Needle in a Supply Chain Haystack

Manufacturers move toward JIT production with increased visibility. New wireless location systems are making it possible to pinpoint instantly that needle of a critical asset in your company's supply chain haystack.

[From iSource Business, January 2002] In today's speed-of-light e-business environment, manual processes for tracking critical assets can bring the most supercharged supply chain grinding to a halt. But new wireless technologies are making it possible to pinpoint instantly the location of "tagged" assets as they make their way through the supply chain. If the supply chain is the haystack, these technologies will tell you where to find the needle.

Imagine 2,000 trucks scattered like checkers across a parking lot two miles wide at an automobile plant. Now imagine that a handful of specific trucks must be returned to the plant for adjustments and it is your job to locate those vehicles based on their identification numbers (VINs) and their general description (red truck, blue interior).

Oh, and did we mention that the plant can't ship out any trucks until you identify all the wayward vehicles?

That was exactly the dilemma facing Ford Motor Co.'s truck facility in Wayne, Mich., which periodically had to shut down its lot so teams of employees could track down errant automobiles. But now a wireless asset tracking system from Santa Clara, Calif.-based WhereNet is reducing Ford's labor costs and producing other savings by, among other things, allowing the Michigan Truck facility to pin down the location of any vehicle on its lot to within 10 feet.

The Move to Real Time

Over the past decade logistics providers, distributors and some manufacturers have implemented wireless systems to track such assets as containers, inventory and works in progress through the supply chain. For example, International Truck and Engine Corp., the operating name of Chicago-based Navistar, has implemented a radio frequency identification (RFID) system from Escort Memory Systems (Scotts Valley, Calif.) at its Huntsville, Ala., plant to track engines as they move along the assembly line. Antennas placed along the line read radio transmitter "tags" placed on the engine transport pallets, telling the plant's production managers where each engine is in the build process and providing a "build history" for each finished product.

Both in terms of time savings and accuracy, RFID systems are a step up from manual processes used to track assets, such as barcode scanners. However, these systems typically don't tell you where the asset is at the moment of inquiry. Rather, they tell you where the asset was the last time it passed by a detection point. So while RFID systems undoubtedly can deliver a return on investment (ROI) and provide a degree of insight into an asset's location, they fall short in providing the kind of real-time visibility that companies are increasingly demanding in their supply chains.

What good is real-time information on the location of assets? Well, consider this: in a survey by solution provider WhereNet, 84 percent of 146 responding executives said their companies still use manual labor to locate and track inventory or high-value assets, with 25 percent reporting more than 10 searches a day and 64 percent saying that each search takes 30 minutes or longer. Moreover, 10 percent of the executives said that their companies write off $500,000 or more every year as a result of lost assets or inventory.

Savi Technology, a Sunnyvale, Calif.-based pioneer in the field of real-time location systems (RTLS), has been working on real-time tracking since 1989 and, beginning in 1994, implemented a system for the U.S. Department of Defense to do item-level tracking in containers shipped around the world. But it is only in the past few years that the possibilities of real-time tracking systems have gained increasing acceptance in supply chain circles and greater numbers of providers have come forward with solutions. Joshua Greenbaum, principal at Enterprise Application Consulting, sees the focus on real-time asset visibility as a reflection of three convergent trends: First, as manufacturers move toward just-in-time production, they need heightened control over inventory and assets. "Dead inventory - inventory that's just sitting there or, worse, that's unfindable - is the bête noir of every manufacturing company," he says.

Companies also are trying to analyze in increasing detail how their supply chains function, and RTLS provides information on assets at a much finer, or more "granular," level of detail. Finally, Greenbaum says these systems "are part of a trend toward looking around all enterprises and saying, 'What are the things we're doing in a hand or paper fashion that could be better automated and provide us better efficiencies?'" In fact, the genius of these tracking systems, Greenbaum asserts, is that they allow companies to do something they are already doing, only much more efficiently. "They are already looking for [their assets]," he says. "You're not inventing a wholly new way of doing business. You are automating and creating something that is much more effective out of an existing set of unautomated processes." As such, any company that is currently tracking a large number of high-value assets within large facilities or throughout its supply chain could potentially benefit from an RTLS implementation.

Ford Gets Real-Time

At Ford, the Michigan Truck facility's asset-tracking project was part of a broader program to improve the automaker's ability to follow a vehicle through the supply chain from the time a customer initiates an order until delivery. The ultimate goals include providing information to customers about the status ordered vehicles and reducing the company's order-to-delivery time from about 60 days to 15 days.

Ford first looked at wireless tracking technology in 1997 and was sufficiently impressed with the prospective applications for WhereNet's technologies - so much so that the automaker made an equity investment in the solution provider in 2000. Following an initial pilot in 1999 at its Van Dyke Transmission Plant in Sterling Heights, Mich., Ford ran a second pilot from August 2000 through May 2001 at the Michigan Truck assembly plant, which turns out about 1,000 trucks and sport utility vehicles every day.

Here's how the system works: WhereNet has set up a network of receiving antennae covering both the plant's interior and the vast yard where assembled vehicles are parked prior to shipment. An employee hangs a WhereNet radio "tag" - similar to, but more powerful and sophisticated than, the tags that retailers put on clothing to prevent shoplifting - on the vehicle at the end of the assembly process. The employee scans the VIN and the tag so that the WhereNet software associates one with the other, and the vehicle enters into pre-delivery for final testing.

The tags can be configured to send out a signal at a user-defined time interval. The receiving antennas pick up the signal and determine the location of the tag by triangulating the origin of the signal (based on the time it takes for a signal to reach three or more antennas).

Following assembly, the trucks, with the tags still hanging from the mirror, remain in the plant's yard prior to shipment to dealers or customers. As groups of cars are prepared for shipping, an employee hand-scans each tag again. The tracking system links to the plant's quality control system to determine whether any last-minute quality issues must be addressed for the vehicle, such as a wiring-harness adjustment or the torque on a bolt. If a vehicle is cleared to ship out, the tag is removed and the truck is loaded. On the other hand, vehicles flagged with a quality concern are placed in a return-to-plant lane for further attention.


Scott Hollister, who oversaw the RTLS program as project manager for advanced manufacturing technology and development (AMTD) at Ford, points to several results from the Michigan Truck pilot. First, he says, the plant reduced the average "dwell time" - the time that the vehicle sits in the yard prior to shipping out - by a half-day through operational improvements made possible by the system. Cars can simply be located more quickly to address quality concerns, and the data generated by the tracking software allow the plant to better enforce its "first-in/first-out" policy for shipping vehicles out of the yard in the order in which they enter the lot. In addition, the plant can now locate vehicles that must be brought back into the plant due to quality concerns without having to shut down the entire yard and not allow any trucks to be shipped out, as Ford was forced to do prior to installing the new system. While Hollister didn't put a figure to these savings, Tom Turner, a senior vice president at WhereNet, estimates that each day of dwell time costs an automaker an average of $5 to $10 per car per day, which would imply savings of at least $700,000 per year at Michigan Truck.

Hollister also cites labor-cost savings. Previously, when the plant initiated a "campaign" to address a quality concern for a given set of trucks, six to nine people would search the two-mile wide yard for the vehicles based on a description of the trucks and their VINs. Because the WhereNet system allows plant staff to pinpoint a vehicle's location in the yard to within 10 feet, fewer people spend less time bringing trucks back to the plant for adjustments, resulting in a labor-cost avoidance that Hollister estimates at five or six full-time equivalents.

Ford has seen savings relating to improved quality at the plant, too. Thanks to the final scanning process prior to shipping, the plant's staff is able to catch greater numbers of vehicles with quality concerns before they get sent to a dealer, reducing the number of trucks that require fixing at the dealership at a cost to Ford under a warrantee. Ford has estimated the savings from the Michigan Truck pilot at $400 per vehicle, for a total annual reduction in warrantee costs of between $500,000 and $1 million.

Hollister declined to discuss the cost of the system at Michigan Truck. WhereNet's Turner says that an RTLS implementation can range from $100,000 to more than $1 million, depending on how large an area is covered and how many assets are tagged. The tags themselves run about $50 each, which explains why Ford tries to ensure that the tags don't leave the Michigan Truck yard as vehicles are shipped out. Hollister says the plant loses about three to five tags a day.

Following the assembly plant pilot, Ford went ahead with small-scale implementations of the WhereNet system at 22 assembly plants, with the last systems due to come on line by the end of October 2001.

How Valuable Is Your Needle?

Alternative uses for RTLS could include securing high-value assets (for example, having the system trigger an alert if an oscilloscope were to be moved outside a facility), increasing the ROI from a costly piece of equipment (such as a airline cargo tug, the movements of which can be tracked to determine whether it is being used optimally) or tracking inventory in a warehouse. The solution providers for these systems are also looking to offer "smarter" tags that include, for instance, temperature, altitude or other types of sensors. A tag with a built-in thermometer not only could tell a warehouse manager that a refrigerated truck full of frozen foods is parked at the loading dock, it could send out an alert that the temperature inside the truck has risen past a critical mark, putting the contents of the truck at risk of spoilage.

The applications for these systems and for the vast amounts of data that can be derived from real-time asset tracking would seem to be limited only by the imagination and the time and money available to invest in them. It just depends on how valuable the needle is that you're looking for in your supply chain haystack.