IntegratedSolutionsMag.com

HANDHELDSA security company’s rugged handheld deployment savestime and eliminates outdoor computing issues.

RFIDExperts reveal the level of customization enterprises should expect for successful item-level RFID deployments.

ASSET TRACKINGAn RFID/bar code solution reduces thetime required to manage 1.5 millionfiles at a government agency.

By implementing item-level RFIDtagging, HP Brazil reduced its supplychain inventory by 17%.

Marcelo Pandini, manager of RFID and business development, HP Brazil

Sens

orma

tic/Ty

co

March 2008

Impin

j

March 2008

How important is it for you to know where eachitem in your inventory sits in your supply chainright now? “It’s absolutely critical,” answers

Marcelo Pandini, manager of RFID and business devel-opment for HP Brazil. He and his team have spent thelast four years working to improve HP Brazil’s supplychain visibility using RFID technology. Pandini is notalone. According to the Compliance and Traceability inManufacturing report byAberdeen Group, 69% of you arebuilding product and processtraceability into your manufac-turing and supply chainprocesses now.

This year, HP Brazil expectsto place nearly 3 million RFIDtags on the inkjet multifunction

printers it manufactures. What makes this implementa-tion noteworthy is that HP Brazil isn’t just tagging thepallets. Instead, it’s taking product traceability toanother level by tagging each individual printer fromconception. Even if you’re not a $104 billion global man-ufacturer like HP, the lessons learned from this projectare valuable for any company considering the imple-mentation of supply chain visibility with RFID.

TAKE RFID TAGGING TO THE ITEM LEVELHP has used RFID technologysince 2002 to tag cases and pal-lets of products to meet Wal-Mart and DoD mandates. In2004, the company decided tostart a pilot program that

Photos by Jorge Rosenberg

by Chris Loringer

Integrate RFIDTo Sharpen Supply Chain Visibility

By implementing item-level RFID (radio frequency identification) tagging, HP Brazil gained critical visibility into its

supply chain, reducing printer inventory by 17%.

RFID • Supply Chain Visibility

RFID INTEGRATION

Installation ProfileTechnology User: HP is a $104 billion manufacturer oftechnology products, solutions, and services. The companyowns the world’s ninth-largest nonmilitary supply chain. HPhas a strong manufacturing presence in Brazil, with 8,000employees producing desktops, notebooks, printers, andservers. HP Brazil celebrated 35% sales growth from fiscalyear 2006 to 2007, and it has exceeded sales projections for 17consecutive quarters.

Problem: HP Brazil produces more than 1 million multifunc-tion printers each year. Without item-level visibility into thesupply chain, as much as 5% of the products were unaccountedfor at any one time — ‘lost’ in the supply chain. HP Brazilneeded a better understanding of where products were at allphases of the supply chain.

Solution: In June 2004, HP began a pilot project to use RFID(radio frequency identification) tagging at the item level in SaoPaulo, Brazil. The company uses a combination of Sirit RFIDinterrogators, Zebra printers, and OATSystems software prod-ucts to collect and deliver the RFID data to its Baan and SAPapplications. Due to the success of the pilot, more than 2 mil-lion HP products are now RFID-tagged and tracked through thesupply chain each year. HP plans to implement its Sao PauloRFID framework at other HP sites and across the supply chain.

22 MARCH 2008 INTEGRATEDSOLUTIONSMAG.COM

HP Brazil is using RFID (radio frequency identification) tech-nology to increase the company’s supply chain visibility. HPBrazil uses more than 100 Sirit RFID interrogatorslocated at each station of the manufacturing, packing,shipping, and distribution processes. However,between the Sirit RFID interrogators at each stationand HP’s ERP (enterprise resource planning) softwareexists a big gap. For instance, what controls the RFIDportals (physical gates that hold RFID interrogators)?What transforms RFID tag data into actionable busi-ness events and integrates it into the SAP ERP sys-tem? What enables HP to take action immediately ifa process step is missed or a faulty componentinstalled?

To perform those functions, Marcelo Pandini,manager of RFID and business development forHP Brazil, built HP’s RFID applications onOATSystems’ OAT Foundation Suite 5.1, anRFID data management platform that includes middlewarewhich integrates directly with HP’s ERP software. When readfrom the tags, RFID data is written to databases, and anautomatic query is used to pull data from the databases andtransfer data to and from HP’s ERP system.

The OAT Foundation Suite is an RFID software framework

that helps companies implement best practice RFID applica-tions. The suite includes OATxpress, OATdesigner, OATdevice

manager, and OATaxiom. OATxpress provides alibrary of best practice RFID applications.OATdesigner provides companies with a visualdrag-and-drop tool to create and adapt RFID busi-ness processes. OATdevice manager is a devicemanagement and filtering platform which supports

both active and passive RFID devices. It also enablescustomers to centrally manage and monitor theirRFID infrastructures. OATaxiom is an enterprise RFID

data management system designed to find the ROIopportunities in an enterprise’s operations byproviding business intelligence and analytics.

“RFID holds tremendous promise for enhancedbusiness performance, but only if RFID informa-tion is actionable for decision makers at the cor-porate level,” explains Pandini. With the help of

OATSystems Foundation Suite, HP Brazil reduced printerinventory in its supply chain by 17% in the first year of its RFIDimplementation.

involved using RFID tags at the item level.There were many reasons for that decision,the biggest of which was to improve supplychain visibility. Pandini says, “In additionto improving supply chain visibility, wethought there were manufacturing efficien-cies to be gained. RFID would give us aclearer view of where manufacturing bot-tlenecks were happening.” There wasanother reason for HP to pilot this project.In addition to being an RFID user, HP isalso an RFID vendor that provides inven-tory control and asset management solu-tions. The company planned to use theknowledge it gained from this pilot to fur-

ther develop its own RFID products andservices.

In order to perform a pilot project in themost efficient manner possible, HP chose itsSao Paulo, Brazil manufacturing headquar-ters location. “Sao Paulo was chosen becauseit has many of the supply chain points suchas manufacturing, packing, shipping, anddistribution located within a small geograph-ic area,” explains Pandini. The projectrequired the cooperation of Flextronics andDHL in Sao Paulo — both partners of HP.Flextronics is a contract manufacturer thatperforms assembly of HP’s printers, and DHLhandles HP’s distribution.

TEST, TEST, AND RETEST FOR RFID SUCCESSOnce HP started on its RFID pilot project,Pandini set up an eight-person implementa-tion team including himself, engineers,technicians, and IT staff. The implementa-tion team had to coordinate all RFID activ-ities with Flextronics and DHL. One of thefirst steps in the project was to create anRFID lab (see photo on page 4) to test tags,interrogators, and software in an area verysimilar to HP’s production environment.The lessons learned were consolidated intoa list of 100 points covering RF installation,systems customization, program manage-

How To Deliver Valuable RFID Data To ERP

Go To www.oatsystems.com

For More Info. On OATSystems

HP Brazil uses the OATFoundation Suite 5.1,an RFID platform thatintegrates directly withHP’s ERP software.

“RFID holds tremendous promise for enhanced business performance, but only if RFID information is actionable for decision makers at the corporate level.”Marcelo Pandini, HP Brazil

INTEGRATEDSOLUTIONSMAG.COM MARCH 2008 33

RFID • Supply Chain Visibility

RFID INTEGRATION

ment, and procurement. During the pilot project, HP learned that

EMI (electromagnetic interference) fromitems such as computers caused problemswriting to and reading from the RFID tags.“We also had problems with interrogatorsreading multiple tags at once,” explainsPandini. The placement of the tags on theprinters and placement of products on pal-lets was critical in solving that problem.

The pilot program ran for more than oneyear. HP tested RFID tagging at one pro-duction line at a time. “The lessons learnedin the trial helped us to fine-tune the RFIDprocesses at each production station,” hesays. “For instance, we had one productionstation that was achieving a low read/writerate. By manually applying the tags to a dif-ferent location on the printers, we wereable to increase the read/write rate to morethan 98%. We would not implement RFID atthe next production station until we hadsolved all issues at the current station.”When all testing was complete, HP wentlive in August 2006.

More than 300 employees at HP,Flextronics, and DHL have been trained touse the RFID systems. HP uses approxi-mately 100 RFID interrogators from Sirit atall three companies. “At HP andFlextronics, the Sirit interrogators areinstalled at the manufacturing lines, thepacking lines, the inventory portals, tempo-rary product storage, the in-warrantyrepair lines, and the outbound door,”explains Pandini. “We have interrogators atthe receiving door, the pallet preparationareas, and the outbound door at DHL.”

USE RFID MEMORY TO STORE YOUR PRODUCTS’ ‘DNA’Last year, HP decided to move from EPC Gen1 UHF (ultra high frequency) tags to Gen 2UHF tags. As a result, read rates haveimproved from 92% to 99%. HP uses the 512bytes of extra memory on those EPC tags tostore what it calls product ‘DNA’ and pro-duction life cycle information for each print-er. “We write the electronic product code, ser-ial number, test results, firmware version,ink cartridges’ ‘install by’ date, and geo-graphical destination to the tag,” Pandinisays. “That information requires only 235

bytes of data, leaving memory for additionalsupply chain data such as service and war-ranty work that may be performed later.

“We apply the RFID tags to the bottom ofeach printer chassis,” continues Pandini.“Throughout the assembly process, inter-rogators are responsible for writing the‘DNA’ information to each printer.” Whenassembly is complete, the printers are movedto inventory transition portals at the manu-facturing facility. Interrogators at the threeportals track the printers as they are movedin and out of temporary storage areas. At theoutbound portals, tags are read as they leavethe factory, and the shipping information issent to DHL. Once the products arrive atDHL, tags are read as the printers enter thereceiving area and again at an area wherepallets are readied for distribution. Finally,an interrogator at the outbound door readsthe tagged printers as they exit DHL for ship-ping. Pandini estimates approximately40,000 tag reads and writes occur every dayat Flextronics and DHL.

The information stored on each tag is usedfor a variety of functions including the for-warding of only approved products to packing.DHL uses the destination information to makesure printers are shipped to the correct coun-try. The serial number is used when printersare returned for repairs under warranty.

RFID IMPROVES PRODUCTION EFFICIENCYAlthough the primary goal of HP’s RFIDintegration was to improve visibility intoits supply chain, its item-level tagging hasprovided the company with the ability toimprove its manufacturing processes. “Bytagging each printer from assembly, wenow know how long each printer spends ateach production station and how long aprinter sits in a temporary storage area,”

says Pandini. “By analyzing that data, wecan make adjustments to our work process-es that are causing bottlenecks.”

Although Pandini doesn’t yet have specif-ic metrics on how much time has beensaved, he says RFID has helped him identi-fy areas of the production process whereprinters ‘dwell’ too long. When asked aboutthe return on investment for this project,Pandini answers, “We haven’t progressed tothe point where we can calculate a produc-tion cost savings yet. We are still learninghow to use all of the data collected.”

Since its RFID system went into full pro-duction in Brazil in August 2006, HP hastagged more than 2 million items. With theincreased visibility into the whereabouts ofits products, HP Brazil estimates that ithas been able to reduce its printer inven-tory in the supply chain by 17%.

What’s next for HP Brazil? “We are con-sidering the expansion of RFID technolo-gies within our own vendor supply chain,”explains Pandini. “The expansion willinvolve RFID component-level tagging byHP’s suppliers, reducing manufacturingdelays due to supplier mistakes. We are alsoconsidering how we can extend RFID track-ing deeper into the supply chain.” HP Brazilis not yet tracking products to any retailers.However, by using only 235 of the available512 bytes of data on each tag, HP is leavingroom to add data for other supply chain par-ticipants, such as retailers.

To date, HP has invested more than $3 mil-lion in its Sao Paulo RFID project. Since it’stoo early to have ROI numbers to support HP’sdeclaration of success, it’s hard to give you areport that an accountant would approve of.However, if you look at the original objective ofgaining supply chain visibility, it is clear thatHP has achieved that goal — a goal that hasalready helped the company reduce printersupply chain inventory by 17% at a cost of lessthan 0.3% of its annual revenue. ❏

Chris Loringer is atechnology editor forIntegrated Solutions.He can be reached at:chrisl@corrypub.com.

HP Brazil created an RFID lab to test tags,interrogators, and software in an area verysimilar to HP’s production environment.

Posted with permission from Integrated Solutions. Copyrighted 2008.For subscription information, call (814) 868-9935 or visit www.IntegratedSolutionsMag.com.

#1-23685406 Managed by The YGS Group, 717.399.1900. For more information visit www.theYGSgroup.com/reprints.

RFID • Supply Chain Visibility

RFID INTEGRATION