J Intell Manuf (2012) 23:2343–2356DOI 10.1007/s10845-010-0476-2

A case of implementing RFID-based real-time shop-floor materialmanagement for household electrical appliance manufacturers

T. Qu · H. D. Yang · George Q. Huang · Y. F. Zhang ·H. Luo · W. Qin

Received: 28 August 2010 / Accepted: 19 October 2010 / Published online: 4 November 2010© The Author(s) 2010. This article is published with open access at Springerlink.com

Abstract Radio Frequency Identification (RFID) technol-ogies provide automatic and accurate object data capturingcapability and enable real-time object visibility and trace-ability. Potential benefits have been widely reported forimproving manufacturing shop-floor management. However,reports on how such potentials come true in real-life shop-floor daily operations are very limited. As a result, skepticsoverwhelm enthusiasm. This paper contributes to there-vitalization of RFID efforts in manufacturing industries bypresenting a real-life case study of applying RFID for man-aging material distribution in a complex assembly shop-floorat a large air conditioner manufacturer. The case study dis-cusses how technical, social and organizational issues havebeen addressed throughout the project within the company.It is hoped that insights and lessons gained be general-ized for future efforts across household electrical appliancemanufacturers that share similar shop-floor.

Keywords Radio Frequency Identification (RFID) ·Air conditioner · Manufacturing execution ·Production management · Material distribution

T. Qu · G. Q. Huang · Y. F. Zhang · H. Luo · W. QinDepartment of Industrial and Manufacturing Systems Engineering,University of Hong Kong, Pokfulam Road, Hong Kong,People’s Republic of China

H. D. Yang (B)College of Automation Science and Engineering, South ChinaUniversity of Technology, Guangzhou, People’s Republic of Chinae-mail: hdyang@scut.edu.cn

Y. F. ZhangKey Laboratory of Contemporary Design and IntegratedManufacturing Technology, Ministry of Education,Northwestern Polytechnical University, Xi’an,People’s Republic of China

Introduction

Radio Frequency Identification (RFID) technologies offerthe capability of automatic and accurate object data capturingand enable real-time traceability and visibility (Chryssolouriset al. 2009). While supply chain logistics industries havemandated the adoption of the technologies and initiated sub-stantial research and development activities (Williams 2004),manufacturing industries have also made practical progress(Huang et al. 2009; Mo et al. 2009). Manufacturers deployRFID devices to shop-floor objects such as men, machinesand materials to capture data associated with their statuses(Brintrup et al. 2010; Ren et al. 2010). Such RFID-enabledreal-time visibility and traceability substantially improveshop-floor management in general and Work-In-Progress(WIP) materials management in particular (Huang et al.2008b).

This paper presents a case study of applying RFID formanaging material distribution in a complex assembly shop-floor typically within household electrical appliance man-ufacturers. The thread of discussion starts with a large airconditioner manufacturer with an intention of generalizingthe insights and lessons for the whole sector. The oper-ational mode in this air conditioner manufacturing shop-floor has several characteristics. First, production volumeis high, production cycle is short, and product structure iscomplex involving large number of parts and components.Second, production processes are normally sequential involv-ing multiple production stages. Between stages are compli-cated logistics supports requiring good coordination. Third,globally competitive markets drive rapid new product devel-opment and lead to changes in both customer orders andproduction requirements. Fourth, supplies of parts/compo-nents and raw materials vary in terms of quality and servicetimes. Fifth, machine breakdowns and capacities complicate

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the production planning and scheduling, and in turn haveserious impacts on shop-floor material flow. Finally, opera-tors are overwhelmed by production jobs and do not havetime to collect and enter operational data, leading to infor-mation and communication breakdowns. These productioncharacteristics are common in most of the household elec-trical appliance manufacturers (De Toni and Zamolo 2005;Perona and Saccani 2004).

In order to address the above issues, some enterprise infor-mation systems (ERP, MRP, etc.) have been exploited byhousehold electrical appliance manufacturers. For example,this air conditioner manufacturer has implemented high-endERP (Enterprise Resource Planning) systems in recent years.However, they are confronted with challenges to fully uti-lize the systems. This is largely due to the information andcommunication breakdowns between the shop floors and theenterprise decision support systems (DSSs). This has beena prime reason for these manufacturers to look into RFIDtechnologies.

Despite widespread enthusiasm, reports on real-life indus-trial RFID practices, either successful experiences or pain-ful lessons, are very limited. Majority of the reports havebeen based on preliminary industrial experiments ratherthan implementations for everyday operations. Skepticsincreasingly shadows potential benefits claimed. In order tore-vitalize the effort, this paper presents a real-life case studywithin our collaborating company. The purpose of this casestudy is multi-folded. Firstly, this case study shows howRFID-enabled potential benefits come true in a real-life com-pany in terms of improved visibility and traceability, informa-tion accuracy, operation efficiency, reduced costs, increasedspeed and responsiveness, and better product quality control(Clarke et al. 2006; Henseler et al. 2008). Secondly, this casestudy demonstrates how the case company has dealt withtechnical, social and organizational challenges in adoptingthe RFID solutions for shop-floor management. Finally, thiscase study generalizes a procedure on how RFID solutionscan be applied in manufacturing shop-floors for householdelectrical appliance products with similar characteristics.

The generalized procedure contains five steps collectedand adapted from successful RFID applications (Ren et al.2010; Ngai et al. 2010): (1) Analysis of existing business pro-cesses, (2) Creation of RFID-enabled manufacturing shop-floor, (3) Implementation of reengineered business process,(4) Champion of good practices, and (5) Reflection for thefuture.

The remainder of the paper is also arranged following theabove procedure. “Shop-floor material distribution” intro-duces the case company, and discusses special features andchallenges of its shop-floor material distribution processes.“Creation of RFID-enabled shop floor” discusses how RFIDtechnologies are used for creating a wireless shop-floor. “Pro-ject institutionalization” explains how the company has insti-

tutionalized the implementation project. “Champion of goodpractice” exemplifies how implemented RFID-enabled solu-tions facilitate the daily operations of shop-floor materialmanagement. “Evaluation and reflection” evaluates the pro-ject in terms of benefits and impacts and reflects on future per-spectives. The generalization is summarized in “Summary”.

Shop-floor material distribution

About the case company

The case company is one of the largest air conditionermanufacturers in China. Its products range two categories:home-use and commercial-use air conditioners. Based on themarket segments, the company adopts a strategy to focus onthe segments for middle- and lower-level consumers. Its keydomestic markets are small cities or rural areas in China andoverseas markets are mainly within developing countries.Due to this market strategy, products have comparativelylower prices. The company enjoys overall profits throughlarger outputs and cost control. Its average annual output isover 4 million sets. Therefore, as compared to other house-hold electrical appliances manufacturers, the case companypays more attention on improving the quality of its mate-rial distribution to secure an efficient and stable productionprocess.

Air conditioner products have complicated structure in thesense that numerous components are involved in the productassembly. However, the case company simplifies its inter-nal production processes into two stages: preassembly andfinal assembly, while over 90% of the parts and accessoriesmanufacturing are outsourced to suppliers and shareholdingsubsidiaries. Currently, three assembly workshops of the casecompany are responsible for three different product lines.Over 5,000 types of materials are used and purchased fromnearly 80 suppliers. Materials are stored in 49 warehousesand are distributed to workshops by more than 100 logisticsstaffs. This case study is concerned with one workshop andits related warehouses.

Description of the shop floor

A typical shop-floor material distribution process is coop-erated by four major functional departments: ProductionPlan Department for making both production and materialrequirement orders; Warehouses for storing both materialsand final products; Logistics Department for distributingmaterials to Production Department, and taking the finishedproducts back to warehouses. As can be seen in Fig. 1,production and logistics departments are located inside aworkshop, while the other two departments are outside. Theproduction department has two preassembly lines and ten

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Final Assembly Lines

Pre-Assembly Lines

Warehouse

Preassembly Buffer

Final Assembly Buffer

Logistics Department

a2

e

Orders / Status

ERP(SAP)

Raw Materials

Raw Materials

WIP

d

b

Production Department

Workshop

Production Plan Department

a1

c

Logistics Manager

Fig. 1 Workshop layout

final assembly lines positioned in two parallel productionareas, with two corresponding buffers located to the left.Buffers and all the logistics operations are managed by thelogistics department.

Cause and effect analysis for the current process

A typical shop-floor material distribution process containsfive stages as shown in Fig. 1. This section will conduct con-firmatory cause and effect analyses to find out whether andhow the RFID facilities are required in the material distribu-tion process.

Stage 1: Production and material requirement plan

Production plan department makes and releases order inpaper-based “multi-copy form” to shop floors. Typical ordersinclude production orders for assembly lines and materialsorders for logistics and warehouse departments. In addition,order copies will also be circulated to document office forrecording. During the order fulfilling process, all the involvedoperations and required manufacturing objects (operator,machine and material) are manually matched to order throughmarking on the paper-form and then input to systems byman.

Three problems currently exist: (1) paper-based order iswasteful, and the manual recording process of transactiondata is time-consuming, error-prone, and subject to trouble-some reprinting when order changes; (2) planned orders arealways unachievable due to the various operational dynam-ics, e.g. machine breakdown or defective material/product;(3) out-of-stock material in warehouse cannot be timely

identified and replenished, leading to frequent productiondelay or order changes.

The causes of the above problems are: lack of appropriatevisibility and traceability functions at key working areas, e.g.order visibility; lack of data synchronization between ERPsystem and shop floor’s key value-adding points (locationslabeled from “a” to “e”).

Stage 2: Material preparation and delivery

Material operators at warehouses pick up all the materialsbased on the received material orders and load to pallets inthe afternoon. Logistics workers collect all the loaded palletsfrom warehouses and deliver to workshops in the next morn-ing. All the finished material orders are manually updatedto ERP system by warehouse manager when they are free,normally with a one-day delay.

Three problems currently exist: (1) material locating anddistinguishing in manual ways is time-consuming, especiallyfor the same type of materials purchased from multiple sup-pliers; (2) logistics jam at a warehouse gate happens fre-quently because the logistics works happen in a relativelyfixed period; (3) delayed materials consumption informationnormally leads to untimely replenishment and thus stock-outsituations.

The causes of the above problems are: lack of Auto-ID tagson material packages, circulating boxes and pallets; lack ofdata capturing devices at warehouse (“a2”); lack of real-timedata synchronization between warehouses (“a1”) and ERPsystem. These causes are suffered in common in the followstages.

Stage 3: Material buffering

Materials delivered to workshops will be stored in preassem-bly or final assembly buffers first before being replenishedto the corresponding lines. Components (WIP) made by pre-assembly lines will also be stored in final assembly buffer.

Two problems currently exist: (1) materials checking inand out buffer involves complex manual data transactionworks; (2) real-time buffer information is not real-time avail-able. In case of order changing, buffered materials cannot getefficient handing, e.g. order transfer or re-warehoused.

The causes of the above problems are similar as those forwarehouses discussed in stage 2, except the data capturingsynchronization point will be “b”.

Stage 4: Preassembly

Logistics workers make their rounds along the preassemblylines periodically, and replenish materials from buffers tolines when the line-side material inventory is below a safetylevel. The finished WIP will be sent to final assembly buffer.

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Two problems currently exist: (1) a lot of unnecessarylabor costs are wasted on line-side inventory checking; (2)without real-time WIP information, final assembly may startearlier or later, resulting in either production delay or redun-dant WIP.

Besides the basic cause of the lacks of Auto-ID tags onmaterials and devices at preassembly line (“d”), lacking ofsynchronization between preassembly line (“c”) and finalassembly line (“d”) is the main cause for the above twoproblems.

Stage 5: Final assembly

The way of line-side inventory replenishing is similar as thatfor preassembly line, while the finished final products willbe sent back to warehouses instead.

Two problems currently exist: (1) the wastes of unneces-sary labor costs on line-side inventory checking still exist;(2) logistics manager cannot arrange timely warehousing forfinal products without real-time output information, resultingin high product inventory at the line’s end.

Besides the basic cause of the lacks of Auto-ID tagson materials and devices at final assembly line, lacking ofsynchronization between final assembly (“e”) line andlogistics department is the main cause for the above twoproblems.

Creation of RFID-enabled shop floor

How to create an RFID-enabled manufacturing shop-flooris critical. Scheme for RFID reader deployment and tag-ging method must be worked out according to the spe-cific characteristics of the manufacturing shop floor. Factorsrelated to both RFID technical solutions and business pro-cesses and operations must be jointly considered and matchedbetween each other. The resulting RFID-enabled shop-floorwould not only determine the effectiveness and efficiencyof tracking and tracing but also acceptability by humanoperators.

For easy demonstration without losing generality, anAUTOM solution put forward in Huang et al. (2008a) willbe adopted to explain a general process of creating RFID-enabled shop floor. AUTOM solution is a standard and exten-sible RFID implementation strategy. It not only owns anopen information infrastructure compliant with ISA-95 stan-dards, but also provides a set of advanced yet optional RFIDfacilities with standard interfaces integrable with other RFIDdevices (Zhang et al. 2010). Therefore, the approach of cre-ating RFID-enabled shop floor to be discussed in the follow-ing is generally applicable when other RFID implementationstrategies or devices are adopted, no matter they replace orcompliment AUTOM solution.

Design of real-time shop-floor information infrastructure

The RFID-based shop-floor information infrastructure pro-posed in AUTOM solution aims to develop an easy-to-deployand simple-to-use information infrastructure for manufactur-ing companies to achieve real-time and seamless dual-wayconnectivity and interoperability between application sys-tems at enterprise, shop floor, work cells and RFID devices.It is consistent with the standard enterprise hierarchy definedby ISA-95 enterprise-control system integration standard(http://www.isa.org), as shown in the left part of Fig. 2. Anenterprise hosts one or more manufacturing sites or areas (e.g.factories or workshops), each of which consists of severalproduction lines/cells or storages zones (e.g. assembly linesor warehouses). The operation of a production line involvesa variety of production units, whose operations are concern-ing with both manufacturing resources (e.g. materials, equip-ments and operators) and their logical combinations (e.g.product assembling). Implementing enterprise informationsystems to be consistent with this standard hierarchy willensure the system applicable and extensible.

The right part of Fig. 2 illustrates the main technical lev-els of the AUTOM infrastructure in correspondence to thefour standard enterprise levels. The highest level includesthose conventional enterprise information systems (EISs),such as ERP, MRP etc, used by enterprise management formaking production plans. The three lower levels are RFID-enabled shop-floor information facilities, including shop-floor application system level, RFID-Gateway and SmartObject. AUTOM facilities provide an efficient way for cre-ating a RFID-enabled shop floor. The following subsectionswill detail the instantiation process.

Development of RFID-enabled shop-floor hardwarefacilities

Creation of shop-floor smart objects

The first step of creating RFID-enabled shop floor is toconvert conventional shop-floor manufacturing objects intoshop-floor smart objects through equipping them with Auto-ID (RFID or barcode) devices. This step is realized in twoaspects. The first is to attach the production materials withAuto-ID tags to make them identifiable. The second is toequip value-adding manufacturing resources with suitableAuto-ID readers to track the information of materials beingprocessed. The above two kinds of shop-floor objects arereferred to as Smart Objects (SO). Specifically, the materialswith Auto-ID tags are called passive SOs, while the manu-facturing resources equipped with Auto-ID readers are calledactive SOs.

In AUTOM solution, the creation of passive SO has twosub-steps. The first is to scope the objects to be tracked and the

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Enterprise Information Systems (EISs)

RFID-Gateway• Assembly Line• Buffer Area• Warehouse• Logistics

802.11gBluetooth ZigBeeUSB Serial Port

Stationary Gateway Portable Gateway

Adaptor

Active Smart Object• Workstation• Shelf/Storage Unit• Forklift/truck• Data Collection Point

Passive Smart Object•Material •Product /WIP• Equipment• Pallet/Container• Personnel

Smart Object

Bar-code Reader HF RFID Reader TerminalEthernet Hub

Pallets Operator

Barcode UHF RFID HF RFIDBarcode

Final Products

UHF RFID Reader

Site

/Are

aP

rodu

ctio

n L

ine

Stor

age

Zon

eP

rodu

ctio

n U

nit

/ Sto

rage

Mod

ule

Res

ourc

esP

roce

ss S

egm

ents

ISA-95

Ent

erpr

ise

Shop-floor Application system

Warehouse BufferLogistics Final Assembly

RFID-Enabled Real-Time Material Distribution System

Materials

Fig. 2 AUTOM infrastructure

second it to determine which kind of tag will be used. Thecase company focuses on the material distribution processwhich concerns about delivering the right item by the rightoperator with the right tools in the right quantity at the righttime from the right source to the right destination. There-fore, the objects need to be tracked include raw materials,final products, storage locations, circulating boxes, palletsand operators. The tagging of these objects follows the close-loop RFID system application principle advocated in Schmittet al. (2007): RFID transponders should be attached to thoseobjects which are shipped or moved within a cycle and even-tually returns to its point of origin. Therefore, internally usedor circulated resources are attached with RFID tags, such asoperators, storage locations, shipping pallets and circulatingboxes. Since the raw materials and final products in the casecompany have already used barcode labeling in agreementwith other supply chain partners, they are kept unchanged.The WIP in the distribution process will be traced with theircontainers.

Active SOs are installed at those significant value-addingpoints of a process where passive smart objects are to betracked. The high-level view of a manufacturing process isa value chain representing how the manufacturer receivesraw materials as input and add values to them throughvarious processes to finally get finished products. Thevalue-adding point defined in AUTOM solution followsthis concept, referring to the location where an operationhappens to drive the state of a material more approaching

finished product. For example, each loading area or trolley fordistributing raw materials, each machine or working stationfor assembling components, each warehouse shelf for stor-ing finished product, are all the possible value-adding points.In the current implementation stage of the project, however,only the entrance points of line-level areas are selected asthe value-adding points for installing SOs, such as the begin-ning of an assembly line and the gate of a warehouse. Thisis due to two reasons. First, all the assembly lines operatein a continuous production mode. One reader put at the endof the production line could help derive the statuses of allthe comprised workstations. Second, for a logistics processcombined with storing, loading, transporting and buffering,stochastic mobile data reading and processing may hap-pen anywhere. Therefore, portable RFID-Gateway is appliedinstead of wastefully equipping each point with anindividual SO.

Integration of shop-floor smart objects

The second step of creating RFID-enabled shop floor is tointegrate all the smart objects deployed at shop floors as wellas their information. Some RFID solutions lack this leveland expose RFID devices directly to application systems,while AUTOM solution puts forward an intermediate levelcalled RFID-Gateway to form loosely-coupled system archi-tecture (Zhang et al. 2010). RFID-Gateway has a hardwarehub and a suite of management software which acts as a

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server to host all the (active) SOs within a certain work-ing area. Through incorporating various drivers of SOs toform a driver library, RFID-Gateway is enabled to work ina “Plug and Play” fashion to newly plugged SO. Heteroge-neous SO drivers are wrapped into standard web service inter-faces, enabling upper-level applications to use all the devicesin a uniform way. The influential range of an active SO (e.g.a RFID reader) is limited, i.e. covering a value-adding point,while that of a RFID-Gateway is the union of ranges of allthe hosted active SOs, i.e. normally a work cell or a produc-tion line. Despite the key word “RFID”, RFID-Gateway issubstantially supported by other technologies, e.g. barcodes,Wi-Fi, PC, PDA etc.

There are stationary, mobile and portable RFID-Gateways. Stationary RFID-Gateway is placed at a fixedlocation, such as the gate of a warehouse. Items are moved tothe stationary RFID-Gateway to be tracked. A mobile RFID-Gateway is installed to a moveable manufacturing resource,such as a forklift truck. Tagged items are not only carried butalso traced by the movable recourses during long distanceof transportation. A portable RFID-Gateway is a handhelddevice responsible for distributed item identification withina certain area or along a certain process. Unlike the previoustwo types, a portable RFID-Gateway is always moved closeto the objects by an operator for tag reading.

The case mainly uses stationary and portable RFID-Gateways. Figure 3a, b show the lab version and onsite ver-sion stationary gateways. The former integrates some of thecommon Auto-ID devices (i.e. active smart objects) beingwidely used in industry, including Alien ALR-9800 UHFRFID readers, ACS 120 HF RFID readers, and MetrologicMS9535 Bluetooth barcode readers. They could be instanti-ated or adapted to various onsite versions thorough selectingsuitable smart objects according to the specific requirementsand conditions of the application sites. Figure 3b shows anonsite RFID-Gateway being used in the warehouse of thecase company now. Figure 3c shows the portable gatewaywhich is implemented based on Motorola MC9090-G RFIDhandheld reader.

All the numbered locations in Fig. 1 have been identifiedas value-adding points and will be equipped with suitableRFID-Gateways. The detailed configurations of these RFID-Gateways are listed in Table 1 for better comparison.

Development of RFID-enabled application systems

The third step of creating RFID-enabled shop floor is todevelop shop-floor application system. It normally aims toprovide a two-way information channel between shop-floorexecution and decision (Zhang et al. 2010). From executionto decision, the system collects real-time information of thesmart objects involved in a manufacturing process (via RFID-Gateways) for adaptive decision or process control. From

decision to execution, the system can transfer and interpretshop-floor decisions into executive work orders that shouldbe followed by smart objects.

Such application system normally includes visibility andtraceability modules. A visibility module shows the real-timeoperation status of a specific manufacturing site with graph-ical user interfaces to facilitate the easy operation of opera-tors. The principle followed is what you see is what you doand what you do is what you see. Traceability is a backendcontrol mechanism which integrates the real-time informa-tion captured from different manufacturing stages. Typically,information from different shop-floor locations could be syn-chronized to enable coordinated operations, while historyinformation of a manufacturing object or process could beretrieved in a later time for failure investigation.

Application system is very process-specific, and thushardly any off-the-shelf system on the market is directlyready for using. The project team customized a RFID-enabled real-time shop-floor material distribution system(RT-SMDS) for the case company. The system is imple-mented based on service-oriented architecture (SOA) archi-tecture, shown in Fig. 4. Visibility modules are implementedin the form of a set of web explorers to be flexible down-loaded and used in RFID-Gateways. Both the traceabilitymodules and a data services are implemented in web ser-vices. Data services not only enable standard XML-baseddata exchanging between application system and its owndatabase, but also implement an ERP Adaptor integratingthe RT-SMDS with the case company’s SAP system. Theadaptor has four pairs of SAP RFC (Remote Function Call).They are Production Order RFC, Material Order RFC, BOMRFC, and Order Change RFC. The former two are used toget newly made production and material orders from ERP.The latter two are used to modify the released orders if aproduction order is changed by production plan department.Details of the individual visibility modules and traceabilityservices will be given in “Champion of good practice” witha scenario description.

Project institutionalization

Project institutionalization is a process ensuring all the pro-ject activities, structures, and values become an integral andsustainable part in the company (http://www.qaproject.org).There are two main phases in this process. First, key institu-tionalization aspects should be identified and the respectiveobjectives/visions are to be set. Second, objectives of eachaspect are translated into action guidelines applicable to thedaily activities of all the concerned parties. The followingfour key aspects of institutionalization are mainly concernedin this project.

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(a) Lab Version Stationary RFID-Gateway

(b) Onsite Version Stationary RFID-Gateway

(c) Portable RFID-Gateway

Fig. 3 Implementation of RFID-Gateway

Project teaming-up

This project is sponsored by several government funds (seeacknowledge part) and collaborated by the case companyand the university to which the authors (i.e. AUTOM group)belong. The project team is composed of three main parts,including AUTOM group, company group and experts group,as shown in Fig. 5. AUTOM group is mainly responsible forsystem’s technical implementation, i.e. AUTOM facilitiescustomization and onsite implementation. Company grouphelps AUTOMs to overcome practical obstacles possiblyconfronted during onsite implementation, e.g. requirementcollection and IT supports. In this project, support from thecompany’s senior management is critical. This is becausebusiness process changes are frequent during RFID appli-cation, and resistance from frontline operators is thereforeunavoidable. Determination and supports of senior manage-ment will help resolving the resistance in a suitable way,either administrative or economic. Expert group is indis-pensible for IT project, especially those involving new ITtechnologies like RFID. They will be consulted mainly forthe proper utilization of RFID.

Periodical system testing

The objective is to guarantee the project deliverables aretrue applicable to the shop floor. Apart from the proof-of-concept testing in lab, there are still two phases of imple-mentation tests, namely local functionality test and parallel

system online test. The former tests the functions, robustnessand user friendliness of the system and evaluate the accep-tance of of onsite users. The latter means the whole systemruns in parallel with the current manual operation process tovalidate its actual effectiveness. Such testing is repeated for5–10 rounds and each round deals with 2–3 production/mate-rial orders. The data integrity and accuracy, operational effi-ciency and stability, user satisfaction are all tested throughbenchmark comparison.

Targeted staff training

The objective is to make the RFID system and associatedconcepts a management/operation culture in the shop floor.Staff training includes both technology training and operationtraining. The former are held in classrooms, mainly for man-agers from all the process-related departments. Such work-shops aim to promote new managerial concepts and explainchanges made to the previous working process. The latter areprovided specifically to the direct system users, i.e. frontlineoperators. Such on-the-job trainings aim to make the opera-tors easy to adapt to the new technologies, systems and thereengineered working/business process.

Standardized operation specification

It is widely known that the success of an IT system notonly comes from the good system design, but also relies onthe standardized system using. This is particularly true for a

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Table 1 Configuration and deployment of RFID-Gateway

No. Location User Major functions Gateway hardware Active smart object

a1 Warehouse storage area Material operators (1) View the pallet loading scheme •Barcode

(2) Bind materials(barcode) with circulatingbox (UHF)

•UHF RFID

(3) Bind circulating boxes(UHF) with pallet (UHF)

(4) Bind pallets (UHF) withlocation (UHF)

a2 Warehouse gate Logistics operator (1) Read staff card (HF) andget associated deliverytasks

•HF RFID

(2) Locate the pallet to be delivered •UHF RFID

(3) Check out the pallet

Warehouse keeper (1) Check the status of logistics operators

(2) Check the validity ofmaterials and pallet to bechecked out

b Preassembly buffer Gate Logistics operator (1) Check in materials (onpallet) delivered fromwarehouses

•HF RFID

(2) Check out bufferedmaterials and send topreassembly lines

•UHF RFID

c End of preassembly line Loading operator (1) Report finished preassembly tasks •UHF RFID

(2) Bind finished WIP with pallet

d Final assembly buffer gate Logistics operator (1) Check in materials (onpallets) delivered fromwarehouses

•HF RFID

(2) Check in WIP (onpallets) delivered frompreassembly lines

•UHF RFID

(3) Check out bufferedmaterials and send topreassembly lines

e End of final assembly line Packing operators (1) Report finished final assembly tasks •Barcode

(2) Bind finished productswith pallet being loaded

•UHF RFID

RFID system whose major benefits result from the integrityand consistency of the real-time information captured fromshop floor. Therefore, a set of operation specifications havebeen standardized. They will not only be monitored of shop-floor supervisors, but also be linked with the operator’s ownperformance evaluation to arouse their interests.

Champion of good practice

Scenario description

A complete material distribution process of using RT-SMDSto accomplish one single production order will be illustratedin this section. All steps are arranged according to the logical

sequence of the involved operators and activities, see Fig. 6.This process is common for other workshops and ware-houses because the material distribution processes are verysimilar.

There are ten operational steps in this process. Each step isdirectly enabled by one of the visibility modules downloadedto the corresponding RFID-Gateway or PC while supportedby the traceability services running at the back end. The cen-tral part in Fig. 6 illustrates the operation details of each stepincluding the venue, while the surrounding part shows thevisibility interfaces. The five steps to the right are more logis-tics related, aiming at delivering materials from warehouseto workshops based on planned material requirements; thefive steps to the left are more production related, responsiblefor replenishing materials to assembly lines following actual

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SAPAUTOM RT-SMDS

Line-side Inventory Traceability Service

Traceability Visibility Modules Services

Final Assembly Line Module

Final Assembly Buffer Management Module

Preassembly Buffer Management Module

Warehouse Material Check-out Module

Warehouse Material Preparation Module

Pallet Load Scheme (PLS) Module

Shop-floor Dynamics Viewer

Preassembly Line Module

ERP Adaptor

Data ServicesOracle

Proprietary Database

AUTOMDatabase

Order Traceability Service

… …

Fig. 4 System architecture

Project Team

AUTOM Group Company Group Expert Group

Technology Members Application Members IT Department Production Department

Project Manager Senior Management RFID ExpertsIT Experts

Fig. 5 Organization of project team

production tempo. The process can also be divided into planand execution steps in the upper and lower parts respectively.The road signs in the central part show the above conceptualdivision.

The operation process is directly supported by a series ofvisibility modules installed at the onsite RFID-Gateways. Butthe information interrelationships among different operationsteps are maintained through two major traceability modules.The usages of these modules will be illustrated in this sectionwith the scenario.

Visibility enabled operation process

Step 1: Production manager: make production and materialrequirement plans

With “Real-time Shop Floor Visibility Explorer”, themanager reviews the real-time shop-floor status includingprogresses current orders, status of production lines, andmaterial availability. Such information enables an adaptive

planning mode and makes the orders more feasible for exe-cution. Generated orders are then released to shop floors.

Step 2: Logistics manager: make pallet loading scheme

When a new material order is released, the logistics manageropens “Pallet Loading Scheme Editor” to make the so-calledpallet loading scheme (PLS). A PLS indicates which and howmany materials of which material orders should be loaded onthe same pallet and delivered to which workshop and on whattime. Based on PLS, the subsequent material distribution pro-cess could be conducted in batches (based on PLS instead ofindividual materials) to enhance the handling efficiency.

Step 3: Material operator: material preparationin warehouse

All PLS are sequenced by the designated finish times andshown in “Warehouse Material Preparation Explorer” onthe material operator’s portable RFID-Gateway at the ware-

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Production Plan Department Logistics Department

Material Operator

Logistics ManagerProduction Manager

Logistics Operator

Preassembly Buffer

Buffer Manager

Final Assembly Buffer

Logistics Operator

Warehouses

Warehouses

Warehouses

Warehouse Keeper

Final Assembly LinesPackaging Operator

Preassembly lines

Preassembly Operator

Make pallet loading scheme

Logistics Department

Logistics Manager

PC@ Logistic Dept’s Office

Portable RFID-Gateway @ Storage Area

Load materials to contains and pallets and bind their tags

Be notified of the completed loading scheme

PC@ Logistic Dept’s Office

Get the target pallet and deliver to assembly line buffer

Check the validity of materials and logistics operator

RFID-Gateway@ Warehouse Gate

RFID-Gateway @ Warehouse Gate

Check the validity of delivered materials

Deliver the finished WIP to final assembly line buffer

RFID-Gateway@ Preassembly Buffer Gate

RFID-Gateway@ Final Assembly Buffer Gate

Replenish materials to final assembly line

RFID-Gateway@ Final Assembly Buffer Gate

Final product packaging and loading to pallet

RFID-Gateway @ Final Assembly line

Make adaptive production plan and material requirement plan

3

1

10

9

8

7 6

5

4

2

PC@ Production Plan Department

Production Logistics

Pla

nE

xecu

tio

n

Fig. 6 A representative operational scenario

house. The material operator selects the most urgent PLSto prepare. Materials are put into circulating boxes first andthen load to pallets. Barcodes of materials will be boundto the RFID tags of circulating boxes and pallet barcodes bythe portable RFID-Gateway according to their inclusion rela-tionships. Finished pallets will be placed to the warehouse’sshipping dock. Tags of the pallet and specific storage cell willalso be bound to record a pallet’s current position.

Step 4: Logistics manager: assign material picking task

Finished PLSs will be highlighted in the “Pallet LoadingScheme Editor”. The logistics manager will then select aspecific logistics operator to get the loaded pallet back fromthe warehouse, namely assigning a material picking task.Tasks containing final assembly and preassembly materials

are shown the RFID-Gateways at the corresponding buffergates. The logistics operator being assigned a task will thenset off to the warehouse for material picking.

Step 5: Logistics operator: material picking

Through patting staff card on the RFID-Gateway at the ware-house gate, a logistics operator may view the assigned mate-rial picking tasks from “Shipping Dock Visibility Explorer”.With the specific pallet position of each PLS, the logisticsmay easily find the pallet to be picked. When checking outthe pallet from warehouse, the “Warehouse Material Check-out Explorer” at the same RFID-Gateway will catch the pallettag and check whether the PLS associated with this pallet isbelonging to the operator’s logistics tasks.

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Step 6: Warehouse keeper: materials check-out validating

When a logistics operator tries to check out a pallet out ofthe warehouse, the materials actually loaded on the pallet willbe automatically retrieved through the binding relationshipscreated during material preparation process and shown on“Warehouse Material Check-out Explorer”. These materialsare contrasted against the original PLS. If they are matching,the logistics operator is allowed to proceed. Otherwise, thewarehouse keeper will request the logistics operator eitherto reload the materials or modify the PLS. All the materialsbeing checked out are deducted from the warehouse inven-tory and updated to the ERP system through the ERP adaptor.

Step 7: Logistics operator: preassembly material buffering

If the picked pallet from warehouse contains preassemblymaterials, it will be delivered to the preassembly buffer.When the logistics operator checks in the pallet, the RFIDpallet tag is captured by the RFID-Gateway at the buffer gate.All the contained materials will be automatically shown onthe “Preassembly Buffer Visibility Explorer” and recordedthrough retrieving relative PLS and marked as “in-buffer”,indicating they are ready for replenishing to lines. When apreassembly line is about to finish a production order, theexplorer will inform the relative logistics operators to replen-ish materials for the next production order.

Step 8: Preassembly operator: preassembly and WIP loading

Components made by preassembly lines are loaded on palletby preassembly operators. Since such WIP are not tagged, theload (quantity) and affiliated production order are manuallybound with the pallet tag. As the type of WIP from a preas-sembly line is normally fixed, they are normally loaded withdefault capacity. Hence, the manual binding operation is nottime-consuming. Production order, default loading capacityand pallet tag will be automatically bound together by the“Preassembly Line Visibility Explorer”. Only when the actualload is not the default value, manual intervention is required.A loaded pallet will be delivered to final assembly buffer.

Step 9: Logistics operator: final assembly line replenishing

Final assembly buffer receives both materials from ware-houses and WIP components from preassembly lines. Theircheck-in processes are all the same (see step 7), enabled by“Final Assembly Buffer Visibility Explorer”. Buffered mate-rials will be replenished to final assembly lines by logisticsoperators based on the real-time status of line-side inventoryshown on the explorer. When materials are checked out frombuffer, either in circulating box or pallet, their informationwill be automatically captured by the RFID-Gateway through

retrieving the tag’s current binding relationship. Quantity ofeach material will be added to the corresponding line-sideinventory.

Step 10: Final product assembling, packaging andwarehousing

All the final products made by final assembly lines willbe packaged and tagged by barcodes based on customer’srequirement. Every tagging operation will trigger the “Line-side Inventory Traceability Service” once and the consumedmaterials will be deducted from current line-side inventory.Packaged products will be loaded on pallets for warehous-ing. Similar as material preparation in warehouse, the prod-uct barcodes will be bound with the pallet RFID tag by the“Final Assembly Line Visibility Explorer” on portable RFID-Gateway. Information of all the loaded pallets will be sent toboth logistics manager’s PC. The logistics manager will cre-ate logistics tasks accordingly by assigning logistics operatorto deliver them to warehouses. This process is very similarto Step 4.

Typical traceability services

Traceability services in this system mainly serve for two pur-poses, tracing the information of another RFID-Gateway ortracing the history information of an operation process. Theformer is required in the normal operation of a material distri-bution process, such as the “Line-side Inventory TraceabilityService” used in Step 10. However, when an order changehappens in a production process, another traceability servicecalled “Order Traceability Service” will be needed.

Line-side inventory traceability service

Current system implementation only installs RFID-Gateways at the end of assembly lines instead of equippingevery station with active smart objects (e.g. RFID readers).However, the line-side material stocks need to be monitoredto enable timely replenishing. This service fulfils this need.Product outputs captured at the end of assembly line are usedin connection with the product’s BOM structure to calculatethe line’s real-time material consumption. Quantities of mate-rialshavingbeenreplenished to linearecapturedby theRFID-Gateway at the buffer gate. By subtracting the accumulativematerial consumption from the accumulative material replen-ishment, the real-time line-side stocks could be easily traced.

Order traceability service

Specifically, inserted production orders may result in newmaterial orders and logistics tasks, while cut or cancelledproduction orders may result in reversed logistics tasks, i.e.

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material return tasks. In either case, the task’s executionprocess is very similar to the normal material distributionprocess.

Exceptional processes are possibly needed if the releasedproduction orders are changed by production plan depart-ment. This service generates a remedy material distributionprocess for order changes. In case a new production ordersis inserted, a new material order will be generated throughtracing the product’s BOM structure via SAP Adaptor (i.e.BOM RFC). Processing of this new material order will followStep 2–10 of the normal scenario. In case a released produc-tion order is reduced of its quantity or completely cancelled,on the other hand, this service will trace its correspondingmaterial order and all the related logistics tasks. Those logis-tics tasks having not been started will be directly cancelled,while those in processing or being processed will be assigneda reversed logistics tasks. For example, a pallet of materialsin preassembly buffer will be assigned a material return taskrequiring it to be sent back to the warehouse from where itis delivered.

Evaluation and reflection

The system has been continuously tested in the pilot work-shop for a month. Five rounds of feedback collection fromusers have largely improved the usability and efficiency ofthe system on the one hand, helped all the operators famil-iar with the system on the other. Although positive ratingshave been generally reported from both management andfrontline operators, the evaluation process also revealed somechallenges that deserve more attention in the future imple-mentation. This section will conclude all the benefits andchallenges. Future works will also be outline after a rationalreflection.

System benefits

This system directly enjoys the benefits offered by RFID andbarcode technologies, such as reducing the manual data col-lection processes which are error-prone, tedious and time-consuming, eliminating the paper-based data sheets whichare wasteful and easy to be damaged or lost, as well asimproving the shop-floor data quality to a level that isreal-time, accurate, complete and consistent. In addition,five higher-level managerial and operational benefits specif-ically related to the material distribution process have beenidentified.

Adaptive decision

Shop-floor resources are converted into smart objects throughattaching RFID tags or barcodes, while the corresponding

readers are deployed at value-adding points of a material dis-tribution process to capture the smart objects’ critical infor-mation. Real-time feedbacks close the loop of planning andcontrol and thus enable an adaptive decision mode. Suchmode potentially results in better efficiency and quality ofmaterial distribution, especially when production dynamics(e.g. order changes, inventory stock-out) appear which entailcoordination from the execution process.

Concurrent execution

Accomplishing a material distribution process entails multi-ple operations performed in distributed sites. Effective infor-mation capturing and sharing mechanism of this systemenable some operations take place in parallel or at least havetime overlaps, thus shortening the whole execution period.For example, through sharing the pallet loading scheme(PLS), the progress of material loading operation in ware-house is real-timely updated to the logistics department. Thuscertain logistics preparation works such as forklift pickingand traveling could take place concurrently with the mate-rial loading operations. Similar concurrent operations existbetween the assembly lines and logistics operators for linereplenishing.

Real-time visibility and traceability

Primitive data captured by RFID/Auto-ID devices is com-bined with the appropriate operational logics of each work-ing site to form meaningful information that is “what you seeis what you do and what you do is what you see” and dis-plays on visibility explorers. Visibilities of correlated sitesare also linked by traceability services to make the wholesystem act as a whole to achieve system-level synchroniza-tion. Both operators and managers could take advantages oftheir necessary visibilities to facilitate their onsite work ordecision. The visibility and traceability in AUTOM wirelessmanufacturing framework could achieve even better perfor-mance because any dynamics occur in anywhere of shop floorcould be more easily captured by backend systems and thenreflected to all the frontend operators concerned.

Batch transaction

Batch transaction in this system means processing multipledata transactions of material in-out operations once at a timeby a RFID-Gateway. Common cases including a pallet withmultiple containers pass a gate (e.g. warehouse or buffer) andmultiple such pallets delivered by different operators pass agate. Such batch transaction not only relieves the logisticscongestions at those gate venues, but also reduces the laborcosts wasted on the piece-by-piece material recording and

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checking. Efficiencies of both operation and economy in thewhole process are therefore enhanced.

Corporate image promotion

Last but not the least, the implementation of this RFID systemhas helped the company boost its hi-tech reputation over othercompetitors. The pilot workshop has already been open forpublic visiting, which advertises the company and explorespotential customer groups in special way.

Current challenges

Change of working habit

The whole system is designed flexible enough to accommo-date the previous material distribution process so as to incurless BPR effort and make it more acceptable for the users.However, some behavioral changes resulting directly fromRFID adoption are mandatory and entail immediate adap-tion. For example, material operators have to use portableRFID-Gateway to bind materials with containers and palletsinstead of merely marking the loading quantity on papers.Managements are happy with these changes because theyavoid paper wastes and enhance the visibilities of processes,but frontline operators are complaining their working habitchanges and the additionally introduced binding operations.Designing simpler ways of using RFID and making RFIDbenefits economically perceivable to operators may be nec-essary when further extend the system.

RFID reading accuracy

Reading UHF RFID tag in batches is an acknowledged ben-efit as mentioned above. However, the RFID reading accu-racy renders a potential challenge when the system is put intopractical usage. Through our onsite test, the reading accuracyrandomly ranges from 90–100% when 10 tags are placed ina 2 × 2 square meter area. In case that multiple forklifts passthrough a warehouse gate simultaneously, the reading areahas to be much larger and the accuracy will be unavoidablelower. Therefore, how to design the position of both RFID-Gateway and the integrated UHF readers and antennas toensure the reading accuracy issues an immediate challenge.

“Three High” problem

Three problems have been worried by the company. The firstis high cost. This includes not only the direct costs spenton acquiring RFID devices and tags, but also indirect costinvolved in streamlining their business processes (Langeret al. 2007). The second is high risk. RFID technologies havedeveloped rapidly: standards and protocols are upgrading,

device costs are cutting, and reader’s reliability and readabil-ity are improving. All these have created enormous concernseven risk-taking manufacturers. The third is high technicalthreshold. Engineers and IT technicians could obtain someknowledge and skills with system using after attending sem-inars and short-course training. However, as RFID solutionsrequire very high level of specialist knowledge and practicalskills in IT, RFID readers and business processes and oper-ations, to conduct further development to the system takesthem significant efforts. For those small and medium sizedcompanies, these “three high problems” cannot be overcomeby themselves individually. They have to share out the cost,risk and technical know-hows (Huang et al. 2010).

Future works

Due to the mutually acknowledged system benefits andpotentials between the case company management and theproject team, the project has been determined to be upgradedto a complete full-scale RFID system implemented to thewhole enterprise. Future works will be carried out in twophases, i.e. inward extension and outward extension.

Inward extension means placing readers (active smartobjects) or RFID-Gateways to more value-adding pointsalong with the material distribution process. In current imple-mentation, only RFID-Gateways are installed at the end ofeach line-level area, such as the end of an assembly lineor the gate of warehouse or buffer. Information of work-station-level points, such as line-side material buffers, canonly be derived through mathematical calculation. However,the accuracy of such calculated information is often violatedby unexpected field exceptions such as unqualified materialappearing. Inward extension may help form more compactand accurate data stream, addressing the above problems.

Outward extension means expanding the current systemimplementation to other workshops and warehouses. Theextension will follow the operational similarities amongworkshops in terms of shop-floor facility layouts (e.g. assem-bly flow line or fixed-position assembly), raw material sup-plier’s coding (e.g. barcode) schemes etc. Specifically, otherwall air-conditioner indoor-unit workshops will be promotedfirst, followed by wall air-conditioner outdoor-unit, win-dow air-conditioner, and finally cabinet-type air-conditionerworkshops.

Summary

This paper has presented a case study of applying RFIDfor managing material distribution in the complex assem-bly shop floor of a large air conditioner company. Spe-cific shop-floor requirements in the case company have beenconcluded and generalized into technical and management

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needs for RFID technologies. An innovative shop-floor RFIDimplementation framework called AUTOM is adopted andfacilitates the project team to address these RFID needs ina systematical way. Technical, institutional and proceduralissues concerning with the project implementation have beendiscussed for the case in specific, for manufacturing compa-nies with similar shop-floor RFID application requirementsin general.

This project is significant in three aspects. First, a holisticRFID implementation framework (AUTOM) and procedureis illustrated in a real manufacturing shop-floor environment.Although not the unique solution, AUTOM indeed providesan effective and efficient way for implementing shop-floorRFID systems. Second, most of them share similar produc-tion characteristics and problems. Therefore, the insights andlessons obtained from this air conditioner company couldbe easily generalized to others household electrical appli-ance manufacturers, providing a visual guide for practitio-ners. Third, through this real-life case study, promised RFIDbenefits have been turned into reality and practically imple-mented for everyday shop-floor operations. Hopefully, moreand more companies will be re-vitalized of their RFID enthu-siasm instead of being shackled by skeptics.

Acknowledgments The authors are grateful to the collaboratingcompany for providing technical supports. We would also like tothank HK ITF (GHP/042/07LP), RGC GRF HKU 712508E, HKUSmall Project Funding (200907176106), China National Science Foun-dation 50805116 and 60973132, Fundamental Research Funds forthe Central Universities-SCUT (2009ZZ0053), and Guangdong Sci-ence and Technology Department-International Collaboration Project(2010B050400005) for providing partial financial supports.

Open Access This article is distributed under the terms of the CreativeCommons Attribution Noncommercial License which permits anynoncommercial use, distribution, and reproduction in any medium,provided the original author(s) and source are credited.

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