Unchaining the Value of Closed-Loop RFID Systems

Dec. 3, 2008
Closed-loop RFID applications can provide fast ROI because users have the flexibility to choose technology and tailor processes to solve specific business problems.

Due to the attention given to RFID for supply chain compliance, companies often lose sight of the fact that RFID can play an integral role in improving the efficiency of many day-to-day manufacturing operations. In fact, according to one research study, RFID is implemented about four times more often for closed-loop, internal applications than for supply chain compliance.

Closed-loop systems tend to provide more value than partner-driven supply chain programs because they give users:

  • more flexibility to adapt RFID to support specific, unique processes
  • more control over project timetables and goals; and
  • more choices of technology, frequencies, standards and products.

Many companies today are unlocking the value of RFID by "unchaining" the technology from the external supply to improve tracking and control throughout the organization's own internal processes, including asset tracking, inventory and materials management and other operations. RFID's return on investment (ROI) in closed-loop applications typically stems from reduced labor time and costs, reduced loss and theft, and improved accuracy, efficiency and productivity.

Following are some specific examples of how RFID can deliver measurable business benefits.

Faster, More Accurate Asset Tracking

RFID technology is well suited for tracking different kinds of assets within manufacturing operations -- from incoming materials and supplies, to tools and equipment, to work-in-process and finished goods inventories. Automated RFID reading helps to eliminate time and labor and minimize errors. Unlike bar codes, reading RFID tags does not require a line of sight and does not require human intervention, provided fixed readers are in place.

Accurate record keeping improves asset utilization and avoids time wasted searching for assets. For example, if employees spend an average of 10 minutes a day looking for tools, equipment or materials, that's the equivalent of one full week each year on non-value-added searching. Lost productivity adds costs -- something no manufacturer can afford in today's economic environment.

More Efficient Container Management

Using RFID to track pallets, racks and returnable containers can provide ROI by lowering operating expenses. Many companies lack accurate information about the quantity and location of shipping containers because these assets often dwell at customer facilities and are not returned promptly. As a result, businesses purchase more returnable containers to ensure an adequate supply, creating excess capacity and locking capital into fixed assets.

Identifying returnable containers and tracking them to customers provides the information necessary to improve return and recovery rates. Containers can be automatically identified each time the container exits or enters a facility, with the transaction time stamped, using unattended RFID portals, forklift-mounted readers, or handhelds. Mobile readers can also be used in the field to record container drop-offs and pickups. Such systems provide a real-time view of container availability and outstanding containers can be tracked back to the customer to aid return and recovery. By actively managing container usage, businesses can improve cycle times and inventory turns, and lower their fixed asset base.

Streamlined Shipping and Receiving

Shipping and receiving are supply chain applications, but can also serve as closed-loop systems to track intra-company transfers and shipments. The benefits of RFID in shipping and receiving are reduced time and labor needed to process goods movement, and the elimination of most data entry errors. Internal shipment tracking can be especially valuable in industries such as food, chemical and pharmaceutical, where distribution is regulated and strong security and documentation are required.

Tracking Work-in-Process Reduces Waste

Many best-in-class manufacturers using RFID for WIP tracking have been able to reduce WIP labor requirements significantly. Highly adaptable and rewritable, RFID tags can be used and reused in harsh industrial conditions, even when exposed to chemicals, pressure and temperature extremes, and can be read when they are covered, stacked or buried, so they provide a method of identifying and tracking materials in processes where bar code and other methods cannot. Because they are rewritable, they can be repeatedly time stamped and updated at each step of the production process with a job code for the operation performed, operator ID, configuration, quality control grades and other records.

Improved Service and Maintenance

RFID tags are commonly used as remote databases on tagged equipment to store configuration data and service history information to assist maintenance operations. Rewritable memory on RFID tags lets technicians access and update essential information in remote and challenging environments where other database or wireless access is unavailable. Tagging helps ensure equipment and components are identified accurately to ensure the correct item is serviced.

For example, after testing many smart labels and printer/encoders, Boeing committed to using RFID on its Dreamliner 787 to identify critical aircraft parts to help airlines improve maintenance operations, save time during pre-flight inspections, improve traceability and safety and streamline record keeping. Smart labels logged more than 1,500 flight hours and provided 100 percent read rates and 100 percent data accuracy, which gave Boeing the confidence to move forward with RFID tagging on its highly advanced Dreamliner 787.

More Accurate File Tracking and Tracing

Imagine having to find a misfiled document in a filing cabinet where hundreds of forms and documents are packed into a dense space. A manual search is like looking for a needle in a haystack. RFID readers can be built into inboxes and filing cabinets to automatically record each folder and document that is filed and removed. For company records and archives, users can automatically check entire boxes of records in and out in seconds, eliminating manual data entry. RFID can also be used to associate the files with workers who signed them out by reading RFID employee ID badges as part of the process.

Flexible RFID Technology Options

One reason RFID is adaptable to so many closed-loop processes is because companies have a broad choice of RFID technologies. EPCglobal Gen 2-standard UHF (858-930 MHz) technology is almost always required for compliance programs. The protocol works well for many supply chain and other operations, but it is not the best technology for all applications. For example, 13.56 MHz high-frequency technology excels at identifying individual items, especially those in crowded and dense conditions.

EPC/UHF is a small subset of the wide range of RFID technologies available, which also include 13.56 MHz high-frequency (HF) technology (which is actually more widely used than EPC Gen 2), real-time locating system (RTLS) tags, and other standard and proprietary systems that operate at other frequencies. Industry and international standards have been set to help optimize performance in various usage conditions. Here's a brief overview of the leading RFID technologies used in enterprise operations.

  • Low-frequency RFID systems operate at about 125 kHz with a typical maximum read range of up to 20 inches (508 mm). Low-frequency RFID is not supported by on-demand smart label printing encoding systems and is commonly used for access control applications, including vehicle tagging to activate parking lot gates.
  • High-frequency RFID systems operate at 13.56 MHz with a typical maximum read range of up to 3 feet (1 meter). It is commonly used for item identification and asset management at short range where high precision is required. Typical applications include file tracking, shelf management, tool crib check-in/checkout and sample identification. 13.56 MHz reader modules are popular for integration into machines used for sorting, dispensing, testing and industrial process control. Such a system eliminates the need for manual configuration and the possibility of operator error.
  • Ultrahigh-frequency RFID systems operate at multiple frequencies, typically between 860 and 960 MHz. EPCglobal Gen 2 is a leading standardized UHF protocol. UHF tags often produce read ranges of 20 feet (6 meters) or more, which is why they are popular for supply chain processes such as shipping and receiving, container management and warehouse inventory control.
  • RTLS technology has been developed and standardized at different frequencies, including 433 MHz and 2.45 GHz systems. RTLS is a long-range technology used to track the location of forklifts in distribution centers, parts bins in factories, cargo containers in yards, and other high-value assets. RTLS is one of the fastest-growing segments of the RFID industry, in part because there are many well-documented business improvement results for RTLS asset management systems.
  • Multiple RFID technologies can be used together in some systems to support different process needs. For example, forklifts in a warehouse may be tracked with RTLS tags, while the pallets they handle are tagged with Gen 2 smart labels, and the goods within the pallets may be individually tagged with standardized 13.56 MHz technology. When not constrained by compliance requirements, organizations can choose RFID products with the frequency, range, memory, re-writeability, security and other features that work best in their specific processes.

Proven Process Improvement and ROI

Many closed-loop RFID applications provide full and fast ROI because users have the flexibility to choose technology and tailor processes to solve specific business problems. Operations where data recording creates a bottleneck, or is often erroneous or incomplete, are prime candidates for improvement with RFID. The real value of RFID technology lies in its flexibility and adaptability in a wide variety of processes and environments. For many closed-loop RFID adopters, the results have been greater accuracy, efficiency, and productivity, and reduced costs.

Steve Park is vice president and general manager of RFID operations for Zebra Technologies, a global leader in specialty printing and automatic identification solutions. www.zebra.com

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