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Volkswagen de Mexico Employing RFID to Improve Parts Distribution

The application enabled the company's Puebla plant to lower its yearly expenses associated with parts distribution by 30 percent.
By Mary Catherine O'Connor
May 20, 2009When Volkswagen drivers in and around Mexico City require replacement parts for their vehicles, they rely on a network of VW dealerships. And those dealers rely on a Volkswagen plant in Puebla, located approximately 75 miles outside the city, from which they order these parts.

As part of a larger effort initiated by Volkswagen de México in order to improve its spare parts distribution process, cardboard boxes used for shipping spare parts to dealers are being replaced with reusable plastic containers fitted with RFID tags. The application has enabled the Puebla plant to lower its yearly expenses associated with parts distribution by 30 percent, through reduced packaging costs and an automated shipment-verification process, according to Juan Manuel Rodríguez Flores, sales manager of Grupo Hasar, the RFID systems integrator that deployed the solution for the plant.

Each of VW's plastic containers, used for shipping parts, is fitted with a bar-coded label containing an EPC Gen 2 RFID tag.

In late 2007, VW de México enlisted Grupo Hasar to help devise a means by which it could reduce some of the manual steps required to track parts shipments headed to its network of dealers. After carrying out a pilot project to test a solution, the company rolled it out permanently in June 2008. Now, VW de México and Grupo Hasar are working to expand the system to additional factories throughout Mexico.

When a dealership submits a parts order with the Puebla plant, the SAP enterprise platform planning software used by VW captures and forwards the request to the factory's warehouse management system (WMS). Employees at the plant take the orders and a forklift truck into the warehouse in order to collect all of the parts needed to fulfill them. They utilize handheld scanners to read the bar code attached to each part, then bring the selected parts to a packing table. (At present, Flores says, RFID tags are too costly to replace the bar-code labels used by VW de México to identify the individual parts. But if tag costs drop significantly in the future, the Puebla plant would likely move to RFID tags in order to further automate parts identification.)

At the packing table, another employee uses a handheld bar-code scanner to read the bar code on a label attached to a reusable container. That label also contains an embedded RFID tag—an Alien Technology Squiggle passive UHF EPC Gen 2 tag. The same unique ID number is encoded to both the bar code and the tag. After collecting this ID with his handheld scanner, the worker scans the bar codes on each part he places in the container. Once he finishes, the handheld computer associates the parts with the container ID, then forwards this data to the WMS.

In the warehouse management software, the order status is updated to reflect that the order has been packed. Then, a Motorola XR440 RFID reader, mounted at the loading dock, captures the ID encoded to the RFID tag as each container is loaded onto a truck bound for the dealers that placed the order. This information is also forwarded to the WMS, which marks each order complete and shipped, noting the date, time and dock location from which it was sent. When the truck delivers an order, the dealer reads the bar-code label on each container, which is logged in the Web-based WMS, so that the Puebla plant knows when each container was received.

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