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Iveco-a truck and bus manufacturer under the Fiat Group-plans to expand the company’s RFID system for processing receipts, sorting and parts, and ensuring the authenticity of parts. This system has been in operation at Iveco’s Torino distribution center for a year, and the company plans to use it in a distribution center in Madrid in the next few weeks.
Iveco works closely with the logistics company Kuehne+Nagel, which manages Iveco’s 190,000 square meter logistics center in Turin. The two companies collaborated with the supply chain consulting company Alfaproject to develop an RFID system-part of the company’s PARTS.iD project.
According to Paolo Guidi, head of sales and marketing at Kuehne+Nagel, this is the first project in Europe to use RFID technology to manage spare parts in the automotive industry
Iveco, whose truck sales volume reached 192,000 in 2008, supplies parts to trucks and buses that have left the factory through the company’s network of nearly 3,500 authorized repair points in 100 countries. When the vehicle needs to be repaired, if the authorized repair point does not have the required parts, you need to place an order with Iveco. Many orders must be completed overnight and sent to the repair shop the next day. Due to the very tight delivery time and the number of parts, Iveco is often prone to errors when shipping. This is also the reason why the company decided to start the PARTS.iD project, hoping to increase the speed of picking and shipping.
The availability of parts is a key factor in protecting Iveco’s profits, said Stefano Fantini, the company’s customer service supply chain director. Iveco’s goal is to provide customers with a complete and complete set of parts and components through fast and stable distribution.
In January 2008, in the first phase of the project, Alfaproject conducted a feasibility study, proposing to use RFID to improve the incoming goods, picking and transportation processes. Iveco agreed to this proposal, but also aware of other uses of the technology-to ensure that the Iveco parts used by customers to repair their vehicles are genuine and not counterfeit products.
At that time, Iveco decided to join Kuehne+Nagel to implement an RFID system in the Torino distribution center. The two companies began investigating the suppliers’ wishes for this project in March 2008, and installed a test version of the system in the distribution center in May.
At the Torino distribution center, Kuehne+Nagel received the parts shipped from the supplier and moved them to a receiving area. The worker then uses an Intermec printer-encoder to generate an adhesive label containing passive inlays that meet EPC Gen 2 and ISO 18000-6c standards. The label is encoded with a unique ID code, and is printed with barcodes and other information. The bar code is the same as the tag ID code so that the distributor can use the same tracking number.
The employee sticks the label on the outside of the storage parts box. Depending on the cost of parts and specific management processes, the company implements single-product labeling for some parts, while others are labelled at the box level. Iveco said that before expanding the application, the company labelled 50% of its components to develop and redefine the RFID process in operations.
“By 2010, the company will label all shipments from Turin,” said Alfaproject management partner Alessandro Dandolo.
“We currently do not require suppliers to label,” Fantini said, “because the company’s own labeling volume is sufficient to define the application process.”
When the box is finished labeling, it is placed on the pallet and loaded onto the cart. The truck driver drags the cart past an Intermec door reader, which reads the tag ID code. The green light is on and the system instructs the driver to move the parts to the warehouse for storage.
When a customer places an order, the system generates a picking list, and the forklift driver uses a handheld barcode scanner to pick up the required parts. The driver then moves the parts to a scale for weighing and RFID identification. Since the goods must be weighed before being sent to the repair center, and a fixed RFID reader is installed on the scale, Iveco and Kuehne+Nagel chose not to use RFID technology to sort the goods from the warehouse. When the goods are weighed, the RFID system confirms the correctness of the goods. If the goods are wrong, the system sends a new picking list to the handheld bar scanner. When the goods are weighed and confirmed, the system generates an RFID shipping label, and the staff sticks the label on the box or component.
Next, the forklift operator loads the parts onto the truck, passes through an RFID portal reader, and the reader reads the RFID shipping tags (the reader accepts instructions to search only for specific tags). If everything is normal, the system lights up with a green light, prompting the operator to load the parts onto the truck.
At the end of 2008, the RFID system was fully operational. In order to save costs, in the first phase of the project, only two warehouses were used to assemble portal readers at the entrance and exit.
For parts sent to other areas, the RFID tag is read for the last time after the shipping label is attached. At the entrance and exit of the warehouse, workers read the label and barcode, and the system confirms that the correct goods are delivered to the correct location.
In the next few weeks, Iveco plans to install readers at its distribution center in Madrid to identify labeled parts shipped from Turin.
In addition, Iveco is also considering the use of RFID in the reverse logistics to track and return parts that need repair.
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