Traceability for improved logistics an ambitious goal

Transcription

1 Summary Traceability for improved logistics an ambitious goal Erlend Ystrøm Haartveit and Ingrid Knotten Norwegian Forest and Landscape Institute PO Box 115, N-1432 Ås, Norway Traceability in a supply chain can be established using several different technologies. The basic idea is marking each item with an identifier which can be registered as the item flows downstream in the supply chain. Abilities to track and trace products and components have become requirements in many supply chains. Systems for traceability may also be used to improve logistics across the supply chain. Supply chain management implies applying holistic perspectives on solutions, spanning from the vendor of raw materials to the consumer. This article presents a Norwegian case in which traceability solutions based on Radio Frequency IDentification (RFID) were tested in a supply chain for poles delivered to power lines. Logs were marked with standard RFID tags in the forest and were registered with a standard RFID reader on several stages from forest to finished product. The standard equipment performed well even when exposed to rough handling, high and low temperatures and high pressure. The results show that even when individual actors may benefit from implementing traceability solutions it is challenging to develop joint and profitable solutions for several actors in a supply chain. Three main obstacles were identified as impediments for supply chain traceability. There are differences in objectives as some firms focus on optimising logistics and production while others aim at reducing errors from manual registrations. There are differences in requirements for technical solutions, especially concerning where the tag should be placed on the log. Finally there are differences in willingness and readiness to adopt new technology. Traceability and Supply Chain Performance For a manufacturing company traceability is being capable of tracing products from purchased raw materials to final products delivered to customers. Traceability systems can be implemented for two distinctly different reasons, documentation and logistical improvements. Traceability enables documentation of the origin of materials as well as the production processes in the company. Trough traceability a company can document e.g. how, where and when the raw materials was purchased, for how long it has been stored, when and how it was modified to intermediate and final products, when the final product was sold, who it was sold to and when and how it was delivered. There are few limits, if any, concerning the information that can be attributed to raw materials and products. Documentation of this kind is often required by customers or governing bodies. Traceability systems may also be implemented to improve the efficiency and effectiveness of operations through a company. The system will provide updated and correct information on

2 e.g. raw material and finished goods inventories, orders currently in production, estimated time for completed order and estimated time for delivery to customers. Manufacturing companies are parts of larger systems consisting of actors that add value to products. These systems are commonly referred to as supply chains which may be defined as physical networks of actors (companies/firms) between which products, information and payments flow. The supply chain starts with a vendor of raw materials and ends with the customer that consumes the final products. Two recent trends have lead to that the traceability systems of today must apply to complete supply chains rather than individual companies. The competition has changed from being between companies to being between supply chains. Substantial improvements in efficiency can be realised when suppliers and customers streamline processes across company borders. By viewing the supply chain as one system the goal is to avoid that improvement in one company results in increased costs for customers or vendors. To create mutual goals for the companies in a supply chain is, however, far from straightforward. In an increasing number of supply chains traceability systems are required in order to guarantee the quality of final products, or to assure that they are environmentally friendly and produced in a sustainable way. This is also the case for many wood based products. In this project the objective was to analyse the potential for improvements in logistical processes by introducing a traceability system in a supply chain delivering poles for power lines in Norway (Figure 1). The project also studied the challenges faced by the supply chain if a traceability system is to be implemented. Although the project had its focus on the pole manufacturer benefits were evaluated using a supply chain perspective. The supply chain for poles There are strict requirements to the dimensions, straightness, taper, and knots of the poles. For this reason trained experts are selecting and marking the trees suitable for pole production already in the standing forest. The stands are mostly harvested with modern single-grip harvesters and forwarded to roadside. ScanPole is a producer of poles which has one factory in Norway. The annual turnover is $ CAN 10.5 million and the number of employees is 16. The annual production is approximately 54,000 poles. After being transported to ScanPole s factory, the logs are debarked and measured before being placed in inventory for outdoor drying. After spending on average 13 months in inventory, the dried logs enter the production process. The production processes are peeling, heating and impregnation. Peeling involves removing the outer 0.5 cm of the log, and cross cutting the log to specified lengths. The logs are heated for 5 hours to improve the penetration of creosote oil. The temperature in the kilns reaches 95 C. The logs are impregnated in an autoclave for 4.5 hours. The pressure is 1 MPa and the temperature exceeds 115 C. The finished poles are placed in inventory, or delivered directly to customers according to order. Customers in the Norwegian markets are power companies that are responsible for power lines to Norwegian households and manufacturing industries. The poles commonly

3 remain in service for years, but the quality of the poles is frequently monitored by aerial and ground inspections. Figure 1: The supply chain for poles. Technologies for traceability systems Traceability can be established using several different technologies, but the basic idea is marking each item with an identifier which can be registered as the item is moved and modified. This makes it possible to trace each item by adding attributes to the identifier attached to it. A common and well known system is based on bar-codes, which is used in e.g. retail sales and in manufacturing and distribution of products to groceries. Standard solutions of barcodes do not make products completely traceable because they only contain a product code. This product code is identical for all items of one product. Common problems with bar-codes are that they are frequently damaged by moisture and handling, and that they are only readable from short distances. Radio Frequency Identification (RFID) is an alternative to implement traceability. Applications based on RFID have gained tremendous interest in logistics research and applications and commonly consist of two main parts: a transponder, or tag which is a microchip with an antenna containing a unique number a reader, or transceiver which is a computer with an antenna To transfer information between the transponder and the reader, the reader emits radio waves that activate the transponder. Between the transponder and the reader there are electric and magnetic fields that are used as the energy source for information transfer (Figure 2). RFID tags can be attached to virtually any item e.g. luggage, goods, containers, cars, retail products, pallets, trucks, cars, tools, keys, animals. Reading distances vary, but are in general substantially longer compared to bar-codes. Advantages with RFID are: tags can be made more robust with respect to damages from handling the transponders are less sensitive to direction of reading the tag gives a unique identity to the item it is attached to

4 Figure 2: The basic principles of RFID Potential utility in the supply chain UTILITY FROM THE PERSPECTIVES OF THE SUPPLIER It takes 1-8 months from selection of trees in the forest to the wood is measured in ScanPole s measurement station and placed in inventory. The measurements are used to issue payments to forest owners. By introducing a traceability system and use the measurements from the harvester as the basis for payments to forest owners, the actors in the supply chain will have incentives to shorten lead times for wood procurement. The earlier transfer of ownership is an incentive for the log supplier to deliver logs faster and thereby be able to invoice the customer at an earlier stage. The traceability system also enables control that all harvested poles are actually being delivered to the customer. Raw materials for poles are divided into more than 70 classes, and there are more than 50 different types of finished products. Presently there is a mismatch between the trees selected in the forest and the distribution of log classes demanded by ScanPole. The mismatch is partly due to unforeseen changes in the market, but also to a poor follow up and calibration of the assessments made by the experts that selects trees in the forest. When traceability is established information about harvested poles can be used to calibrate the selection procedures in the forest, and to estimate projected stock on hand and thereby adjust the plan for future deliveries and selection of trees in the forest. UTILITY FROM THE PERSPECTIVES OF THE MANUFACTURER The time from selection of trees in the forest to the finished poles are delivered to customers can often exceed two years. The long lead times result in large investments in inventories. ScanPole has an average raw material inventory of $ CAN 3.4 million, and an average finished goods inventory of $ CAN 1.9 million. Hence, the value of inventories correspond to 51% of the annual turnover. The interest for borrowed capital for ScanPole is approximately 10%, resulting in an annual capital cost of inventories of $ CAN 0.53 million. The annual inventory turnover rate is as low as 0.9 for the raw material inventory. A well functioning traceability system enables inventory reductions. By restructuring the manufacturing processes and increase the utilisation of kilns it will become possible to reduce the average throughput time as some of the poles will be kiln dried. ScanPole has excess capacity in the kilns and access to cheap heat from own boilers.

5 When logs are debarked and measured as the first stage of production, detailed measurements are obtained. These measurements should follow the log so that the fit between selected raw materials and desired products can be improved, thereby reducing the risk of producing obsolete products. This also enables inventory reductions of raw materials and finished products. UTILITY FROM THE PERSPECTIVES OF THE CUSTOMER Power companies conduct frequent control and maintenance of power lines. At present this involves a large amount of manual work, and registrations using pen and papers. The system suffers from errors from re-keying information, and for incorrect attribution of properties to poles. Poles do not have unique identies in the field, and within one municipality poles with identical identity are commonly found. This increases the risk for incorrect registrations, and also increases time consumption for locating poles in the field. A traceability system will remedy these negative effects. RFID tags can potentially be used to give identity to poles during their entire service life. This will increase the efficiency and effectiveness of the work conducted to control the quality of poles. Pilot study tracing from forest to product A small traceability system using standard RFID tags and readers was implemented for two different log deliveries. Traceability started from piles of logs delivered at roadside in the forest. The purpose was to get experience with RFID-technology and to get improved knowledge about the potential utility and the major challenges in the development and implementation of a complete traceability system in the supply chain for poles. In all, 87 logs were marked with two different types of RFID tags. All tags were readable when the logs were delivered at the industry after 2 months of storage in Norwegian winter conditions, and subsequent handling and road hauling to industry. One batch containing 31 logs (62 RFID tags), were tested through the manufacturing processes. After pre heating, only one tag was damaged and could not be read. After the impregnation process one additional tag was damaged. From this pilot study it seems that little development is needed to manufacture RFID tags that can withstand the stress from handling, temperature and high pressure in the supply chain for poles. Remaining challenges The development of a system for traceability of poles faces numerous challenges. For products and raw materials to be traceable the tags must be read as the state of the individual logs changes. When a log is transported, the tag must be read prior to and after transportation. This requires that readers are available for all actors handling the products. In addition to the cost of equipment and training of personnel, the reading may itself become a time consuming process. The further development of systems needs to minimise reading time and ensure that tags are read parallel to other processes. In our particular case no position of the tag is optimal for all supply chain processes. As can be seen in Table 1 there are advantages and disadvantages with the different positions. For complete supply chain traceability, several tags must be used for each pole. The tag used in e.g. wood procurement can be placed in the butt end of the log, while the tag used in service

6 may be placed along side of the log. At present ScanPole is marking each log with one or more small plates. An RFID tag can easily be built into one of these plates. The information obtained in early stages of the supply chain must then be attributed the tags attached during manufacturing. Even with this system tag readability is a challenge for some processes. Table 1: A summary of advantages and disadvantages for different placements of tags Placement of tag Advantages Disadvantages At the cross section at the butt end of the log - easy to read when transported on conveyors during manufacturing - protected from rough handling - the tag remains when logs are shortened (always shortened from the top end) - easy to read when logs are piled in storage or on trucks - easy to locate visually Close to the middle of the log At the cross section in the top end of the log - easy to read when readers are placed in the grapple of cranes - can be used when logs are in service - can be combined with plates used to mark poles for customer - easy to read when logs are transported on conveyors - protected from rough handling - can be read from the air (using helicopters to control power lines) - easy to read when logs are piled in storage or on trucks - easy to locate visually - difficult to read when readers are placed in the grapple of cranes - impossible to use when the pole are in service (tag is below ground) - impossible to place on standing trees - difficult to read when logs are piled in storage or transport - difficult to locate visually - time delays if tag is inserted by harvesters - difficult to read when readers are placed in the grapple of cranes - difficult to read from the ground when logs are in service - impossible to place on standing trees - logs are commonly shortened in the top end One significant challenge for supply chain traceability is that the actors in the supply chains have different mindsets and attitudes to traceability. The actors also differ in their state of development towards a digital supply chain. The drawbacks of manual registrations are not fully realised, and the drive for change is limited. This makes it extremely difficult to develop a system for traceability and improved logistics. In addition, the objectives for changing the supply chain, and the goals the companies intend to reach can be quite different, and commonly focus on own operations only. In these situations success is dependent on the development of a technical solution that is useful for many different purposes. When the requirements for technical solutions differ, such as different requirement for placement of tags, the solution becomes more expensive. In our case the volume of tags (< 60,000 per year) is also too small for commercial development at an affordable price. Hence, establishment of traceability in this part of the supply chain relies on the simultaneous development of a traceability solution for other log products such as sawlogs and pulpwood.