As the progressive implementation of NICTs takes place, there is a prejudice that the law of the market dictates that there are no intermediate steps if you want to be competitive.
RFID is associated with pilot projects by large firms with multi-million dollar R&D budgets. However, today, it can be the lever for a company to take a leap forward in warehouse management, without the need for such a solution to be integrated into its supply chain or imposed by its customer. This is the case of an industrial company, leader in its market segment and one of whose plants assembles products with metal and electronic components for use in buildings and homes, whose RFID implementation project in its chaotic warehouse was carried out by an AMIPEM consultancy.
The implementation of an RFID solution for this client was motivated by its significant growth in the last two years and by the interesting expectations for the future. Despite its high specialisation, the assembly of such articles is complex because the 250 finished product references are created from the assembly of some 2,400 references, all of which are small in size: the finished product does not exceed 50 centimetres in length or width in any case. This means that at the time of storing the primary references (before assembly), several references can be placed in the same storage space. Packages with references are placed on metal shelves without specific spaces for them. Once the production order has been placed, the operators of the primary product warehouse (2,400 references and 500 square metres with shelving at four levels) take the references to the assembly plant, from where they go to the finished product warehouse (250 references in 500 square metres on two floors).
These facilities (warehouses and assembly plant) are within the same building, so their physical interconnectivity is very easy. From the finished product warehouse, the products are sent to the company’s distributors, never to the end customer. Due to the company’s production processes, warehouse management was chaotic, using a WMS developed exclusively for the company, and with the control of the supply chain in a simple spreadsheet where the references and their location were listed. Likewise, the identification of gaps was carried out by means of printed cards, incorporated into a magnetic support attached to the metal shelving.
This warehouse management and reference control was effective for many years. However, due to the significant growth the company was experiencing, it was already proving to be clearly insufficient and many mismatches were occurring in its supply chain, as it too often took a long time to find the parts required for assembly. Therefore, management concluded that the support required for this organic growth was not so much to increase the size of its facilities and workforce, but to improve its existing management model.
Among the problems faced by the plant’s work team, three main ones stand out:
1. The permanent or temporary loss of components: “In the primary product warehouse, there was no objective tool for locating them in time, so the success of this search was linked to the experience and working memory of the employees. This factor, in a daily work operation that required working faster and faster with more and more parts for an increasing amount of finished product, was a hindrance to providing the right service to the customer”.
2. As a result of the previous point, there were inefficiencies in the preparation of the batches of parts needed to meet production orders, with the consequent delays in the assembly line.
3. This led to a significant loss of productivity and “poor internal communication between work teams, as the search for parts depended on the memory and experience of each employee, it was easy to subjectivism the assignment of responsibilities in the event of stoppages in the supply of parts to the assembly plant.
In reality, the spreadsheet was still effective, because through the parts accounting statements, the consumption of parts and where stock-outs were occurring were known: “The key was that it did not have the speed that the daily operations were demanding”.
When the clients came to the consultancy firm, there was no clear idea of what means to use to improve the situation, they just wanted a solution that would give medium and long-term performance: “After studying the warehouse, the company’s situation, its needs and critical factors, as well as the client’s expectations, we decided to develop a customised RFID application that could have potential upstream (suppliers) and downstream (distributors)”.
This project had the following objectives:
1. The implementation of an easy-to-implement system that would not mean having to do without the rest of the management and control applications that the company had until then: “We had to avoid by all means an implementation process that would paralyse, for a more or less long period of time, the company’s activity. Moreover, what was required was not a technology with revolutionary applications, but one that would speed up the control and search for items in the raw materials and finished product warehouses”.
2. Improvement of the input and output processes of finished product and raw materials and of internal movements.
3. Real-time inventory control.
4. Provision of a reliable history for the company’s management.
5. Traceability of raw materials and finished products, in order to identify the origin of possible defective parts.
To provide warehouse managers and operators with a technological tool that would not only improve their daily work, but would also be reliable and easy to use.
“At no point was it intended to have any impact upstream or downstream, although it was, of course, designed with a view to the company being ready for the application of RFID throughout its supply chain”.
The elements involved in the development of this project were:
• Passive RFID tags (no power supply required), rewritable and operating in a frequency band of 13.56 MHz. These tags are coated with highly resistant capsules, “due to the nature of the work in the warehouse, which has no type of automation, and in which many sudden movements are made. For this reason, the tags have to be protected to ensure their useful life: 10 years. Another of the conditioning factors in the design of these tags is that this project is an isolated solution within the item’s supply chain: they are microchips that will not leave the warehouse and will always be reused. In this way, the tags assigned to gaps in the shelves remain fixed on the shelves. In the case of packaging, the tags are continuously retrieved and recycled as they are used in the assembly plant to identify the part numbers or finished product that is shipped to your customers.
• Allocation of RFID identification tags: on the one hand, in each shelf slot, and on the other hand, on each packaging with raw material references.
• Software that establishes an operative relationship between the identification tags of the gaps and those of the references in the packaging and that allows these data to be migrated to the warehouse WMS.
• Operational management of the warehouse through portable terminals (PDAs) connected to a wireless router* with the capacity to transmit and receive data by radio frequency. These PDAs are equipped with an HF (high frequency) antenna/reader with the capacity to read tags up to a distance of 10 cm. This small distance is necessary to prevent the PDA from making erroneous readings from other microchips. It also has a computer application for programming and managing the information contained on the microchip: “When an order with several primary parts is received at the warehouse reception, the warehouse operator registers them on the PDA and stores them in a package with a tag, which is registered by the device. Then, following the instructions of the device, the operator places this packaging in a shelf space and registers its location by passing the PDA reader over the tag. These two pieces of information – references on the packaging and its location on the shelf – contained in the portable device, are transmitted to the WMS. In this way, when the operator has to look for primary references, he writes them down on the PDA and the PDA tells him where to find them. Once the parts have been removed, they are deleted from the system. Another point is the preparation of finished product shipments. The operator registers on his device the references that are in that order, places them in a package, which is placed in a hole in the finished product warehouse, repeating the operation so that his portable terminal reads the signal emitted by the microchip in that location so that the data is crossed and sent to the WMS, also deregistering this data when it is withdrawn. All this means that the system automatically records the inputs and outputs of items in the warehouse, as well as their location and internal movements”.
The implemented RFID technology has two management applications. One is intended for the company’s central information system and is connected to a database server for execution on workstations with no special requirements. The main menu of this application is structured in three areas: entry orders, queries and movements, the latter being able to create, delete, modify and search for areas or references in the database.
The second application refers to the portable terminals used in the warehouse. Its functionalities correspond to those of the daily operations, analysed in the process prior to the implementation of the project. The PDA screen menu manages the following aspects:
• Assignment of tags to the slots and to the boxes or logistical units.
• The inputs that arrive from the different options (suppliers, production, external jobs, etc…).
• The outputs that are produced (external works, customers, scrap, etc…).
• The internal movements.
• The location of the references.
• Inventory adjustments.
• Consults, including those corresponding to inventory or the content associated with a tag.
So that operators can make the most of the possibilities offered by the PDA, the application has been developed in a very intuitive and easy-to-operate way, with simple screens, drop-down menus and graphic elements for visual management (such as, for example, a traffic light).
One of the elements that have favoured the success of this project has been the involvement of the operators. Even though their knowledge of NICTs was practically nil. On the other hand, they had already experienced the internal tensions between teams due to the loss of parts and the associated delays, not to mention those resulting from any new application of ICTs.
the tensions arising from any new technological application and its impact on their work. From the outset, it was clear that the aim was to improve their performance and thus avoid unnecessary staff expansions, not to cut staff. This system was conceived from the outset as a tool that had to be used by the warehouse team to facilitate their work, so their prior IT knowledge could not be a significant element. With these requirements that could be applied to the new management system, the training period on the new technology was straightforward: a total of three weeks were spent part-time on training and coaching the employees and they were able to come up with improvement solutions related to their experience in daily operations.
One of the main conclusions has been the applicability of RFID to make a big technological leap within a small company, “without the need of having to make a clean sweep of its corporate culture or changing its staff structure”. In addition, not only have the initial objectives been met, but other improvements have been achieved, among them:
1. Increased productivity, derived from the reduction of time in the search for components. This has resulted in a clear improvement in the supply to production.
2. Real-time inventory control. This has made it easier to check the availability of raw materials.
3. Objectification of processes: “This has been fundamental, as the memory of inventories and locations is in the systems and no longer depends on the human factor”.
Many will be struck by the fact that no mention is made of improving customer service by finding complementary products to the one ordered in case it is not in stock. The type of market targeted by this manufacturer means that the distributor has a very clear idea of what product is required and cannot seek complementary products. It is this element that has led the company to integrate the incoming and outgoing warehouses and the production plant in the same installation”.
Another important element is the ROI: “The return on the investment made is expected to be made within a year of the project being fully operational”.