Supply chain solutions

Packaging Professional magazine
17 Jan 2011
inventory control extract - see full diagrams below

Dr Thomas Seidel of AMC Managing Complexity GmbH, and Dr Reik Donner, from Potsdam Institute for Climate Impact Research, both Germany, discuss the development of applying tracking systems in the packaging manufacturing process.

Technology has been widely discussed for improving performance and, hence, assessing economic potentials in manufacturing systems. Whether or not automated material handling systems are used, it is essential to know the position and the inventory level of material at all times. Otherwise, over-production and high ‘work in progress’ levels are caused, which tie up capital.

Optimised transfer of goods to machines and within warehouses provides economic potential. Internal logistics will become the main bottleneck in future manufacturing plants if not resolved by new developments and applications such as radio frequency identification technology (RFID).

In the packaging industry, many nonautomated material handling processes still rely on barcode technology. Since these mainly manual processes are prone to human error, it is difficult to reliably identify and localise individual products in the material handling system and warehouses. As a consequence, tracking and tracing of goods is time-consuming. Manual interference in the system, including human-powered transfers and forklift operations, requires costly data administration.

Transponders (RFID tags) can supplement traditional barcodes and may even replace them at the end of their evolution. Radio frequency identification provides a reliable tool for real time inventory control. The technology is already successfully used for raw materials and finished goods, but the idea to use RFID tags for transferring intermediate products and tools is novel.

Integrating automation

Material flow control can be automated for manually operated transport processes and even integrated into existing computer-based information systems, accelerating transport processes and reducing the overall cost.

Integral elements of the material handling system equipped with RFID readers can supplement the identification infrastructure in such a way that all goods circulating in the factory are identified and localised in real-time. Transfer control can be extended to manually operated transport processes.

Automatic identification technologies can be used with both global and local control strategies. Traditionally, decisions regarding the transport of products are made centrally, mainly based on global considerations. At a local level, such strategies result in transfers performed independent of each other. So the mutual influence of material flows is not considered, which arises when several operating material flow units merge or intersect.

Using RFID, intermediate products can be automatically detected and located. In addition, products can receive information about their immediate environment, their next machine and anticipated production time, as well as products in their neighbourhood. Using this information, the system can anticipate the future motion of all units, and determine the best path to their next destination. This approach leads to the decentralised control of all material flows, which enables flexible adjustment to the situation in the plant, for example, in the case of machine failures.

Modern simulation environments using decentralised control algorithms for product movements in packaging plants can systematically assess the economic benefits of automatic identification systems – allowing a systematic comparison of decentralised and central material flow control.

Comparing barcode and RFID

The use of barcodes has the important benefit of small variable costs. In addition to the one-time investments of label printers and barcode scanners, there are no further running costs. If a barcode can be completely scanned, the reading process and, therefore, the identification and correct interpretation of the following procedure are reliable.

However, whenever a barcode is not read properly a malfunction in the automated line control will occur, forcing the operators to manually correct the mistake. This is timeconsuming and can cause bottlenecks. While readability problems are a practical disadvantage of barcodes, failed readings are greatly reduced using RFID.

The implementation costs for readers and tags are a possible argument against an RFID extension. Many production processes are labour steered – accounting for up to 20% of the costs – so the additional costs for an RFID infrastructure could be offset against lower labour costs and, as a result, reduced unit costs.

Modern plants are already successfully using RFID technology to monitor and control movements of raw materials with comparably high unit costs, such as paper reels. Moreover, some plants have implemented RFID control systems in order to monitor the position and expected completion time of products ready for shipment. By doing so, trucks can load products in time and saving standing costs at the manufacturing site.

The future will show how RFID technology can support lean manufacturing with a reduction of overproduction and WIP levels, reducing production costs and making modern plants more competitive.


Further information

Dr Thomas Seidel, AMC Managing Complexity GmbH, An der Tongrube 1-3, 40789 Monheim am Rhein, Germany. Email:

Dr Reik Donner, Potsdam Institute for Climate Impact Research, P.O. Box 601203, 14412 Potsdam, Germany.