RFID Strategy -- Best Practices -- RFID And Indirect Materials

Nov. 6, 2006
Crown Equipment Co. finds a quick ROI.

It is clear to see how RFID can change the face of logistics, but seeing it work in your manufacturing operation is often a bit blurry. Crown Equipment, the makers of electric lift trucks in the U.S., is no stranger to innovation and implementing RFID has been no exception. In January 2006 Crown installed their first CribMaster Accu-Port, designed to manage indirect material. With this technology, Crown envisioned their employees simply walking into a tool crib or store room, picking up their supplies and getting back to work without sacrificing inventory management, tracking and proper replenishment. This vision became a reality. In fact, it has been such a success that they have reduced their daily average indirect material usage by 21.65% and received a ROI on the Accu-Port in under four months.

But how did they do it? RFID is great conceptually, but it has some obstacles. In particular, tagging and costs. Passive Gen2 tags cannot be applied directly to metal or be read through liquids, which are great setbacks for many operations. Let's face it, metal and liquids make up the large percentage of the indirect material in most operations. Tools, MRO items and janitorial supplies are examples of indirect material in which you would have a tagging challenge. Crown discovered the trick: tag the packaging, not the product. Crown implemented a system where items are placed in bags with the corresponding label and RFID tag. A great advantage here is once a worker takes their item and walks out of the crib, they simply remove it from the bag, place it in a 'mailbox' and that packaging can be used again and again. This not only minimizes the cost of tags, but also reduces the effort of restocking.

Another great benefit of this tagging concept is that the packaging is used over and over again. At this point, RFID tags can cost anywhere between 30¢ and 60¢. Recycling these reprogrammable tags is a great cost reduction. Perhaps more importantly, these bags can save time and money on restocking. Because they do not have to be repackaged, the employee simply refills the bags and take as many as 30 items back into the crib at a time. Here, all thirty are recorded and assigned to the tag instantly. This process reduces restocking time and allows Crown employees to focus on other aspects of their indirect supply chain.

With so many items in this tool crib, it was critical that time was not wasted searching for products. Crown came up with a coordinate system, much like the game Battleship, where employees can look on a sheet to find their item's coordinates, then simply walk up to Row B Column 4 and remove their item from the wall. Then, if for any reason the crib needs to be moved, the walls can be taken apart, shrink-wrapped, and moved with all products still attached. The dismantling and reassembly can be completed in one day. It doesn't get much easier than that.

The continuous improvements with RFID and indirect materials are endless. Of course there will be new indirect material point-of-use products built with RFID, but in the future, RFID is expected to be used to track hazardous materials as well. Then, as prices continue to drop and the technology gains more ground, WinWare, Inc.'s president Larry Harper predicts that industrial distributors will package their items with RFID tags before shipping off to their end-users, helping to streamline the indirect material supply chain. Ultimately, this is expected to reach back to the manufacturing level, where all products will be embedded with RFID from their origination.

WinWare Inc. creates enterprise-wide systems that manage tools and indirect material in the manufacturing environment. WinWare provoides software and hardware solutions, including RFID. www.CribMaster.com.

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