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Car Makers Steer Toward RFID

Manufacturing benefits drive adoption, and down the road, supply-chain standards could accelerate the ride.
By Jennifer Zaino
Mar 04, 2013

Auto-industry players often quip that returnable containers are never lost, just misplaced. But while said in jest, it reveals a hidden truth—actually, a costly problem. Containers can cost thousands of dollars, and studies estimate that the automotive industry spends millions of dollars annually replacing returnable transport items (RTIs), including racks, totes and pallets. In addition, lost or misplaced RTIs carrying essential parts and assemblies can lead to production delays.

To improve RTI tracking, the international Joint Automotive Industry Forum (JAIF)—composed of the United States' Automotive Industry Action Group (AIAG), Europe's Odette International, the Japan Automotive Manufacturers Association (JAMA) and the Japan Auto Parts Industry Association (JAPIA)—set out to drive standards into the industry's supply chain. Closed-loop supply chains exist in the auto market, but many supply chains are open, says Michael Liard, VP of AutoID at VDC Research. "Manufacturers are sourcing materials and goods from various supply-chain partners, and in an open-loop supply chain, standards are critical," he says.

In 2011, JAIF published global guidelines for RTI management. They recommend identifying RTIs with EPC Gen 2 ultrahigh-frequency passive RFID tags. They also include rules for storing data on RFID tags so information can be read by bar-code and RFID readers, fed in a common format into diverse back-office systems and shared among parties worldwide.

"You have some expensive containers, boxes and pallets designed to protect parts in transit, and they need to go back to the supplier after the parts are delivered to the customer," says John Canvin, managing director of Odette International. Tags encoded according to the guideline specifications put everyone in the chain—from the subsuppliers of a supplier to the carmakers themselves, wherever they are in the world—on the same page. "It's almost the analogy of the mobile cell-phone market," he says. "There are different makes and service providers in different countries, but they can all speak to each other because of a common format for data exchange and protocols.

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