When an OEM orders parts from its tier suppliers, it can find itself with limited visibility over just where containers of parts are within the supply chain and how soon they will arrive. Tracing containers can be a complex business – and if a problem does occur, the vehicle-maker needs to work out how to adapt to potentially irregular parts flows.
That is why Honda, Nissan, Toyota, General Motors and Fiat Chrysler Automobiles (FCA) have come together with a group of tier suppliers and logistics service providers, as well as the Automotive Industry Action Group (AIAG), to trial a new system designed to address the longstanding problem of visibility over returnable containers and parts throughout their respective supply chains.
Announced in May, the Automotive Data-Ecosystem uses passive RFID tags on returnable containers, a variety of RFID readers at various points in the network and a digital platform provided by solutions provider Surgere to track, monitor and manage containers of parts as they move through the supply chain; location information is shared among the various parties and provides the visibility that is crucial.
“The group collaboration has been fantastic and humbling because you go into meetings with five big egos – five large groups that have their own agendas – but they cooperate for the good of the industry,” comments Dana McBrien, associate chief advisor at Honda North America. “This is unique.”
While none of the OEMs does a bad job of tracking returnable containers, with the present system working about 98% of the time, McBrien says the problems in the remaining 2% include not having containers of the right type or in the right quantity at a certain supplier, for example containers which cannot be stacked as required or that create repackaging issues.
The collaboration began at the Automotive Logistics Global conference in Detroit last September, explains Surgere president and CEO, William Wappler, where it became clear from talks with various OEM clients that they were all facing similar problems. “It culminated in massive collaboration to resolve a big, common issue,” Wappler states.
Chris Styles, senior logistics director at Nissan North America, adds: “It quickly became obvious that we should try to [achieve commonality] as much as possible in the requirements for common parts suppliers, in order to avoid issues such as redundancy or duplicate costs.”
Independent research conducted for the group suggests that savings of 20% or more could result, says Wappler – mainly from reduced container losses, lower manpower requirements and a decrease in the volumes of disposable packaging required. There are also gains from the ability to visualise and manage containers, and from the operational clarity generated by the vast amounts of data gathered, he stresses. “The analytics provided by data on this scale was not possible until the creation of the ecosystem,” Wappler suggests.
"The group collaboration has been fantastic and humbling because you go into meetings with five big egos – five large groups that have their own agendas – but they cooperate for the good of the industry." - Dana McBrien, Honda North America
Those involved in the group can see shared data from their common supply chain, helping both OEMs and tier suppliers to better manage container flows, Wappler explains. That data provides the opportunity to create various performance metrics and measure themselves against the overall ecosystem.
The system monitors each container, checking whether it is in the right place at the right time and if it is performing as planned. It also monitors overall container quantities in the supply chain and projected need, triggering advanced shipping to counteract any potential shortfalls. Should a serious issue arise that is likely to cause a shortage of containers, an artificial intelligence (AI) feature in the software can alert all relevant parties to prompt further action.
The system is based on a core database in Surgere’s cloud-based COS platform, which can be integrated with other systems including ERP, warehouse management and yard management systems, as well as various data capture devices. COS pulls all the information together, organises it, and acts as a virtual manager to help control sourcing, specifications, location, motion and disposition of containers.
McBrien says that Honda’s early nervousness about the capacity of the software to service all of the vehicle-makers at once proved unfounded. “Surgere’s CEO answered all of our capacity questions,” he confirms.
Surgere's cloud-based COS platform can be integrated with other systems like ERP and warehouse management systems, as well as various data capture devices
Apart from providing its core technology, Surgere has also helped to source the RFID tags and readers (which consist of both gate and handheld units) and provided engineering support to test and tune them for accuracy, ensuring 99.9% data capture rates. Furthermore, it has assisted the technology vendors in terms of design and product specifications, and helped to train users.
Millions of containers will eventually be included in the system, with two RFID tags apiece. Although currently only reusable containers are being tagged, Wappler says that a pilot project is also underway for tagging corrugated containers to cover situations where reusable containers are unavailable, and for parts that are commonly transported in corrugated paper. There is also a trial to test embedded labels.
“We expect to see a large conversion to the application of tags directly for parts, and particularly, parts that require granular visibility or need tightly controlled traceability, such as safety parts or electronic parts,” he confirms.
Both tags and readers are being sourced from a variety of suppliers; as long as it meets the AIAG’s standards, any tag is acceptable, says Wappler. As long as they provide the accuracy needed, the same goes for readers.
A phased approachThe five vehicle-makers involved are all at different stages with the system. Most have completed proof of concept and are starting to use it to connect to their primary suppliers, says Wappler. Others are testing and deploying the technology to ensure that it meets the requisite standards before starting on a full rollout.
Honda, for example, has recently completed a proof of concept to test the benefits and the reading accuracy of scanners. Since then, it has begun working on internal funding to get the project moving in terms of resources and hardware.
The OEM aims to implement the project over the next two to three years in the US, Canada and Mexico, says McBrien, reaching some 600 supplier locations including plants and warehouses. At sites handling large volumes – multiple truckloads of containers, typically – gate readers will be put in place, whereas for small suppliers who handle just a few pallets, handheld RFID readers will be used.
[mpu_ad]Wappler says the biggest challenge for the OEMs involves training up their own users and then deploying the system to their suppliers. McBrien says that ramping up the system at such a large number of its supplier sites will be a multi-year process. “The process of providing equipment, such as portals and handheld scanners, while getting all assets tagged and then testing them is like herding cats,” he comments.
Meanwhile, Styles says that Nissan has also been working with some of its key suppliers – who have been involved in discussions with the AIAG on the project from the start – on proof of concept. This includes movements between one supplier and the OEM’s logistics centre and trials with GPS tracking of containers. All of this, says Styles, is helping Nissan to understand how the technology and tools can best be used.
The next steps, he says, are to continue working through additional proof of concept projects and then map out the deployment, which will happen over the next few months. Full-scale rollout across the whole group of OEMs and tier suppliers should occur by January next year, Wappler says, with further suppliers being brought on in 2020.
Keeping it open sourceThe working group behind this project involved the AIAG at an early stage to ensure that RFID standards were correctly applied in terms of labels, chips, data formats and readability standards.
Honda’s McBrien says the AIAG wanted the process to be open source, so that any RFID tag-maker could access the standard. This is also important for the carmakers because it means that tier suppliers can easily get onboard. “This allows anyone to play,” he comments.
Lang Ware, director of supply chain products and services at the AIAG, says the association is providing a number of written shelf standards, such as for RFID tags and returnable item transfer (RIT) portals, which let users see where they are located, where and when they are being used, and to identify any breakdowns in the system.
Although the AIAG is working on other large collaborative projects, for example in cyber-security, Ware points out that this collaboration involved an unusually large number of vehicle-makers and suppliers.
Moving aheadHonda’s McBrien says that in bringing everything together at the start, there was an initial risk that the five OEMs would disagree or would have different ideas or interests, and that some might even break away. “But, if everyone does their own thing, we’ll have the same issue as before,” he warns.
Now that things have come this far, he is hoping to find new ways of using this technology. “They [the other OEMs] may say ‘we saw a problem and found a solution, but then we stopped because that problem was solved…’. However, in my opinion, we should be innovators and look for more ways to move ahead,” he says.
According to Wappler, the next major step will be to look at further potential areas of cooperation, such as finished vehicles, car hauliers, empty trucks, or ways to share loads and resources. Visibility is important and a common problem, he emphasises.
In the meantime, another vehicle-maker has recently started talks and may soon enter the group, Wappler says.
The group could also be opened up to other technology companies, principally sensor companies, as long as they can meet the 99.9% accuracy minimum. “We agreed to open it up to all tech companies,” he states.
The participants also hope there will be competing groups or new collaborations conducting similar projects. Vehicle-makers and other suppliers are likely to establish their own ecosystems, but this too will require working together for best results; if it is a single group, it will only have limited success, Wappler believes. “We hope new suppliers will jump onboard,” he concludes.