RFID in mixed-model automotive assembly operations: Process and quality cost savings

Abstract

This research shows how to characterize the potential operational benefits of RFID in a complex automotive assembly system. Both process savings and quality (rework) savings are included in the presented model and it is demonstrated that process savings and quality cost savings are strongly interdependent. Indeed, a trade-off exists in which the decision maker has to decide whether to allocate time savings afforded by RFID to process time savings, or to allocate those time savings to potential quality cost savings. It is shown how this allocation decision can be solved such that the maximum expected cost savings are achieved. From the structural properties of this optimal solution, it is concluded that an RFID implementation will tend to yield the most benefit in a fast-paced complex assembly environment where: (i) total assembly times are substantial; (ii) tact times are low; (iii) there is little to no worker idle time; and (iv) rework is present and costly. How to evaluate the impact of an RFID implementation in terms of the net present value of cost savings is demonstrated. The model framework is applied in a numerical example to study a situation at a car manufacturer and the main results are reported.

Keywords:

• RFID
• pick-to-light
• automotive assembly

Acknowledgements

We gratefully acknowledge research support from Volkswagen AG. We are particularly grateful to Dr. Sven Strohband of the Volkswagen Electronics Research Lab for all his assistance. No confidential data is contained in this paper.