1 June 2006
On the radio
By Vivek Bapat, Andreas Somogyi, Alfonso Gutiérrez, and Dr. Raj Veeramani
RFID moves upstream from supply chain and into heart of manufacturing operations
RFID is having a broad impact on manufacturing operations, including information management, manufacturing execution, quality control, compliance, tracking and genealogy, asset management, inventory visibility, and labor productivity.
For years, manufacturers have made investments in providing production with supply chain information it depends on to optimize inventory, while at the same time improving production efficiency, flexibility, and responsiveness.
Accurate, detailed, and timely information delivered by new generation MES systems is critical in getting the most value out of existing investments in automation.
For a broad cross-section of manufacturers that have not made substantial investments in MES, RFID provides a method to close some functional gaps, particularly related to tracking and genealogy and compliance management. For these manufacturers, a combination of RFID investments and incremental, but functionally focused, MES applications (such as tracking and tracing) can quickly and cost-effectively deliver functionality that parallels comprehensive MES solutions.
An Accenture white paper describes in detail the potential opportunities to leverage RFID on the plant floor. RFID initiatives will immediately influence these key areas.
By combining RFID with existing manufacturing information systems investments that drive both MES and ERP, a much more potent information supply can drive production efficiencies, asset utilization, quality, and other production measures to much higher levels.
For a broad cross-section of manufacturers, RFID technology potentially provides a means to close some functional gaps, such as those related to compliance management, tracking, and genealogy.
By applying RFID technology incrementally across the plant floor, manufacturers can seamlessly integrate the new information captured by RFID, without disruption into existing, reliable, and industrially hardened control, visualization, and information infrastructure. Existing MES systems can then be updated to deliver the necessary RFID data management and reporting and also synchronize production with the RFID-enabled supply chain.
In order to deliver information from RFID downstream out to the supply chain (ERP) and upstream into production (MES), existing information infrastructure must convert to co-exist with emerging EPC standards and IT that includes software and application management such as device brokers.
Once this information shares across the enterprise and plant floor, receiving, manufacturing, warehousing, and shipping operations must coordinate and execute in the context of orders and customers.
Regardless of how much effort and dollars go to RFID on the enterprise level, poor management and execution of RFID efforts at the plant level could drive down potential benefits.
For manufacturers, it is becoming increasingly important to design and integrate RFID information and solve connectivity issues related to plant floor and warehousing execution in such a way that new information integrates into plant floor reliably and through industrially hardened conduits.
In addition, deploying an RFID network for a manufacturer is of little or no value unless the information it provides is accessible using an array of hardware and software that ties together and back into the plant for execution and action.
For the most part, manufacturers have to take raw data from RFID readers and determine how to get it into MES and control systems that drive manufacturing. In addition to delivering the right information at the right time to an MES or control system, the rules concerning manufacturing execution such as control, scheduling, routing, tracking, and monitoring must all change to collect and be responsive to new RFID-information.
In addition to managing operations on the plant floor, warehousing operations must also receive support from an information perspective to ensure the right products get to the supply chain at the right time.
Quality control and compliance
RFID has the potential of complementing MES in terms of providing new streams of real-time data that can support existing Lean and Six-Sigma programs.
RFID information can ensure the correct labor, machine, tooling, and components are available and ready to use at each processing step, thereby eliminating paperwork and reducing downtime.
Furthermore, process steps could be controlled, modified, and even reconfigured in real time as inbound materials, parts, and assemblies move through manufacturing.
As raw materials turn into finished assemblies, triggers could be set off, controlling either inbound materials and thereby impacting work-in-process inventory or post-process inventory.
By tagging raw materials with detailed specification information, alerts could automatically trigger at mixing operations if an incorrect formulation is imminent. This can help reduce scrap rates and increase yield, assuring a high degree of reliability and quality in processing.
For manufacturing operations that require a high degree of compliance with governmental standards and regulations in particular, RFID can provide additional information streams to support existing MES activities enabling tighter tracking, verification, and validation of processes including those involving 21 CFR Part 11 compliance.
Tracking and genealogy
Increasingly demanding FDA quality requirements are forcing consumer-packaged goods, food, and beverage companies to manage product information, lot tracking, and related quality standards across their entire supply chain network.
If there ever is a need for a product recall, it must be done as quickly and as precisely as possible. Reliable, accurate, and up-to-date information is absolutely critical to achieve recall objectives. In addition, as contract manufacturing increases, suppliers are more dependent upon information from their trading partners.
RFID can complement existing MES efforts in genealogy tracking. MES, for the most part, is already collecting information such as product ID, time stamp, physical attributes, machine, order numbers, and lot number at each step of the processing.
This information can code onto an RFID tag, pass downstream into the warehouse at a pallet level, and then out into the supply chain, greatly enabling the ability for a manufacturer to retrace steps in a product recall.
Plant asset management
Tagging assets provides information about their location, usability status, maintenance requirements, contents, inventory levels, and so on. Devising production steps, maintenance, and labor schedules based on this information can help increase asset costs, optimize asset performance, and maximize asset utilization.
Tagging reusable assets such as machines, fork trucks, tools, fixtures, and material handling devices is one of the easiest ways for companies to test RFID in a closed loop environment.
By helping reduce downtime and managing scheduled (as well as unscheduled) maintenance more effectively, manufacturing performance parameters such as overall equipment effectiveness (OEE) can improve.
As contract manufacturing becomes increasingly important, visibility into supplier as well as customer activity becomes critical in order to achieve supply chain synchronization. Inventory tracking and visibility relates directly to information management.
The better a manufacturer is able to collect, manage, and use information to drive production assets and processes, the more visibility provided to trading partners.
Depending upon investments in automation and MES, RFID can work on varying scales, either locally or across the entire facility to provide visibility into incoming raw materials, WIP, production sequencing, packaging, palletizing, and warehousing operations, as well as final shipping to the next destination in the supply chain.
Bar coding is very common in today's manufacturing environment. However, in many bar coding activities, manual intervention is required for capturing data. An immediate impact of RFID is eliminating those requirements, thereby freeing up labor to perform other, more value-added tasks.
Effective deployment of RFID also has the potential to quickly provide accurate and reliable data that exceeds the bar coding or manual capabilities available. This can have major impact, particularly in high-volume and high-speed manufacturing operations, where speed, accuracy, and timeliness are critical for throughput and performance.
Information management is critical in how RFID-enabled information can link man/machine tasks and gain visibility into labor usage and productivity, setting the stage for redistribution of related tasks and processes.
RFID can dramatically influence critical performance issues like machine performance, line performance, plant performance, and supply chain performance for all manufacturers.
The primary drivers of RFID implementation in manufacturing operations that go well beyond current mandates are more likely to be specific industries such as pharmaceuticals.
The ARC Advisory Group said the pharmaceutical industry possesses the unique attributes most receptive to RFID implementation in the manufacturing supply chain following the rush to fulfill retailer driven mandates.
Regulatory and anti-counterfeiting requirements within the pharmaceutical industry place a premium on accurate and real-time tracking and tracing capabilities to facilitate product recalls to effectively track products across the supply chain.
The U.S. Food and Drug Administration has already recommended RFID be part of an incremental approach to prevent theft, augmenting other tools such as tamper-proof packaging, bar codes, and hidden inks.
In addition, pharmaceuticals in general have a higher price tag and profit margin on a product basis as compared to typical retail supply chain products. As RFID tag prices continue to fall, pharmaceutical manufacturers will likely lead the drive to begin applying passive RFID tags at a product or item level.
ABOUT THE AUTHORS
Vivek Bapat (firstname.lastname@example.org) has degrees in industrial engineering and mechanical engineering and an MBA. Vivek is on the board of directors of MESA International. He works at Rockwell Automation in RFID business development and strategy. Andreas Somogyi (email@example.com) has degrees in electrical engineering and business. He publishes extensively and speaks at global conferences including ISA and Hanover Fair. Somogyi works at Rockwell with the company's RFID consulting and support business. Alfonso Gutiérrez (firstname.lastname@example.org) is director of the University of Wisconsin's RFID lab (www.uwrfidlab.org) and associate director for research and education at UW E-Business Consortium (www.uwebc.org). Dr. Raj Veeramani (email@example.com) has degrees in mechanical and industrial engineering. He is the Robert Ratner Chair Professor of Industrial and Systems Engineering at the University of Wisconsin-Madison. He has received awards from the Society of Manufacturing Engineers and the Society of Automotive Engineers.
Procter & Gamble (P&G) expects to reduce its $3 billion in inventory to $2 billion by combining real-time information about its operations with more timely data about sales from its retailer partners.
If it can achieve this, P&G will free up $1 billion in working capital and cut inventory-carrying costs by $200 million per year.
That will offset most of the cost of the infrastructure and tags, and all the other savings will help bolster P&G's bottom line.
Exacting the truth
Until recently, most of the mandate or regulation-driven RFID implementation efforts focused at the warehouse or distribution center, a strategy manufacturers realized had very few positive benefits for them.
Today, the central issue for manufacturers is how to convert the potential of RFID into a business strategy that not only results in a sizeable return on investment (ROI) but also drives sustainable value.
Many manufacturers now believe the plant floor presents a vast untapped opportunity for recovering investments, creating value and gaining a strategic advantage.
The biggest challenge in doing so, however, is how to capture and make use of the wealth of information on the plant floor from RFID readers, controllers, sensors, and other smart devices.
To deploy RFID technology incrementally across the plant floor and deeper into the production process, manufacturers must integrate the new information captured by RFID into existing reliable and industrially hardened control, visualization, and information infrastructure to minimize costs and reduce disruption in production.
RFID application on the plant floor can help manufacturers uncover several opportunities for ROI through:
The potential benefits to large suppliers deploying RFID on a wide scale across the supply network are now fact. The ROI to manufacturers is still in question.
How manufacturers strategically embrace RFID as part of their production processes will play a pivotal role in securing future competitive advantage.
RFID is a method of identification using radio frequency suitable for objects, animals, or people that does not require direct contact or line-of-sight scanning.
EPC is electronic product code and the RFID version of the UPC barcode.
Lean is an amalgamation of Just-in-Time, Kaizen, Kanban, and Total Quality ideas leading towards zero paper, zero inventory, zero downtime, zero defects, and zero delays in design, manufacture, and distribution.
Six-sigma is a method and movement focused on business process improvement. It is a quality measurement and improvement program originally developed by Motorola that focuses on the control of a process to the point of ± six sigma (standard deviations) from a centerline, or put another way, 3.4 defects per million items.
MRO is maintenance, repair, and operations, a class of goods and services purchased by a business to support its internal operations.
ERP: Enterprise resource planning is an industry term for the broad set of activities supported by multi-module application software that help a manufacturer or other business manage the important parts of its business, including product planning, parts purchasing, maintaining inventories, interacting with suppliers, providing customer service, and tracking orders.
21 CFR Part 11 are the Food and Drug Administration guidelines for trustworthy electronic records, and they require companies to employ procedures and controls designed to ensure the authenticity, integrity, and when appropriate, the confidentiality of electronic records.
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