Using RFID to Manage Reusable Transport Items: Case Studies from Automotive and Fresh Produce

Eliminate container and pallet loss. Examples from the field illustrate how RFID enables reusable packaging owners to reduce their need for emergency expendable packaging procurement while allowing them to minimize their pool size

bins landscape

For all of the benefits of reusable packaging, a lack of availability can be, quite literally, a show stopper. “When we don’t have enough, we either stop or slow down production,” stated Tom O’Boyle, Director of RFID for Barcoding, Incorporated. “Customers don’t like to hear we are delayed because we don’t have enough totes.”  O’Boyle outlined the advantages of RFID for reusable transport item management at MODEX 2016.

When reusables are not available, manufacturers may be forced to switch to a corrugated cardboard tote or gaylord. “And unfortunately,” O’Boyle added, “unless you can prove otherwise, the expense of those expendable packaging units have a tendency to be pushed to the supplier.”

Other tactics, such as the expediting return of empty reusables to maintain supply, keeping a large on-hand buffer of empties to avoid a shortage, purchasing extra reusable containers to fill shortfalls, and frequent cycle counts of reusable asset inventory, can also translate into inefficiencies, burdening the packaging program with additional cost.

“But what if you knew how many you really had,” O’Boyle asked? “What if you could validate the receipt for the shipment of these units as they’re going in and out. And what if you could know that the unit actually passed inspection and is available to be used internally?” With access to accurate information, RTI owners have the capability to eliminate inefficiencies.  

A key element is to find the right tool for the job, O’Boyle noted. Given the line of sight requirement for barcode, passive RFID was the application of choice for the two case studies outlined. For reusable containers, getting a barcode read can be challenging when collapsed and nested with the barcodes inward.  The type of container and the application will inform the selection process for tag selection, ranging from label-type tags to encapsulated or hard tags.

RFID reader direction

Readers configured to determine the direction of travel into or out of a zone.

The industry, O’Boyle noted, has matured to the extent that solution providers are not typically dealing with specialized tags or readers. “These are commodity products that we have the ability to get.,” he said.  “So I can acquire readers from Company A and reader from Company B.. And they’re going to read the tags from Company C., which is using a worldwide standard.”

Batteries are no longer a requirement. Chip memory will last up to 50 years for passive tags. “One other thing that we see in the industry is that tag prices continue to go down, and our read range continues to go up,” O’Boyle added. He emphasized that in some cases, an active tag makes sense, depending upon the application.

 

Automotive Case Study: RFID Helps Supplier Avoid $425,000 in Expendable Packaging and Reduce Pool by 40 Percent

The automotive supplier had a pool of about 250,000 totes, which it supplemented with expendable packaging when it did not have reusables available. It spent an average of $450,000 annually for the single-use containers. While the customer would reimburse the cost of expendable packaging if the supplier could prove that the shortage of reusables was the fault of the customer, this in practice was tough to do. The supplier did not have confidence in its data. Due to the labor-intensive requirement of counting returned empty packaging, estimates were made (“I think there are 200 on that pallet.” ) To complicate the issue, many totes looked similar or the same from the outside, but with different dunnage.

As a result, daily cycle counts were required, meaning that someone had to physically move and handled packaging units to count them. Additionally, totes were staged ahead of time to eliminate concern about running short, a practice that caused other inefficiencies. 

After the decision to implement RFID, totes went through a tagging process as they returned to the supplier, an implementation that took around three months.  Read points were set at the dock doors. “They had very controlled doors,” O’Boyle said. “We knew which doors were in which stores were out which stores were used for individual plants. It was relatively simple.”

After installation, the supplier was able to log the event of every shipment and receipt, including when returning empties were moving in and out of quality assurance. If reusable totes were needed, and it could identify if the required quantities were already in the building, but had not yet cleared quality assurance, the process could be expedited.

For the first time, when reusable container shortages resulted, the supplier had the data to share with the customer to show that there had been a failure to return them, to justify being reimbursed for expendable packaging expenditure.  The customer temporarily improved its return rate after receiving the feedback but has subsequently regressed. From the supplier’s perspective, however, it is now being reimbursed for much of the expendable packaging required to cover reusable packaging shortfalls.

The results have been impressive. Over four years into the program, expendable packaging expenditure by the supplier has been reduced by $ 425,000 annually, and it has been able to reduce its pool size from 250,000 reusable totes to less than 150,000.  In the process, the supplier has reduced its container storage area, and with confidence in the data, it has completely eliminated its cycle count process.

 

Fresh Fruit Processor Case Study: RFID Delivers Accurate Data, Identifies Dormant Assets, and Allows Efficient Physical Count

A fresh fruit processor spent $7 million to purchase reusable plastic bins  (intermediate bulk containers) to replace an aging inventory of wooden bins.  The processor utilized eight 3rd party facilities for bin storage.

Physical counts were daunting to take. The facilities had “huge stacks” of bins that were up to 40 feet in height and nested, with as many as eight or ten rows deep.  At the end of each season, the processor would send a counting team of four people to each location to perform an accurate bin inventory, an activity that might take as much as three weeks to perform, and which was recorded on an Excel spreadsheet. Also, there wasn’t a process for managing damaged bins identified during the count.

As part of the solution, the bins were tagged, and readers were installed at the scales, at the gates, and at the driveways to log movements.  The processor has a bin cleaning process, and those events were also recorded.   “Instantaneously, they knew where 63,000 units were,” O’Boyle stated.  Inventory information was available online, for each location. Using RFID handhelds, a physical inventory could be taken in one day by a site employee, versus requiring several weeks by a group of processor employees. The new process eliminated excess labor and travel requirements.

One surprise, accurate data revealed that 20 percent of the bin inventory did not move during the entire growing season. “It stayed in the same place, but was in the wrong place,” O’Boyle said.  This visibility allowed the processor to disperse the available bins accordingly. An additional benefit was the accurate tracking of damaged bins. Many of them were still under warranty and could be returned for repair or replacement, thus avoiding expenditure on new bins. A key benefit came in having visibility of bins in transport, thus helping to better predict bin availability and reduce concerns about potential shortfalls in supply.

“You can control your system,” O’Boyle emphasized in conclusion. “Don’t let your system control you. Put a little effort into it and I think you’ll be able to find that you’ll be able to reduce your pool. You’ll be able to reduce the costs associated with managing them. And if you use expendable packaging you will be able to lower your expense.”

Tom O’Boyle’s presentation is available at the MHI.org website.

 

Further Reading

Big data, heroic management and reusable automotive packaging: what’s next?

The Chinese automotive supply chain could reduce packaging-related costs 35 percent through pooling

Daylight at the end of the RFID hype cycle tunnel?

OEM increases usage of reusables while reducing expenditure by $16 million

CHEP Automotive interview with Evi Shulz

An introduction to reusable packaging and pallets in automotive