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Driving Change in the Auto Industry

Car makers have been among the leaders in using RFID technology, but there is still plenty of untapped potential, as the industry moves toward adopting passive technology and in-vehicle systems.
By Samuel Greengard
Apr 01, 2004—One of the most challenging tasks in the business world is manufacturing millions of automobiles and getting them to market. With millions of parts, thousands of assembly processes and the intricate logistics of delivering custom orders to specific locations, it’s easy to understand why profit margins are so slim. Today, the pressure to cut costs and boost efficiencies is so critical that many automotive companies are looking to harness RFID technology to shift production and distribution into high gear.

During the past decade, automotive manufacturers have turned to sophisticated hardware and software to manage factories and supply chains. Behind the high-profile enterprise resource planning, supply chain and e-commerce systems, RFID has emerged as a powerful supporting player. Automakers are primarily using active, or battery-powered, RFID systems to automate and improve an array of manufacturing and supply-chain management activities (see An Active Role for RFID). The road ahead leads to greater efficiencies through the tracking of each individual part and to benefits for drivers through the use of RFID technology inside the car.

“Automotive companies are turning to RFID in a major way,” says Joseph Tobolski, an associate partner at Accenture Technology Labs in Chicago. “Although many companies are already using second- and third-generation RFID solutions, the technology and applications are becoming far more sophisticated and complex all the time.”

To be sure, the auto industry has raced ahead of other vertical industries in moving RFID out of the lab and onto the shop floor. Despite all the attention heaped upon Wal-Mart and the retailing industry, market research firm Allied Business Intelligence reports that the auto industry now represents 46 percent of the total RFID market, with carmakers prepared to plunk down $600 million more over the next several years. In fact, auto manufacturers spent 30 times more than the retail industry on RFID products in 2003.

Today, RFID tags and readers are simplifying inventory visibility, making it easier to customize vehicles and ensure that they receive the right paint and features, and allowing manufacturers to locate specific vehicles at a distribution lot with tens of thousands of other cars. RFID will also make it possible for a new generation of smart robots to find the correct parts in a bin and respond dynamically to changing events occurring inside a factory.

Manufacturing Results
All this is only the beginning. Within a few years, auto manufacturers will rely on RFID to boost consumer convenience and safety. “There are enormous opportunities,” says Duncan McFarlane, research director for the Auto-ID Lab at Cambridge University’s Institute for Manufacturing.

One of the early adopters of RFID technology in the automotive industry was Ford Motor Co. It began using active RFID tags in the late 1980s to track vehicles through the assembly process. Today, Ford uses reusable RFID transponders on every vehicle at its manufacturing facilities in the United States. “We can identify every step in the process and ensure that each action corresponds to the specifics of a customer order,” says David Decker, manufacturing practice manager at Ford.

The benefits of this approach are clear. For example, when a car enters a painting booth, an RFID transponder sends a query to a database to find the correct paint code. The system routes the information to a robot, which then selects the correct paint and sprays the vehicle. The entire process occurs instantaneously and automatically.

Before adopting the RFID system, Ford handled the entire painting process manually, which was time-consuming and led to errors. Each vehicle carried a build ticket—a piece of paper with all the necessary instructions—along the assembly line. An operator had to scan through rows and columns of data on the build ticket to find the appropriate process, such as painting, as well as the correct color for a vehicle.
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