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Finnish Tractor Manufacturer Harvests RFID

Valtra is collaborating with a parts supplier to improve inventory management and streamline processes.
By Mary Catherine O'Connor
Nov 02, 2009Valtra, a Finnish manufacturer of custom tractors, must run a very efficient manufacturing process. Because its tractors are made to order rather than mass-produced, falling short on parts disrupts production. As such, Valtra works closely with its suppliers to ensure that its factory in Suolahti is always adequately stocked to fulfill orders.

But since each tractor is made to order, it's nearly impossible for suppliers to know which parts and components will be consumed on a day-to-day basis. Thus, the companies must maintain inventory levels at Valtra's warehouse to cover all short-term manufacturing needs—but without overstocking, because they own their parts until they're consumed. To maintain this delicate balance, suppliers must check their inventory often—in many cases, daily.

Since each tractor is made to order, it's nearly impossible for suppliers to know which parts and components will be consumed on a day-to-day basis.

To help automate and streamline its parts replenishment and parts inventory-management processes, Valtra began testing passive ultrahigh-frequency (UHF) RFID tags and interrogators in 2003. The technology showed promise, but was not mature enough to meet the company's needs at that time, says Antti Virkkunen, CEO of Vilant Systems, a Helsinki systems integrator specializing in RFID applications. In late 2006, Valtra worked with one of its suppliers, Metal Power, and Vilant on a second pilot, which demonstrated that RFID technology had matured significantly. Vilant then designed an RFID system that can track parts from suppliers' facilities to Valtra's warehouse.

The RFID system, deployed in 2007, enables Valtra to automatically track the parts that Metal Power ships to the Suolahti warehouse, and to monitor them as they are moved into production. The technology also benefits Metal Power, which supplies Valtra with a range of large mechanical parts, by providing visibility into inventory levels and parts consumption at the factory.

Valtra plans to attach RFID tags to large components of the tractors—such as the cabins or engines—to track the production process more closely.

The Process
The RFID system is based on passive EPC Gen 2 (ISO 18880-6C) hardware and Vilant's Server 5 RFID software. Vilant worked with Tieto, a Finnish IT services company, to integrate the RFID-driven inventory data into Valtra's existing enterprise resource planning (ERP) software.

When Metal Power prepares to ship supplies to the Suolahti warehouse, it places the parts onto pallets with embedded RFID inlays. To create the pallets, Vilant collaborated with Finnish pallet manufacturer Jalander. A Confidex Pino RFID tag—which is EPC Gen 2 (ISO 18000-6C) compliant and can store an ID number of up to 240 bits, as well as 512 additional bits of user memory—is embedded in each pallet. Metal Power workers employ a Nordic ID PL3000 handheld RFID interrogator to encode the tag with an identification number (overwriting existing product IDs previously encoded on the pallet tag), as well as any additional data they want to associate with the pallet, such as an order ID or special instructions.
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