The New Frontier in Supply Chain Management

Are the efficiencies that result from RFID automation of inventory tracking worth the high investment? The analysis requires a CFO's expertise.

As Hummers roll down the assembly line at AM General LLC's manufacturing plant in Mishawaka, Ind., managers never have to guess about the location of a particular vehicle. An employee who wants to check on a custom order doesn't scour the plant or pore over paperwork. Instead, anyone who wants details about a vehicle's position in the production process can view that information in real time from his or her PC.

The plant produces 148 Hummer H2s every day. Its warehouse space is limited, so managers place a premium on production-line efficiency. That's why, with the launch of the model year 2003 Hummers, the company implemented a radio frequency identification (RFID) system from Santa Clara, Calif.-based WhereNet to continuously monitor the status of vehicles on the plant's main Hummer-body assembly line. Each carrier that holds an H2 body as it moves through the assembly process is equipped with a battery-powered RFID tag. Antennas in these tags transmit data to RFID readers throughout the 637,000-square-foot building. The tag readers then interact with software that tracks individual trucks' movement around the facility.

Through the same software, employees can see whether a part is where it needs to be or verify that the actions related to that part correspond to the specifics of the associated customer order. In addition, assembly team members can use the software system to notify materials staff when the assembly line is low on a particular part. "It has created new opportunities for efficiency," says Tim Kurtz, manufacturing systems coordinator. "The system informs the forklift operator which parts are needed at which station. The person can then replenish the lines from the dock location without sorting through paperwork and details."

Because the system is entirely wireless, employees don't have to fuss with cables and clunky pieces of infrastructure. What's more, it is flexible enough that AM General can adjust its manufacturing processes as needed.