Caterpillar Looks to RFID to Improve Work-in-Progress Visibility

By Mary Catherine O'Connor

Feb. 12, 2007—When it comes to designing and manufacturing mining and other earth-moving equipment, Byron Blackburn thinks Caterpillar has the job down pat. "We are the largest supplier of mining equipment in the world," he says. "No one has the market share that we have." However, keeping track of all the earth-moving equipment it makes, sells and rents around the world is a monumental task, one the company currently manages largely though bar codes and paper trails.

Blackburn, a new technology analyst for Caterpillar's technology research and development division, thinks the company can and should improve its supply chain visibility through a combination of auto-ID technologies, including RFID. To that end, he is leading a company-wide, global initiative to improve overall products and parts visibility.

Caterpillar's Byron Blackburn

"Do we have a problem in parts logistics? Everyone does," says Blackburn, explaining that Caterpillar is exploring RFID and other technologies not to solve a specific issue or set of issues unique to Caterpillar, but rather to improve its control over its parts and finished products. Better control and more visibility, he notes, will lead to improvements in its ability to fill orders and satisfy customers.

"We have just as much outbound supply chain as inbound supply chain," Blackburn says, "and the outbound equates to customer service. Better visibility will let us circumvent supply chain problems before they reach the customer." Caterpillar also expects better product visibility to enable the company to cut costs.

"We'd like to have better inventory visibility as product moves around the world. Most large mining equipment is shipped to the end user in sections that are assembled at the site. A mining truck might ship out on seven separate railcars," Blackburn explains. "Some of the welding is even done at job site, and right now we use bar coding and tear sheets to keep this straight."

The company had $41.5 billion in revenue in 2006 and operates a global sales and manufacturing system. At present, it is taking a measured approach to revamping its parts- and product-tracking system. Blackburn has formed a cross-functional team within the company—the material tracking and tracing council—to develop a roadmap and contract technology-integration partners to help Caterpillar achieve its mission. The firm has decided to begin integrating RFID into its Decatur, Ill., manufacturing facility to improve parts and subassembly tracking.