The relationship between the automotive sector and RFID goes back as far as the key fob and placing chips on the chassis. The relationship now is how RFID can be integrated in the factory, used for container management as well was yard management.
The best news for manufacturing companies is that the ROI on RFID is robust and in some applications, quite quick.
Honda Italia, Industriale, the Italian subsidiary of the Honda Motor Co. and leader in the 2 wheels worldwide market with more than 12.7 million PTW (powered two wheels) models sold in 2006, is an example of how a company successfully integrated RFID on one of its scooter lines while finding benefits beyond ROI. The company underwent an extensive pilot program before rolling out a full RFID program for their ASSi line of scooters produced at their plant in Atessa, Italy. They set up general guidelines for implementation of the program which included the following:
- VIN progression tracking along the supply chain
- Pull approach in the operative production management
- Change on management support (Communication, Organizational alignment, Operational training)
- Future extension to engine line assembly
The RFID tag is part of an overall integration with the entire manufacturing production. In the factory the VIN code is stored on the RFID tag/label and is read on specific RFID reading points on the assembly line. The RFID system checks all the Tag reads and sends Alerts or Notifications for errors during operations or for parts replenishment. The VIN code is stored on a RFID tag/label, tag of critical parts, attached to the first item of the critical parts cage at the location and is read using a RFID reading drawer/hole. The RFID System creates a request of critical parts to supply to the assembly line
"This system allows for a reduction in the work in process, as well as quality improvement. Furthermore we have reduced the need for adjustment after the scooters are sold," explains Nicola Marrone, RFID Project Executive, Honda Italia.
From a supply chain perspective, Honda has better tracing ability as well as improving critical parts availability which reduced assembly line stops due to parts shortages.
"We viewed RFID technology as a continuous improvement. We assembled the necessary team members and worked closely together throughout the pilot and implementation," said Marrone.
IBM, which developed a customized software solution to enable the project, was an active partner throughout. "The teamwork effort was so successful that we are now all working on expanding the system to Honda's suppliers," explains Armando Grosso, the Honda Italia client representative at IBM.
"If you can tie RFID into additional transparency in the supply chain a company can push the benefits further and not simply save on man hours but can reduce process failure. For example don't have to stop line as all suppliers are informed and know what needs to arrive and when. This gives you an image of the real world in a digital way in the system," explains Kurt Rindle, RID solutions executive for manufacturing at IBM.
Other applications within the auto industry include container and yard management. In the case of container management it is becoming increasingly hard to track both the location and the status of the containers given the longer supply chains. Rindle explains that when IBM applies their Container Management Solution, it makes sense to charge the suppliers for containers that are lost, damaged or delayed. Today, OEMs often don't have visibility on that.
With loss rates of 2-5% per year and the cost of a standard metal container at several hundred dollars, this represents a considerable investment on the part of manufacturers. RFID can offer immediate savings says Rindle giving an example of a company IBM worked with in Europe which saw immediate savings of 40% of the investment that they would have by implementing the solution. And the savings increased throughout 2006-2007 through continued use.
The movement towards industry standards in RFID technology among automotive companies still has some way to go says Rindle. "While Ford uses the Electronic Product Code (EPC), Volkswagen uses ISO standards. Some companies have agreed to the VDA's standard, (German Association of the Automotive Industry -- VDA) and others use 5501."
In the use of RFID for yard management, an U.S.-based auto distributor used RFID to help manage the substantial growth in its annual volume. Vehicles arrive and are unloaded and accessorized within the distributor's 84-acre vehicle processing center (VPC) before being shipped off to 145 regional dealerships. But the company lacked a way to efficiently locate, track and prioritize vehicles within the VPC, preventing staff from responding quickly to dealer requests and slowing overall throughput.
Using an RFID tracking and management system the company saw a 100% ROI in one year from labor savings and optimized workflow.
"One of the exciting things about RFID is that it can plug into existing structures. This is especially important in the automotive sector since different OEMs have different levels of integration. Some are moving toward SOA while others are at the beginning stages and see this as a service only. Others use the data for material flow application, plant management and production scheduling," says Rindle.
RFID will grow both in the U.S. and in Europe predicts Rindle. "The movement towards industry standards in RFID technology among automotive companies has just started," says Rindle. "Some companies implement to the VDA's recommendations regarding container management with RFID, (German Association of the Automotive Industry -- VDA) that is named 'VDA recommendation number 5501.' It has been agreed upon by all major associations of the automotive industry like AIAG, Odette as well as JAMA/JAPIA."
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