Radio-frequency identification (RFID) technology is not a myth. It's real and while its adoption has not turned the supply chain world on its ear like some market watchers predicted it might, it has been put to good use at some manufacturers. Perhaps one of the strongest examples of putting RFID to use in the supply chain comes from U.K.-based automaker Land Rover.

Land Rover first started using RFID in its supply chain when its parent company Ford Motor Co. presented an initiative for the plant floor in conjunction with RFID technology provider WhereNet, a Zebra Technologies company. In this project, RFID technology is used to communicate when stock is running low on the production floor. As Dave O'Reilly, manager of manufacturing and purchasing IT for Land Rover, explains, when a worker on the assembly plant floor moves into parts in the last bin at their station, he or she simply pushes a button at their station which relays an RFID signal to a "market area" which holds a larger inventory of stock. A forklift operator in the market area prints a ticket that instructs them where to find the parts, what quantity to deliver and where to deliver them.

This RFID-enabled Lean logistics approach reduces the amount of line-side stock Land Rover has to carry as well as the total amount of inventory it has to carry, says O'Reilly. It makes forklift operators more efficient by ensuring they only work on real demand issues for parts, rather than having to patrol around looking for shortages. The results have been so positive that Land Rover has pushed the system out to all manufacturing plants in the U.K. for use on all parts, with the exception of very basic parts (fasteners) or "sequenced" materials, which are delivered by suppliers only when the OEM requests them.

With some positive experience with RFID, Land Rover chose to look into another use for RFID technology at its 308-acre assembly plant in Solihull, England. The plant was built in the 1940s and doesn't have one large storage area for vehicles once they come off the assembly line. Those vehicles are stored in various spots around the facility, which made it somewhat difficult to track which vehicles were located where if a change was required.

To alleviate this problem, Land Rover began hanging an RFID tag in each vehicle as it exits the assembly line that has a host of data attached—the vehicle identification number, color, model, even the end-market the vehicle is headed for. "So with this system in place, if we need to find all of the vehicles with a V-8 engine headed to the North American market, we can just pull them up on a map with dots that show where every requested car is located within three meters," O'Reilly says. "If we need to make an update to those vehicles or change something before they are dispatched to a carrier for shipping, we can."

In fact, the ability to track the vehicles also allows Land Rover to prioritize vehicles for shipment much more easily—if there is a ship leaving port on a certain day for a specific market, all the vehicles for that ship can be located and prioritized if needed.

Tagging cars also allows the plant to track the flow of its vehicles better. In addition to the 130 locating antennae around the facility, there are 50 WherePort stations that "wake up" the RFID tag when it passes so plant management can see when and how many vehicles move through a certain point in the facility. And what gets tracked gets improved.

"So using this system we have reduced the amount of time cars dwell after coming off the production line and that will reduce our order to cash cycle," O'Reilly says. He adds that one of the major ROI calculations for the project was reduction in overtime for plant. "There's been a reduction in labor in trying to locate cars as well as improved flow-through of cars, which in turn, improves order-to-cash cycles."

The WhereNet RFID tags are re-usable—so when a vehicle leaves the yard for shipment, the tag is removed and disassociated with that vehicle and then re-used. O'Reilly says the life of a tag depends on how active you want it to be—how frequent you want it to "blink" and tell the system where it is. Land Rover's tags blink and update the location of the vehicles every four minutes (or when they pass by the WherePort hub), which O'Reilly says is sufficient for an automotive manufacturing setting.

With the benefits of RFID clearly proven in a controlled environment (its own plant), what's the next step for RFID at Land Rover? O'Reilly says the company is currently looking very seriously at using RFID to track shipments from key suppliers into its plants, which would work well in the automotive model because suppliers tend to be shipping from more local facilities. Once the plant is down to a certain level, the supplier can be notified and begins shipping the parts, and those parts could be tracked in transit to the plant, all through the use of RFID.

"If we knew a specific shipment was coming from a supplier, we could do automatic receiving of those shipments at our dock," says O'Reilly. And closer tracking of inbound shipments may allow re-use of containers between supplier and Land Rover's plants. "[Containers] should be at our plant, the supplier's plant or in between—but not at another plant."

But moving out to the supply base with RFID requires a deeper supplier partnership and some additional costs. O'Reilly says the first step is getting suppliers' cooperation and allaying their fears about cost. "You need to share the cost of this with the suppliers," he says. "You should not burden the supplier with the total cost. But if multiple automotive firms standardize on [RFID] technology across all suppliers it will reduce the cost and complexity for suppliers."

One of the major advantages that Land Rover has is O'Reilly himself—not just his personal capabilities, but his position. Having a person with both IT and purchasing connections dedicated to evaluation and possible application of new technologies in the supply chain is a far cry from the more casual investigative work most companies do in these areas.

"Many companies today cut IT down to the bare bones to keep the business running to reduce costs and don't invest in futuring," O'Reilly says. "Or they wait until a vendor approaches them or read about something another company has done. By then, you may have missed out on some benefits."