The company Bracket International has grown 78 million last year with a cost of goods sold of 61 million. Currently there are three locations in Ohio, Kentucky, and South Carolina. At the Ohio and Kentucky factories are automated flow shops and South Carolina factory focuses on small custom orders and is more of a batched process. However all three locations use a bar coding labels and scanning equipment to monitor and control the flow of material. Currently there are 8,850 items scanned per day at all three factories. The Bracket International employees work 2000 hours each year with a average salary of $5,000. A company is trying to explain why switching to a radio frequency identification device (RFID) system can save money. It will help the company to be on demand operational planning and control.
The system could help speed of the process of workflow. Right now the average scan time per items is ten seconds. The ten seconds does not include the employee walking to each location to scan the bar code or replace any demanaged bar code tags. An average replacement of a tag can take as much as five minutes. To purchase a radio frequency identification device for all three locations will cost around $620,000 plus for the software programming and debugging another $480,000. There could be an error with the computer unable to read the scan and the company believes the items is lost or not recorded in the Bracket International system.
This could be cost error on the equipment. This system could cut down on audits because it is a readily location inventory. Bracket International has lost a job averaging around two million per year from Wolf Furniture because they were not able to react quickly enough to change in job specification and order size. The Home Depot is expressing Bracket International needs to be more flexible and wants the radio frequency identification. The Home Depot is Bracket International number one supplier.
Related Information to Text
After reading about Technology and Operation Management section in our text book it give me an understanding of the different type of technology out there. According to the text they do speak about radio frequency identification and explains this technology is considered hard technology. Using technology can have a huge advantage for companies whether it be from productivity improvement from technology or cost savings from technology.
1) Some advantages of radio frequency identification technology are simple to install or inject the body, human intervention is required to scan a barcode, where in most application a tag can be detected with hands off, have a long reading range, has read/write memory capability, and is able to scan without having to physically scanning (Advantages of RFID 2009). Some disadvantages are difficult to read if tag is in liquid because liquid reflect the radio waves, dead area and orientation problems, security concern, ghost tags, and high cost (RFID FAQ & Tutorial 2010). How do they compare to barcode scanner? There is no line of sight requirement, the tags can stand a harsh environment, long read range, portable database, multiple tag read/write and tracking people, item, and equipment (Pandey, K., 2010).
2) There are a few paybacks for the RFID. One of the payback could be reduce the amount of time it takes an employee to search and found the barcode take ten second while the RFID system is done in 2/100ths seconds. Another payback a RFID system does not having to redo labels that could take over five minutes. The company will be able to reduce inventory because the new system will be done in real time allowing supplier to see what needs to be restocked. All these things have a cost advantages to making the switch.
3) I think the short term would be to start doing research and getting an understanding of what it really takes an employee to do their job. Job shading would give a leader an true understanding of how long it will take to do thing. After the short term happens the long term would be doing the calculating to see if the cost advances to purchasing the equipment. If the company decides to move forward with purchasing the equipment they will need to get the employees to buy into this new equipment.
Advantages of RFID. (2009) Retrieve November 6, 2010, from http://www.activewaveinc.com/technology_rfid_advantage.php Moscatiello, R. (2010) Advantages of RFID. Basic Concepts in RFID Technology. Pg. 1 Pandey, K., (2010) Advantages and Disadvantages of RFID Technologies. Retrieve November 6, 2010, from http://www.buzzle.com/articles/advantages-and-disadvantages-of-rfid-technology.html RFID FAQ & Tutorial (2010) Retrieve November 6, 2010, from http://www.idautomation.com/rfid_faq.html#RFID_Advantages