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RFID Kanban System Pays Off for Bosch

The German car parts manufacturer says the RFID application could save it at least a million euros annually.
By Rhea Wessel
May 07, 2007A factory that produces car parts sold by Bosch Fahrzeugelektrik in Eisenach, Germany, is using RFID-based kanban cards to speed its production process and better manage customer orders. Started as a pilot in 2006, the project is now operational and uses approximately 60,000 tags.

Bosch estimates that the RFID application will save the company more than €1 million ($1.4 million) per year.

The Eisenach factory produces about 18 different parts for cars, including gas pedals, engine speed sensors, accelerator sensor modules, wheel-speed sensors and secondary-air pumps. Bosch has outfitted each production line with RFID readers and created an application in which the RFID tag embedded in a paper kanban card assigned to a particular container is interrogated four times. This allows the company to track each part's progress through production. It can also use the system to document each part's production path in case government safety officials request such information.

Bosch delivers car parts to its customers—major automobile manufacturers—on a just-in-time basis using the "pull" principle. Under this concept, orders are triggered automatically as soon as a customer runs low on parts. The customer "pulls," or demands, new parts and wants quick deliveries since it doesn't keep many parts in stock. Such customer demands require Bosch to be able to produce quickly.

"We have to be able to build every part every day," says Carsten Frost, who heads the IT department of the company's logistics division.

Bosch Fahrzeugelektrik considered continuing with a bar-code system but rejected that option because it would have taken much more time to manually scan bar codes than to interrogate RFID tags, and it wanted to avoid bar-code stickers.

Prior to implementing RFID, the firm had made an internal decision to switch to smaller lot sizes—in other words, smaller groupings of parts—to increase the efficiency of its own production by making parts on demand rather than filling its warehouse shelves with car parts. As a result of this decision, Bosch began to produce smaller batches and make shipments to customers more frequently.

Previously, when the company was using larger lot sizes on pallets, data entry was not much of a problem; after the smaller lot sizes were introduced, however, more data was produced—that is, more production "events" occurred because of the smaller lot sizes. As a result, it sometimes took more time to enter data about all the orders going into production than it would have taken to gather the parts needed on the production line. The RFID system would eliminate the manual bar-code scanning of the smaller lots, thereby saving time and energy and helping the company become more flexible in filling orders and eliminate mistakes At one point, Bosch calculated that producing in smaller lot sizes would create the need for 12 million additional scans each year, for which it would need to employ 50 workers.

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