How to make money with RFID

Recent mandates by DOD and Wal-Mart are making many manufacturers see radio frequency identification (RFID) as an onerous additional cost of doing business. But the technology offers potential benefits far beyond satisfying the demands of supply-chain gorillas.

RFID’s strengths include non-line-of-sight reading, multiple reads at long ranges and high speeds, potential for higher security, the ability to change and add information, and reliable performance in harsh environments. Radio-based systems promise more flexible and efficient warehouse management; raw material and work-in-progress (WIP) tracking and control; maintenance stores and tool tracking; and asset identification, location and condition-monitoring capabilities.

Critical Steps

1. Understand how the technology works: active, passive, frequencies, etc. 2. Explain it to operations and describe the options. 3. Identify problems for application. 4. Do a pilot, collect the data, calculate ROI. 5. Decide whether and where to roll out.

Costs are coming down rapidly, and emerging standards offer some assurance that the system you chose today will support your expanding needs. Instead of just paying to play among DOD and Wal-Mart suppliers by hastily pasting RFID labels on outgoing products, forward-thinking plants are planning implementations with an eye to solid ROI.

“You can slap and ship, or you can have a vision,” says Carolyn Lankford, IT architect, Cummins Power Care, Memphis, Tenn. “Start with the right first impression so you can get on board with the right vision and strategy. You want to build a foundation for growth, not a series of limited, expensive, one-off solutions.”

Streamline warehouse management
“Even though you’re being hit with a compliance mandate, if you don’t integrate it into your process, you’re just adding cost,” says Matt Ream, senior manager of RFID systems, Zebra Technologies (www.zebra.com). “Once you put in infrastructure for compliance, you can use it for yourself, for incoming goods, work in process, and so on.”

Your RFID initiative will almost certainly start with storage and retrieval of raw materials, WIP or finished products. That was the case at International Paper’s bleached board mill in Texarkana, Texas, where large rolls of paper are stocked and shipped in a 375,000-square-foot warehouse and distribution facility.

“We want to know where every roll of paper is in our facility,” says Don Forst, manager of operational services at the mill. “A lost roll can cost thousands of dollars. We wanted real-time knowledge, not information about our inventory every three to six months. By knowing that, we can serve customers better and manage waste.”

The plant’s investigation and requirements for RFID technology led to the development of International Paper’s Customer Solutions Center in Memphis, Tenn., as part of the company’s Smart Packaging group (www.ipsmartpackaging.com). The center (Figure 1), which opened for business in June 2004, includes a non-temperature controlled warehouse, complete with concrete floors and walls, metal racking and a host of industrial equipment to provide a real-world warehouse environment. It adds up to a fully integrated warehouse demonstration, testing and training facility.

Figure 1

International Paper’s Customer Solution Center in Memphis is a non-temperature-controlled facility with equipment chosen to provide a real-world industrial RFID test environment.

The Texarkana mill was the pilot site. “There was no resource to go to for outside expertise,” says Troy Ashmore, Texarkana production, scheduling and distribution manager. “Now that we’ve learned and grown, we’ve developed our Smart Packaging business, so that we and others can leverage that expertise to solve new problems as they occur.”

The center is available to both International Paper and other plants interested in RFID solutions. It tests and demonstrates the latest reader and tag technology, including portal and dock door readers, high-speed conveyor readers and the company’s fork-lift-based solution. “We conduct testing for our customers to ensure they purchase the RFID solution that works best with their product’s packaging and meets their business needs,” says Gary Lofrese, center manager. “With rapid adoption of the technology and standards within the industry, it is exciting to participate in this developing field as we witness improvements in tag design and reader performance on a daily basis.”

On a roll
At Texarkana, product is made to order. Roll cores are identified with passive smart-label tags that associate it with order data throughout manufacturing, storage and shipping. The mill facility and yard are huge, and paper rolls have shelf-life issues. Humidity, dust and debris can cause degradation, so location tracking is critical.

Hardware and software are predominately clamp-truck-mounted, creating mobile reader stations. The warehouse tracking software is fully integrated with the plant’s legacy MES system and an 802.11b network that supports the truck-mounted terminals. The system can track inventory to within six inches using passive RFID tags with a minimum of stationary readers.

The system takes advantage of RFID’s at-a-distance capabilities. “You can keep track all the time,” says Scott Medford, vice president, RFID, Intermec (www.intermec.com). “It’s very good in a chaotic environment. You have freedom of movement, you can put things away in any open slot. You don’t have to have a preset allocation scheme.”