Active RFID Keeps Toyota Distributor Rolling

By Mark Roberti

Gulf States Toyota deployed a real-time locating system to make the process of installing optional car equipment more efficient—cutting costs and improving customer service.

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No customer wants to spend a lot of money for a shiny new car, only to wait several weeks for it to arrive from the dealer. Gulf States Toyota, a large Toyota distributor based in Houston, Texas, worked with IBM Global Services and WhereNet, a provider of real-time locating systems, to create a solution that tracks cars on its 84-acre lot and speeds up the process of installing optional car equipment. The system cuts costs and keeps Toyota dealers and customers happy.

IBM's Deepak Mahbubani

Gulf States Toyota receives new cars from Toyota factories in Japan and the United States via railcar. It takes orders from 145 dealers in the South, adds a wide variety of optional features—such as auto-dimming mirrors, CD and/or DVD players and alloy wheels—and then conducts a final quality control check before a transportation company picks up the vehicles and delivers them to the dealers.

Gulf States, however, faced a problem: It was handling more and more vehicles—185,000 last year alone—and the supply chain was becoming more complex, with cars and parts coming from an increasing number of countries; as a result, its supply chain costs were rising about 10 percent a year. The company was using employees to walk the lot to find specific cars for dealers, and to take those cars from one station to another to install various accessories. Staffers used radios to communicate, but orders were often backed up because stations were out of particular parts.

Gulf States needed a more efficient way to move cars through the facility. About a year ago, the company began working with IBM and WhereNet on a system that would locate cars anywhere on the lot, direct their movement through various workstations and manage the accessory installation process.

The first stage of the project—the installation of WhereNet’s RTLS infrastructure—was completed last December. WhereNet installed 40 WhereLAN wireless locating access points around the parking area and 74 WherePort devices at the entrances and exits of workstations. The WherePoint devices trigger active RFID tags, which are placed in the cars, to emit a signal when entering or leaving a specific zone.

WhereNet also created a digital map of the facility. Now, when a car comes off of a railcar, Gulf States hangs one of WhereNet's WhereTags on its rearview mirror. The tag's ID is associated with the car’s vehicle identification number (VIN) in a database. Each time the tag is read, the vehicle's location is updated on the digital map.

For the second stage, implemented in February, IBM integrated handheld bar code readers from Intermec Technologies with the RTLS. Presently, when a technician installs a part, he or she scans a bar code on the accessory, indicating the job is complete. IBM also created business rules that would use the bar code scans, inventory information and RTLS data to direct cars through the process of installing accessories.

Here's how it works: Each vehicle arrives with a work order listing which accessories need to be installed. In some cases, one accessory must be installed before another; that information is written into a software rules engine. Other accessories can be installed in any order. So when a bar code is scanned on, say, alloy wheels, that information is sent to IBM's Data Collection Software, which passes it on to the rules engine.

The IBM middleware communicates with Gulf States Toyota's main frame system to determine what other accessories need to be installed, then checks the RTLS and inventory system. If a sunroof wind deflector needs to be installed on a Camry, but none are in inventory at that workstation, the rules engine might direct the employee to bring the car to the station where custom knobs are placed on the stick shift. If the RTLS says cars are backed up at that station, the employee might be directed instead to bring the car to the station that installs mudguards or six-disc CD autochangers.

Once a vehicle is outfitted with all the required accessories, it is sent to a station for a final quality control check, then put in a lane for outbound shipping. After it is loaded on a truck, the WhereTag is removed from the rearview mirror. A security guard then interrogates the tag, confirms that this vehicle belongs on the truck and clears it for delivery to the dealer.

IBM is currently rolling out the third stage of the system, which manages inventory and exceptions. When a bar code is scanned, the data collection middleware sends that information to the inventory management system, so inventory can be decremented accordingly. If two bar codes are scanned, employees must explain why two items were used instead of one. This gives Gulf States more accurate inventory data.

Gulf States is currently considering whether to expand the system to manage the transportation of cars. The idea would be to share information with the transportation companies that deliver the cars to the dealers. A transportation provider might have only a partial load going to an area in Texas. If Gulf States were able to expedite the processing of vehicles going to the same area, the truck could take a full load.

Deepak Mahbubani, project lead for IBM Global Services, says the RTLS system should deliver a return on investment from Gulf States Toyota within a year. The system cuts labor costs, he maintains—workflows are automated and staff don't need to be trained as much since the system tells them where to bring the cars—reduces mistakes (alerts are sent if a car misses a processing step) and decreases the amount of time cars are in the facility.

"These benefits are becoming more important," says Mahbubani, "but the biggest benefit of the system is [that] it allows Gulf States to improve [dealer] satisfaction, and that satisfies the end consumer."