RFID Tool Tracking Basics

For a technology to take a strong hold in the marketplace, it must directly solve a known challenge or support the process improvement needed to overcome this challenge. RFID moved into the spotlight when WalMart and the DoD began to push the rapid development of the technology. The goal was to improve the processes surrounding logistics, delivery and receipt of product. This was the driving factor behind the rapid technology advancement of the last 5 years.

Although RFID has made an impact on the logistics side of things, it has not been an easy road. Process improvements have been made and standards established, but I think everyone would agree it hasn’t proven to be the “pie in the sky” as it was once being billed. While the primary media focus remained the logistics side of RFID, a few innovative small companies were finding unique uses of RFID technology that did directly solve a known challenge.

In the background, many asset tracking applications were being developed to monitor high cost machines, IT equipment, hospital assets, amusement park rides, tools and MRO supplies. This “closed loop” use of RFID has become amazingly popular and has proven amazing ROI.

As a member of a company that was leading the marketplace with a robust bar-coding application to manage tool and MRO inventory, RFID began to intrigue us, and the president of our company, Mr. Larry Harper began to really see a vision. One of the challenges with having software within a tool crib was that it still left a person responsible for checking out the tools or supplies to an employee. Larry began to see how an RFID portal could eliminate the need for human interaction and still trigger the transaction. And so we went on the journey of discovering about RFID tool tracking.

The management of MRO supplies and tools is one of those areas that really has had a lack of focus. Very few processes have been defined and supply chains are also very remedial. The reality is for the average manufacturer the spend for MRO and tools is less than 10% of their overall spend. Because of this, it has not been given the attention it really deserves. Although it is less than 10% of the overall spend, the amount of processes dependent on having this product on-hand and built correctly into the manufacturing process are overwhelming. The amount of direct cost is substantial but the indirect cost is often times mind blowing.

RFID technology provides the ability to accurately track this inventory reducing costs and improving process flow resulting in substantial bottom line savings. Not only do you have an immediate direct cost of inventory savings because of increased accountability, you begin to see process time saving. Actually, you may not have even realized how much it was costing you. For example, it has been reported to us that an RFID portal used to manage a crib area can reduce wait times at the crib by 60%-90%, issue and return time can be reduced by 50%-90% and reduced labor cost by 40%-80%. These calculations are just the cost reduction based on process improvement. The software driving the system typically returns users cost savings such as: reduction in lost tools, reduced carrying cost, reduced usage based on accountability, reduction in obsolete inventory, reduction in overstock inventory, and a whole lot more.

So what do you have to do to understand if RFID can help you track tools or MRO supplies? First of all take an objective view of your current processes and look for areas of improvement. With RFID in particular, ask yourself if there is a great deal of wasted time in that process. Ask yourself if there are areas of resisted flow or areas that could benefit from automation. In particular, RFID can help you develop an unrestricted process flow which in turn returns dramatic savings based on increased production and less down time searching for material or waiting through a process that was never really well thought out.

Manufacturers who have taken this route have proven successful implementations with an average of 4 months or less to achieve their ROI. In fact, many of the customers who achieved that ROI had already defined integrated supply processes but had an unmanned shift. RFID has also produced huge savings and safety perks with foreign object debris (FOD) tracking in aerospace manufacturing facilities. RFID controlled toolboxes monitor when things are missing and where they may be. The risk of leaving a tool on an aircraft that is being assembled is greatly reduced as well as the manual process of checking each toolbox drawer to ensure tools have been returned. Integrated supply relationships have improved with RFID because now the need for the supplier to run to the facility to take counts is eliminated and replenishment is automatic.

Tool and MRO tracking is an area that can prove substantial savings in a short period of time using RFID technology. I will tell you that RFID does directly solve a known challenge and support and improve the process change needed to overcome this challenge. So, you should begin a tool and MRO tracking program today and begin to reap the awards.

MRO Successes

It is one of life's toughest questions. We live our lives in continuous improvement mode trying to get a little better in every aspect of daily living. We want to be better parents. We want to be better employees. We want to be better bosses. We simply strive to be better overall. But, how do we know when we have reached our goal, and more importantly, how do we know if we were successful?

When it comes to managing MRO inventory, the answer to that same question about success can be elusive. Just as managing tool and MRO inventory is sometimes forgotten during the pace of every day business, measuring what makes a successful tool and MRO management program can also be left undone. We often go down the road of improving our MRO management because we simply know we aren't doing a very good job. We forget to benchmark, set measurement tactics and we lack an understanding of all the areas of possible impact. If we start without this understanding and an overall lack of measurable information, how can we measure success?

I'd like to take a few moments to point out areas you may or may not have thought about but are clear indicators of a successful MRO management program. Some of these are obvious and some are not...so here we go.

Spend

Obviously, if you are spending less on tool and MRO inventory you have found success. This is one of the most apparent areas where improvement is measured. When determining the success of a good management program, reduced inventory spend is a great black and white result. If you spend less, you are probably doing something better and more efficient.

On-hand Inventory Reduction

Okay, this is another one that is really obvious. If you are spending more, you should have less on-hand inventory which means less carrying cost and greater efficiency. There is a little more to this one than meets the eye. If you have an on-hand inventory reduction, it may also mean you may have identified surplus inventories and have relieved yourself of the burden of managing that inventory, floor space to store that inventory, labor time taking bi-annual inventory of that material and so on. So, carrying less is a direct correlation with buying less but can also reach beyond the inventory that is commonly on your MRO purchase orders. Carrying less inventory is a direct result of an effective MRO inventory management program and is a solid measure of success.

Reduced Walk Time

A good MRO inventory management program takes into consideration all aspects of inventory flow around your facility. Not only is success measured by reduced spend or less carrying cost, it is measured by improved process flow. Every piece of indirect material used in your operation has a trail. Maybe it is received at your shipping dock, sent to your main supply room and then out to each tool crib. Maybe it is brought in by a supplier and taken directly to the tool crib. Maybe it is simply a mystery on how and where you receive some of these supplies. Therefore, a real hard look at this overall process from receiving to distribution on the shop floor should be analyzed. There are some serious costs to be associated with process inefficiencies and when shortening and streamlining the distribution of MRO inventory you can have dramatic success. Do you know how much time your employees wait in line at the tool crib for a tool or a pair of gloves? Do you know how many times a day they make that trip? Do you know how long it takes each person to walk to the tool crib? Think about the cost factors involved with a trip to the tool crib. You have labor costs. Is that really what you are paying that employee for? You have reduced production because while walking and waiting nothing is being produced. A walk study may open your eyes to a substantial area of possible success with you MRO inventory management.

Reduced Search Time

Joe said he had it last on rolling mill 5. Karen is over on that machine and she says she hasn’t seen it. Fred says he thought Gerald had it on the screw stud machine…and so on…and so on. What an incredible waste of time and money. Amazingly, most facilities will tell you this kind of scenario is quite common. So how long does it take to finally find it? Sometimes the answer is never. Another tool is delivered overnight to satisfy demand and then a week later the case of the missing drill is solved. Reduce this scenario from taking place and you have yourself another successful venture.

Increased Production

All of these common inefficiencies when managing tool and MRO inventory means less time doing what you are in business to do…make product. When implementing a tool and MRO management plan, a real gauge for measuring success is often measured by your ability to increase production. Locate inventory closer to where your production workers can retrieve it quickly. Make it easy for them to retrieve yet make them accountable,so you can stop inventory from floating and people from searching. You will see that this can have a significant impact on your production numbers. This is a real measure of success with your tool and MRO inventory management program.

I have outlined a few ways you can measure success with MRO inventory management. I personally have seen companies save millions in the first year when rolling out an effective program. It takes some investment in technology and possibly in change management programs but the ROI is mind blowing. Very few times have I seen the ROI for implementing a successful program longer than 18 months and many times it is well under 12 months. So, if you are in that continuous improvement mode trying to get a little better in every aspect of daily living, you should put a little focus on your MRO. I hope I’ve helped you determine how you can be successful. The better parent, employee or boss thing…you’re on your own but I’m sure you’ll keep up the effort like most of us will. 

2011 CribMaster User Conference Through the Eyes of a "First-Timer"

* Jamie Brock is a contributing guest writer for "The CM Blog."

The 13th Annual CribMaster User Conference has come to a close from the Legacy Lodge at Lake Lanier Islands in Buford, Georgia.  The four-day excursion brought together once again professionals from all walks of life who share one common goal:

• Improving upon their individual business processes in order to leverage their companies with CribMaster. 

What better way to do this than to put together meetings of the freshest minds, freshest strategies and newest concepts all in one place?  And where else can you find distributors brainstorming with end-users, project managers and computer programmers?  The only other place besides here at the conference would be at the CribMaster headquarters in Marietta, GA.

Many industries were represented, including:

• Aerospace
• Consumer Products 
• Textiles
• Mining
• Computer Programming
• Hydraulics
• Power Generation
• Nuclear Power 
• Precision Machining 
• RFID Inventory Management
• RFID Retail

The company I am proud to represent is Accu-Traq.  As a CribMaster "2011 Certified Master Distributor," Accu-Traq uses cutting-edge RFID (Radio Frequency Identification) and FME (Foreign Material Exclusion) technology to provide alternatives to the cumbersome paper-based inventory systems that businesses currently use for tracking tools, assets, personnel, etc.  It's an exciting time to be involved with such a powerful technological advancement while still in its infancy. 

Because CribMaster is such an innovative and open-minded company, the potential for continued growth is limitless.  So much so that the feeling permeates the atmosphere at the conference and fills the attendees with a palpable, positive energy.


Some of the breakout sessions included:

• RFID Tagging
• Turn-Key Kitting
• Using the NEW CribMaster 9.2 Software
• Database Programming
• Blue Ocean Strategy
• Generating Leads from Your Website
• Structuring Deals
• Marketing Your Company with CribMaster
• Customer Care Best Practices
• Getting Socially Involved (Social Media)
• Preventive Maintenance
• Mobile Jobsite Solutions
• RFID Tool Control - The Complete Solution

And more...

Now that the conference has ended, my mind is buzzing with a million thoughts and ideas:

• How do we most effectively leverage our company with CribMaster?
• What marketing strategies are most beneficial for improving SEO (Search Engine Optimization)?
• How do we clarify our company's value proposition?
• What would Larry do?
• Who drank my last beer?

So many things for a CribMaster User Conference "first-timer" to think about.  So many important questions to answer.  All in due time. 



Jamie Brock

Accu-Traq

4541 N. 12th Street
Phoenix, AZ 85014
1.800.336.9959
http://www.accu-traq.com/
http://www.diversifieddiamond.com/

    

Indirect Material and MRO Cost Savings - RFID Solutions That Impact the Bottom Line

Managing Indirect Material is Worth It

Indirect material is defined as any inventory that does not go into the final product but is used during the manufacturing process. This includes MRO items, tools, machine parts, chemicals, shop rags and other inventory items. These items play a key role in manufacturing the product but are peripheral to the product being manufactured. This inventory is thought of as a cost of doing business. In reality, it is a cost of doing business that - with the right technology to support inventory distribution - can dramatically impact the bottom line. After all, this inventory is not considered an asset for your organization. It is considered an expense. Because of this, any reduction in this inventory immediately hits the bottom line.

Manufacturing companies of all sizes depend on indirect material to keep their plants running smoothly and to meet production goals. By properly managing indirect material, you are increasing the effectiveness of those processes. Always having those materials needed to complete the task or being able to locate them quickly are crucial to obtaining smooth processes and the goal of becoming lean. Having those items on hand without carrying too much inventory is a lean principle we always attempt to reach and is crucial when this inventory is attached to a process. Lean is sometimes defined as eliminating or reducing waste. By effectively managing inventory, you eliminate wasted money on too much on-hand inventory, wasted time searching for tools, wasted man hours searching for inventory, wasted production time when attempting to locate items, and wasted money from pilferage and hoarding of inventory.

Many years ago, the obvious way to control this inventory was to centrally locate the inventory within the plant and control inventory in a tool crib. A person or persons would be responsible for managing the indirect material and handing out the inventory to the shop floor workers. Challenges were faced with travel time to the crib and the associated soft costs. Additionally, a good technology system to manage all the aspects associated with this type of inventory - calibration schedules, inspections, kitting, order points, supply chain management - simply did not exist.  Later, to solve the soft-cost issues, inventory was moved from the tool crib to locked cabinets or toolboxes closer to the point of use. There was a great challenge in this scenario as well. If limited staff had access to this inventory, there would often times be lengthy waiting for someone to unlock the cabinet. If everyone had access, you had no wait time but very little control of the inventory. This also created a great deal of challenges especially at the re-order level.

Next came vending machines which still make sense today for some inventory. The challenge with vending machines is that not all types of indirect material fit into a vending machine. Also, vending can sometimes have a negative cultural impact on the workforce. Thus, we have come full circle. The crib of the future now constitutes a robust software application to assist in managing all of those needed aspects of indirect material with technology that enable Passive Issue Transactions. RFID and other technologies have allowed a new line of devices to be developed. These devices retain a high level of accountability and have removed any involvement from the user. This new breed of tool crib, store room or parts room management provides a way to achieve those cost reductions without hindering the workforce.

A Dramatic Soft-Cost Reduction

Part of the continual improvement process of indirect material management is reducing soft costs. After you gain control of your inventory and processes as they are currently, it is time to look for more cost savings and reducing travel time to store rooms or tool cribs is an immediate solution. But how do you retain inventory control at those locations and also retain the reporting capabilities that got you the improvements up until this point?

In order to effectively gather correct usage information, you need to track individual usage transactions. In other words, you can issue or transfer items from a main store room to a locked cabinet next to a machine, but how do you know how much is actually being used and when? How can you identify discrepancies of operation if you aren’t tracking actual usage? The correct way to effectively reduce travel time is to locate items at point-of-use but retain actual usage information.

Another key part to this is the ability to track and order that inventory in either a total plant quantity or at the point-of-use device. By tracking and ordering items at a plant quantity, you reduce the number of purchase orders and enable greater quantity discounts. By ordering by point-of-use device, you can enable distributors to manage inventory within that machine without affecting the inventory counts for the rest of the plant. Either way, you need to have a system that will do both. More importantly you need to have point-of-use devices that completely tie into your indirect material inventory management system. No matter where your inventory is stored or distributed, it needs to be managed in one cohesive system to see the greatest cost reduction.

Most of all these point-of-use devices need to allow workers to quickly get what they require and then get back to work. These devices need to be very accurate so the workers are confident that supplies will be there when they are required.  They also should create a sense of accountability without creating a sense of big brother watching.

All Areas of Cost Reduction

Therefore, a good inventory management solution designed to minimize employee involvement with passive transactions will impact the bottom line by reducing soft costs such as travel time and search time for inventory which increases production time. Defining your processes and managing your supply utilizing this technology will also allow you to:

-         Re-coup expense by reducing inventory overspend

-         Optimize order quantities

-         Consolidate suppliers and negotiate price based on corporate use quantity

-         Ensure PM tasks are scheduled and material is ready when the task is to be performed

-         Eliminate dead-stock inventory and identify current dead-stock for resale

-         Reduce overnight shipping expense

I see it everyday. A little thought, work, preparation and the right technology impacts the bottom line immediately. Trust me when I tell you that Managing Indirect Material is worth it.

To Control, or Not to Control - That Is the Question

Yes, that really is the question. Everyone is familiar with the question that was proposed by William Shakespeare’s Hamlet in the 1600’s: “To be, or not to be”. This is a very famous literary quotation and some would argue that it may be the most famous. You see if you read further into the soliloquy from which this quote is extracted, you see the question is much greater. In Hamlet Shakespeare was really referring to life itself. Should I continue to live this way or should I end it by taking my life? This was the question proposed by the fictional character.

The line directly following this famous question is:

“Whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles,
And by opposing end them?”

What if you take that same question and apply it to a single aspect of life or business? You can replace the word “be” with things like “control” or “manage” and all of a sudden it becomes much less depressive and much more encouraging. In fact if we were to re-write the first couple of lines and tailor them to current business challenges, the answer becomes obvious.

What if it read something like:

To control, or not control: that is the question
Whether 'tis nobler in the workplace to suffer
The slings and arrows of outrageous mis-management,
Or to take arms against a sea of poor workplace habits,
And by opposing end them?”

You see the question simply becomes: should I stand up and change something that my company does poorly or should I just live with it the way it has always been? Should I recognize an area for improvement or should I simply ignore it and go about my ways? Should I continue to waste money on inefficient means of doing things or stand up and make a change? Well, of course, the choice is always yours but so is the fruit it bears.

OK…OK…if choices were really that simple we’d all live perfect little lives and be incredibly efficient at everything we do. That is not the case. Many of use are very efficient at certain things and not so efficient at others. As a whole, I have seen companies that are very good at managing their direct supply chains yet they fall short when it comes to the indirect side of things. I have seen companies that are very good at making product but not very good at forecasting demand. The bottom line is that there is always room for improvement.

The first step to improving anything is establishing the right process and controlling the process so that you achieve the desired result. This article is really discussing the control of indirect material, MRO supplies, PPE inventory, tools, haz-mat, and other supplies. The question that is proposed in the title of the article is really aimed towards managing this type of inventory. So the questions should really be, “To control indirect material better and manage the supply chain or not to control and waste time and money?” I bet you can tell from the tone of that last question what my answer would be. You’re darn right you control it. So little focus is put on this inventory and yet so many dollars can be saved. In fact a recent corporate user of our management system reported a 10 million dollar savings in the first year alone. That was direct inventory savings alone. It didn’t even take into consideration things like less purchase orders cut, less time searching for tools, less stock outs, reduced travel time, and on and on.

To control, or not to control: that is the question. You know what my answer is. Take control and love it.

Unlock the Secret of Positive Tool Control

It’s no secret that the world of FOD prevention is complicated and confusing. Tool tracking and tool control in high-accountability areas at the point of use can be overwhelming and can even seem mysterious. With FOD prevention, the “now-you-see-it, now-you-don’t” disappearing act of tracking tools is no longer acceptable.  In fact, lost or misplaced tools in aerospace and nuclear environments are considered a safety hazard and if not found or returned properly can result in some serious consequences.

To make tool control more confusing, there is an array of technologies available. There are systems that use digital imaging, “chit” methods, RFID, barcode scanning, the honor system, and so on.  Which systems truly consider the human factor of tool usage? After all, we do make mistakes. In an effort to finish a task, even the most seasoned technician could misplace a tool, return it to the wrong cabinet, or accidentally not return it at all.

While it is not intentional, technicians have misplaced tools and later found them in unusual places such as trash cans, a locker, in the pocket of a pair of jeans, or more importantly, areas of an aircraft that could lead to major safety risks or a catastrophic incident. Searching for a lost tool becomes a guessing game that can cause costly completion delays, aircraft tear-down, and/or FOD-compliancy violations.

A complete tool control solution takes into consideration the human factor of tool usage.  So, what exactly does ‘complete’ mean?  As defined in the dictionary, ‘complete’ means having all the necessary parts, components, or steps. What are the components of a complete tool control solution?  There are 5 components and they are: software, RFID-tagged tools, heavy duty steel cabinet(s), Last-Point-Read (LPR) Monitors, and RFID scanners.

Component #1: The software.  It provides critical information such as who took it, where it was used, and when it was returned.  Beyond just monitoring whether tools are in or out of the cabinet, it also monitors gauge calibration, tool inspections, expiration dates, and mechanic and/or tool certifications. If a tool is returned to a different cabinet other than where it originated, a transfer notice is automatically sent via email to a supervisor.  Likewise, if a kit is returned with a missing tool, an electronic inspection notice is automatically sent to ping the appropriate personnel.

Component #2:  RFID-tagged tools.  Each tool is individually tagged non-invasively with a RFID tag by using a double secure method approved by all aerospace FOD departments.  This method utilizes both durable adhesives and special polymer coatings to securely wrap the bonded RFID-tagged tool.

Component #3:  The Cabinet.  All the RFID-tagged tools and RFID-monitored tools are housed in a secure, heavy-duty constructed, modular drawer system or cabinet. After the employee authenticates by scanning his/her employee badge, the cabinet unlocks and the user removes the needed tools from neatly organized foam cut-outs inside each drawer and goes back to work.  The cabinet re-locks and calculates what was removed.  An “Items Out” icon appears on the touch screen monitor indicating missing tools from the cabinet.

Component #4:  The LPR Monitors.  When placed at choke points such as entrances or walkways, the LPR’s can track the movement of the tool throughout the facility.  Each time a tool passes the LPR’s, a transaction is sent back to the software indicating where the tool was last seen.  This drastically narrows the search area if and when a tool does go missing.

Component #5:  The RFID Scanner.  To now locate the missing tool, the RFID scanner with “find” software is used. After typing in the serial number of the missing tool, the scanner is waved systematically in the area and begins to beep when it sees the tag on the tool.  This greatly reduces the time to retrieve the missing tool.

With FOD-prevention, knowing critical data such as tracking when a tool is removed and when it is returned from the cabinet are vital components of any tool control system, but this is only part of the solution. Achieving positive tool control is only done with a complete system that has all five of these previously mentioned components.  It must have the ability to reach beyond the cabinet itself to locate a tool if and when one does go missing. 

What then is the real secret to unlocking a positive tool control solution?  It’s not complicated, confusing, or even mysterious. The real secret is simple. It starts with software.