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Barcodes outpacing RFID technology in manufacturing adoption

Tough economic times are changing the relationship between manufacturing and RFID. Adoption of RFID technology has slowed and barcode technology is becoming a popular and cheaper option. Read how some Pennsylvania manufacturers are using barcoding in the supply chain.

Interest in  radio-frequency identification (RFID) has been growing in the manufacturing world. This technology, which involves specialized tags that emit radio waves, can be used on the shop floor and beyond for product identification, location and tracking.

RFID holds great potential for making manufacturers' supply chains more efficient, but the hefty cost of implementing the technology -- software, customized RFID tags and RFID readers/scanners -- has slowed its rate of adoption by manufacturers, particularly in the current shaky economic climate.

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Faced with shrinking IT budgets and growing demand for better supply chain management (SCM), many manufacturers are turning to barcode technology for their product management needs. Barcoding technology, RFID's predecessor, has been in use since the 1970s. For cash-strapped manufacturers, the main appeal of barcoding is its comparatively low cost -- the average barcode label costs a fraction of the price of an RFID tag. While RFID tags average between $.07 and $.30 each, barcode labels can be as inexpensive as $.005 each.

Barcodes helping some organizations improve order tracking systems

RAS Industries, a Charleroi, Pa.-based manufacturer of pre-formed polyurethane millwork, needed to improve its order tracking system because the company "had no visibility [into production]," said chief operating officer Angelo Pasquale. "A customer order would come in and, without knowing if we already had an order in process, we would start a new order." In 2007, the decision was made to add Syspro's riteScan Mobile Warehouse to the Syspro ERP system already in use at RAS. The riteScan implementation was completed in early 2008.

Since implementing barcoding throughout its production process -- on product orders, packaging, invoices, shop floor bins and tracking slips -- RAS has seen many SCM improvements. "We know the status of an order at any time, and [riteScan] provides info about throughput and where the bottlenecks are," Pasquale said. "We can track all the way from raw materials to production to shipping." Employees can now use handheld scanners to locate parts without having to physically search the shop floor.

Barcode vs. RFID for manufacturing

According to Pasquale, RAS selected barcoding because it was a more affordable option than RFID. With hundreds of thousands of parts being made each year, using the pricier RFID tags didn't make financial sense.

Nevertheless, RAS is still looking at ways to use RFID. One potential use is keeping track of product molds and the number of times each has been used, to avoid overstressing the molds. With IT budget constraints in place, however, RFID software selection at RAS is on hold indefinitely.

Medrad, based in Warrendale, Pa., uses barcoding to track the product histories of the electronic medical devices it manufactures. At the Medrad Heilman Center Electro-Mechanical Manufacturing Plant, barcode serial number tags are placed on all printed circuit boards and modules. Personnel read each serial number tag with a wireless barcode scanner during module assembly and attach printed barcode labels to associated paperwork. Later, all paperwork is scanned using a handheld scanner that is attached to a computer. This data is used to create a device history record, which is stored in Medrad's SAP ERP system.

Medrad staff manufacturing engineer Cliff Higgins writes and maintains the custom barcode software using Microsoft.NET technology. He estimates that Medrad has saved $100,000 annually since implementing barcoding. The company has also seen faster SAP processing, greater operator efficiency and improved data accuracy.

"Barcoding has also improved employee satisfaction," Higgins said. "[There are] no more accidental typos or transposing of serial numbers." Like RAS, Medrad is not currently using RFID but is looking into deploying it down the road.

Another manufacturer using barcode technology is Philips Respironics Inc., a manufacturer of sleep and respiratory aid devices. Pittsburgh-based Philips began using Loftware Inc.'s Label Manager barcode creation and printing software nearly a decade ago. The software is synced up with Philips' SAP 4.7 ERP system; information is pulled from SAP to create and print packaging barcode labels.

Barcodes are also placed in circuit boards to track rejected devices on the shop floor and track the history of products that are sent back by the customer for repair. Because each serial number is unique, the SAP system is able to store complete histories for every product that Philips ships.

Barcoding has streamlined manufacturing at Philips, according to Eric Kulikowski, director of North American operations. "We're able to do things in milliseconds that once took minutes," he said. Philips has error-proofed its shop floor, reducing materials management mistakes through a "three-way match" system. Each bin, shelf and bag associated with a specific part is labeled with identical barcodes; personnel must scan all three labels to ensure that the correct part has been selected.

Although barcode technology has worked well for Philips, the manufacturer has not ruled out RFID altogether. Project engineer Kevin Czajkowski has been leading the investigation into potential uses of RFID at Philips. He ran an RFID pilot program several years ago in which writable RFID chips were created. The software worked as predicted, but "the real hurdle was the cost of the tags," Czajkowski said. Philips is considering RFID as a viable option in the future, but barcoding remains the technology of choice for the present.

"[Barcoding] is helping us drive the way we look at our business and put automated quality control in place," Kulikowski said. "We're finding new ways to utilize the barcode technology all the time."

About this story: In May, the SearchManufacturingERP.com editors toured a number of manufacturing plants in the Pittsburgh area and talked to the plants' IT managers as part of a media tour sponsored by the Pennsylvania Department of Community and Economic Development.

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