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Air Canada GETS Asset Tracking
Reusable supply chain assets often seem to sprout legs and walk off on their own. Learn how Air Canada used an innovative RFID system from Scanpak to slash unexplained losses and improve food cart utilization globally.
Mar 09, 2003—March 10, 2003 - Call it an "ah-ha" moment. Or maybe it was an "uh-oh" moment. Either way, Air Canada knew it had a problem that it could no longer ignore. Each November, the Canadian carrier asked its catering partners, maintenance providers and its own warehouse staff and in-flight training centers to take inventory of all the food trolleys it owned. The company skipped the counting exercise in 1994, and the following years, when the numbers came in, millions of dollars worth of equipment had somehow vanished.
Air Canada executives were dispatched to some of the catering stations around the world to oversee a recount. Some of the trolleys, which cost about C$1,000 (US$675) each, were found, but when the final numbers were tallied, the airline still had more than $2 million in unexplained losses. That was unacceptable. Senior managers wanted to find a system that could stem the losses and improve the way the company managed those assets.
That led Air Canada to become one of the first airlines to adopt a radio frequency identification system for tracking the location of more than 10,000 food trolleys at more than 50 locations around the world. The system has dramatically reduced unexplained losses. It has also cut maintenance fees, slashed charges for trucking trolleys to caterers that are short, and eliminated the need to do yearly inventory counts. The system is already providing a return on investment, and other airlines are beginning to catch on to the value of the system.
It wasn't clear from the start, however, that RFID would be the right way to solve the problem. In fact, when Barry Wilkins, then Air Canada's manager of equipment design, maintenance and repair, was given the assignment of developing a better tracking system, he turned to a Montreal bar code company called Scanpak. (Wilkins has since resigned and started a consulting company called OutsidetheBox-Solutions, which advises airlines considering adopting RFID systems).
Wilkins and Scanpak were planning to put a bar code on every food trolley so that it could be scanned with a handheld scanner. The problem with that was, if the caterers didn't scan the bar codes, the system would be just as inefficient as manual counting. Then, Wilkins read an article in which KLM, the Dutch carrier, was given an award for an innovative new tracking system that used RFID. Wilkins got permission to fly to Amsterdam to check out the system.
At that time, KLM was using a small, passive tag, with a read range of about 15 cm. The antennas for the readers were placed either on the floor or directly above the trolley. The caterer had to push every trolley over a specific floor location or under a bar. "My evaluation of that system was if you wanted to count the number of trolleys that you washed during the day, it was perfect," says Wilkins. "But it wasn't perfect for anything else."
Wilkins had been talking to several caterers, particularly Cara Operations in Canada, and they kept telling him that any counting system that forced them to change their procedures or slowed down the work flow would mean they would have to hire additional staff. That cost would be passed on to Air Canada. So the KLM system might reduce the loss of trolleys, but the benefits would be at least partially offset by higher catering costs.
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