Toyota Case Study
Management of Reusable Assets Keeps Toyota’s North American Lines Moving
How does major auto maker drive productivity while streamlining manufacturing costs?
Asset management is one of the many ways OEM’s can drive efficiency. That’s why, when a major Japanese auto maker sought to control costs and improve throughput at a major North American manufacturing plant, the company sought to tighten its control over high-value returnable transport containers used to ship and handle parts, materials and goods.
In this real-world example, Toyota North America called on Xterprise to design and implement an advanced RFID-based asset management solution.
Reusable Asset Management
This Japanese auto maker currently operates twelve manufacturing plants in North America and will be opening two additional facilities in the future. In 2005, the existing North American facilities produced more than 1.55 million vehicles, which included more than 1.3 million engines and nearly 400,000 automatic transmissions. By 2008, these facilities will have the annual capacity to build nearly 2 million cars and trucks, 1.44 million engines, and 600,000 automatic transmissions.
Annual purchases of parts, materials, goods and services from North American suppliers total more than $28 billion. To facilitate these major purchases, the Japanese Auto maker has developed an efficient and effective cross dock supply chain model that allows the goods to move to the cross dock and then directly to the manufacturing facility. This reduces lead time and ensures that manufacturing is focused on moving parts through their system, rather than on warehousing raw materials.
The parts that are handled throughout their supply chain are transported in reusable transport containers that have been specifically designed for safe and effective handling and transportation of parts. The auto maker invested hundreds of millions of dollars in the design and procurement of these returnable transport containers to safeguard the parts until their final installation. This helps limit any production downtime that might result from a damaged part.
A Stop Loss Challenge
Over the past several years the auto maker has inadvertently lost or misplaced a significant number of these returnable transport containers within their systems. Without a tracking procedure, or bar code system, in place to monitor each unit, there was no effective means of maintaining their inventory of returnable containers. To address this ongoing asset loss, the auto maker asked RFID vendors to design a pilot solution to track their returnable transport containers through critical choke points in the supply chain.
The company believed that if RFID could provide accurate item level asset tracking data, and properly illustrate the chain of custody as it occurred, they could improve internal asset management efficiencies, and could implement a program to bill back suppliers for lost returnable assets when applicable.
A High Definition Enterprise™ Solution
The auto maker selected Xterprise to design and execute a pilot solution for this particular business challenge. After conducting a detailed site assessment of their inbound and outbound cross docks, Xterprise met with key supply chain decision makers to discuss the results and design an effective solution. This solution involved tagging and tracking 480 returnable transport containers as they traveled from the manufacturing inbound cross dock and returned to the outbound cross dock.
By selecting Xterprise to provide this solution, this Japanese automation gained access to a new generation of process and execution applications designed to support the High Definition Enterprise™. As a proven leader in RFID supply chain solutions, Xterprise solutions combine Microsoft technology, continuous improvement and lean supply chain expertise and advanced RFID technologies. Together, those qualities allow organizations up and down the value chain to achieve unmatched levels of timeliness, resolution, adaptation and integration.
The solution involved designing a reusable Generation 1 passive tag that would be rugged enough to survive in a warehouse environment. After the tag was designed, dock door portals were constructed to facilitate read rates that were high enough to support the speed of the operation. An asset management software program was also designed to allow the auto maker to monitor each asset as it moved through the RFID-enabled dock doors. The final installation process included mechanically attaching two tags to all 480 returnable assets, erecting four door portals and deploying asset management software on local servers in each of the warehouses.
Once the solution went live, Xterprise assisted the auto maker in analyzing the data that was being captured. The analysis involved matching the data that was read from the RFID pilot with the delivery and shipping confirmations seen in the manufacturing facility.
Tighter Asset Control
The initial pilot deployment resulted in an 86% accuracy read of the returnable transport containers for this Japanese Auto maker. Following the conclusion of their pilot, additional testing was done in the Xterprise RFID solution center, resulting in a tag and portal design configuration that achieved 98% to 100% accuracy levels.
Based on this information, Xterprise is now working with the auto maker on a Phase Two pilot utilizing Gen 2 RFID technology.
By reducing loss, and by gaining tighter control over key production assets, this world-class auto maker expects to improve the overall profitability of its North American manufacturing operations.
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