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Intermech Uses RFID to Slash Inventory and Manufacturing Costs

The Singapore distributor and manufacturer of industrial automation components is using high-frequency passive tags to manage inventory and track production at its factory.
By Beth Bacheldor
Aug 04, 2006Intermech Machinery, a Singapore distributor and manufacturer of industrial automation components, is using RFID to help track and manage inventory and production at its new 52,000-square-foot factory in Tuas. Its goal is to improve customer service by delivering better products more quickly.

Intermech got its start 16 years ago as a distributor of such products as geared motors and speed controllers, and as a manufacturer of subsystems for factory automation. The company says it used to keep customers happy by fulfilling orders within one to two months. However, according to C.E. Tan, Intermech Machinery's general manager, that has now changed. "Today, they are demanding less than a week of turnaround time to achieve their own just-in-time targets to reduce downtime," Tan says.

C.E. Tan, Intermech Machinery's general manager, oversees production at the company's new 52,000-square-foot factory in Tuas.

To improve visibility into its inventory and distribution processes, Intermech is using passive HF (13.56 MHz) tags made with Philips Semiconductors' I-Code SLI chip, which is compliant with the ISO 15693 standard. The tags are affixed to about 80 percent of the inventory of products the company distributes and the materials it uses to manufacture subsystems. Each tag is encoded with the item's unique purchase-order number andthe date the item was received. RFID antennas placed on shelves communicate with RFID readers and multiplexers. Intermech worked with TCM, an RFID systems integrator, to provide customized antennas and other RFID components. Its readers, meanwhile, were supplied by Brooks Automation.

The antennas automatically read the tags, thereby detecting the volume and age of the inventory sitting on the smart shelves. This allows the company to adhere to its first-in-first-out (FIFO) inventory policy, designed to reduce waste stemming from outdated materials. Many of the components Intermech offers have one-year factory warranties. If warranties expire, Intermech has to put the components through costly and time-consuming tests to have warranties reissued.

The RFID interrogators transmit tag data via a wireless 802.11g network to Microsoft Dynamics AX, a supply-chain management system that keeps track of inventory and work-in-progress, helping to manage picking, packing and shipping processes at the factory.

In addition, before goods are shipped to customers, supervisors provide employees with handheld RFID interrogators and a pick list generated by supply-chain software. The latter identifies the exact products needed to fill orders, and on which shelf and in which case the products can be found. Employees then pick these products, using handheld interrogators to read their tags and document that the correct items were picked for a particular order. In addition, workers in Intermech's factory use handheld interrogators to track works-in-progress as they move from pallet to pallet and assembly station to assembly station.

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