RFID Enhances Supply Chain Management for Automotive Parts at Hyundai/Kia Motors

By Andrew Price

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Hyundai/Kia Motors Group, a leading South Korean vehicle manufacturer, is to implement RFID technology to improve the visibility of its automotive parts supply chain. Glovis, an affiliated company of Hyundai/Kia Motors Group, is in charge of Hyundai/Kia’s automotive parts supply chain management (SCM), which will now become RFID-enabled.

In March 2007, Glovis will begin receiving RFID tagged boxes of automotive parts from more than 200 suppliers to Hyundai/Kia Motors. Using RFID technology and EPC middleware, Glovis will be able to track corrugated cardboard boxes of automotive parts through the major SCM processes, including delivery to the distribution centre, the repacking process, leaving the distribution centre, delivery to the overseas distribution centre and final delivery to Hyundai/Kia Motors’ overseas factory.

In the first phase of the project, and with the support of the South Korean Ministry of Commerce, Industry and Energy, approximately 130,000 UPM Raflatac UHF RFID tags will be applied to parts boxes and packaging cases from five major suppliers for exportation to Hyundai/Kia Motors’ overseas factory in Alabama, USA. In the second phase of the project, 20 million UPM Raflatac RFID tags will be used annually to track all boxes and containers of automotive parts through the supply chain. The project’s scope will also be broadened to include Hyundai/Kia Motors’ Slovakia factory as well as another major manufacturing site.

A timely supply of the exact volume of parts is crucial due to the way the automotive industry supplies goods made to order according to customers’ options. Until now, Glovis has applied bar code labels with shipping marks to the parts boxes, which has made it difficult to automate distribution and acquire real-time distribution information. Moreover, occasional human error during repacking is an additional cost burden to Glovis and the manufacturer due to lead times for re-dispatch and conflicts in production scheduling at Hyundai/Kia Motors’ overseas production line.

In the RFID-enabled SCM, the completion reports for each process are automatically collected by passing the parts boxes through an RFID interrogator gate. In the repacking phase, workers can check for errors by comparing data from the RFID tags against order information. Even during delivery, the information system automatically provides delivery status reports for dispatch from the distribution centre, readiness at port for export and arrival overseas at Hyundai/Kia Motors’ factory, among others.

Glovis also offers real-time distribution information to Hyundai/Kia Motors’ secondary suppliers, third party logistics companies and other manufacturers to optimize their inventory and production plans. With this predictable distribution information, Glovis and Hyundai/Kia are able to cut logistics and production costs. “Through the RFID implementation, production and cooperation will be improved among all Hyundai/Kia Motors’ affiliated companies. Hyundai/Kia Motors’ Alabama factory can expect optimal supply to maximize its efficiency,” says Senior Managing Director at Glovis, Mr Jin-Gi Hong.

ECO, Inc. is responsible for the RFID system deployment in the project. The ECO RFID middleware (SmartEPC) is based on the global EPC standard, which makes the RFID system at Hyundai/Kia compatible with the global Gen2 standard. The RFID system can also be seamlessly integrated with Glovis’s legacy SCM system. The total RFID system, comprising UPM Raflatac DogBone UHF Gen2 tags and EPC compliant RFID interrogators, has been chosen with future expandability in mind.

Mr Jin-Gi Hong, Senior Managing Director of Glovis, comments: “The RFID supply chain management system can make us a more competitive company globally. Thanks to RFID technology, we can minimize loss from dispatch errors and revolutionarily cut costs. Glovis seeks to be the global pacesetter in logistics with this pioneering effort.”

For more information, please contact:

• Mr Hyung-Joon, Koo, General Manager of CKD Material Team, Glovis, tel. +82 41 537 2003

• Mr Edward Lu, Sales & Marketing Director APAC, RFID, UPM Raflatac, tel. +65 6238 3705

• Mr Jin-Hyuk Hong, Sales & Marketing General Manager, ECO, tel. +82 2 2024 9721

Glovis (www.glovis.net) is a global logistics company offering globally leading services through the logistic innovations of the Hyundai/Kia Motors Group and a global distribution network and advanced logistics system suitable for SCM systems. Glovis’s systems connect to all regions worldwide to provide a customized distribution service appropriate for the needs of overseas customers.

UPM Raflatac (www.upmraflatac.com) is a world-leading supplier of self-adhesive label materials for a wide variety of needs in product and information labelling. In addition, the company is at the global forefront in the development and high-volume production of HF and UHF radio frequency identification (RFID) tags and inlays. UPM Raflatac has around 2,500 employees and sales of approximately EUR 1 billion in 2006. The company has a global service network consisting of 11 factories on five continents and a broad network of distribution and slitting terminals and sales offices worldwide. UPM Raflatac is part of UPM.

ECO (www.eco.co.kr) is a leading provider of RFID-enabled Logistics Solutions and Library Automation Systems in South Korea. Since 2001, ECO has successfully developed and provided a series of products for library automation using RFID technology. Currently, almost all RFID-enabled libraries in Korea use ECO’s RFID products. The company is also focusing on the development of high-performance RFID middleware and applied equipment for logistics, with the aim of becoming a leading provider of RFID technology worldwide.