Sector: Manufacturing

Annual Savings: $16.8 M ($1.4M per month)

Submitted by UPM RFID

The use case for day two of the RFID 24-7 $1M-a-Day Challenge comes from Korea, where steel maker POSCO is using RFID to track more than two million steel components that it produces each year. POSCO began with a pilot to identify coil products manufactured at its Kwangyang and Pohang plants in Korea for a small group of 17 customers. But starting in October, POSCO began to tag all of the items it produces – more than two million per year.

In this case, return on investment might be the reason for such a quick ramp-up. POSCO says that the solution has reduced costs by $1.4 million (U.S.) per month, resulting in a savings of almost $17 million a year. By implementing the RFID-based logistics system, POSCO has automated the inspection, packaging and shipping of its metal coil products. In addition to providing complete traceability of company products, the RFID system has decreased packaging and shipping errors and improved customer satisfaction.

The other interesting aspect is that the automated RFID-based solution, which is designed to improve the accuracy and efficiency of key operational processes, is being backed by funding from the Korean government as part of the nation’s drive to become a leader in the field of ubiquitous sensor networks.

The Korean government has already jump-started RFID tagging in the pharmaceutical industry by mandating that 50 percent of the drugs sold in that country carry RFID tags within five years.

POSCO, one of the world’s largest steelmakers, has implemented a proprietary RFID-based logistics solution that relies on custom UPM DogBone™ UHF RFID tags to track and trace multi-ton metal coil products from the manufacturing process through customer delivery.

Implementing RFID technology in steel mills poses unique challenges, as the pervasive metal environment interferes with RF signal readability. POSCO used its experience implementing an RFID-based worker safety program in 2009 to design its own logistics system and ensure it integrated seamlessly with its existing manufacturing systems.

The company is using modified UPM DogBone™ UHF tags that have two antennas and are applied upright inside heavy metal coils tags as flag tags, perpendicularly to the items’ curved surfaces. Positioning the tags thus solves the problem of readability, while enabling POSCO to capitalize on UPM DogBone™ paper-based tags’ superior performance and cost-effectiveness for large-scale inventory deployments.

Metal coils are tagged during the packaging process, and items are read when they are moved by cranes to the warehouse, during storage and again when they are readied for shipment. POSCO’s RFID system is comprised of UPM DogBone™ UHF tags, hand-held industrial PDAs, fixed RFID readers placed attached to cranes and placed at factory gates, enterprise resource planning and manufacturing execution systems and a server.

Because the RFID system integrates with customers’ own planning solutions via the Internet, they can access real-time information on POSCO products, using data to plan and fine-tune their own production operations.

This story was modified from an article published by RFID 24-7 on July 27, 2011. Read the original article here.

About the RFID 24-7 $1M-a-Day Challenge: To help publicize RFID use cases and the ability of RFID to reduce costs, RFID 24-7 is posting a use case every day that saves at least $1 million. Send us your use cases today! Click here for more information about the $1M-a-Day Challenge.