A leading German supplier of screws, structural bolts and nuts and other fasteners and fastening technology is employing RFID to manage the supply of empty containers the company uses to fulfill orders and ship hundreds of thousands of small parts to its customers.
Reyher, a 120-year-old company based in Hamburg, Germany, offers more than 90,000 fastening products, shipped from its warehouse in a suburb of the northern German port city. To manage all those parts and fulfill each customer’s order, Reyher uses about 300,000 plastic bins of different sizes and colors. Each bin is assigned to a specific customer and designed to hold specific items. The RFID technology, which Reyher first began testing in 2005, is designed to help track those bins within its warehouse. Reyher wanted to have a more accurate way of determining how many, and which, containers were available at any given time. Before the project started, Reyher was not tracking any empty bins at all. Today, Reyher has RFID-tagged 3,000 bins for three different customers. The company uses passive 13.56 MHz tags supplied by Rako Security Label. The tags comply with the ISO 15693 air-interface standard.
Reyher worked with UCS Industrieelektronik, an industrial electronics services provider it has used on other projects, to design, develop and implement the RFID technology.
“We wanted to gain experience with RFID and play a leadership role with the technology,” says Norbert Schmidt, a manager of the project at Reyher. He adds that the company specifically chose a simple application for its first project in order to ease the learning curve.
Reyher already uses lean manufacturing processes to automatically replenish customers’ orders. Lean manufacturing is a methodology that attempts to drive waste out of manufacturing processes by employing such tactics as just-in-time inventory to ensure goods arrive for production when needed rather than ending up as inventory, and kanban, the Japanese term for signal, which establishes a “pull” instead of “push” system of moving goods through the factory. At a Reyher’s customer site, for example, when a bin of screws is emptied, a worker pulls a kanban card out of the kanban pocket on the side of the bin and scans the card’s bar code to trigger a new order of those screws. The order is created in the customer’s warehouse management system (WMS), which triggers a request for replenishment in Reyher’s order management system. The empty bin is then sent back to Reyher via a logistics company.
The RFID technology helps Reyher track all the different bins it uses to fulfill orders, thus ensuring that customers’ replenishment orders aren’t delayed because of missing bins. When empty containers bearing RFID tags arrive back at Reyher, the tagged containers are stacked in a wooden box on a pallet (each wooden box holds about 100 containers). The pallet is moved on a conveyor belt through an RFID-enabled gate that has been fitted with an interrogator from Sentronik. The gate has four antennas located inside two plastic walls on either side of the conveyor belt. As the pallet passes through the gate, the interrogator scans each container’s RFID tag, which has a unique ID number. That ID is associated with other information, such as the customer’s name and the container’s size and color, in Reyher’s WMS. The scan updates the WMS, which Reyher employees can later query to find out which bins have been returned. The empty bins are stored until they are needed to fulfill an order.
Keeping an accurate count of bins is vital for Reyher to confirm that it has enough of the right types of bins on hand to fill orders, because customers expect to get the same type of bins. Often, the customer has made associations in its WMS regarding bins and products, and employees have grown accustomed to identifying types and colors of bins with specific products.
Reyher has automated some of its software processes to trigger alerts when bin stocks fall below certain levels. If, for example, the stock of small red containers used to ship screws to a particular customer runs low, Reyher’s WMS will automatically issue an alert via e-mail so warehouse employees can begin searching for the containers at Reyher’s facility, as well as contact the customer to see if it has any of the bins at its site.
Currently, Reyher scans only incoming bins, not outgoing bins of shipments. Reyher didn’t want to have to install a second gate to scan tags on filled bins as they leave Reyher’s premises, a step that would have added to the RFID project expenses. “We wanted a pure container-management system. This is not about managing orders over RFID,” says Schmidt.
Reyher’s WMS does, however, combine the RFID and order-fulfillment data to keep a running tab on exactly how many of each different tagged bins are on hand. Whenever an order is processed and shipped, the WMS system records that shipment and associated bin (though not through an RFID read), and then subtracts the number of bins used in that order from the total number of those bins currently on hand (as collected by the RFID reads when the bins were returned).
Today, Reyher is experiencing perfect read rates, and the pallets of bins move through the RFID-enabled gate at a constant speed. The supplier does have a handheld interrogator it uses when it needs to perform a manual read. This interrogator comes from Feig Electronic. Initially, however, Reyher did have problems with read rates, especially when it was moving pallets of bins through the RFID gate with a forklift. Reyher worked with Rako to design the gate around its conveyor system, and worked with Sentronik to find the best positioning possible for the antenna.
Reyher did not calculate an expected ROI for the project because initially it viewed the project as a test. Costs were low in part because Rako and UCS donated products and services. “Basically, we had very little cost except integrating the RFID application into our warehouse management software,” says Schmidt. But the project, now two years old, has morphed into a full-fledged RFID implementation for the company, and Schmidt says the project has saved Reyher time by making it easier to locate bins, and has improved customer service because it now always has the right bins available to fulfill orders. In addition, the RFID project has given Reyher hands-on experience with the technology. “We can now hold our own with RFID,” he says.
Reyher is interested in further RFID projects but has put them on hold because it believes the technology behind RFID systems is changing quickly. “We want to wait for more developments in RFID and see the prices for tags come down,” Schmidt says.