Executive White Paper - IW RFID ROI

8/7/2019 Executive White Paper - IW RFID ROI

http://slidepdf.com/reader/full/executive-white-paper-iw-rfid-roi 1/13

UncovertheROIinRFID...ClosedLoopSystemsProvideSavingsRFIDProvesBenefitsWithAssetTrackingandIndirectMaterialManagement

.............................................................................executivewhitepape

WinWare Incorporated1130 Northchase PkwySuite 100Marietta, GA 30067..........................................

Phone: 888.419.1399Fax: 770.419.1968..........................................www.cribmaster.com..........................................January 2007



Contents

..................CribMasterInventoryManagementSystem|WinWare,Inc.

1 ..... RFID is Not All the Same

2 ..... The New Bar-Code vs. Process Automation

3 ..... Compliance / Process Discipline

4 ..... Cost Reduction Capabilities

5 ..... Taking Away the Guess Work - Making RFID Repeatable

6 ..... Growing Beyond a Single Solution



It’s Not All the Same

RFID


Wal-MartandtheDODhavedoneamazingthingsforthemovementofRFIDtechnology.TheirmandatesforcedthecomplianceofasingleuseofRFIDandhasbroughtagreatdeal

ofattentiontothe900mhzpassivetechnology.Italsoseemsthat,becauseoftheseman-

dates,thedevelopmentofthistechnologyhasmovedquiterapidlyandtheGen2releases

areprovingthespeedofmaturityisatagoodpace.RFIDhascomealongwayinthelast

twoyearsandwithsomanysuppliersbeingforcedtotagpalletsandcontainers,RFID

remainsinthespotlight.Sothat’sit...wetagourpalletsandboxes,butwhatelse?

OK...inafairlyshortperiodoftime,RFIDtechnologyhasdevelopedthenecesssarystan-

dardstofunctionasawaytoimprovethelogisticsoperationsofsuppliersandmanufactur-

ers.HatsofftoEPCGlobal,Spec2000andsomeoftheotherorganizationsthatputtheir

bestfootforwardtomakesurethesestandardswereestablished.Thankstothosecompa-nieswhohavefocusedonthemovementofthistechnologytoimprovethelogistics/supply

chainoperations,anewbreedofassetmanagementandindirectmaterialmanagementsys-

temshavesurfaced.

The New Breed of RFID (Closed Loop Systems)Closedloop,indirectmaterial,assetmanagement...thesearetermscommonly

usedbycompaniestodescribethemeansinwhichtheyhaveutilizedthis

technologytoproverealresultsineverydayoperations.Almosteveryopera-

tionhaschallengesassociatedwithmanagingassetsorindirectmaterialof

sometype.Itmaybealargeofficewhocan’tkeepcontrolofofficesupplies,a

technologycompanywhocan’tkeepupwiththeirlaptopsorhand-heldcom-

putersoramanufacturerwhocan’tkeepupwithsparepartsortoolinventory.

AclosedloopRFIDsystemisdescribedasasystemthatbasicallycompletes

anentiretaskandisnotrequiredtohavestandardizedinformationtoshare

amongstsystemsofotherorganizations.Thesystemmayshareinformation

withotherinternalsoftware,butthetagwillnothaveinformationembedded

intoitthatwillmakesensetoanyothersoftwaresystem.TheRFIDtagofa

closedloopsolutionwilloftentimeshaveauniqueidentifierthatwillmarryto

moreextensiveinformationabouttheitemcontainedinadatabase.Whenthis

tagisviewedbyRFIDreadersattachedtotheclosedloopsystemitwillmake

thematchandknowthattheIDnumberof12874537embeddedonthetagis

identifyingthetaggeditemasaBlackandDeckerCordlessDrillwithaserialnumberof BD567-9823-DR.ToanyotherRFIDsystemitissimply12874537andweknownothing

elseaboutit.

AMRResearchhasstatedthatitfinds,“companiesthattakeamoresimplifiedandfocused

approachtotheuseofRFIDtechnologyincurmuchlessriskinimplementation,receivetan-

giblevalue,andbuildcapabilitiesthatgivethemsignificantdifferentiationfromtheircompeti-

tors.-"FindingtheROIinRFID",byJonFontanellaandMattBilodeau,AMRResearch,

October31,2003

1

Away with the Standards...a Simpler, More Focused Approach



Process Automation


HowmanytimesoverthelastfewyearshaveyouheardthatRFIDisgoingtobethenewbarcode?Welltheremaybesomerealtruthtothat,butinrealityitisn’tanewbarcodeitisa

wholenewwaytolookatbusinessprocesses.RFIDtagsprovideanewlevelofautomation

thatfaroutweighsthatofbarcodes.AlthoughbarcodesmaybereplacedbyRFID,thepoten-

tialtofurtherautomateprocessesandreducehumaninteractionprovidesmuchgreatereffi-

ciencythanabarcodesystem.Youprobablyaren’tgoingtofindtoomanyinstanceswhere

youwillreplaceyourbarcodeswithRFIDtechnologyandtheprocessesremainthesame.

RFIDtechnologyisveryflexibleandradiowavescanbereadthroughmostsolidobjects

(excludingmetal)whichdoesnotrequirethetagtobevisible.Thisfactisafarstretchfrom

thatofabarcodeandcancreateawholenewwaytolookatthebusinessprocessassociat-

edwiththisnewlevelofautoidentification.Lookingattheseprocessesandtheopportunityto

streamlinecurrentmethods,willidentifyareaswherehumaninteractionisreducedgreatly,whichdirectlyrelatestocostreduction.

BarCodesvs.RFIDforAssetTrackingandIndirectMaterialManagement

Asyoucanseefromtheabovechart,RFIDcanbeutilizedasmorethanadatacollection

technology.Infact,RFID canbeusedtofurtherstreamlinetheflowofmaterialormoreclose-

lymonitorthemovementofassetsaroundafacility.Anyprocessthatcanbenefitfromhaving

anuninterruptedflow,becauseitcurrentlyrequiresmanualbarcodescanningormanually

enteringdata,areprimestartingpointsforpotentialprojectsthatwillproveROIwithRFID.A

commonareawhereROIhasbeenproveninmultipleinstallationsbyWinWare,Inc.hasbeen

instorerooms,toolcribsormaintenancestorageareasthatcontainindirectmaterialor

assets.

2

RFID...the New Barcode?

The New Barcode vs.

Creates a high level of hands-free automation

Is a mature technology

Can be used to monitor and store information

Is “Read and Write” capable

Does not have limited industry expertise

Proven ROI from implementations

Allows uninterrupted process flow

Bar Code Technology

X

X

X

RFID Technology

X

X

X

X

X



Compliance & Process Discipline


Makeiteasiertodotherightthingthanitistothewrongthingandpeoplewilldotherightthingeverytime.Thisisthetheorythatshouldbeappliedtotheincreasedprocessautoma-

tionprovidedbyRFIDtechnology.Everyworkenvironmentisdifferentandthelevelof

employeecomplianceyouwillreceivewhenimplementingnewprocessesvaries.Often

timesitevenvariesfromoneshifttoanother.Youmayfindthatthedayshiftismorelikely

tocomplytoacertainprocessthanthosewhoworkafternoonsoranovernightshift.One

thingforcertainisthatthemoreobtrusivetheprocessis,thelesscompliantpeoplewillbe.

Thisisnotalwaysonpurpose.Whenretrievingneededinventory,iftheprocessrequires

slowingdowntoscanabarcodeorcountinventory,itjustgetsforgottenbecausetheir

numberonegoalistomakeproductionnumbersorwhateverthenextstepmightbeto

completethattask.ThisisexactlywhyRFID hassuchatremendousupsidewhenapplied

toeverydayassettrackingandindirectmaterialmanagement.

Forexample,let’stakealookatanoperationthatrequiresmachineoperatorstocheckout

theirownmachinecomponentsbeforeperformingchangeovertomakeadifferentproduct.

Thesemachinecomponentsconsistsofdies,punches,toolsandmillparts.Allofthe

machinecomponentsarelocatedinanunlockedroomandeachoperatorisresponsiblefor

removingthecomponentsandcorrespondingtoolingtoperformthechangeover.Theyare

alsoscanningabarcodeoneachpiecewhenremovinginventory.Itisimportanttohave

openaccesstothisinventorybecausetheoperatorsarerequiredtomakeproductionnum-

bersandareallotedacertainamountoftimetocompletethechangeoverandcontinue

production.Thentheseitemshavetobescannedbackinwhentheyarereturned.

Duringtheprocess,machineoperatorsgatherallofthepartshe/sheneedsandgetsback

tohis/hermachinetoperformthechangeover.Whileperformingthechangeover,whichis

pushingtheallotedtime,theoperatorrealizestheyforgotthegageneededandgoesback

totheroomandretrievesit.He/sheforgetstoscanitout.Whenanotheroperatorgoesto

useit,itcomesupmissing.Aftersearchingforhours,anewoneisorderedforovernight

delivery...aboutthesametimetheotheroneisfound.Thisentiremishapisnotuncommon

andhasagreatdealofcostassociatedwithit.Again,thisisanexamplewheretakingthe

requiredhumaninteractionoutofthisprocesswouldhaveimprovedthisgreatly.Thisis

possibletodaywithRFID.

Lookingatthisscenario,eachmachinecomponentneededforchangeovercanbekittedintoacustomkitboxorrollingcart.ThatboxorcartisidentifiedwithasingleRFIDtag

whichisassociatedwitheachiteminthedatabaseoftheclosedloopsystemwetalked

aboutearlier.Onissue,theemployeeisrequiredtoidentifythemselftothesystembefore

enteringtheroomthroughalockedportaloropeningalockedcabinet.Uponidentifying

themselfaccessispermittedandtheboxcanberemovedfromaRFIDequippedcabinetor

thecartcanberolledbackthroughaRFIDportal.Thisrequireslittletonohumaninterac-

tionanddramaticallyimprovesaprocessthatwillprovidemeasurableROI.

3

Employee Compliance

making the process work



Cost Reduction Capabilites


CostreductionsvarybasedontheprocessyouarelookingtoenhancewithanRFIDsolu-tion.Youmaybelookingatmanagingexpendabletoolinventorythroughanautomated

RFIDtoolcribortrackingspecializedtestequipmentthatrequiresahigh-levelofcalibration

andcertificationsthatareloggedwithdigitalsignaturesconfirmingthattheyhavebeenper-

formed.Nomatterifitisadurableassetorapieceofexpendableinventorythatrequires

continualreplenishment,itisallinventory.Asamatteroffact,iftheitemdoesnotbecome

partoftheproductyouaremanufacturing,itcanbeconsideredindirectmaterialinventory

andtherearemanywaystodetermineROIbasedondifferentcostsavingcategories.

Thesecanbebrokendowninto4areasofcostreduction.

On-HandInventoryReductions

OverstockInventoryRedcutionsCarryingCost(OverstockandObsolete)

InventorySpendReductions

InventoryReductionBasedonUsageAccountability

InventoryReductionBasedonOptimization

LostInventoryReductions

ReductionsinCarryingCost

Operational/LaborReductions

ReducedRedTicketShipments

ReducedSearchingTime

ReducedPurchasingTaskTimeReducedPlanningTaskTime

ReducedWaitTime

ReducedWalkTime(InventoryRelocationinRFIDCabinets)

ReducedIssueTime(OrganizationandKitting)

ObsoleteInventoryLiquidation

RevenueReceivedfromInventoryLiquidation

Onceyouhavetakenthemanagementsolutiontoanenterpriselevel,youbegintosee

theseresultsateachplantbutadditionalsavingsbecomeapparentbyamuchhigherlevel

ofmanagement.Thesesavingsareseenenterprise-wide,inboth“Hard”and“Soft”cost

reductions.Hardcostsatthislevelarethosecoststhataredirectlyassociatedwiththecostofinventoryand“Soft”costsaregenerallyassociatedwithtimespentbycorporateman-

agementanalyzingspendorusageinformation.

Withthepropersystemandenterpriseviewatthecorporatelevelyoucanidentifyweak

spotsacrossyourorganization.Aswell,youwillbeabletoidentifyareasofsurplusand

enabletransfersofindirectmaterials.Thisisa“Hard”costsavingsthatcansometimesbe

dramatic.

Fo racompletecostsavingsworksheetcall1.888.419.1399

4

How Do I Determine if I Can Make My ROI?

how do we save money with rfid



Making RFID Repeatable


Withanemergingtechnologytherearegoingtobeearlyadopterswhostrugglethrough“scienceprojects”toachieveresults.Typicallytherearetechnologycompanieswhotakeon

thesescienceprojectsandlearnalittlemoreeverystepoftheway.Therearealsothose

whofindasuccessfulmeansofutilizingthistechnologyandthosecompaniesaretheones

youshouldlookforwhendecidingtoventureintoanRFIDproject.Likeanyprocess

change,itisimportantthatyourcompanytakecompleteownershipoftheprojectandman-

agethechangeinternally.IntheseearlydaysofRFIDassettracking,itisimportantthat

youlooktopartnerwithacompanywhocan:

-Bethesinglepartnerfortheproject

-Provideacompletesolutionforthetaskathand

-Provideasolutionthateasilyexpandableplant-wideandenterprisewide-ProvideexpertiseinanicheuseforRFID

-Proveasuccessfulimplementationhistory

-ProveROIfromotherinstallations

-UsesRFIDtoenhanceatechnologyshortcomingorhumanprocess

Literally Plug-n-PlayThosearewordsIbetyouneverheardbeingappliedtoRFID,yetitispossi-

ble.IknowitseemslikeanRFIDsolutionthatwasliterally“plug-n-play”

shouldbeinaRipley’smuseumsomewherebutinsteadtheyarebeingused

bycompanieslikeATIWahChang,CrownEquipment,theUSAF,BassettIndustrialandotherstorapidlyimproveprocesses.Theydothiswithoutneed-

edtrialperiodsandanaverageinstallationtimeoftwodays.Howcanitbe?

TheyhaveimplementedaCOTS(commercialofftheshelfsystem)thatserves

aspecificpurpose.Thesesolutionsarebuiltintoproductsthataremanufac-

turedtoperformaspecifictask.Portalstomanageindirectmaterialandtool-

ing,cabinetstoalsomanagetheseindirectmaterials,toolsormaintenance

sparepartsatpoint-of-useorRFIDenabledmodulardrawersystemsusedtomanageFOD

processes.

Thesesolutionsaredrivenbyarobustsoftwarepackageandweredesignedtoprovide

rapidgo-liveandexpansiontomanageindirectmaterialsandassetswithinmanufacturingandotherproductiveenvironments.Typicalinventoryitemsbeingmanagedinthe“Plug-n-

Play”RFIDdevicesareMROitems,powertools,safetyproducts,expendablecuttingtools,

cleaningsupplies,tonercartridges,abrasives,gagesorcalibratedinstruments,costlytest

equipmentlikeoscillospopes,ITinventory,batteriesandspareparts.UsingRFIDforthis

typeofinventoryhasprovenaveryrapidpaybackandisaverygooduseofthetechnolo-

gy.

5

Look for Successes in an Emerging Market

taking away the guess work



Growing Beyond a Single Solution


WhyImplementaCorporate-WideSolution

Backtothebasics.Theultimateleverageyouhavewhennegotiatingcontractswithsuppliersisorderquantity.Youcertainlystandagreaterchanceofgettingabetterdealon70,000pairs

ofsafetyglassesratherthan10,000pairsofsafetyglasses.Doyouhaveasysteminplace

whereyoucanconfidentlyattempttoestablishcorporatecontractsbasedonactualusagefig-

ures(notorderfigures)ofeachofyourfacilities?Doyouhaveasinglesystemthathas

trackedusage,replenishment,maintenancetasksandoptimizedinventorylevelsforeachof

thosefacilities?Doesthissystemenhanceprocessesandaccuratelymonitortheseindirect

materialsorassetswiththeuseofRFID?

Wouldn’titbenicetobeabletorunausagereportoneverycommonmroitem,tool,comput-

er,orlubricantofallofyourfacilities?Ifyoucanclearlyseeactualusageoflikeitemsacross

yourentireenterprise,youcannegotiatecontractswithconfidencethatyouarenotoverpur-

chasingyourindirectmaterialorneededassets.Allofthisinventoryshouldbelinkedbya

commonitemnumberandbepushedtoadatawarehousesothatyouhaveenterprisewidereportingatyourfingertips.Optimumorderquantities,optimuminventorylevelsandenter-

prise-widetransferringandreporting...anincredibleimpactonyourbottomline.

6

continuous improvement

Single Location Contract

10,000 Pairs of Safety Glasses Yearly = $6.00 per pair25,000 Carbide Inserts = $43.50 per 1025,000 Drills = $2.00 each5000 Vice Grips = $14.00 each

Corporate Contract

70,000 Pairs of Safety Glasses Yearly = $3.50 per p175,000 Carbide Inserts = $33.50 per 10175,000 Drills = $.95 each35000 Vice Grips = $9.00 each

Contract Savings$420,000 vs $245,000 = $175,000 difference$761,250 vs $586,250 = $175,000 difference$350,000 vs $166,250 = $183,750 difference$490,000 vs $315,000 = $175,000 difference

TOTAL COST SAVINGS = $708,750 with 4 produc

VS.

=



Crown Equipment: Case Study


Therearesomethingsweallwishwecouldhave24hoursaday.Likea

nicemeal,oraqualityTVprograminthemiddleofthenight.Muchlikethe

restofthemanufacturingworld,CrownEquipment,themakersofthenum-

beronebrandelectriclifttrucksintheUS,isnoexception.Theyrequire

accesstotheirinventory24hoursaday,7daysaweek.Butunliketheir

peers,Crowntookthenecessarystepstoensuretheiremployeescould

accesswhattheyneedednomatterwhattimeitwas.

Crownisacorporationwhichhasreceivedover50productdesignawards,

beennationallyrecognizedfortheirDP(Demonstrated

Performance)QuickStart™trainingprogram,andhonoredbythe

EPAfortheirwasteminimizationefforts.Thisisacompanywith

innovationandefficiencyattheheartofitsdesignandmanufac-

turingphilosophies.

There Must be a Better Way

ItbecameapparenttoCrownthattheremustbeabetterwayto

manageindirectmaterialsthanwhatwascurrentlyinplace.

BrendaHughes,SupervisorandBuyerforCrownEquipment

noted,"Wereallyneededtogetproducttotheoperatorsonthe

machines.Wefeltourreplenishmentwaseffective,butunavail-

abilityforallthreeshiftswashurtingproduction."Crown,being

theforward-thinkingorganizationthattheyare,begantolookatRFID(Radio

FrequencyIdentification)tohelpwiththeirindirectmaterialchallenges.

Beingamanufactureroflifttrucks,RFIDhadcertainlybeenonCrown's

radarscreen.Thebenefitstomaterialhandlingandlogisticsoperationshave

beenbecomingmoreandmoreobvious.Butwiththegrowingindustrybuzz

1

A Common Scenario





aroundRFID,CrownbegantoinvestigatethepossibilityofexpandingtheirRFIDusetomanageindirectmaterialsandsolvingthechallengeofprovid-

ing24-houraccess.

Conceptually,CrownbelievedwithRFIDitsemployeescouldsimplywalkin

acrib,pickuptheirsupplies,andgetbacktowork.Wasthispossible?Their

researchuncoveredtheCribMasterAccu-Port(illustration2:1),whichisa

commercialofftheshelf(COTS)inventorymanagementsystemgeared

specificallyformanagingindirectmaterials.CribMasterhaspartneredwith

SymbolTechnologiestoprovidetheantennaeandreadersto

powertheAccu-Portandhavedesignedaplug-n-playportal

specificallyformanagingindirectmaterials.TheCribMastersys-

temutilizespassiveRFIDtechnologyandGen2passivetags.

ThissystemofferedCrownmanybenefits.

1. Abilitytoaccesstheirtoolsatanytimewithoutstaffingthe

crib.

2. Reductionofa24-hourpositiontoanhourandahalfrestock-

ingjob.

3. Theuseoflight-dutyworkersforrestocking.

4. Establishingorganizeddeliveryofitems.

5. Retaininganalreadyeffectivereplenishmentmethodbyintegratingwith

theircurrentsystem.

2

Illustration 2:1




Evenwithalltheseadvantages,thecommonissueoftaggingsmall,

expendableitemswithRFIDwasstillonthetable.Itishardtoimag-

ineattachingatagtoascrewdriverordrillbit,butwithWinWare's

help,Crowndiscoveredanotherway:tagthepackaging,nottheprod-

uct.(illustration3:1)Crownimplementedasystemwhereitemsare

placedinbagswiththecorrespondinglabelandRFIDtag.Agreat

advantagehereisonceaworkertakestheiritemandwalksoutofthe

crib,theysimplyremoveitfromthebag,placethebagina'mailbox'

andthatpackagingcanbeusedagainandagain.Thisnotonlymini-

mizesthecostoftags,butalsolimitstheeffortofrestocking.

Crown'semployeescouldnowfinditemsandevenmovetheentirecribwith

ease.Allitemshavebeentaggedandstockedaccordingtoacoordinate

system(illustration3:2).Then,ifforanyreasonthecribneedstobemoved,

thewallscanbetakenapart,shrink-wrapped,andmovedwithallprod-

uctsstillattached.Thedismantlingandreassemblycanbecompleted

inoneday.Itdoesn'tgetmucheasierthanthat.

Withtaggingtakencareofandthe'mailbox'systeminplace,restocking

becameeasierthanever.AtCrown,eachcribmonitorsthemovement

oftwotothreehundreditemseachday.Incrib1,everyoneofthese

productsisanexpendableitem,andthereforemustbereplaced.This

processreducesrestockingtimeandallowsCrownemployeestofocus

onotheraspectsoftheirindirectsupplychain.WithRFIDtheemployee

cansimplyrefillthebagsandtakeasmanyas30itemsbackintothe

cribatatime.Here,allthirtyarerecordedandassignedtothetaginstantly.

3


illustration3:1

illustration3:2

Tag...You’re It




..................CribMasterInventoryManagementSystem|WinWare,Inc.4

ROI - The Determining Factor of Success

ntheend,havingtheCribMasterAccu-Portinjustoneareaoftheiropera-

ionisbenefitingCrown.ROIstudieshaveprovenasubstantialimpact,and

hissavingshasallowedCrowntojustifythesystemwithreducedinventory

usagealone.Usingreportablepurchasinginformation,Crownhasacknowl-

edgedthatsinceimplementingtheAccu-Portcrib,theirdailyaverageinven-

oryusagehasbeenreducedby21.65%.Thishasprovenareturnoninvest-

mentoflessthanfourmonths.

SoftCostReductionsAcknowledgedbyCrown

Theotherreductions,nottakenintoconsideration,arealsosubstantialand

candramaticallyshortentheROIevenmore.Theothercostconsiderations

arelistedbelow.

LaborSavings -thereductionofa24-hourpositiontoanhourandahalf

wasagreatreductioninlaborcost.

WalkTime-havingacentralcribreducedtheemployee'straveltime.

ImprovedProductivityandLessDownTime -withtheeasilyaccessible

tools,Crownemployeescannowgrabwhattheyneedandgetstraight

backtowork.

ImprovementInitiatives

SomecontinuousimprovementplansforCrownincludeexpandingtheirRFID

network.BrendaHughesforesees9-10Accu-Portsacrossherfacilitiesby

2010.Thisconsolidationwillgivehertheabilitytoutilizebulkbuyingincen-




..................CribMasterInventoryManagementSystem|WinWare,Inc. 5

WinWare,Inc.

1130NorthchasePkwy

Suite100

Marietta,GA30067

p:770.419.1399

f:770.419.1968

tf:888.419.1399

www.cribmaster.com

ives,whilethemobilityandeasy"go-live"ofthecribswillmakethistransitionperiodrunsmoothly.RFIDendedupbeingano-brainerforCrown.They

savedontagsandreducedrestocktimewiththeinnovativeidentification

schemebytaggingthepackages.Theiremployeescouldmaximizethesys-

em'spotentialwithease,butmoreimportantly,theycouldfinallyreachthe

oolstheyneededaroundtheclock.

CrownhasproventhatRFIDtaggingandtheCribMasterAccu-Portarethe

necessarymeansforsolidifyingtheirindirectmaterialinventorymanagement.

maginetheirsavingsonceallfiveplantsareupandrunningwithRFID.It

maybealongshot,butiftherestoftheworldwouldcatchupwithCrown

Equipment,theremaybeadaywhenweactuallycangetaMichelinstarmeal

orhavesomethingbesidesaninfomercialtowatchat3am.

Executive White Paper - IW RFID ROI

Documents

Transcript of Executive White Paper - IW RFID ROI