time for RFID's acceptance, but it is one of the fastest growing technologies in the United States. The following are examples of some companies that have capitalized on RFID technology advantages and have made great strides by applying this technology.

Harley-Davidson. In 1903, in a Milwaukee factory that was no more than a wooden shack, Harley-Davidson built its first motorcycle for the public. That year, the company produced only three motorcycles. A hundred years later, Harley-Davidson is the maker of famous street, custom and touring motorcycles, and has a loyal following of bike enthusiasts. This year, it expects to build more than 300,000 motorcycles.

In 2002, in an effort to maintain an edge over competitors, Harley-Davidson sought a solution that would improve efficiency and eliminate errors on the assembly line in its Wisconsin plants. The company needed to track the location and status of engines during the manufacturing process, as well as collect information that could be used to trace quality issues back to specific units and components.

The company implemented an RFID-enabled automated tracking system (called AVIS) on the assembly line. The system implants a tag on each engine that uniquely identifies the individual unit model, serial number and operations required at various pans of the assembly chain and tells the operator exactly what to do. The data is shared among stations on the assembly line and determines whether the component is fit to pass to the next stage. Stationary RFID readers are installed at each station, and they read unit tags and ensure the appropriate instructions are displayed on the PCs matching the required operations.

Harley-Davidson's RFID-enabled AVIS helps the company achieve many benefits, including reducing assembly errors by 90 percent, increasing repeatability and manufacturing efficiency, improving designs based on feedback from tracking quality issues, and refining processes based on data collected. The results of the program were so exceptional that the system has been rolled out at other Harley-Davidson facilities.

Good Shepherd Hospital. Rising healthcare costs and government regulations have put significant pressures on hospital operations. Good Shepherd Hospital in Barrington, Ill., is no exception. Good Shepherd is one of the eight hospitals in the Advocate Health Care System -- the largest fully integrated, not-for-profit healthcare delivery system in metropolitan Chicago and one of the top 10 systems in the country. Good Shepherd is a five-floor facility licensed for 140 beds.

In 2002, Good Shepherd formed an in-house steering committee to find ways to improve facility operations, relieve financial pressures and improve staff productivity and satisfaction. The committee identified problems and organized them into three major categories: equipment management, financial pressures, and staff productivity and satisfaction.

The committee investigated hiring more staff and using bar coding systems, but concluded that what was needed was a real-time equipment management system that could quickly find available equipment, measure equipment utilization, and integrate with existing processes and information technology infrastructure.

This hospital chose an RFID system and has seen a return on its investment through lower capital equipment expenditures, lower rental equipment costs, increased staff satisfaction and improvement in department level performance. In the first year of installation, Good Shepherd reduced its equipment rental costs and equipment purchasing costs by 25 percent and 45 percent, respectively. Good Shepherd also noted savings in unexpected areas, including fewer equipment recalls and faster access to emergency and life-saving equipment.

Grantex. This uniform supply company handles more than 10,000 rental garments a day, each of which contains a sewn-in RFID chip. The low-frequency smart tags track and sort Grantex's thousands of uniforms automatically by status and condition, and point to where they should be sent. After the chips are programmed, a computer scans each garment to tally and validate how many times it has been laundered, or if it needs to be mended or undergo special cleaning or repair.

Among the benefits enjoyed by Grantex have been reduced cost errors (from 2 percent to 0.1 percent), a 100 percent increase in repair rate, a 50 percent reduction in labor and a 300 percent increase in processing speed. The company credits its RFID program for its 20 percent growth.

Paramount Farms. The company is the world's largest supplier of almonds and pistachio nuts. It grows and processes about 60 percent of the U.S. pistachio crop. The scope of pistachio receiving operations at harvest is enormous: 400 loads a day, each with a gross green weight of about 50,000 pounds. That adds up to 20 million pounds per day for receiving, recording, weighing, pre-cleaning, sampling and processing. With this kind of volume, the grower receiving system is one of the most critical points in Paramount's supply chain.

In 2004, the company decided to improve efficiency and productivity by implementing RFID technology: 11 handheld computers, three access points and three RFID tag readers. As each nut-laden trailer arrives at the Paramount scale house, a fixed reader interrogates the trailer's RFID tag, captures each tag's unique identification number, and wirelessly transmits the data to a central server. The database relays the prerecorded profile of the identified trailer back to the scale house worker's mobile computer.

Now the worker knows the trailer's net weight, license plate number, equipment number and owner name. Scale house workers next use the handheld computers to gather load details, including the grower name, ranch, field, product temperature and harvest method. The trailer's gross weight is then automatically retrieved from the truck weigh scale and a weight certification is printed.

Paramount's new RFID system helped the company reduce its load processing time by 60 percent, increase crop receipt data accuracy and reduce raw material costs. The system also ensures that the volume and quality the company pays for is the volume and quality it receives.

International Paper. The US$24.5 billion paper maker needed to address customer service problems -- from inaccurate inventory to mis-shipments -- and maintain an edge over competitors. The company's existing bar code system was slow and imprecise.

In early 2000, IP decided to use RFID technology in the automated inventory tracking system installed in its Texarkana, Texas, warehouse. The 280,000-square-foot warehouse operates three shifts year-round, producing paper rolls up to 75 inches in diameter. RFID tags were mounted on products at the paper-winding stage that respond to radio signals by transmitting a unique product identification code. The paper roll travels by a conveyor to the warehouse, where a clamp truck waits.

Sensors track the flow of products from winding machine to a finished process, and through warehouses and stores without anyone manually scanning bar codes. The company chose to mount the sensors not at points around the truck's route, but on its 22 clamp trucks that transport paper around the warehouse. The sensors had to be protected from environmental hazards, so they were engineered to work in temperatures up to 145 degrees Fahrenheit.

The truck's wireless LCD display directs the driver to the roll's predesignated destination. Each truck identifies the rolls of paper it picks up, and then notifies the main computer of its movements through a separate warehouse-wide wireless network. Drivers receive immediate notification on an LCD display if they put a roll down in the wrong place.

The combination of real-time visibility and a precise plan for every paper roll, and a system to enforce that plan, creates an accurate workflow. As long as the paper roll is in the warehouse or truck dock, its movements can be tracked. The company has achieved near 100 percent on-time delivery, drastically improving customer satisfaction .

Advantages and Disadvantages
According to experts, compliance is not the only dynamic that is influencing manufacturers to adopt RFID. The other major factor is the need within manufacturing for business process improvements that cut costs, reduce inventory, improve order forecast, improve asset management and provide high customer satisfaction. ROI is associated with the business process changes RFID enables. The technology also offers as much of a competitive advantage to the early movers and followers as it offers a competitive disadvantage to those who wait.

The decision about whether to go with RFID is one that many companies may have to make eventually. RFID tagging requires a significant investment of time and resources, and is a technology full of promises and potential pitfalls. It would be a mistake to implement RFID without fully exploring the initiative specific to a company's environment.

Before you consider implementing an RFID solution, consider the expected benefits, significant amount of engineering and testing, measurement methods, associated business process changes and infrastructure requirements. Finally, the challenge for IT experts today is to determine how to integrate RFID with existing supply chain management, customer relationship management and enterprise resource planning applications in the entire system.

In the end, only those companies with a well-defined implementation plan can achieve the full benefits of RFID.

© 2006 Industrial Engineer. All rights reserved.
© 2006 ECT News Network. All rights reserved.

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