radio frequency identification
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http://www.slideshare.net/CPappasOnline/radio-frequency-identificationThe goal of supply chain management is to increase organizational effectiveness through the coordination of activities among suppliers, manufacturers, distribution centers, and customers. Technology evolution in the latest years has significantly contributed towards this direction. The implementation of systems such as ERP, SAP, RFID, etc., makes the production and distribution of the products more accurate and efficient. Through technology implementation, the parties of the supply chain manage to accomplish the production and distribution of the right product, at the right time, to the right location, at the minimum cost while sustaining a certain level of quality (Ramsay, n.d.).This paper will explain what exactly the RFID system is and how it works. Moreover, the steps a company should follow in order to effectively implement RFID technology will be discussed. The advantages and the disadvantages of this technology will also be presented. Finally, three real life case studies regarding RFID implementation will be analyzed. www.christopher-pappas.comTRANSCRIPT
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Part One
Introduction
The goal of supply chain management is to increase organizational effectiveness through
the coordination of activities among suppliers, manufacturers, distribution centers, and
customers. Technology evolution in the latest years has significantly contributed towards this
direction. The implementation of systems such as ERP, SAP, RFID, etc., makes the production
and distribution of the products more accurate and efficient. Through technology
implementation, the parties of the supply chain manage to accomplish the production and
distribution of the right product, at the right time, to the right location, at the minimum cost while
sustaining a certain level of quality (Ramsay, n.d.).
This paper will explain what exactly the RFID system is and how it works. Moreover, the
steps a company should follow in order to effectively implement RFID technology will be
discussed. The advantages and the disadvantages of this technology will also be presented.
Finally, three real life case studies regarding RFID implementation will be analyzed.
RFID
RFID stands for Radio Frequency Identification and is an example of automatic
identification technologies. Based on the RFID Journal glossary of terms (2009), automatic
identification technologies such as barcodes, biometrics, voice recognition, and RFID are able to
collect and then enter the necessary data into computers automatically without human
intervention. Specifically, RFID uses radio waves in order to wirelessly transfer the identity of
either an object or a person. The identity for each item or person is unique and is in the form of a
serial number (“What is RFID?”). The purpose of RFID system is to transfer data and provide
information regarding the location of a product, its price, its date of purchase, and, in case of a
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human being, personal information. In the following paragraphs it will be discussed in further
detail how this system works, its advantages, and its drawbacks.
Typical RFID tags consist of tiny computer chips, called microchips, which are placed on
the package of the product. Microchips storage capacity is 2 kilobytes, or less, of data regarding
current location of the product, date of shipment, date of manufacture, destination point, etc.
These microchips are surrounded and connected with an antenna which absorbs the
electromagnetic energy when reader devices scan them. Hence, in order to access the data stored
in the microchips, a reader and a computer system are necessary. The reader is an electronic
device which consists of one or more antennas that can transmit radio waves to the microchips
and then receive back the identification number and the other information stored in the
microchip. Finally, the reader sends the information in digital form to a computer system (“What
is RFID?”). These microchips can send information to reader devices that are up to 30 feet away
or more (Albrecht, n.d.).
RFID has been used for more than one decade by thousands of companies. Initially, due
to its high cost, its usage was limited. RFID cost was bearable in just in time manufacturing
companies where tracking a high volume of products is essential and contributes to the system’s
profitability, and in cases where RFID tags could be reused. The cost was approximately one
dollar per tag. Hence, in open supply chains the cost of RFID was not sustainable (“What is
RFID?”). Nowadays, RFID tags cost from 20 to 40 cents, but research is being made in order to
reduce the cost to 5 cents. The lower cost attracted many companies such as Wal-Mart, Tesco,
and Metro to implement RFID technology. RFID tags are placed on the products a company
owns and then supply chain partners get the information they need via the internet through a
secure network. In addition, the U.S. Department of Defense inserts RFID tags in U.S passports
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for identification and safety reasons. The reading distance for the tags placed on passports is
about 30 feet.
Companies that specialize in technology related to supply chain management conducted
studies about the successful RFID implementation. Some companies assert that there are
fourteen steps for successful implementation, while others assert twelve or ten. Regardless of the
number, these companies highlight the following steps. These steps will be further analyzed in
this section.
1. Training: As in every innovative implementation the first step is training. Engineers,
managers, mechanics, and every employee whose job requirements are affected by RFID
should be appropriately trained. Training should be adjusted to employees’ job duties.
For example, operations managers should be able to answer questions such as: “Should
linear or circular polarized antennas be used?” and “What is the difference between
passive backscatter and inductive-coupling?” On the other hand, financial managers
should focus on cost, savings, return on investment, etc. (Sirico, n.d.).
2. Team creation and operations/system analysis: A company should create teams that will
focus on the design, process, and evaluation of the project, and the planning and
development of a strategic plan regarding the implementation of RFID technology. The
team should identify the needs the company has. In other words, the team can identify the
inefficiencies the company wants to eliminate through technology implementation and
the goal of this implementation.
3. Radio frequency product profiling and tag/ reader/ equipment selection: In this phase
using the appropriate software and other means, the company should determine which
needs should be covered by which characteristics of RFID products. In other words, the
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company should determine which RFID product features will better fit with the
company’s and the supply chain’s needs. For example, passive RFID or active RFID
should be chosen (“Twelve steps to successful RFID implementation”). Moreover, the
selection of tag, reader, and peripheral products is essential for the efficiency of the RFID
system. Therefore, the selection should be done after a detailed analysis of the special
needs of the company and of the whole supply chain. For example, some significant
criteria for the readers’ selection may be their distance ability to transmit and receive
data, the amount of tags they can scan per second, etc. Significant criteria for the
selection of the tag may be the required read range, the read/write capability, the weather
conditions, etc. (“RFID tag and antenna services”).
4. Infrastructure and controls: Though changes and/or adjustments in the infrastructure are
required, consistency should be ensured. Control is needed to ensure the proper
integration (“Twelve steps to successful RFID implementation”).
5. Implementation: After the training has been successfully completed, the operations
analysis has been conducted, and the selection of the RFID products has been
accomplished, it is time to integrate the outputs of the above steps in order to make the
system work.
6. Validation: Criteria for the effectiveness and productivity of RFID implementation
should be set. Once the system has been installed and has been working, its effectiveness
and success needs to be measured.
7. Local and remote data management: Internal management systems, as well as
information technology systems such as ERP and WMS, are useful tools to facilitate
control and provide real time feedback. By receiving, filtering, and evaluating data,
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managers will evaluate the effectiveness of the system in order to be able to make
additional changes, readjustments, etc.
8. 24 x 7 x 365 support: Round the clock support is essential for the effectiveness of the
system since transportation and logistics services are non-stop operations (“Twelve steps
to successful RFID implementation”).
9. ROI, operational verification and refactoring: When a company decides to make a new
investment, its main goal is to increase its ROI. In other words, the company needs to
verify if the investment is adding value and if the investment has helped the business to
achieve its objectives. In addition, the company needs to implement a non-stop system of
monitoring and collecting data. Using the collected data, managers will stay up-to-date
and will be aware of inefficiencies, delays, etc. Changes and improvements are essential
for the long-term acceptance and benefit of the system. Nowadays, technology changes
rapidly and if a company wants to be effective and competitive, it needs to stay up to date
and make the necessary adjustments, changes and improvements.
RFID Advantages
RFID technology has many advantages and in some cases it is more efficient than other
automatic identification technologies. For example, with RFID technology, unlike barcodes,
there is no need for a person to scan the tag since this can be done automatically. Moreover, with
RFID technology, each particular item of product has its own identification code while barcodes
are the same for the whole branch of a product. To illustrate, all Coca-Cola cans have the same
bar code, for example, a can in Ohio has the same code as a can in Florida. On the contrary, with
RFID each can has its own identification code. Hence, a supply chain partner knows the exact
location of a specific can. In addition, reader devices can access the information on the RFID
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tags from a big distance and regardless of the weather conditions. For instance, reader devices
can scan a product from a distance of 30 feet to 300 feet away, even under rain or snow
conditions. Furthermore, RFID readers are much faster than barcode readers. RFID codes are
better protected since they are rugged and electronic parts are covered by plastics, unlike
barcodes that are printed in the package of the product and sometimes the code can be
deteriorated. One more advantage of RFID is that information on the chip may change since
information can be added or deleted, based on the needs. Barcodes do not offer this alternative
(“Advantages of RFID versus Barcodes”). Later on, the paper will particularly focus on the
benefits of RFID technology in the companies’ and supply chains’ efficiency.
Part Two
Case Studies
The number of companies that take advantage of RFID systems continuously increase. In
fact, not only companies such as Wal-Mart, Dell, Levi Straus and Co., and Gillette implement
RFID technologies, but also hospitals and governments. In hospitals it is used primarily to track
patients, doctors, and expensive equipment in real time, control the pharmacy inventory, etc.
(Carr, A., Zhang, M., Klopping, I., Min, H., n.d.). Governments use this system mostly for
military, identification, and security reasons. In the following paragraphs, the RFID
implementation by three different companies will be discussed.
Case Study One: Perfecting Just-In-Time Production
Johnson Controls business manufactures car and truck seats for big automakers such as
General Motors, Toyota, Ford Motor Co., and Daimler Chrysler (Collins, 2003). The company’s
mission is to deliver to automakers what they want, when they want it. For example, Johnson
Controls’ plant, Livermore, ships approximately 1,500 seats daily doing more than 20 deliveries
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per day, to the New United Motor Manufacturers (NUMMI) production plant, which
manufactures Toyota and General Motors cars. The manufacturing process in the auto industry is
based on an assembly line; hence, even a little mistake in the features of a seat or in the type of
the seat will cause the car manufacturing plant to be interrupted for several hours. Thus, the
productivity will be reduced and the cost will be increased.
The implementation of an ID system is required in this case. Managers at Johnson
Controls initially thought of implementing a barcode system. This implementation would be
inefficient since due to the manufacturing process there is a high possibility that the labels would
get dirty and/or damaged. Hence, the barcodes would not be able to be read at all, or they could
be misread. RFID is the best solution, since its tags are protected by hard plastic covers. The
advantages gained from the implementation of RFID are discussed in the following paragraph.
For both parts, Johnson Controls and the auto industry, accuracy is of great importance.
Through the implementation of an RFID system, accuracy rate for Johnson Controls is 99.9%.
RFID makes possible for the supplier to deliver the correct number and type of seat in the exact
order demand. Moreover, the process of producing the range of seat has been smoothed and
human errors have been eliminated. At the same time, the supplier is able to meet the demander’s
requirements for just-in-time services and supplier receives seat orders every hour. The orders
consist of a list of serial numbers that assigns the quantity of the seats, the type of the seats, and
the exact sequence which seats should follow in order to directly enter the production line as
soon as they arrive at the car manufacture. In addition, the RFID implementation provided time
saving and flexibility not only for the seat production function, but for the car industry as well.
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Case Study Two: Logistics Gets Cheaper by the Yard
NYK Logistics is a company which is responsible for the shipment and distribution of a high
volume and variety of products including consumer and industrial goods, software, food and
beverages, etc. (Maselli, 2003). NYK Logistics serves approximately 1,000 companies globally.
The distribution center at Long Beach, California, manages approximately 50,000 inbound
freight containers and 30,000 outbound trailers per year. NYK Logistics used to track its
containers and coordinate its activities manually. To be more specific, when a truck arrived in
the yard, an employee needed to manually enter information regarding the truck and its cargo,
including where the truck should park, drop the cargo and then pick up another cargo for the next
shipment. However, if a parking spot was occupied by another truck, the truck had to be
relocated based on the driver’s free will. Hence, employees on the gate had no accurate
information on where trucks were located. The situation was even worse during peak seasons,
even though the company was hiring seasonal employees. The consequence of the above was a
number of organizational problems that led to inefficiencies and delays. Therefore, the company
decided to implement RFID technology.
After the implementation of an RFID system, the NYK Logistics is able to know the exact
location of every truck and every container in the yard. The company is able to monitor 1,100
parking spots and 250 dock doors in real time, 24/07. The employee at the gate scans the license
of the driver as he enters the yard. Then, a tag is attached to the cargo; hence, the yard operators
can locate the cargo at any time. Next, the system prints a ticket to the driver giving him
direction on where to park, drop the cargo, and pick up the cargo for next shipment. If, despite
the directions given, the driver parks in another location, the system will recognize that and it
will be updated automatically, assigning the new empty spots for the next drivers. At the same
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time, NYK Logistics monitors the driver’s behavior, and if he systematically does not follow the
exact parking directions, he will be charged. As the driver exits the yard, the tag is removed and
it can be reused. After RFID implementation, the above procedure eliminated the check-in time
by half. Moreover, the new system has been integrated with the company’s system, which is a
custom database that provides information regarding distributor, content of the container, and
shipping notices. Pople, NYK Logistics’ manager, mentions that “Not only do we know the
name and the identity of the unit, we also know its DNA. We can see the yard and the
containers”(p. 2). Other than the previously mentioned information the system provides, it also
gives a list to the supply partners regarding the carrier costs. Based on the list, the system will
suggest the least expensive available carrier first and will suggest the most expensive only when
no other carrier is available. In this way, the supply chain partners reduce their shipping costs.
The advantages of the RFID system implementation for both NYK Logistics and its supply
chain are significant. NYK Logistics has cut its costs and has increased its operational efficiency.
The time a trailer spends in the yard has been decreased by 20 to 40 percent; hence, the supply
chain average turn time has decreased, increasing efficiency. The average turn time in the yard
used to be 10 hours, but after RFID implementation the average turn time is usually 6 hours and
sometimes can reach 8 hours. The two hour decrease on the average turn time means that there
are 35 to 60 parking spaces saved. The fact that the yard is well organized improves the speed of
the operations, thus NYK Logistics and the whole supply chain save money. Moreover, the time
spent for tracking containers has also been decreased and the possibility of making mistakes in
the container selection has been significantly eliminated even during peak seasons. In addition,
employees’ productivity has been increased and the company does not need to hire seasonal
personnel during the busiest seasons anymore. One of the most important advantages of the
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system is that it has been integrated with the customer’s system; hence, the communication with
its carriers and the other logistics partners has been improved. The system sends e-mails to all
the relevant parties to inform them about the shipments and the containers. Every day three
emails are sent automatically to the relevant parties. Another significant advantage of the system
is that the company and its partners have reduced its detention fees levied by the shippers.
Shippers can charge detention fees if empty containers are not on time at the dock. The system
provides the company and its partner with the following information: what is inside the trailer,
which containers are empty, which dock doors have trailers, how long the trailers stay at the
docks, which containers are “hot loads”, or of high priority, etc. Since the supply chain partners
have this information, they can manage better the flow of trailers and containers. Further, since
the transactions have all been made automatically, it is easier and more accurate for NYK
Logistics to measure its ROI and keep track of its financial transactions.
Case Study Three: Boeing Finds the Right Stuff
Boeing Wichita is a facility that has the size of a small city. In this facility, the building
of commercial airplanes takes place (Anderson, 2003). There, Boeing’s employees design,
fabricate, and assemble fuselage structures, struts, and engine parts for the majority of Boeing’s
commercial jetliners. The Military Development and Modification Center also operates in the
same facility. Overall, this plant employs approximately 15,000. Each one of them, in order to
successfully accomplish his/her job mission, needs to have the right tools or parts, at the right
time. Employees work in a highly complex environment since each plane consists of tens of
thousands of parts that should be assembled in a well organized process. Every flow of the parts
should be followed by a flow of the necessary documents. Moreover, each part has to be tracked
separately based on the aviation regulations. Losing track of a part means that the production will
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be delayed. As a consequence, the company needed a system for tracking parts and their
documents as they move through the plant.
It is of great importance for Boeing to be able to track transportation vehicles, material
handling equipment and other assets located in the plant. At the same time, keeping track of the
paperwork that accompanies the parts as they move through the production process is also
essential. For the successful completion of this project, two different teams were created. The
teams had to perform research and face challenges not only prior the implementation, but also
through the implementation. For example, some pilots didn’t perform as advertised and had to
shut down. Due to the numerous challenges and the complexity of the project, the teams gave
priority on implementing a system for tracking the paper work of work in process. Later on, the
company will implement an asset tracking system.
As previously mentioned, tracking paperwork is just as important as tracking assets.
Documents that accompany parts include information such as Boeing’s certification of the parts,
Federal Aviation Administration requirements, quality assurance information, etc. All these
documents are put inside a plastic pouch and follow the flow of the parts. The system can read
the tag from a distance of 20 feet regardless of the orientation of the tag. Terry Alderson, the VP
of Aerospace and Government at Boeing, explains how this system works: “the RFID supplier
writes a serial number into each tag at the factory. The supplier attaches a tag to the Boeing
purchase order and then sends us an advance shipping notice over the Internet and lets us know
the serial numbers associated with the parts. That information is stored in our database. When the
supplier delivers the parts, they are scanned automatically as they come into our receiving area.
The system matches the parts to the purchase order and confirms that the company got all the
items ordered. The system also sends information to all of our enterprise resource planning
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(ERP) and legacy systems.” (p.3) In addition, the company had to deal with the integration of the
data from the readers with backend software applications. The data needed to be formatted in
order to be sent to the legacy systems. This procedure was the most time consuming process of
the project.
Though there were challenges, after the systems implementation there is 99% accuracy
on the tag readings. Moreover, Boeing labor costs have been decreased. Line managers have
become more efficient since their job is less complex now. Further, all managers have immediate
access to the information they need in order to perform their duties. Since the system is efficient,
the company added more shops to the tracking process. Boeing is willing to implement a system
in order to track “on-load” work.
As it was previously mentioned, in the facility there is also the Military Development and
Modification Center. Boeing decided to install 20 RFID readers in that part of the facility in
order to track certified tools in two large hangers. Each tool is being tagged so employees can
check through the computer where tools are located in the facility. This system is going to
expand so it can also track assets.
Disadvantages of RFID
In the previous paragraphs, we discussed in detail the advantages of RFID technology as
well as the benefits companies and their supply chain gain from RFID implementation. However,
RFID system is not perfect and has some drawbacks. First, RFID technology has a high cost
mostly related to the cost of tags, but also to other components, software and support personnel.
Therefore, many companies cannot afford to make such an investment. Tag producers try to drop
the cost per tag to 5 cents, so it would become easier for many companies to implement RFID.
Second, there are some technical drawbacks. For instance, passive tags (tags that have no on
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board power and they draw power from a reader) cannot be read near metal or liquid, since metal
tends to reflect the RFID waves and liquids tend to absorb the RFID waves. Moreover, when
many tags are being read simultaneously, collisions may occur (“RFID frequently asked
questions,” 2004). Another technical issue is that tags may be damaged by static discharge or
high power magnetic surges (“Advantages and disadvantages of RFID”). Finally, there are some
social concerns. Consumers worry that privacy issues arise from RFID implementation
(Farragher, 2004). For instance, Benetton’s and Gillette’s customers protested against RFID
implementation on these brands’ products. Using slogans like “I would rather grow a beard” or
“I‘d rather go naked,” consumers were calling people to boycott these products. They claimed
that through RFID-delivered data, their individual item purchases can be monitored, and then the
customers can be subject to spam advertisements. In order to avoid misunderstandings with
customers, many American and European countries implement RFID technologies only at
warehouses and “back end” operations and not at the retail or “shelf” level. Though there were
some concerns whether RFID technology is dangerous for health, RFID specialists verify that
RFID waves are similar to AM and FM types of signals; hence, they are not harmful (“RFID
frequently asked questions,” 2004).
Conclusion
To sum up, RFID which stands for Radio Frequency Identification is a system that
consists of tags, antennas, reader devices and computers. RFID is used by business, hospitals,
governments, etc., in order to wirelessly transfer data regarding the identity of an object or a
person. RFID is superior to other automatic identifications such as barcodes. The basic
advantages of this system is that there is no need for a person to scan the tags, each item of a
product has its own identification code, reader devices can access the information on the RFID
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tags from a big distance, RFID readers are fast enough, and RFID chips are rewritable. The most
important drawbacks of the system are its cost and the fact that RFID passive tags tend to reflect
waves when they are near metals and tend to absorb waves when they are near liquids. In
addition, static discharge or high power magnetic surges may damage the tags. Further, when an
increased number of tags are being read simultaneously, collisions may occur. Despite these
disadvantages, companies that implemented RFID support that they have increased their ROI
and their profits. Moreover, they have become more efficient as they save both money and time.
Research shows that RFID sales for supply chain will be increasing by 38% annually (Carr, A.,
Zhang, M., Klopping, I., Min, H., n.d.).
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Appendix
RFID Tag
Source: http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=34100
RFID Chip
Source: http://www.epnonline.com/lib/image.php?uri=/content/USER/scope/.bin.WEB.1199881566722.jpg
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RFID Handheld Reader
Source: http://www.gaotek.com/index.php?main_page=product_info&products_id=1449
RFID Reader
Source: http://farm1.static.flickr.com/48/151316853_86048a468c.jpg
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RFID at Gillette Packages
Source: www.indymedia.org/en/feature/archive45.shtml
RFID at Passports
Source: http://infosecurity.us/images/rfid_passport.jpg
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