RFID in Manufacturing - Pharmaceutical Manufacturing

RFID in Manufacturing
A practical guide on extracting measurable
value from RFID implementations in plant
and warehousing operations
RFID in Manufacturing
Executive Summary
Wal-Mart, the world’s largest retailer, announced in June 2003 that its top 100 suppliers
would be required by January 2005 to put Radio-Frequency Identification (RFID) tags on
cases and palettes of consumer goods shipped to Wal-Mart distribution centers and stores.
The consequence? RFID sensor technology has been given its first broad, real-world test,
prompting Wal-Mart suppliers and competitors to learn about this wireless technology,
which enables companies to automatically identify and track items in the supply chain.
While Wal-Mart’s mandate compels RFID awareness, it really is already a global
phenomenon, with applications outside of commercial retail. Global companies such as
Tesco, Marks and Spencer, Nokia and others are implementing certain aspects of RFID.
Several industry groups are driving their own requirements, affecting manufacturers and
suppliers alike.
The potential impact of such requirements on manufacturers could be even bigger than that
of Wal-Mart initiatives. The U.S. Department of Defense (DOD) met with over 200 of its
suppliers to explain its RFID strategy. And it’s not just about goods; the U.S. Department
of Homeland Security recently showed how RFID technology can speed the movement of
people across borders while reducing the threat of terrorism.
Across industry, companies with
better demand forecast accuracy
also have 15% less inventory,
17% better perfect order ratings,
and 35% shorter cash-to-cash
cycle times than their peers…
(AMR Research Report
“The Hierarchy of Supply Chain
Metrics: Diagnosing Your Supply
Chain Health,” February 2004).
The potential benefits to large suppliers of deploying RFID on a wide scale across the supply
network are now well documented. Precise, real-time forecasting yields tangible benefits in
supply chain performance. Across industry, companies with better demand forecast accuracy
also have 15% less inventory, 17% better perfect order ratings, and 35% shorter cash-tocash cycle times than their peers, AMR Research's benchmarking studies show (see the
AMR Research Report “The Hierarchy of Supply Chain Metrics: Diagnosing Your Supply
Chain Health,” February 2004). But do these companies also lead their industries in bottomline financial and market performance? Based on the leading manufacturers that make up
AMR Research's Consumer Products benchmarking group, the answer appears to be “yes.”
(AMR Research Report “The Hierarchy of Supply Chain Metrics: Diagnosing Your Supply
Chain Health,”February 2004).
Several vendors in peripheral, related industries have geared up to help manufacturers and
retailers comply with the challenge of meeting RFID regulations and mandates. In conjunction,
global software suppliers such as Oracle, SAP, Microsoft and IBM are all accelerating efforts
to meet the RFID challenge. Business consulting services firms are helping customers with
business performance issues related to supply chain network integration and changes in
customer management, or front- and back-office business processes impacted by RFID.
IT services organizations in particular are creating specialized packages to develop the
software that their clients will need to link their RFID networks to existing enterprise systems.
IT specialists are focusing on addressing the complexities arising in applications, event
management, product directory services, networks, and RFID equipment.
RFID in Manufacturing
But what about the impact of RFID on the plant floor?
RFID efforts aimed at inventory visibility across the supply chain are closely tied to the
control systems and execution processes driving production. To fully realize the proposed
benefits of RFID, control systems that drive manufacturing execution need to be modified.
Retooling manufacturing assets, revamping execution strategies, recalibrating plant-level
information systems, and integrating new RFID-enabled manufacturing data to enterprise
systems will be critical for synchronizing the plant floor with the RFID-enabled supply chain.
Since powerful retailers have imposed rigorous mandates and the United States Government
and Department of Defense have developed new RFID regulations, manufacturers and
suppliers often have no other choice but to bear the cost of compliance. For these
manufacturers, the central issue is how to convert the potential of RFID into a business
case that not only is aimed at recovering some of those costs, but also results in a sizeable
return on their investments.
…while slap-and-ship may be
a safe choice in the short term
given companies' questions
about standards, they may well
be gearing up for enterprisewide implementations. Add to
that the expectation that 50
percent of responders were
pursuing AIDC solutions to
improve efficiency, the idea
that companies will primarily
pursue slap-and-ship does
not hold up in the long term.
(RFID Survey Results, AIM Inc.,
Tuesday, August 10, 2004)
In searching for the return on investment, many manufacturers now believe that for them,
the plant floor presents a vast, untapped opportunity for value creation and even strategic
advantage, as RFID moves upstream from the supply chain and into the heart of
manufacturing operations.
By applying RFID technology incrementally across the plant floor, manufacturers can
seamlessly integrate the new information captured by RFID, without disruption, into existing,
proven, industrially hardened control, visualization and information infrastructure, reducing
the need for purchasing new infrastructure or investing in expensive, time-consuming, and
unproven IT integration projects. Existing Manufacturing Execution and Information Systems
can then be updated to deliver robust and reliable real-time information flow to drive
manufacturing execution in tune with the RFID-enabled supply chain. Only by synchronizing
an RFID-enabled plant floor with the RFID-driven supply network will a manufacturer achieve
the true benefits across the supply chain realized from out-of-stock reduction, counterfeit
prevention, efficient inventory management, shrinkage reduction and just-in-time production.
Rockwell Automation's customers can use a four-step methodology developed by the
company to take them from RFID pilot projects to full-scale implementation of RFID,
starting at packaging lines, across plants, and out to the supply chain. The methodology
incrementally integrates and customizes the manufacturer’s existing investments in control
systems, assets, plant management and execution software, and information solutions to
help manufacturers extract value from RFID more quickly and cost-effectively than any other
competing alternative. (This methodology will be discussed further in the section titled:
Rockwell Automation Methodology to Support RFID Initiatives).
RFID in Manufacturing
Even though significant business value can be gained by deploying RFID technology, a
RFID Adoption Lifecycle
and Deployment Strategies: supplier can’t simply slap a smart label – one with an RFID tag embedded in it – on 60 cases
of coffee cans, stack the cases randomly on a pallet, and read every tag as a forklift carries
the pallet through a dock door at five miles per hour.
There are many questions to be answered by both retailers and suppliers. For example,
retailers must figure out sensible solutions for hundreds of products with high liquid content
or that are made of metal. Suppliers may have to follow different compliance requirements
for different retailers, and it’s safe to say that the requirements will change over time, as the
technology matures. Solutions might include using a specific type of tag, placing the tag in a
precise location on the case and arranging the cases in a special configuration on a pallet.
Clearly, the ability to know where every item is in the supply chain and store could save
retailers billions of dollars per year. But companies deploying RFID technology must be
prepared, because the changes will affect virtually everyone in the organization, from the
forklift operator to the head of logistics; however chances are that the IT department will
be most affected.
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.
(RFID Journal, Case Study:
Procter & Gamble)
Fig. 1
(Phase 1 and Phase 2 of RFID
lifecycle adoption, projecting
the rise in implementing RFID
technology into more and more
industry segments as it becomes
practical to apply tags more
specifically.)
Procter & Gamble (P&G), for instance, 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.
According to several industry analyst groups, the RFID adoption lifecycle for manufacturers
progresses from pallet-level tagging to possibly tagging individual products. Full-scale RFID
deployment and its impact on manufacturers, suppliers, and consumers can potentially take
several years depending upon existing and developed technology, and return on investment
projections in the early adoption stage.
RFID in Manufacturing
Leading manufacturers are quickly investigating and adopting RFID initiatives from both
short-term and long-term strategic perspectives. This is being accomplished in a two-phased
approach, summarized as follows:
Phase I: “Slap and Ship” (By January 2005)
This phase predominantly consists of closed-loop piloting activity that is internally
managed through pilot teams consisting of engineering, warehousing, IT and plant
managers. The goals are to:
•
Meet retailer (Wal-Mart) mandate, which impacts post-production, repackaging
processes, and out to supply chain.
•
Identify integration components into supply chain resulting in minimal impact on current
production operations.
•
Selection of a few product SKUs for piloting purposes.
•
Building a broad business case and strategy for broader RFID integration across
the enterprise.
Examples include devising solutions that trace products at the pallet level and matching the
information to a production order. The main issues being surveyed in this phase revolve
around tag validation, error checking, and reliability standards superior to bar code technology.
… once companies made the
initial capital investment, they
found that successive
applications could be deployed
that leveraged the same
infrastructure. Typically, the
recurring costs decreased and
the benefits increased over time
as end users found new ways to
take advantage of the
infrastructure to improve
business processes and
become more responsive to
customers.
(RFID Journal, Unlock the
Business Case for RFID,
Feb. 16, 2004)
Phase II: RFID Deployed As an Integral Part of Operations and to Gain
Strategic Advantage (Post January 2005)
This phase includes tactical and execution plans surrounding increasing levels of integration
of RFID deployment into mainstream business operations. As part of this phase, manufacturers
are asking key questions such as:
•
How far downstream into manufacturing and out into the supply chain should RFID
be implemented?
•
How far upstream and at what level of granularity and into the production process should
RFID be implemented?
•
Which types of standards, software, and integration should be deployed?
The Wal-Mart RFID mandate is significant to all manufacturers because it means its top
suppliers not only have to put tags on pallets and cases, but they must also install RFID
readers in their manufacturing facilities, warehouses, and distribution centers. They, in turn,
can require their suppliers to tag shipments, a requirement that is then passed on throughout
the supply chain.
As more and more suppliers adopt RFID, it will make sense for other companies to take
advantage of the technology, which will eventually drive down the cost of tags and readers
and encourage still more companies to comply.
RFID in Manufacturing
This assertion is supported by leading industry analysts, who now predict that RFID use at
the pallet and case level will increase rapidly due to what economists call the “network
effect,” which means that the more people use a physical network (say, the Internet) or
shared service (like eBay), the more valuable it becomes. That encourages even more people
to use the network, creating exponential growth.
The Big Jump
1,200
1,000
Projected U.S. retail supply chain
spending on RFID
(US$ millions)
800
600
Hardware
400
Software
200
Services
0
2003
2004
2005
2006
2007
A recent report from IDC, entitled, “U.S. RFID for the
Retail Supply Chain Spending Forecast and Analysis,
2003-2008,” focuses only on the retail supply chain
and tries to quantify the impact of Wal-Mart’s
mandate – and to a lesser degree, the U.S.
Department of Defense’s – on RFID sales within the
CPG industry. It also covers retailers that will follow
in Wal-Mart’s footsteps and issue their own tagging
requirements for manufacturers, wholesalers and
logistics providers.
2008
In the study, it is predicted that the bulk of the $1.3
billion spent on RFID will be for hardware, including
RFID tags, readers and antennas, as well as servers to run those readers, and network
equipment to handle the data. The balance will come from spending on middleware and
services related to business consulting, systems integration and maintenance and support.
source: IDC
New manufacturing capacity,
additional retailer mandates,
and the emergence of supply
chain benefits for leading
suppliers will help to drive tag
prices down, but cheap (5 cents
or below) tags won't see the
light of day until at least 2008
to 2010.
(AMR Alert: First Thing Monday
for August 2, 2004)
In February 2004, ABI, a technology market research firm based in Oyster Bay, N.Y.,
announced a study that predicted that by 2007 the amount of spending on RFID integration
services worldwide will exceed spending on RFID hardware. In fact, the study shows that
RFID integration services spending will rise to approximately $580 million in the year 2005
from about $135 million in 2004. Most of these services revolve around ensuring that
information captured by RFID tags and readers would be transformed into action both at
the ERP level as well as at the manufacturing level.
Given such predictions, it is no surprise that the RFID hardware, software, and services
markets are becoming better defined and are on a strong growth track.
RFID in Manufacturing
The Business Value of RFID
According to an IBM Business Consulting Services analysis, the following flowchart outlines
the business value that RFID will bring to corporations:
…it is predicted that the bulk
of the $1.3 billion spent on
RFID will be for hardware,
including RFID tags, readers
and antennas, as well as
servers to run those readers,
and network equipment to
handle the data.
(IDC, U.S. RFID for the Retail
Supply Chain Spending
Forecast and Analysis,
2003-2008)
While many questions remain unanswered regarding how RFID technology will be deployed
– such as what information will be shared between Wal-Mart and its many suppliers, and
how companies will track goods with both bar codes and RFID tags during the transition
period – Wal-Mart is moving to deploy it at the pallet and case level and intends to expand
the requirements soon. According to an AMR Alert for June 21, 2004, Wal-Mart announced
that in spite of difficulty experienced by manufacturers gearing up to meet the mandate,
“that it is in fact moving ahead with its rollout. RFID tagging requirements will be expanded
in June 2005 to include three additional Distribution Centers (DCs), representing an
additional 100 stores. By October 2005, the mandate will be expanded to seven additional
DCs and 350 stores.”
Why? Because the technology has the capability to improve efficiency, cut costs, and boost
sales. Below are the significant benefits and initial savings estimates to Wal-Mart:
•
$6.7 billion in reduced labor costs (no bar-code scanning required)
•
$600 million in out-of-stock supply chain cost reduction
•
$575 million in theft reduction
•
$300 million in improved tracking through warehousing and distribution centers
•
$180 million in reduced inventory holding and carrying costs
This represents an $8.4 billion in annual savings, which is greater than the total revenue of
half of Fortune 500 companies combined
– ROI Watch, Nucleus Research; December 30, 2003 edition.
RFID in Manufacturing
The Impact of RFID
on Manufacturing:
In this section, we discuss the broad scale impact of RFID in 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 that 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 being viewed as 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
scheduling, can quickly and cost-effectively deliver functionality that parallels comprehensive
MES solutions.
“Speaking of sleeping well,
Wal-Mart’s top suppliers
will likely be investing some
sleepless nights – and painful
dollars – to comply with
Wal-Mart’s RFID push.
The spending should drive
increased R&D and innovation,
making RFID a better ROI
prospect for companies not
pressured by Wal-Mart for
accelerated adoption.”
(Accenture, Auto-ID on the
line: The Value of Auto-ID
Technology in Manufacturing)
An Accenture white paper entitled “Auto-ID on the line: The value of Auto-ID Technology in
Manufacturing,” has described in detail the potential opportunities to leverage RFID on the
plant floor. The key areas that will be immediately impacted as a result of RFID initiatives are:
Manufacturing Information Management
By combining RFID with existing manufacturing information systems investments that drive
both MES and ERP, a much more potent information supply can be created that can drive
production efficiencies, asset utilization, quality and other production measures to much
higher levels.
RFID readers will capture data, but companies need middleware to process the data and
feed it to enterprise systems. Completely new middleware software and technologies are
evolving to provide for dynamic near-real-time communication between readers and software
using the Internet or other networked platforms.
A recent article from RFID Journal categorized middleware technologies to include:
Software applications that solve specific vertical market connectivity and monitoring
requirements. The most powerful of these applications will allow for rapid development
and interaction with other specific applications, with the goal of solving problems in
particular verticals, or processes across verticals.
Application management technologies are focused on taking full advantage of the open
data standards and protocols to connect disparate applications within the enterprise.
This is the place where devices and databases come together, at the highest level,
where that transparency and near real–time information is available to the enterprise,
often being provided autonomously. These are features that will be seen in the third phase
RFID in Manufacturing
of connectivity (beyond the first two phases shown in Fig. 1 and discussed in the RFID
Lifecycle and Deployment Strategies section) where function is maximized and the user
interface is standardized around the browser. Device Brokers allow for open data protocols
but tend to be more segmented in solving specific areas of the enterprise such as
ERP, CRM or IDM.
To get the most out of their RFID
systems, companies will have
to deploy both new RFID
middleware and conventional
integration middleware. The
key to success will be knowing
when and how to use each.
(RFID Journal, April 5, 2004)
In order to deliver information from RFID downstream out to the supply chain (ERP) and
upstream into production (MES), existing information infrastructure must be converted to
co-exist with emerging EPC standards and IT that includes software, and application
management such as device brokers.
Once this information is shared across the enterprise and plant floor, receiving,
manufacturing, warehousing, and shipping operations must be coordinated and executed
in the context of orders and customers. Regardless of how much effort and dollars are spent
on RFID on the enterprise level, poor management and execution of RFID efforts at the plant
level could drive down potential benefits.
To Supply Chain
ERP Integration
RFID Information
(Integration with Local Databases)
Shipping
Control System Receiving
Integration
Plant
Warehouse
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 the new information is integrated 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 can be accessed and managed using
an array of hardware and software that has to be brought together and tied back into the
plant for execution and action.
RFID in Manufacturing
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 be modified to collect and be responsive to new RFID-information.
In addition to managing operations on the plant floor, warehousing operations must also be
supported from an information perspective to ensure that the right products are released to
the supply chain at the right time.
Operating benefits derive
from greater availability of
operating data and more
efficient collection. The pace of
operations can be sped up for
data collection tasks such as
component verification, where
the RFID reader could collect
the information without
human intervention.
(AMR Alert; on Manufacturing
for March 18, 2004)
Manufacturing Execution, Quality Control and Compliance:
RFID has the potential of complementing MES in terms of providing new streams of realtime data that can support existing Lean and Six-Sigma programs. RFID information can be
used to ensure that 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 are consumed and assemblies created, 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 be automatically
triggered 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 and more dependent upon information
from their trading partners.
RFID in Manufacturing
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 be
encoded onto an RFID tag and then passed downstream into the warehouse at a pallet level,
and then out into the supply chain, greatly enabling the ability for a manufacturer to re-trace
steps in a product recall.
RFID systems enable reduced
stockouts and other benefits
by improving data visibility.
This type of visibility is also a
powerful tool for tracking,
tracing, and recalling both
regulated and non-regulated
products alike.
(RFID Systems in the
Manufacturing Supply Chain
Worldwide Outlook, ARC, 2003)
Plant Asset Management:
Tagging assets provides information about its location, usability status, maintenance
requirements, contents, inventory levels and so on. Devising production steps, maintenance,
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 be positively impacted.
Inventory Visibility:
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 is directly related to information management described earlier. The
better a manufacturer is able to collect, manage, and use information to drive production
assets and processes, the more visibility it can provide to its trading partners.
Depending upon investments in automation and MES, RFID could be used in 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.
Labor Usage:
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 valueadded 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 today. 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.
As discussed earlier, information management is critical in how RFID-enabled information
can be used to link man/machine tasks, gain visibility into labor usage and productivity,
setting the stage for redistribution of related tasks and processes.
RFID in Manufacturing
As we can see in the chart below, RFID can dramatically impact critical performance issues
for all manufacturers, including machine performance, line performance, plant performance
and, ultimately, supply chain performance.
Improve Asset Utilization
by tracking reusable assets
and providing visibility into
their location and usability
Improve MRO
Operations
by providing accurate,
timely and detailed
information to CMMS
applications
Many tag and reader
manufacturers are already part
of the gold rush surrounding the
Wal-Mart, US Department of
Defense, and other mandates...
ARC believes another potential
gold rush is lurking after these
mandates have taken flight:
pharmaceuticals.
(RFID Systems in the
Manufacturing Supply Chain
Worldwide Outlook, ARC, 2003)
Improve Quality
Control by tagging raw
material, WIP, and
finished goods inventory
Reduce Scrap and
Increase Line
Performance by
controlling line
operations based on
tag information
Improve Production
Execution and Supply
Chain Performance
Provide accurate,
timely, and detailed
information to ERP
and MES
Support 21 CFR Part
11 Compliance with
complete tracking,
verification and
validation of processes
Improve Inventory
Tracking and Visibility
with real-time tracking
and automatic
synchronization
Deliver Surgical Precision in Product
Tracking and Genealogy by collecting
historical information on product ID,
time stamp, lot number at each step
of manufacturing process and across
supply chain
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. A recent
report published by ARC Group titled RFID Systems in the Manufacturing Supply Chain
discusses the pharmaceutical industry as one in particular that possesses the unique
attributes that are 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 that 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.
In the next section, we describe how Rockwell Automation can help manufacturers address
the issues discussed above and help extract sustainable value out of RFID implementation
today and into the future.
RFID in Manufacturing
How Rockwell Automation
Can Help Manufacturers
Create Value Through
RFID Deployment
RFID deployment aims to provide accurate, real-time information about consumer demand
and about goods that are in the supply chain – what they are and where they are. If
retailers share real-time or near real-time data about what is happening in the store and
what is available in the back room of the store, manufacturers can better match supply
to demand.
As was discussed earlier, how manufacturers filter, use, and share that data will decisively
impact the end benefits that can be derived. To get all of the potential benefits, manufacturers
will need to enhance their Manufacturing Information Systems to enable them to react to the
real-time data, whether it’s a sudden spike in demand or a glitch on the assembly line. They
will also need to change their business processes and train people to use the data that will
be at their disposal. It’s a difficult task, but its one that manufacturers will have to undertake
to remain competitive.
Rockwell Automation’s extensive experience dealing with automated process data collected
at shop floor level gives customers implementing RFID a way to accomplish that task. As
RFID deployment proliferates across the plant floor, the new information captured by RFID
can be seamlessly integrated into Rockwell Automation's Integrated Architecture.
In addition, Rockwell Automation can help update MES and information solutions (hardware
and software) to deliver robust and reliable information in real-time to drive manufacturing
execution and ERP. That information also can flow out to the supply chain.
By incrementally RFID-enabling existing investments in control systems, plant management,
and execution software and information solutions, manufacturers can extract value from
RFID more quickly and cost-effectively than competing alternatives.
Rockwell Automation’s Methodology to Support RFID Initiatives:
Rockwell Automation provides a compelling, four-step methodology to assist manufacturers
not only in achieving compliance with impending retailer mandates, but also ensuring that
they are able to generate sustainable value from their RFID deployment.
1. Business Case Justification and ROI Analysis
This first step includes developing a complete ROI analysis to support budgetary needs and
investment outlays across the entire supply chain.
Numerous business issues are addressed: Where will the production and service disruption
be minimal, but the returns the fastest? What incremental investments will be needed as
part of a long-term strategy, and during what time frame? What’s the IT strategy for fullscale rollout at the MES level?
RFID in Manufacturing
Through simulations and pilot programs, ROI can be projected. Various components of
Rockwell Automation offerings include simulation, custom EPC ROI assessment tools and
knowledge sharing from partners.
Simulations for experimenting with RFID
implementation strategy
Business Analysis and RFID “relevance” Tools and
Templates from Business alliances and third parties
Share ROI experience from other engagements
Manufacturing Assessment Planning (MAP) Services
RFID Training Course/Workshop
With simulation, the effectiveness of deploying RFID technology is “test-driven”
within your organization in a controlled (simulated) environment under varying
conditions and decision criteria before it is implemented on “live” operations or
customers. Coupled with Manufacturing and Assessment (MAP) services and
RFID training, Rockwell Automation can provide concrete answers to business
issue questions.
In particular, in Phase 1 Pilot implementation efforts, Rockwell Automation’s combination of
process simulation services and optimization technologies provide a quick, cost-effective
way to identify the real impact of proposed improvements of deploying RFID technology,
helping reduce the risks associated with this capital investment, and ultimately improving
business performance across the entire organization.
Companies seeking selective changes to meet initial retailer mandates can look to Rockwell
Automation for help developing scalable, tactical plans that impact production and
warehousing execution surrounding RFID deployment at each node of the supply network.
The company can help determine which assets should be tagged (tools, trucks, machines,
and robots) to help synchronize manufacturing operations and processing steps and costeffectively track components, sub-assemblies and final assemblies to help minimize lost
production time and labor consumption.
Production control and process changes will inherently accompany the new process. Control
system behavior, MES data collection and manufacturing process routing need to automatically
and efficiently match production to specific customer orders. In addition, the solution should
leverage existing real-time data management and MES to preserve these IT investments.
The fastest returns, and the RFID implementation necessary for initial compliance, can be
realized in End of Line and Warehousing operations. Rockwell Automation is developing and
refining these applications in its RFID lab and pilot program, which aim to increase warehouse
productivity throughput by productively using warehouse resources with wireless warehouse
phased technologies, including Wireless LAN, Bar Codes, and EPC. Through these efforts, the
company is testing in real world scenarios the integration of RFID technology into labor
operations, palletizing, conveyor lines, material handling, storage, and robots that facilitate
the movement of goods from production (End of Line) to the warehouse with new RFID data
and mobile readers, so that information accuracy and reliability is assured.
RFID in Manufacturing
By working with manufacturers to address these issues, Rockwell Automation can help
customers gain strategic advantage through RFID and help solve critical issues in strategy
and operations integration, as well as execution across manufacturing, warehousing, and the
supply network.
2. Design and Architecture
This step involves assisting manufacturers in selecting tags and readers that are most suited
to their environment. It includes piloting assistance related to RFID laboratories, setting up
Share Tag/Reader usability results from
mobile labs for testing in the customers’ environments and arranging lab tours at
other engagements
existing internal or customer sites, if possible. It also includes both design and
Facilitate Lab design and commissioning
architecture for complying with the Wal-Mart Mandate at the case and pallet
Arrange RFID Lab Tour for quick learning
level, as well as setting the strategy and foundation for future expansion of RFID
Slap and Ship – Phase 1 – Meet Compliance
into the plant.
Meet Compliance
Design integration strategy with existing bar codes
Design, software/hardware integration and testing
Integrate EPC information with ERP
Components include designing an integration strategy with existing bar-code
implementations, designing methodology for integrating RFID information into
ERP, as well as case-to-pallet validation at end-of-line operations.
Case-to-Pallet verification at the end of line operation
Foundation for future plans – Phase 2
Synchronize EPC data with Control System
Process Data Association – leverage process and
product information for tracking and genealogy (MES))
RFID upstream – integrate with warehouse and
factory automation
Another important aspect of this step includes synchronizing RFID information
with control systems in the most reliable and cost-effective fashion; identifying
how to coordinate RFID with existing MES implementations and designing
process and automation capability to facilitate item level tracking and
tracing functionality.
3. Software and Systems Integration:
Data filtering from RFID readers,
middleware integration
Control System integration with
RFID information
Custom software design and development
MES/ERP integration with RFID information
This step includes comprehensive integration of RFID implementations into mainstream
manufacturing and warehousing operations – from the ERP to the control level. It includes
custom services, such as software and engineering services that facilitate integration
with middleware, to integration with local database management systems, ERP systems,
control systems, and MES.
4. Maintenance and support:
Global services and support
On-line monitoring
Preventive Maintenance
Step 4 includes the ongoing maintenance and support required to ensure that all aspects of
the RFID implementation are continuously monitored and supported at an engineering, as
well as from an information service, perspective.
RFID in Manufacturing
In summary, Rockwell Automation's four-step methodology offers a wide array of services to
support immediate compliance needs as well as position customers for future value
extraction. A summary of capabilities is shown below.
Supply Chain Modeling with
Simulation
Custom ROI Development
RFID Relevance Tool
ROI tool based on UWC
1 day Training Workshop
Lab Visits
Rockwell Automation
RFID Test Lab:
Consolidated report on tag/readers
in live settings
Internal Pilot Support: Lab Design
and Commissioning
Laboratory Learning Modules
RFID Demonstration Lab
Phase 1 – Meet Wal-Mart Mandate
(Slap and Ship)
- Integrate with existing Bar Code
- Software, Hardware design and
Testing
Preliminary Integration with ERP
Architect for Phase 2 RFID in factory
Track and Trace, Genealogy
- Integration with MES
- Integration with ERP
- Integration with ControLogix
Data Filtering and
Global services and support
Middleware connectivity
On-line monitoring
Logistics/Warehouse
software integration
Preventive Maintenance
Custom Software Development
Integration with Local DBMS
Integration with MES and product
level tracking and genealogy
Integration with external database
or ERP
To demonstrate its breadth of RFID services and capabilities, Rockwell Automation has
has opened an RFID test lab at the company’s global headquarters in Milwaukee. The lab is
designed to help manufacturers that are facing production and inventory mandates from
retailers understand how they can make RFID technology an integral part of their distribution
operations. With this lab, Rockwell Automation is helping manufacturers look beyond the
current, short-term mandates, and understand how they can integrate RFID as tool for
improving future manufacturing efficiencies and distribution.
The RFID test lab replicates situations that are designed to help manufacturers capture
detailed, real-time information that drives line production and synchronizes supply chain
tracking and tracing. The lab combines existing Rockwell Automation expertise with a
simulated factory environment to allow accurate testing and evaluation of a wide variety
of RFID products. Demonstrating how Rockwell Automation integrates RFID data into the
existing control architecture of manufacturing, and how different RFID readers and RFID tags
perform on a closed-loop conveyor are just two examples of activities in the lab that will
result in benefits for customers.
RFID in Manufacturing
Additionally, Rockwell Automation test lab engineers offer visitors advice on the best
methods for leveraging RFID-gathered data to improve factory efficiency and productivity.
Simulating a factory conveyor, packaging station and a dock door, the Rockwell Automation
test lab currently incorporates the company’s own products as well as elements from Alien
Technology Corporation, FKI Logistex, SAMSys Technologies Inc., ConnecTerra Inc., and Zebra
Technologies Corporation to help test and integrate RFID technology in distribution centers
and factories.
Rockwell Automation Champaign Distribution Center Pilot Project
In addition to the RFID lab, where applications, software and hardware can be tested in proofof-concept and what-if scenarios carried out, Rockwell Automation has been conducting a
pilot project in its own manufacturing and warehousing facilities in a live setting.
The “Champaign Distribution Center Pilot Project” replicates a manufacturer's RFID/EPC
process from “end-of- line” packing to warehousing and distribution. As part of the project,
specific products from the company’s Twinsburg, Ohio manufacturing facility, are RFID-tagged
and shipped to its central Champaign, Illinois warehouse.
The project activity includes utilizing RFID technology in parallel with existing bar-coding
methods, integration of RFID information with existing databases, reliability studies that
include tag and reader selection. The project also includes a business case analysis
providing an assessment of business process changes related to quality and verification
procedures, and the future impact on annual labor costs, labor force counts, order cycle
times, and order throughput associated with the RFID implementation.
RFID in Manufacturing
Conclusion
Retailers are increasing their requirements to deploy RFID technology because the benefits
are so significant. Financial analysts agree. Sanford C. Bernstein & Co., a New York
investment research firm, estimates that Wal-Mart alone will save nearly $8.4 billion per
year when RFID is fully deployed throughout its supply chain and in stores.
With those kinds of benefits in sight, it’s not hard to understand why retailers are forging
ahead so aggressively. Companies who are just beginning to look at this technology have a
huge task in front of them if they want to be fast followers.
RFID is not a simple, plug-and-play technology. Given the complexity of implementing RFID,
companies that don’t move quickly – and choose the right strategic partner to deploy the
technology correctly throughout its operations – will finish at a severe competitive
disadvantage.
In particular, “End of Line” operations such as packaging in manufacturing and sorting in
warehousing will be the central and significant points of leverage in the initial phases of
RFID deployment. Manufacturers who are seeking a long-term competitive advantage will
likely gauge their long-term ROI based upon several internal or closed-loop pilots in these
areas as they continue their drive toward full-scale Electronic Product Code deployment.
Rockwell Automation offers a comprehensive, four-step methodology that helps
manufacturers not only achieve compliance, but at the same time design and execute a
sound strategy that provides for sustainable value-extraction from RFID over the long term.
The methodology includes business case development, component (tag and reader)
selection, piloting laboratories, system design and architecture services, and comprehensive
systems integration services to the plant level as well as to the enterprise level. As
deployment is scaled up from slap-and-ship warehousing activity and pulled deeper into
the plant floor, Rockwell Automation’s value proposition is significantly amplified.
As RFID deployment proliferates across the plant floor, the new information captured by
RFID can be seamlessly integrated into Rockwell Automation's proven, industrially hardened
control, visualization, and information infrastructure, reducing the need for purchasing new
infrastructure or investing in expensive, time-consuming, and unproved IT integration
projects. Existing Rockwell Automation MES and information solutions can be easily updated
to deliver robust and reliable information flow in real-time to drive manufacturing execution,
as well as to ERP, and out to the supply chain.
By incrementally leveraging existing investments in Rockwell Automation, plant management
and execution software, and information solutions, manufacturers can extract value from RFID
more quickly and cost-effectively than any other competing alternative.
RFID in Manufacturing
Vivek Bapat is member of a core team responsible for RFID Business Development and
Strategy related to Rockwell Automation's supply chain performance offerings including
Simulation, Manufacturing Information and Execution Services. Vivek’s experience spans
business management, product management, consulting, sales development, and solutions
marketing. From 1998-2000, one of the product businesses that Vivek led received worldwide
acclaim by winning a record eight Industry Awards. Vivek is co-author of a book entitled
“Call Center Performance Enhancement Using Modeling and Simulation” published by ICHOR.
Vivek’s formal education includes an M.B.A. from Robert Morris University, an M.S.
(Industrial Engineering) from Clemson University, and a B.S. (Mechanical Engineering) from
College of Engineering Poona, India. Vivek also completed an intensive program on Business
Marketing Strategy at Harvard Business School. Vivek currently serves on the Board of
Directors of MESA International and can be reached at [email protected]
Ken Tinnell is Rockwell Automation's Practice Leader of Wireless Warehouse RFID
Solutions and brings 12 years of Logistics Engineering & Information Management
experience to the team. Having worked for Rockwell Automation as Geographic Logistics
Manager, and then as the Global Warehouse Management System Program Manager at
Procter & Gamble, Ken built the basis for leading Global Manufacturing Solutions into the
Warehouse Automation space.
Studies include Electrical Engineering at the University of Kentucky, an M.B.A. at the
University of Cincinnati and a Masters of Industrial Engineering also at the University
of Cincinnati. Ken is also the Software Action Committee group leader for the University of
Wisconsin's e-Business Consortium for RFID.
Ken Tinnell can be contacted at [email protected]
Resources:
www.RFIDupdate.com – Free, daily news on RFID technology and trends
www.rfidjournal.com – Radio frequency identification for business source
www.aimglobal.org/technologies/rfid/ – A link to happenings in the RFID world
(sponsored by AIM GLOBAL)
www.idtechex.com – Independent analysis on the development and application of
RFID, Smart Label and Smart Packaging technologies
www.rfidgazette.org – Weekly newsletter covering RFID across broad spectrum
of industries
www.bitpipe.com – IT related information, including whitepapers, industry reports and
Webinar notices
www.rfidworld.com – Source for information, education and resources to aid in
understanding RFID technology and solutions, for a wide variety of enterprise applications
www.rockwellautomation.com
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October, 2004
Copyright © 2004 Rockwell Automation, Inc. All rights reserved. Printed in USA.