RFID Enhances Supply Chain Management for Automotive Parts at Hyundai/Kia Motors

A timely supply of the exact volume of parts is crucial due to the way the automotive industry supplies goods made-to-order according to customers’ options. Until now, Glovis, an affiliated company of Hyundai/Kia Motors Group, has applied bar code labels with shipping marks to the parts boxes, which has made it difficult to automate distribution and acquire real-time distribution information. Occasional human error during repacking is an additional cost burden to Glovis and the manufacturer due to lead times for re-dispatch and conflicts in production scheduling at Hyundai/Kia Motors Group’s overseas production lines.

Hyundai/Kia Motors (Seoul, www.hyundai-motor.com), a leading South Korean vehicle manufacturer, is implementing RFID technology to improve the visibility of its automotive parts supply chain. Glovis is in charge of Hyundai/Kia’s automotive parts supply chain management (SCM), which will now become RFID-enabled. Starting in March 2007, Glovis will begin receiving RFID-tagged boxes of automotive parts from more than 200 suppliers to Hyundai/Kia Motors. Using RFID technology and EPC middleware, Glovis will be able to track corrugated cardboard boxes of automotive parts through the major SCM processes, including delivery to the distribution center, the repacking process, leaving the distribution center, delivery to the overseas distribution center and final delivery to Hyundai/Kia Motors’ overseas factory.

In the first phase of the project, and with the support of the South Korean Ministry of Commerce, Industry and Energy, approximately 130,000 UPM Raflatac UHF RFID tags will be applied to parts boxes and packaging cases from five major suppliers for exportation to Hyundai/Kia Motors’ overseas factory in Alabama. In the second phase of the project, 20 million UPM Raflatac RFID tags will be used annually to track all boxes and containers of automotive parts through the supply chain. The project’s scope will also be broadened to include Hyundai/Kia Motors’ Slovakia factory as well as another major manufacturing site.

In the RFID-enabled SCM, passing the parts boxes through an RFID interrogator gate automatically collects the completion reports for each process. In the repacking phase, workers can check for errors by comparing data from the RFID tags against order information. Even during delivery, the information system automatically provides delivery status reports for dispatch from the distribution centre, readiness at port for export and arrival overseas at Hyundai/Kia Motors’ factory, among others.

“The RFID supply chain management system can make us a more competitive company globally. Thanks to RFID technology, we can minimize loss from dispatch errors and revolutionarily cut costs. Glovis seeks to be the global pacesetter in logistics with this pioneering effort,” says Jin-Gi Hong, senior managing director at Glovis.

Glovis also offers real-time distribution information to Hyundai/Kia Motors’ secondary suppliers, third party logistics companies and other manufacturers to optimize their inventory and production plans. With this predictable distribution information, Glovis and Hyundai/Kia are able to cut logistics and production costs. “Through the RFID implementation, production and cooperation will be improved among all Hyundai/Kia Motors’ affiliated companies. Hyundai/Kia Motors’ Alabama factory can expect optimal supply to maximize its efficiency,” Hong explains.

ECO, Inc. is responsible for the RFID system deployment in the project. The ECO RFID middleware (SmartEPC) is based on the global EPC standard, which makes the RFID system at Hyundai/Kia compatible with the global Gen2 standard. The RFID system can also be seamlessly integrated with Glovis’s legacy SCM system. The total RFID system, comprising UPM Raflatac DogBone UHF Gen2 tags and EPC compliant RFID interrogators, has been chosen with future expandability in mind.

Source: Hyundai/Kia Motors Group

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