Benefits of RFID in Slab and Coil Logistics

ThyssenKrupp
Steel
The Benefits of RFID for Slab-

and Coil-Logistics
A Point of View on the use of Radio Frequency
Identification (RFID) for the steel industry
By Loc Feinbier, Lars Schittko and Guillaume Gallais

March 2008
1
ThyssenKrupp Steel and its logo are trademarks of
ThyssenKrupp Steel.
Accenture, its logo, and High Performance Delivered
are trademarks of Accenture.
Electronic Product Code (EPC), EPCglobal and
EPCglobal Network are trademarks of EPCglobal Inc.
Sato is trademark of Sato International Pte. Ltd.
2
Contents
Preface 4 4.1.3 Battery-assisted passive spacer tag 27

1 Executive summary 5 4.2 Resistance to change 27
2 Introduction 6 4.3 Established bar-coding
2.1 Background 6 infrastructure 28
2.2 Why standardization matters to the 4.4 Multiple tagging 28
steel industry 6 4.5 Identifier attribution 29
3 Benefits of RFID in slab and coil 4.6 Data interchange 29
logistics 8 4.7 Heterogeneous customer base 29
3.1 Perfect Steel case study 5 Cost considerations for RFID 30
methodology 8 5.1 Tags 30
3.1.1 Perfect Steel Business case 5.2 Readers 30
assumptions 10 5.3 Antennae and cabling 30
3.2 Asset use 14 5.4 Installation 30
3.2.1 Handling equipment 14 5.5 Tuning 31
3.2.2 Transport vehicles 14 5.6 Controllers 31
3.2.3 Safety stocks 14 5.7 Software platform 32
3.3 Operational efficiency 16 5.8 Integration 32
3.3.1 Improved stock management 16 5.9 Maintenance 32
3.3.2 Supply chain visibility and insight 16 5.10 Process 32
3.3.3 Detention / demurrage cost 6 A vision for an integrated steel
reductions 17 industry 34
3.3.4 Increased productivity / 6.1 Standards requirements 34
simplified labor 17 6.2 Introducing the EPCglobal
3.4 Safety and security 20 Network 35
3.4.1 Improved worker safety 20 6.2.1 Electronic Product Code (EPC) 36
3.4.2 Improved process security 20 6.2.2 Discovery and Object Naming
3.5 Customer service 24 Services (DS and ONS) 36
3.5.1 Faster receiving and ability to plan 24 6.2.3 EPC Information Services (EPC) 36
3.5.2 Improved production control 24 6.3 The suggested standardization
3.6 Combined business case for Perfect approach 37
Steel 24 6.3.1 Ground rules for standardization 38
4 Challenges for RFID in the steel 6.4 How steel companies can
industry 26 participate 38
4.1 Radio-frequency identification and 7 Authors 40
metals 26 8 Contributors 41
4.1.1 Flag-tag 26 9 Sources 42
4.1.2 Plasmonic decoupler tag 27
3
Preface
Modern identification technologies Brazil, which is scheduled to start pro- industry players around a common
such as radio-frequency identification, duction of 5 million metric tons of steel effort to harness benefits highlighted
or RFID, have become increasingly per year in 2009. It will also use RFID by the Datamonitor article such as
important for streamlining production at harbours in Rotterdam, Netherlands, RFIDs ability to assist steel makers and
and logistics operations in almost and Duisburg, Germany, to identify customers with streamlining business
every industry. Radio-frequency identi- steel slabs automatically and to speed processes, harnessing automation
fication enables process automation up the unloading process. more extensively and reducing costs
reducing the need for manual labor, while maximizing revenue opportuni-
speeding up execution of critical busi- The company needed an automated ties.
ness processes while improving infor- system to identify more than 100,000
mation security and worker safety. steel slabs per year because of the More specifically, ThyssenKrupp Steel
tight unloading times when clearing and Accenture are collaborating with
RFID Reaches Into Steel Industry,a sea vessels from their cargo. other global steel leaders, steel cus-
recent article published by tomers from the automotive and
Datamonitor, illustrates some of these There is a window of less than three industrial construction segments,
points. Journalist Rhonda Ascierto minutes per slab when clearing cargo industry bodies and standardization
writes, Germanys ThyssenKrupp Steel that must be maintained at all times. organizations in order to create RFID
has become the first steel producer in Any delay would likely create addition- standards for the benefit of the entire
the world to use RFID technology for al cost. steel industry.
slabs.
The power of RFID in supporting the We are pleased to invite you to explore
The article continues: needs of the steel industry is increas- the possibilities of RFID and to join this
ingly apparent in the marketplace. standardization initiative.
ThyssenKrupp Steel will use RFID at its ThyssenKrupp Steel and Accenture are
new steel mill in the Bay of Sepetiba, leading an initiative to align steel
4
1_Executive summary
Over the next couple of years, radio- Safety and security: Automating prod- customers, industry bodies, standard-
frequency identification (RFID) and the uct identification and tracking removes ization organizations and RFID vendors,
Electronic Product Code (EPC) are people from physically dangerous situ- to create standards for the benefit of
poised to be among the most exciting ations and averts the potential for all. This paper illustrates the potential
and transformational technologies to product confusion. This in turn reduces RFID holds for steel companies and
influence the steel industrywith the risk exposure. demonstrates how cooperation within
potential to radically change the way the steel industry can lead to a stan-
global steel companies run their inter- Customer service: In addition to the dardization of IT-systems that is advan-
nal and external logistics. range of benefits accrued by the steel tageous for the industry and its cus-
industry as a result of RFID adoption, tomers.
Leading steel companies should move Accenture anticipates that steel cus-
as quickly as possible to adopt RFID tomers too will experience all the For further information about the joint
technology to increase supply chain same benefits and will likely mandate ThyssenKrupp Steel and Accenture ini-
visibility, improve process security, the use of RFID if the industry does not tiative to assist steel companies with
generate cost savings and allow for take the lead. RFID adoption that supports high per-
steady business growth. formance, please contact:
While it is clear that RFID applications
Major benefits of adopting RFID tech- can unlock unprecedented value for
nology include: steel companies, the path to adoption Loc FEINBIER (ThyssenKrupp Steel)
will see some challenges. Technical
Asset use: Radio-frequency identifica- and process hurdles to overcome +49 (203) 52 47906
tion speeds up the identification of include getting RFID to work on metal- +49 (173) 7000 90 2
tagged items, increasing throughput lic products, addressing internal resis- loic.feinbier@thyssenkrupp.com
and optimizing the use of expensive tance related to changing decades-old
handling equipment such as forklifts processes, meeting the need for
and cranes. Time gained can be so sig- repeated tagging because of the itera- Lars SCHITTKO (Accenture)
nificant that it is possible to eliminate tive nature of the production process
machines and reduce attendant capital and supporting the heterogeneous +49 (6173) 94 66691
investments and personnel costs. customer base. +49 (175) 57 66691
lars.schittko@accenture.com
Operational efficiency: Radio-frequen- Despite the challenges, the benefits of
cy identification improves operational RFID will contribute to each steel com-
efficiency in many ways including panys effort to realize high perfor-
improved collaboration with trading mance. ThyssenKrupp Steel and
partners, faster product localization Accenture have set out to collaborate
and reduced manual effort. with other global steel manufacturers,
5
2_Introduction
Automatic identification, or Auto-ID, global steel producers, industry bodies 2.2 Why standardization matters to
technologies such as radio-frequency and standardization organizations to the steel industry
identification (RFID) are increasingly leverage their knowledge and experi-
important for streamlining production ence and to create standards of benefit Standardization will be key to success
and logistics operations in almost every to the entire industry. and to the realization of the many ben-
industry. Radio-frequency identification efits. It is paramount for the following
enables process automation, reducing Implementing RFID in slab and coil reasons:
the need for manual labor, speeding logistics results in several benefits in
the completion of critical business the following key areas: Customer acceptance: Most steel com-
processes and simultaneously increas- panies sell their products (largely coils)
ing process security. Asset use and intermediary products (slabs and
Operational efficiency coils) to a uniform customer base in the
Safety and security automotive and industrial segments. If
2.1 Background Customer service steel producers adopt diverging RFID
solutions to identify slabs and coils, this
After conducting several successful places the onus on customers to work
pilot projects using RFID for slab and with multiple systems. Conversely, as
coil logistics, ThyssenKrupp Steel and has already occurred in the retail, mili-
Accenture are collaborating with steel tary and pharmaceutical sectors, if the
customers from the automotive and steel industry proposes anything other
industrial construction segments, other than a standardized approach, cus-
Figure 1 Benefits of using RFID in slab and coil logistics
Maximized Usage of Handling Equipment
Asset Utilization Maximized Usage of Transport Vehicles
Reduction of Safety Stocks
Improved Stock Management
Improved Supply Chain Visibility

Operational
Efficiency
Reduced Detention / Demurrage Costs
Benefits
Reduced / Simplified Labor
Improved Worker Safety

Safety and Security
Improved Process Security
Faster Receiving Process

Customer Service
Improved Production Control
6
tomers may simply mandate solutions, exist in a production-ready form or The steel industry must proactively
leading to unnecessary complexity, which are at least more expensive than develop standards for RFID-enabled
redundancy and cost for steel compa- products used by other industries. slab and coil identification. A wait-and-
nies. While designing RFID products appro- see attitude is strongly discouraged
priate for handling steel is technically because implementation times would
Flexibility: By implementing a standard feasible, many vendors will only do so increaseas would the costs and risks
for solutions, the integration of new given sufficient sales volumes. As a associated with responding to diverg-
customer systems will be far easier result, the steel industry should focus ing customer requirements.
than if a customized solution for every on adopting a limited number of stan-
unique customer scenario were neces- dardized solutions. It is for these reasons that we invite
sary. Standards also allow customers to steel companies as well as steel indus-
choose among different suppliers and No duplication of effort: There is no try customers to join and participate in
reduce their dependency on a single point in duplicating efforts and individ- this standardization effort.
one. In other words, the necessarily ually repeating technical mistakes.
tight integration of customer and sup- While the RFID applications described Opportunities for steel company partic-
plier systems will not become an artifi- in this paper would provide benefit ipation may be found at the conclusion
cial trade barrier. even if only used in one company, far of this paper.
greater benefits would be realized by
Availability and cost: Using RFID for standardizing systems across the entire
slab and coil logistics requires special- supply chain, from producers to end-
ized solutions, which either do not yet use manufacturers.
7
3_Benefits of RFID in slab and coil logistics
Radio-frequency identification tech- entering the information into the The following sections will detail the
nologies are most suitable for slab and appropriate IT-system, involving time, benefits of RFID technology for slab
coil logistics beginning after the con- manual effort, and the risk of human and coil logistics within typical supply-
tinuous casting of slabs and on through error. Some companies have imple- chain steps (compare Figure 2 and
internal production and finishing steps mented barcode technology, but this Figure 3).
all the way to delivery of the finished approach provides partial automation
product (see Figure 2). Much of the only with people still required for
effort spent on this complex process tedious manual scanning. 3.1 Perfect Steel case study
typically goes into handling activities, methodology
especially for local, internal and exter- Using RFID at key points along the sup-
nal1 shipping and receiving. ply chain can streamline and automate To demonstrate the value of RFID tech-
many handling activities. While com- nology in a typical steel supply chain
In addition to the typical process flow plete automation (automation that we created a hypothetical company
from continuous casting to production eliminates human quality assurance, called Perfect Steel. Throughout this
use, slabs and unfinished coils may be for example) will remain the exception, document, we will review several sce-
purchased from third parties if a com- RFID saves some real costs, while help- narios using Perfect Steel to illustrate
pany specializes in finishing activities ing to respond to emerging require- the potential business benefits of RFID.
only. ments just as barcodes did more than
30 years ago. Increasing sales volumes The examples represent a limited
Today, handling activities are per- and the continuous drive to make oper- number of potential benefits, and are
formed by visually identifying a prod- ations more efficient will lead compa- mainly focused on specific applica-
uct, writing down its identifier and nies to adopt RFID. tions. As a result, they do not neces-
1
Local meaning handling and transportation activities
within the same business and / or site; internal
referring to handling and transportation activities
involving different sites or businesses within the same
group; and external representing handling and
transportation activities between manufacturer and
customer.
Figure 2 Generic steel supply chain Internal Material Flow Material Flow f.o. manufacturer
Hot, up to 1400C / 2500F Cold, below 85C / 200F
Internal Material FlowCold, Material Flow to customer

3rd Party 3rd Party below 85C / 200F Cold, below 85C / 200F
Slab Coil
Producer Producer
RFID-reader
Start
Steel Tandem Temper

HRM Pickling
Shop Mill Mill
SF
Casting Slab HRM HRM CRM CRM

Slab Stock Stock Stock Stock Stock Stock
Yard I Yard II Yard I Yard II Yard I Yard II
Slab Production Hot Milling Cold Milling
3rd Party
Coil
Producer
Surface Coating / Temper

Cutting Packaging
Finishing Painting Mill
CRM Customer
Finishing Finishing Finishing Final

Stock Stock Stock Product
Yard I Yard II Yard III Warehouse
Finishing Packaging and Dispatch
8
sarily take into account the potentially The network effect has a key role to integration, dedicated consulting,
much greater network effect, that is, play in this discussion. In other words, RFID tags for developing specific
the impact of amortizing the initial if a company implements a common RFID solutions, that will be charged
RFID platform costs across multiple RFID platform that could be used by to the business / the respective pro-
applications of using RFID along an many different RFID applications across ject on a case-by-case basis.
entire internal and / or external supply operations, that platform becomes
chain. All scenarios are based on mea- more valuable as more applications In the following case studies we do not
surable indicators and cautious esti- leverage it. account for general infrastructure
mates, and do not take into account costs, only application-specific costs.
potential positive effects or soft bene- A companys RFID implementation will That said, we do include platform costs
fits that might further improve Perfect divide into two types of investment: in the comprehensive case study at the
Steels success. end of this section. Please note that by
1. A radio-frequency identification choosing to illustrate only three appli-
The most common mistake when platform, including middleware cations, we do not mean to imply that
investigating RFID business cases is to licenses, servers, and operations Perfect Steel could only ever use its
view RFID as a project. It is not. It is support considered a common ser- RFID platform in the three specific
crucial for decision makers to under- vice-cost to the companycompara- application scenarios. Rather, once the
stand RFID as a critical infrastructure ble to general IT infrastructure and companys RFID platform is estab-
program made up of a growing num- support. lished, that company would be in the
ber of use cases that allow companies enviable position of being able to
to drive efficiency and better meet 2.Multiple applications, including cus- implement any number of applications
customer needs. tom software development, process that add business value.
Figure 3 Estimated potential and effort of

RFID-technology along the supply chain by area
Benefit:
Continuous Casting
Hot-Rolling
Cold-Rolling
Finishing
Packaging and Shipping
Receiving
Production Use
Very high
High
Medium
Low
Very low
Asset Utilization
m m m m m h m Effort:
l: Low
Operational Efficiency m: medium
m l l l m h m
h: high
Safety and Security
m l l l m h m
Quality Control and
Customer Service h h h
9
3.1.1 Perfect Steel Business case
assumptions
Perfect Steel processes 352 thousand General Assumptions Slabs

slabs per year (320 thousand are self- annual production of slabs [tons] 8.000.000
produced and 32 thousand are pur-
chased from third parties). Slabs and annual purchased slabs ratio [%] 10,0
coils weigh 25 tons each. annual slab purchases from 3rd parties [tons] 800.000
annual slab capacity to be handled [tons] 8.800.000
avrg. weight per slab [tons] 25
annual no. of slabs produced 320.000
annual no. of slabs purchased from 3rd parties 32.000
annual no. of slabs processed 352.000
Figure 4 General assumptions slabs
From these slabs, Perfect Steel pro- General Assumptions Coils

duces a total of 8.8 million tons of hot- annual production of hot rolled strip [tons] 8.800.000
rolled coils per year. Twenty-five per-
cent or 2.2 million tons of these coils avrg. weight per coil [tons] 25,0
are directly delivered to end customers annual no. of produced unfinished coils 352.000
while the remainder go into cold rolling
annual sales of unfinished coils to 3rd parties [%] 25,0
and finishing.
annual no. of unfinished coils sold to 3rd parties 88.000
annual no. of unfinished coils processed 264.000
unfinished coils to finished strip ratio [%] 120
annual no. of finished strip 316.800
avrg. price per ton of finished strip [] 650
avrg. annual value of finished strip [] 4.290.000.000
avrg. inventory [months] 1,5
avrg. inventory [tons] 825.000
avrg. value of inventory (sales outstanding) [] 536.250.000
internal rate of return [%] 10,0
avrg. annual cost of capital [] 53.625.000
Figure 5 General assumptions coils
10
Perfect Steel maintains its own seaport General Assumptions Assets
with one portal crane, a fleet of 20
no. of forklifts 20
forklifts and 80 trailers to transport
slabs and coils internally. no. of trailers 80
value of forklifts [] 500.000
value of trailers [] 80.000
total value of forklifts [] 10.000.000
total value of trailers [] 6.400.000
annual cost of maintenance [%] 10,0
total cost of maintenance per year [] 1.640.000
Figure 6 General assumptions assets
With a supply chain similar to the

generic one described. Perfect Steel is
estimated to require a total of 29 RFID-
readers and 116 RFID antennae.
Location Type Equipped Inbound Outbound RFID RFID

locations Readpoints Readpoints Readers Antennae
Slab Stock Yards 1 0 1 1 4
Pickling Stations 1 0 1 1 4
HRM Stock Yards 1 1 1 2 8
Tandem Mills 1 1 1 2 8
Temper Mills 1 1 1 2 8
CRM Stock Yards 2 1 1 4 16
Surface Finishing Stations 1 1 1 2 8
Coating / Painting Stations 1 1 1 2 8
Cutting Stations 1 1 1 2 8
Finishing Stock Yards 3 1 1 6 24
Packaging Lines 1 1 1 2 8
Final Warehouses 1 1 1 2 8
Dispatch Stations 1 0 1 1 4
Total 16 10 13 29 116
Figure 7 Perfect Steels RFID hardware needs

for RFID rollout throughout operations
11
The business cases assume current RFID Hardware-Pricing (approx. list prices as of 2007)
market prices for RFID hardware.
UHF RFID fixed reader 3.000
UHF RFID antenna 200
UHF RFID printer-applicator 20.000
UHF RFID handheld reader 2.500
Figure 8 Radio-frequency identification hardware-pricing
We have incorporated average deploy- Average Deployment Costs

ment costs for site surveying and for
RFID site survey (per site) 1.000
installation activities. In addition to
setup and customization services, the RFID HW installation (per readpoint) 20.000
average includes peripheral equipment Figure 9 Average deployment costs
such as motion sensors, light stacks
and installation materials such as fix-
tures and cables.
Because of the high handover and RFID-equipped Units Units Added / % of new no. of new
numerous shipping activities among Location Processed Removed Tags Tags
the many production steps, including
the inadvertent removal / destruction
Slab Stock Yard II 320.000 32.000 100 % 320.000
of RFID tags, Perfect Steel is estimated
to require a total of roughly 2.5 million Pickling 352.000 0 100 % 352.000
RFID tags per year. HRM Stock Yard II 352.000 0 0% 0
Tandem Mill 352.000 0 100 % 352.000
CRM Stock Yard I 352.000 0 0% 0
Temper Mill 352.000 0 100 % 352.000
CRM Stock Yard II 352.000 -88.000 0% 0
Surface Finishing 264.000 0 100 % 264.000
Finishing Stock Yard I 264.000 0 0% 0
Coating / Painting 264.000 0 100 % 264.000
Finishing Stock Yard II 264.000 0 0% 0
Cutting 264.000 52.800 120 % 316.800
Packaging Line 316.800 0 100 % 316.800
Final Warehouse 316.800 0 0% 0
Dispatch 316.800 0 0% 0
Total 2.537.600
Figure 10 Perfect Steels annual need for RFID-tags at full rollout
12
Given that RFID tags are a recurring RFID Label Price Prediction
cost with prices falling every year, we
Price per label at 500k+ volumes in 2008 0,25000
applied a cautious estimate for tag
prices2 over the next five years. Price per label at 500k+ volumes in 2009 0,24500
Figure 11 RFID label price prediction
We include percentages for annual General Assumptions Financial Factors

hardware and software maintenance as Average Annual Hardware Maintenance 5%
well as for vendor support and soft-
ware updates. Finally, we also assumed Average Annual Software Maintenance 5%
an weighted internal cost of capital of Vendor Support & Software Updates 10 %
12 percent per annum in order to eval-
Weighted Average Cost of Capital (WACC) 12 %
uate the suggested investments
according to their net present value Figure 12 General assumptions concerning financial factors
(NPV).
2
The prices assumed here are for a radio-frequency
identification label (an RFID tag or inlay plus a sur-
rounding label) suitable for slabs / coils.
13
3.2 Asset use 3.2.2 Transport vehicles 3.2.3 Safety stocks
Expensive machinery, tools, transport Transporting slabs and coils between Gaining a more accurate, real-time
vehicles and other large items required different production lines, company overview of the entire supply chain will
to run a business are commonly sites or to third parties for finishing and help manage processes to reduce risk
referred to as assets. Asset investments back, represents a significant portion of from the Bullwhip Effect. To mitigate
are most often significant, which is activity in the supply chainand trans- against fluctuations in customer
why companies aim to minimize the portation tends to present the greatest demand, companies often accumulate
number of total assets required by opti- number of potential challenges along safety stocks. The Bullwhip Effect
mizing how they employ existing the way. describes the accumulation of order
assets. fluctuations beginning with the end
Production and finishing steps can only customer and moving all the way down
move forward when half-products are the chain. Safety stocks can create pro-
3.2.1 Handling equipment available and are delivered accurately portionally large costs compared to
and on time. Optimal vehicle manage- customer demandespecially for com-
Using RFID generally speeds up the ment is crucial. Many steel companies panies at the beginning of the supply
identification of tagged items, which own larger than necessary fleets of chain.
has the salutary effect of increasing trucks, trailers, railcars and heavy lifting
throughput and making the most effec- vehicles. Even if third parties own The effect is analogous to the causes of
tive use of expensive handling equip- transportation vehicles, RFID technolo- a traffic jam that builds despite any
ment. In some cases, the time gained gy can contribute to better resource actual obstacle on the road. Drivers
can be so significant that companies management and reduced rental and make decisions based on the limited
can reduce the number of machines service costs. information they have, limiting person-
required along with associated capital al risk. This results in an increased
and human investments. Reducing the Using RFID to individually track and number of cars slowing for no obvious
quantity of overall machine assets manage all transport assets would be reason and causing traffic jams. If dri-
translates directly to a shifting of the best solution, but this may not vers could see the entire traffic system,
human resources from manual labor to always be possible since another party using real-time traffic updates, they
potentially higher value tasks. may own the equipment. Fortunately, could make better decisions about the
Similarly, the total cost of operations simply using RFID tags on slabs and overall state of the roads.
and maintenance based on a reduced coils significantly speeds loading and
machinery load reduces proportionally. unloading, which reduces vehicle turn- With this analogy in mind, using RFID
around times. helps reduce inventory levels / safety
The factors outlined in this section stocks and increases inventory turns,
delineate why steel companies seek to Radio-frequency identification read- resulting in an overall positive impact
limit asset acquisition while ensuring points at key locations along the chain on working capital because product is
that tight asset allocation does not provide companies with the ability to not just sitting in a warehouse waiting
cause a bottleneck. Using RFID technol- automatically verify sequence, correct to be purchased.
ogy to automate slab and coil identifi- routing, and shipment completeness
cation represents a major step towards all factors that lead to further reduc-
achieving this goal. tions to the total number of vehicles
required.
14
Perfect Steel Case study Asset use (stock) of approximately 54 million dant equipment. Related maintenance
euros. Implementing RFID technology costs would also reduce by 10 per-
This scenario describes the reduction improves the integrated planning sys- centtranslating into one million
of necessary working capital and fixed tems and the outbound logistics and is euros of additional savings per year.
assets using RFID across the internal estimated to reduce inventory and Increased throughput allows Perfect
supply chain. (see figure 13) related working capital by two per- Steel to cope with increased volumes
cent. Perfect Steel identifies more resulting from growth without requir-
1. Safety stock: Perfect Steel holds a than 1.1 million euros in savings per ing additional equipment.
safety stock of approximately 825 yearsavings grow with increased
thousand tons of coils with a reference business. Perfect Steels RFID investment for
price of 650 euros per ton. This repre- asset use pays off in its second year,
sents the production capacity of 2. Fixed assets: Implementing RFID with a cumulated ROI of 5.2 million
approximately one-and-a-half months. optimizes forklift and trailer use for euros, representing a net present
The average value of the coil invento- internal product movement. Perfect value of 3.0 million euros after five
ry is approximately 536 million euros. Steel will reduce forklift and trailer years. The initial investment for this
The weighted average cost of capital requirements by 10 percent, repre- scenario is 2.9 million euros.
(WACC) is 12 percent, which representing a one-time gain of over 800
sents an average cost of capital thousand euros by selling off redun-
Asset Utilization Business Case Year Business Rollout 2008 2009 2010 2011 2012
Growth Rate n/a n/a 5,00 % 5,00 % 5,00 % 5,00 %
Benefit Summary
Value Lever Improvement Initial Cost %-Change
Recurring
Safety stock Working capital 53.625.000 2% 1.072.500 1.126.125 1.182.431 1.241.553 1.303.630
(finished products) reduction
Maintenance of Fixed capital 10.000.000 10 % 1.000.000 1.000.000 1.000.000 1.000.000 1.000.000
fixed assets reduction
One-Off
Utilization of fixed Fixed capital 6.400.000 10 % 640.000
assets (forklifts) reduction
Utilization of fixed Fixed capital 1.640.000 10 % 164.000
assets (trailers) reduction
Total Annual Savings 2.876.500 2.126.125 2.182.431 2.241.553 2.303.630
Cost Summary
Cost Type Item Units Unit Price
Recurring
Hardware Reader replacement, 5% 6.510 6.510 6.510 6.510
Maintenance
Software Bugfixing, 5% 100.000 100.000 100.000 100.000
Maintenance
Tags Label with inlay 2.537.600 634.400 652.798 639.475 626.153 612.830
One-Off
RFID-Hardware Readers 29 3.000 87.000
Antennae 116 200 23.200
Printers / Applicators 1 20.000 20.000
Initial Deployment RFID Site-Survey 17 1.000 17.000
Installation 30 20.000 600.000
System and Process Software 1 2.000.000 2.000.000
Integration development
Training 1 200.000 200.000
Total Annual Costs 2.947.200 634.400 759.308 745.985 732.663 719.340
ROI-Summary
Total Cumulative Savings 2.876.500 5.002.625 7.185.056 9.426.609 11.730.240
Total Cumulative Costs 2.947.200 3.581.600 4.340.908 5.086.893 5.819.556 6.538.896
Total Cumulative ROI -705.100 661.717 2.098.163 3.607.053 5.191.344
NPV-Summary
Total Annual Result -2.947.200 2.242.100 1.366.817 1.436.446 1.508.890 1.584.290
NPV after n-th year -2.947.200 -945.325 144.293 1.166.727 2.125.654 3.024.623
Figure 13 Asset use scenario business case
15
3.3 Operational efficiency crane-coordinate systems to record 3.3.2 Supply chain visibility and
each items exact offloading position. insight
Radio-frequency identification technol- In theory, these systems eliminate mis-
ogy can improve the operational effi- placement yet they have a weakness As with all transportation-related activ-
ciency of a steel company in many the initial identification is still error ities within the supply chain, RFID tech-
ways. Among the more obvious are prone. Radio-frequency identification nology holds the potential to make a
faster product localization and reduced tags limit the chances of human error dramatic impact. In a supply chain
labor costs. and facilitate faster and more accurate where slabs and coils are tagged, RFID-
product localization. readers on cranes, forkliftsand at crit-
ical points along a companys rail
3.3.1 Improved stock management The same logic applies to inventory trackswill deliver a detailed, accurate
management in general, where RFID record of the movement every time a
From the continuous casting (or pur- makes it easier than ever not only to tagged item passes a reader.
chase) of slabs, to hot-rolling (or pur- see in real time individual products and
chase) of coils, to cold-rolling and / or their qualities that are in stock, but also The result of this abundance of infor-
one or multiple finishing steps all the to receive detailed information about mation is unprecedented insight into
way to packaging and shipment, a sig- product turnaround. the functioning of internal and external
nificant number of movement and stor- supply chains, in particular the different
age operations are conducted for slabs Knowing exactly which products with transportation processes, use of rental
and coils. what qualities are located at precise assets such as railcars or vessels, and
positions, allows logistics managers to half-product turnover.
The more frequently a half-finished swap equivalent half-products and
product needs to be moved to an inter- reassign them to new orders to avoid Such insight will improve monitoring
nal warehouse or storage yard, the unnecessary handling. So if, for exam- and management of transportation
higher the chance that it may become ple, the bottommost slab of a pile is performance over time and help to
lost. This is particularly true if, as is about to be shipped, and could easily uncover problem areas, place service
the case with many operations today, be replaced with a more accessible slab provider charges under secondary
identifying the object being stored is with the same qualities, this would review and, ultimately, improve the
conducted manually. save time and resources. Radio-fre- efficiency of the entire supply chain for
quency identification improves a com- cost savings and improved customer
To overcome this risk, some companies panys ability to capture these opportu- service.
use sophisticated stock-keeping solu- nities to drive efficiency and effective-
tions with GPS-enabled forklifts or ness.
16
3.3.3 Detention / demurrage cost tion and demurrage charges, which code solutions. Employees often wel-
reductions RFID can also help to minimize. come RFID systems because they
relieve them from tedious, repetitive
A major benefit of automatic product activities that they may believe are of
identification using RFID is that it 3.3.4 Increased productivity / small value.
speeds loading and unloading cycles simplified labor
without compromising security.
In addition to speeding up many activi-
Today product identification is often ties, RFID can automate many tedious
performed visually or using barcodes, product identification tasks related to
involves walking around a coil or slab half-product identification that has been
to access its identifier with a handheld traditionally performed by workers.
reader. There are a sufficient number of
instances in which an optical product Besides the obvious benefit of being
identifier will become unrecognizable able to reassign those workers to other,
as a result of dirt, scale or damage to a more value-generating tasks, ultimate-
printed labels surface all of which ly increasing labor productivity, RFID
slow the handling process. Radio-fre- can be used to enforce vital verification
quency identification does not require procedures that previously depended
optical readability (most of the times on the diligence of responsible person-
not even line of sight) and is therefore nel.
much better suited to face harsh condi-
tions that occur along a typical steel Barcode-based solutions rely on per-
supply chain. sonnel to scan every barcode. The accu-
racy of the entire solution depends on
Because steel companies rely on a employee reliability. With an RFID solu-
large number of third-party transportation, in contrast, so long as each item is
tion assets to help them move and tagged, RFID-readers identify items
process slabs and coils, managing the automatically each time they pass by.
loading / unloading process and
returning these assets within the con- In business processes where accurate
tracted time frame is vital. Failing to do identification is critical, RFID will almost
so can result in incurring costly deten- always be the better choice over bar-
17
Perfect Steel case study operational
efficiency
This scenario describes handling Specific Assumptions Operational Efficiency Scenario

improvements for semi-finished prod-
fully loaded cost per FTE per hour [] 40
ucts during unloading and loading at a
company owned port. In addition to avrg. working hours per day 8
the general assumptions described in avrg. annual no. of business days 220
section 3.1.1 this scenario is based on
the following specific assumptions: annual fully loaded cost per FTE [] 70.400
no. of FTE needed 10
annual total fully loaded cost of FTE [] 704.000
Figure 14 Specific assumptions for the operational-efficiency scenario
To keep its supply chain moving, performing only two tasks: Reading a Speeding up the unloading and loading
Perfect Steel loads and unloads slabs spray-painted ID number off the items processes is estimated to reduce the
and coils to and from vessels at its sea- and keying it into a mobile terminal to companys lead time by 0.01 percent,
port. Because of the cranes limited direct the crane operator accordingly. representing an additional potential
capacity, workers have a very limited This labor requirement represented a saving of initially 430 thousand euros
window of up to three minutes per total of 10 full-time employees (FTE) to per year, which will grow proportional-
item to be seized, identified, moved ensure sufficient personnel to keep ly as the business grows.
and placed at the right location. operations running around the clock.
The per FTE cost averages at 40 euros The RFID investment pays off in its sec-
To achieve tight turnarounds and opti- per hour, added up to more than 700 ond year, with a cumulated ROI of 3.7
mize crane use, the company operates thousand euros per year for identifica- million euros, representing a net pre-
24 / 7 in three daily shifts. Before tion personnel only. Using the RFID sent value of 2.3 million euros after
implementing RFID, slab and coil iden- solution, 80 percent of the personnel five years. The initial investment for
tification was performed by two previously needed for identification this scenario is 1.2 million euros.
employees per vessel per shift, each purposes were freed to perform other
more valuable activities.
18
Operational Efficiency Business Case Year Business Rollout 2008 2009 2010 2011 2012
Growth Rate n/a n/a 5,00 % 5,00 % 5,00 % 5,00 %
Benefit Summary
Recurring
Handling of Labor cost 704.000 80 % 563.200 591.360 620.928 651.974 684.573
unfinished products reduction
Sales Lead time 4.290.000.000 0,01 % 429.000 450.450 472.973 496.621 521.452
reduction
One-Off
Total Annual Savings 992.200 1.041.810 1.093.901 1.148.596 1.206.025
Cost Summary
Recurring
Maintenance
Maintenance
Tags Label with inlay 320.000 80.000 82.320 80.640 78.960 77.280
One-Off
Antennae 8 200 1.600
Training 1 100.000 100.000
ROI-Summary
Total Cumulative Savings 992.200 2.034.010 3.127.911 4.276.506 5.482.531
Total Cumulative ROI -276.400 631.710 1.593.591 2.611.846 3.689.211
NPV-Summary
Total Annual Result -1.188.600 912.200 908.110 961.881 1.018.256 1.077.365
NPV after n-th year -1.188.600 -374.136 349.804 1.034.452 1.681.571 2.292.897
Figure 15 Operational efficiency scenario business case
19
3.4 Safety and security 3.4.2 Improved process security When discovered early, the resulting
product could simply be re-labeled and
Safety and security are of paramount Whenever a slab or unfinished coil stored for reassignment to a corre-
concern for any industrial manufactur- enters a production step it is vital to sponding order, causing nothing more
er and especially for steel companies. ensure that the correct product is used. than a production delay. The longer it
Workplace accidents and product Product identification based on RFID takes to discover a problem, the more
misidentifications result in significant provides an unprecedented level of costly the error becomes since the
costs. Radio-frequency identification process security over human error. wrong product will result and unneces-
can help mitigate safety and security sary processing accrues costs for a
risks. Because it is increasingly difficult to product that was not requested.
identify that the wrong material was Processing the wrong material may
used as the product moves down the lead to a wasted product, or worse,
3.4.1 Improved worker safety production chain, it is all the more result in damaged production equip-
important to take steps to ensure cor- ment.
One of the side benefits of task rect identification from the start. When
automation is that humans need not products are assumed to have the cor- The worst outcome, however, would
be exposed to dangerous situations. In rect qualities, but do not, a company be to deliver the wrong material to a
the past, two workers were required exposes itself to significant risk. customer, potentially leading to a law-
inside each vessel in order to identify suit for resulting damages and / or a
slabs, secure them, and then direct the Given the stringent procedures many sinking stock price.
crane operator to pick them up. Using companies apply (for example when
a crane with an electro-magnetic lift- scheduling and entering slabs into the For all these reasons, product confu-
ing devicecombined with RFID for reheating furnace) chances for a sion must be avoided. Radio-frequency
identificationeliminates much of the misidentification to occur are arguably identification further improves security
manual effort while increasing worker low. Nonetheless, the consequences of by eliminating misidentification result-
safety and process security. The same a single such failure can be disastrous, ing from human error.
logic applies to other areas where and even though companies try their
employees typically need to enter utmost to avoid such failures, there
danger zones for no other reason than have been examples of catastrophe in
visual product identification. the steel industry.
20
21
Perfect Steel case study safety and
security
Perfect Steels customer Super Specific Assumptions Safety & Security Scenario
Washer manufactures high quality
rate of finished product mix-ups (1 in N years) 5
washing machines targeting high-end
customers. The company has a spotless material weight of a single housing [kg] 5,5
public image. In addition to the gener- no. of washing machines produced out of one coil 4.545
al assumptions described in section
3.1.1 this scenario has been based on annual no. of coils purchased 105
the following specific assumptions: average market price of a single product [] 1.200,0
total market value of manufactured products [] 5.454.545
Figure 16 Specific assumptions for the Safety & Security scenario
Super Washer manufactures roughly Without RFID, one un-detected product cent of Perfect Steels total annual
800.000 washing machines per year, misidentification (one coil) is likely to sales at a price of 650 euros per ton,
requiring a total of approximately occur within five years. The result is would be at least 1.3 million euros per
4.400 tons (or 176 coils) of finished that incorrect steel product would be year.
material for housings, all of which they delivered to Super Washer that is, for
enamel to protect the final product and example, not suitable for enameling. The RFID investment pays off in its sec-
give it a finished look. Super Washer As a result, enamel would peel off ond year, with a cumulated ROI of 8.0
buys approximately 60 percent (or 105 either during delivery to the consumer million euros, representing a net pre-
coils) of their material from Perfect or within a few weeks of use. sent value of 4.8 million euros after
Steel. five years. The initial investment for
Eliminating that single product this scenario is 3.6 million euros.
Each washing machine requires an misidentification would have saved
average of 5.50 kilograms of steel for Perfect Steel about 5.5 million euros or Note that this simulation does not
its housing so Super Washer can pro- the cost of buying back unusable include any potential compensation
duce approximately 4.545 washing washing machines. payable to Super Washer for loss of
machines from a single coil. As a result image (lawsuits), nor the cost of losing
of Super Washers superior quality and Assuming this error would lead Super other customers based on poor reputa-
brand equity, the average market price Washer to change suppliers, the poten- tion, nor any effects on Perfect Steels
per washing machine is around 1,200 tial cost of losing this customer stock price.
euros. accounting for approximately 0.03 per-
22
Safety & Security Business Case Year Business Rollout 2008 2009 2010 2011 2012
Growth Rate n/a n/a 5,00 % 5,00 % 5,00 % 5,00 %
Benefit Summary
Recurring
Elimination of Reduction of lost 4.290.000.000 0,03 % 1.287.000 1.351.350 1.418.918 1.489.863 1.564.357
product-mixups sales
One-Off
Elimination of Reduction of product- 5.454.545 100 % 1.090.909 1.090.909 1.090.909 1.090.909 1.090.909
product-mixups buybacks
(distributed over a 5 year period)
Total Annual Savings 2.377.909 2.442.259 2.509.827 2.580.772 2.655.266
Cost Summary
Recurring
Maintenance
Maintenance
Tags Label with inlay 264.000 66.000 67.914 66.528 65.142 63.756
One-Off
Antennae 40 200 8.000
Training 1 300.000 300.000
ROI-Summary
Total Cumulative ROI -1.277.091 944.354 3.234.753 5.597.483 8.036.093
NPV-Summary
NPV after n-th year -3.589.000 -1.524.795 246.127 1.876.387 3.377.945 4.761.678
Figure 17 Safety & Security scenario business case
23
3.5 Customer service 3.5.1 Faster receiving and ability to plan 3.5.2 Improved production control
Many of the benefits of RFID described in Tagging coils with RFID technology in con- Tagging slabs and coils with RFID technolo-
previous sections also apply to customers, cert with advanced shipment notices gy will improve accuracy and speed of
whether delivering slabs or intermediary (ASNs) automatically sent to customer IT- material identification throughout cus-
strips to other steel industry players, or fin- systems via enterprise data integration tomers internal handling and transporta-
ished coils to manufacturing companies. It simplifies and accelerates the receipt of tion processes. This in turn leads to
is important to avoid underestimating the goods at customers premises. To support improved process security and product
positive impact that efficient and accurate accurate production planning among cus- quality for end-use steel customers.
customer service can have on organization- tomers, ASNs confirm the products that are
al performance and corporate results. The being shipped, when they will leave their
majority of these benefits can only be point of origin and their estimated time of 3.6 Combined business case for Perfect
achieved if the steel industry manages to arrival. Steel
agree on common RFID standards.
Because supply is so important to the man- Having analyzed the different scenarios
ufacturing business, giving customers the throughout this document individually, the
ability to plan will provide steel makers combination of all three applications in one
with invaluable competitive advantage. At business case promises some additional
minimum, it may positively impact cus- savings due to the ability to share some of
tomer loyalty. the RFID-equipment.
24
Perfect Steel case study all scenarios years, while the individual investments
combined would add up to 7.7 million euros (higher
investment leading to a lower ROI / NPV).
The total combined business case for
Perfect Steel features an ROI of 17.7 million This is yet another reason why -- as was
euros or a net present value of 10.8 million already stated in the introduction to the
euros after five years. The initial invest- case study RFID should not be regarded as
ment for the combined scenario is 7.3 mil- a project or number of projects but rather
lion euros. as an infrastructure program. Only by using
that infrastructure to support a growing
In comparison, the total ROI of all three number of use cases will allow companies
scenarios implemented individually is only to maximize the benefits this technology
16.9 million euros and the net present promises.
value is only 10.1 million euros after five
Combined Business Case Year Business Rollout 2008 2009 2010 2011 2012
Growth Rate n/a n/a 5,00 % 5,00 % 5,00 % 5,00 %
Benefit Summary
Application
Project-Specific Benefits
Asset Utilization One-Off and Recurring combined 2.876.500 2.126.125 2.182.431 2.241.553 2.303.630
Operational Efficiency One-Off and Recurring combined 992.200 1.041.810 1.093.901 1.148.596 1.206.025
Safety & Security One-Off and Recurring combined 2.377.909 2.442.259 2.509.827 2.580.772 2.655.266
6.246.609 5.610.194 5.786.158 5.970.921 6.164.921
Cost Summary
Cost Type
Project-Specific Costs
RFID-Hardware 170.200
Initial Deployment 77.000
System and Process Integration 6.600.000
Tags 634.400 652.798 639.475 626.153 612.830
Hardware Maintenance 8.510 8.510 8.510 8.510
Software Maintenance 300.000 300.000 300.000 300.000
General RFID-Software Platform Cost (Common Services)
Software Licenses 250.000
Custom Component Development 100.000
24 / 24 Operations Support (partial) 50.000 50.000 50.000 50.000 50.000 50.000
Vendor Support & Software Updates 25.000 25.000 25.000 25.000 25.000
Component Maintenance 5.000 5.000 5.000 5.000 5.000
7.247.200 714.400 1.041.308 1.027.985 1.014.663 1.001.340
ROI-Summary
Total Cumulative ROI -1.714.991 2.853.896 7.612.069 12.568.327 17.731.908
NPV-Summary
NPV after n-th year -7.247.200 -2.307.728 1.334.561 4.721.334 7.871.126 10.801.080
Figure 18 Combined business case
25
4_Challenges for RFID in the steel industry
The previous sections have shown that radio waves, resulting in similar read prob- making them interchangeable / enabling
there is vast potential for RFID to improve lems. them to co-exist within an enterprise.
internal and external slab and coil logistics.
To reap the rewards, a number of technical, A current approach to work around signal
economic and process challenges will have reflection places an air layer (via a layer of 4.1.1 Flag-tag
to be overcome, as is the case with the foam or similar spacer material) between
introduction of any new technology. The fol- the metal item and the RFID tag. Another The so-called flag-tag is a radio-frequency
lowing topics describe these challenges and employs a dielectric shield (for example, a identification label folded to form a small
suggest methods and tools for overcoming ferrite layer) to decouple the tags from the flag standing just above the surface of
these obstacles. metallic object. tagged objects. The short distance placed
between the tag and the metal has been
Radio-frequency identification readers can- Other options include low-frequency (LF) shown to ensure performance independent
not be guaranteed to communicate with all transponderswhich because of magnetic of the characteristics of the underlying
tags one hundred percent of the time. coupling are less susceptible to detuning material.
Environmental issues and inherent proper- and active RFID, which does not rely on
ties of objects being tagged impact read radio waves from the RFID-reader to func- Flag-tags actually function best when
accuracy. The degree of concern for accuracy tion. applied to a metallic surface, provided the
is directly proportional to how heavily an RFID-inlay is placed at the right distance.
enterprise relies on data accuracy and how Some of these approaches can add signifi- Their performance improvement occurs as
exposed it is to risk as a result of inaccuracy. cant size to a tags form factor as well as an the result of the radio waves emitted by the
increase in cost. Others simply are not an reader hitting the RFID tags antenna once
Still, an absolute read accuracy of less than option for use with slabs and coils as is the before deflecting off the metallic objects
100 percent does not necessarily negate case with the last two examples because of surface on an angle that sends the signal to
the usability of RFID. In industries where their very limited read range (LF technolo- the tag a second time, thereby increasing
risk exposure is high, process redesign, gy) or size / environmental aspects (active- the amount of available power to the tags
information auditing and redundant readers RFID technology). chip. Reading distances of eight to ten
can address accuracy-related system short- meters are achievable with this solution.
comings. Tests conducted by ThyssenKrupp Steel and
Accenture have proven that passive and Design factors and a plastic coating make
battery-assisted tags that use the ultra-high flag-tags flexible and relatively rugged with
4.1 Radio-frequency identification and frequency (UHF) range are best for tagging respect to harsh environmental conditions
metals slabs and coils. There are three options to and mechanical stress. They cost by far the
choose from and the most appropriate one least of the three options and have the
One of the main challenges with RFID tech- for a given application depends on the par- added advantage of being able to be
nology is read performance with tagged ticular business case, requirements and encoded, folded and printed on (with
items made primarily of metal or water- environmental context. human-readable information or / and a
based liquids. Metallic objects tend to barcode as backup) in one step, saving
reflect radio waves, which means that read- From a hardware and air interface perspec- valuable time and significantly reducing the
ing RFID tags directly applied to metal tive, all three options represent a first cru- risk of confusion when applied to a metallic
becomes extremely difficult if not impossi- cial step towards standardization because product.
ble. Water-based liquids tend to absorb they incorporate EPCglobal standards,
26
Despite these advantages, flag-tags have Although more rugged than flag tags, plas- Also, if shorter read ranges are required, the
one critical flaw: If the flag is pushed onto monic decoupler tags present a number of range of battery-assisted passive technolo-
the metal surface, readability goes from out- disadvantages including higher price, lack gy can be far more easily controlled by
standing to zero. This is why, together with of an automatic print / encoding solution turning down the RFID-readers transmis-
its inventor, the printer specialist Sato Inc., (though in theory one could be built) and sion power.
ThyssenKrupp Steel and Accenture have higher sensitivity to orientation, making
developed a modified version of the flag- them unreadable at certain angles. Of the three alternatives to tagging, bat-
tag and corresponding flag-tag printer opti- tery-assisted, passive tags offer the best
mized for use with steel slabs. performance and range. There are other
4.1.3 Battery-assisted passive spacer tag issues that make them less attractive:
4.1.2 Plasmonic decoupler tag A passive RFID tag is battery-assisted if it 1. They are the highest cost of all three
includes a thin, flexible battery known as options.
The plasmonic decoupler tag is a variation a printed battery. The embedded battery
on the classic spacer in which an air layer does not generate a radio signal to be sent 2. Managing battery expiration dates is
(via a layer of foam or other material) is back to the reader. Rather it powers the troublesome, raising potentially tricky
introduced between the tagged object and RFID tags chip. logistics to guarantee a first in first out
the RFID tag. The insulation does not rely use of tags.
solely on the introduction of distance from Considering that a typical RFID chip con-
the metallic surface. It also complements sumes about 85 percent of the energy of 3. Battery life diminishes when exposed to
(or replaces) the tags antenna with a very the readers radio signal, the effect on read- harsh environmental conditions such as
thin layer of metal, which redirects the able range is comparable to active tags. wide temperature swings.
readers radio signal through tiny apertures However, adding a battery to power the
in such a way that energy from the reader RFID chip does not eliminate the need for a 4. Current battery-assisted passive tags do
is drawn to the slit. spacer for on-metal applications because not automatically fall back to purely pas-
the tag still requires the radio signal coming sive operation after the end of battery
When tags are positioned at the slit, there from the RFID-reader to backscatter its own life is reached, so that a tag with a dead
is more than sufficient energy to activate response. battery would become unreadable.
them. Using this method requires only thin
layers of metal, which means both tag The advantage of battery-assisted, passive
thickness and cost can be reduced while on-metal tags is that long read ranges of up 4.2 Resistance to change
increasing performance beyond typical on- to 45 meters can be achieved using stan-
metal solutions. Reading-distances of six to dard passive reader hardware. In addition, Many steel companies rely heavily on man-
eight meters are achievable. their performance is far more reliable even ual processes or barcode scanning to track
under challenging conditions. slabs and coils. In any organization, moving
3
A sticker with an embedded RFID-inlay is commonly
referred to as an RFID-label.
27
from a familiar way of working or a known for speed or mistype product numbers 4.4 Multiple tagging
technology to a new one, poses a challenge when a barcode is not readable, leaving
especially when the move also requires operations open to error. As a result of the large number of process-
process change. It is important to fully ing steps that steel slabs and coils undergo
understand the benefits that RFID technolo- Regarding total infrastructure and system in a typical supply chain, RFID tags will
gy can deliver and to gain top management integration costs for a barcoding solution inadvertently be removed or damaged.
support. versus a radio-frequency identification solu-
tion in todays marketplace, both cost Unlike other industries such as the retail
approximately the same. If equivalent industry, where an RFID tag remains often-
4.3 Established bar-coding infrastructure requirements are taken into consideration, times be attached to a product from the
some very sophisticated long range, auto- beginning of production to final delivery to
In some steel companies, barcode systems focusing barcode systems would be neces- the consumer, the steel-processing environ-
have been used for many years at least to sary to achieve the same level of automa- ment requires several RFID tags per coil as
identify coils at key positions in the supply tion that RFID solutions provide. it moves down the supply chain toward
chain. Since barcode systems are efficient final delivery.
and represent a substantial investment, it In terms of recurring costs, RFID tag prices
can be difficult to justify the switch to RFID. have already come down to levels where Attaching, detaching and reattaching new
Common questions about RFID technology the ROI surpasses the additional cost for RFID tags to slabs and coils at different
include What does RFID give me that bar- tags. steps in the supply chain generates addi-
code doesnt already do? and Isnt RFID tional costs which need to be evaluated in
much more expensive than barcode? Finally, barcode technology was introduced order to ensure it makes business sense.
to support the end of the supply chain Analysis conducted by Accenture and
These are valid questions, and barcode- because customers mandated it. The same ThyssenKrupp Steel has shown that in gen-
technology may be totally appropriate or is likely to happen with RFID, which is why eral the business case for RFID in slab and
better than RFID for some applications. Yet steel manufacturers should take the lead. coil logistics makes most sense when there
because RFID is non-intrusive and automat- For all the economic reasons outlined is a significant amount of transportation
ic, there are many situations along a supply throughout this document, introduction of required between production sites. Inter-
chain where RFID conveys significant RFID technology in the steel supply chain is site transport requires secure identification
advantage over barcoding. not a question of choice. Rather, it is a ques- and as has been shown in this document,
tion of time. Starting today, however, the effort required for workers to identify
Radio-frequency identification can alleviate allows steel companies to gain process effi- slabs and coils increases costs and reduces
the risk of human error for many tasks. ciencies earlier than competitors and to efficiency while introducing the risk of
People can diverge from established make this significant technology change in human error.
processes and may trade barcode scanning a phased approach.
4
Products implementing a failsafe mode that enables
the tags to operate passively are scheduled for release
this year.
28
4.5 Identifier attribution Storing additional information on the chip specific, supply chain data among trading
allows the original product identifier to be partners.
There are two approaches to using RFID derived from the EPC, which can be an
technology. In the first approach, the RFID advantage. However, this is still not recom-
tag stores a single unique identifier linked mended because in many cases, the system 4.7 Heterogeneous customer base
to more detailed information residing cannot be applied across the entire product
somewhere in a steel companys IT-system. range of a company since some product The heterogeneous and widespread cus-
This approach, commonly known as identifiers may be alphanumeric or simply tomer base that most steel companies ser-
license plate, is the most common way to too long. In other scenarios, the codes vice represents one of the biggest chal-
use RFID. uniqueness may be temporary because for lenges to introducing RFID for slab and coil
certain products with a short lifetime, serial logistics. While slab logistics are mostly
In the second approach, the RFID chip stores numbers are recycled. Radio frequency internal, coil logistics present the further
additional information about the tagged identification-based codes are meant to be complication of inter-company system com-
object. This approach is rarely used today unique for the long term. patibilities and integration.
when it comes to supply-chain manage-
ment . Because the license plate is suffi- As is common procedure for assigning IP Getting all customers to agree in advance to
cient for most applications and the second addresses today, companies implementing one system will likely be the single greatest
kind of tag costs more, most supply chain RFID must establish a standard method of challenge that steel companies face. Which
applications employ the first approach. assigning RFID identifiers supported by a is why it is highly important that the steel
Another benefit of the single identifier central IT service to automate identifier industry work together to proactively pro-
method is that product-related information attribution. pose a unified solution. Customers do not
is stored in a central database, making data want to build proprietary electronic data
management and security far more robust. interchange (EDI) systems because they
4.6 Data interchange end up being locked into one supplier. As a
Whichever approach is selected, every RFID result, they are far more likely to take the
tag must carry a globally unique identifier Radio-frequency identification technologies lead and mandate interchange systems that
in order to ensure that no product (or prod- improve supply chain visibility and opera- will fracture the IT effort of steel compa-
uct instance) can be confused with another. tions across organizations and contribute to nies. Both customers and steel companies
better cooperation among trading partners. benefit from a global standard.
The ability to assign globally unique product Using the EPC scheme opens the door to a
identifiers, however, is a major challenge growing market of standardized software Using the EPC as the basis for a standard,
for many large corporations. Solutions to products supporting RFID solutions and unified solution presents the most promis-
this problem are emerging and the most helping to reduce their cost. ing approach so far. Some major global car
promising of these is the Electronic Product manufacturers have recently stated their
Code or EPC. The introduction of RFID and the huge inter- support for the EPC.
est for this technology in the industry rep- This initiative should stimulate discussion,
The Electronic Product Code is a numbering resents a chance to review and standardize leading to the development of standardized
standard created by EPCglobal (see sec- many of the data interchange-related RFID solutions for slab and coil logistics
tion 6.2). Electronic product codes can be issues of the past. Radio-frequency identifi- within the steel industry.
generated using entirely new serial num- cation becomes most valuable in logistics
bers associated with corresponding items in operations involving different locations Any interested party may join the discus-
a database. Alternatively, companies can such as in intra- or inter-company ship- sion.
embed an existing product identifier so ments. The EPC allows companies to take
long as it is unique and its encoding fits into advantage of the EPCglobal Network,
the serial number portion of the EPC . meant to support easy exchange of item-
5
Note: Local data storage is more commonly used in
maintenance- and asset-management type scenarios.
6
EPCglobal may also specify new EPC-types that
address the requirements of a specific industry.
29
5_Cost considerations for RFID
Radio-frequency identification tags are mounted on metal? Will the tag need should drop as the volume of readers
the most frequently cited cost compo- to be concealed? Will the tag antenna produced continues to increase.
nent in RFID implementations. While be printed or metal coil? If the tag
tags represent a significant recurring requires a printed label, then a label
cost, they are not the whole story. Tags, printer and RFID writer may also need 5.3 Antennae and cabling
readers, antennae, servers, middle- to be purchased.
ware, operations and maintenance all Antennae are another essential compo-
contribute to the total cost of owner- All these factors will increase baseline nent of reader systems. Different
ship for an RFID system. Accurate cost tag costs and different tags will need to antennae will be required for different
estimates must include all system com- be implemented in different applica- applications and system architects will
ponents, tailored to a given application. tions. A blend of tag types should be choose from among shelf, mat, portal,
This section outlines each of these selected based on costs versus require- wand or directional antennae. These
components and offers recommenda- ments for a specific identification task. can range in cost from 25 to 500 euros
tions for methods to calculate overall and more, depending on application
costs in a business case for RFID. and base operating frequency.
5.2 Readers
Another factor is cabling. Although
5.1 Tags Readers power passive tags with ener- there are generally fewer limits on the
gy, receive the results from the tags distance between reader and con-
The most frequently mentioned cost and often handle the low-level, anti- troller, there are signal degradation
component when implementing RFID is collision algorithms that allow readers effects along the cables connecting
the cost for tags. There are as many tag to scan more than one tag at a time. readers and antennae. Purpose-built,
variants on the market as there are They are generally controlled via an high-grade RF cables can be expensive.
potential applications. Changes in form application programming interface Estimate up to 10 euros per linear
factor, packaging, memory capacity, (API) or network protocol provided by meter, keeping in mind distance limita-
read or read-write capability, active or the reader manufacturer. tions and local regulations as changing
passive configurations and range, all antenna cable lengths / quality also
impact cost. Reader costs vary as a function of read- impacts power output at the antenna.
er type, range, speed, robustness, net-
Conversion and commissioning costs work readiness and antenna capability. A single reader-antennae setup is com-
must also be factored in. Conversion The more capable a reader is the monly referred to as a readpoint. A
means the application of the tag to a faster, more robust and long range whole solution will require numerous
coil or slab. It also includes associating the higher the readers cost. For lower readpoints.
the unique identifier with the actual cost readers, a personal digital assis-
producta process referred to as com- tant (PDA) application with an SD card
missioning. Commissioning may mean reader may cost two hundred euros. For 5.4 Installation
programming an EPC onto the tag or high-speed conveyor or dock door
alternatively, reading a predefined applications reader may range from Physically mounting antennae, power
EPC value from the tag. three thousand up to ten thousand supplies and readers can be costly,
euros, and for forklift installations read- depending on the environment.
Product type will influence conversion ers may reach five thousand euros. Retrofitting existing sites or material
costs. For example, does the tag These ranges are based on todays handling equipment can add to costs as
require a standoff as is the case for tags commercially available equipment, and well.
30
Readers and antennae may need to be 5.5 Tuning server will be required. These
concealed, equipped with heating or servers run appropriate middleware to
cooling devices, and / or modified to Every physical environment will impact control the readers. Initial processing,
withstand environmental abuses that radio-frequency (RF) waves in a differ- event firing, buffering in case of net-
come with industrial locations. Power ent fashion. The RF field will need to be work failure and some diagnostics run
drops must also be provided to reader measured for dead spots and adjust- on the server. The controller need not
locations and these will likely be ments made. This cost is highly variable be a high end PC unless it must handle
charged at union rates. given the expertise needed, selection a large number of RFID-readers or be
of reader systems and the changeable hardened for factory or other industrial
As with power, a network connection nature of RF fields. applications. The cost of an RFID con-
may be required. Ethernet, WiFi or ser- troller can range from a couple of hun-
ial communication cabling / infrastruc- dred euros to twenty-five thousand
ture (RS232 or RS485) must also be 5.6 Controllers euros per unit.
installed, shielded or concealed,
depending on the method, application For every group of readers a server
and location. also called a controller or edge
31
5.7 Software platform be difficult to compare based on differ- factored into operations and mainte-
ent licensing models. Simple yet usable nance costs. A standard software
Commonly referred to as RFID middle- products can start from tens of thou- license and maintenance agreement
ware, a software platform controls the sands all the way to hundreds of thou- usually runs approximately 10 percent
RFID system, though modern RFID solu- sands of euros for large implementa- per year. This is a good estimate for
tion packages reach well beyond sim- tions. these systems. Finally, since so much
ple middleware functionality. In the physical infrastructure is involved,
simplest terms, the software translates equipment depreciation must be fac-
tag reads into business events. 5.8 Integration tored in as a cost item in a well-built
business case.
The software platform will most likely Integration will be a large factor in RFID
be a distributed system. At the very implementations regardless of the soft-
least, it will run on one or more servers ware platform chosen. Depending on 5.10 Process
aggregating data from the transaction- the number of legacy systems
al level and feeding it into enterprise involved, costs for integration will be The last pieces of the RFID puzzle are
resource planning (ERP) and ware- on the order of magnitude of the cost process and human elements. Many
house management systems (WMS). of readers and installation combined. existing processes, especially inter-
The software provides publish and sub- Some implementations will take a company processes, will need to be
scribe interfaces to facilitate integration company well beyond simple integra- redesigned. Current batch or paper-
with other applications. It also provides tion. Some systems may need to be based processes can be eliminated and
abstraction layers for connecting vari- replaced altogether if they are not reinvented entirely through workflow
ous types of readers along with read- capable of taking advantage of incre- re-engineering and tighter system inte-
point monitoring and diagnostics. mentally large volumes of real-time gration.
data provided by RFID technology.
Almost every RFID implementation will Radio-frequency identification tech-
be highly dependent on business rules, nologies place people in a better posi-
which is why many of todays RFID 5.9 Maintenance tion to act on information, because
solution packages not only come ready they can see into the entire supply
with basic device control functionality In addition to one-time capital infra- chain in real time. This means compa-
but also with a business rules engine, structure costs, the ongoing mainte- nies must increase peoples ability to
enterprise service bus and other com- nance and upkeep of RFID systems act on that information. Involving per-
ponents of modern service oriented should be factored into ROI calculations sonnel in the design of new processes
architectures (SOA) to facilitate rapid that are part of any business case. and training them to make the best use
integration of RFID into existing busi- Factors influencing maintenance of new technology should be added
ness processes. include hardware upgrades, failed or into overall implementation costs.
damaged equipment replacement, Change management is anticipated to
The cost for an RFID platform can vary ongoing firmware and middleware be a necessary discipline for fully
enormously depending on the extent upgrades and any software or licensing addressing RFID implementation at
and reach of the entire system and can fees. Ongoing tag purchases should be scale.
32
33
6_A vision for an integrated steel industry
Analysis conducted by Accenture and mandate RFID solutions for their From a high-level perspective several
ThyssenKrupp Steel has shown that suppliers. It is prudent for steel compa- technical standards are required to make
using RFID technology for slab and coil nies to support the creation of industry- this happen:
logistics indicates a large number of wide standards rather than being forced
benefits across all stages of a typical to individually address the inevitably 1. Global identification system: A
supply chain for steel industry players. varying requirements of each customer. commonly agreed RFID numbering
Most of these benefits are similar along scheme. This scheme must enable
the entire production and supply chain globally unique identifiers and at the
and are as applicable to steel makers as 6.1 Standards requirements same time allow a companys internal
they are to steel customers: numbering schemes to limit the
Slab and coil products proceed differ- complexity and effort with respect to
Increased materials handling speed ently through their lifecycle and this adapting existing IT-systems to
and throughput impacts the use of RFID. For slabs, RFID is accommodate the change.
typically limited to streamlining the
Optimized asset utilization and internal supply chain, while using RFID 2. Shared data: A look-up service
reduced need for capital investments for coils extends the benefits to end allowing the location of relevant
customers information sources with respect to a
Better visibility into internal and particular slab or coil.
external supply chains In either case, for RFID to deliver on its
promise, it is essential that all affected 3. Common access method: A common
Increased process security and worker internal and external systems can gain query method and standard interface
safety access to tracking information as well as for accessing product-related tracking
relevant product information. With this information once a source is deter-
The examples used in this document to type of data available, steel companies mined.
illustrate the potential business case are can gain greater insight into their supply
simulations and may not directly apply chains as well as automate identifica- 4. Security: A means of securing product
to all companies. They are meant to tion processes that traditionally have information so that only authorized
provide a guide to assist with performing been performed manually. parties or IT-systems can access the
a comparable analysis in order to build a appropriate information for which
solid business case so that you can deter- Finding technically viable ways to tag they have security clearance.
mine ROI for your company. slabs and coils is only half of the solution.
The other, more important part is to stan- Standardizing the way RFID information
Leaving aside the financial benefits of dardize the way in which the industry is made available within the steel
using RFID to streamline internal exchanges RFID information internally, industry is a requirement because
processes, it is likely that steel customers with trading partners and with product tracking often involves multiple
themselves will sooner or later begin to customers. trading partners. These companies are so
7
Note that product and tracking information may be
held across multiple IT-systems run by the different
supply-chain partners.
34
interwoven that different approaches undertaking. Fortunately, an existing and shared across a supply chain, with a
would be technically unmanageable. solution, generic enough to be adapted focus on RFID.
to a steel context, already exists. It is
Many steel companies already exchange called the EPCglobal Network. Five key components make up the
data either via standardized EDI EPCglobal Network:
messages or in a customer-specific
format. Attempting to replace those 6.2 Introducing the EPCglobal 1. Hardware devices such as RFID tags,
messaging platforms with new systems Network readers and printers
would be a significant barrier to the
introduction of RFID technology as a The EPCglobal Network is a collection 2. The Electronic Product Code (EPC)
result of costs, risks and internal resis- of standard concepts and technologies
tance associated with such a migration. that provides automatic, real-time iden- 3. RFID device management software /
tification and sharing of tracking infor- middleware to manage hardware
All that is necessary to realize the bene- mation about a product for use inside complexity, translate low-level RFID
fits of RFID-based slab and coil logistics and outside enterprises. EPCglobal is a data and integrate with company IT-
is a standard method for identifying non-for-profit organization that is a joint systems
products and for accessing the appro- venture between the Uniform Code
priate information source. Council (UCC) and the international Elec- 4. Discovery and Object Naming Services
tronic Article Numbering association (DS and ONS),
Attempting to build a global IT infra- (EAN International). EPCglobal
structure for the steel industry that currently is the most promising global 5. EPC Information Services (EPCIS)
implements the necessary technical initiative seeking to standardize the way maintaining product-related tracking
standard from scratch would be a huge product-related information is collected information
Figure 19 Conceptual architecture of the EPCglobal Network Service / System Interface / Protocol / Structure
Root ONS
Product Business (Verisign) Business Product
Information Applications Applications Information
Local ONS Local ONS
Event Authentication Event

EPCIS EPCIS
Information Authorization Query Information
Application Level Events Application Level Events
RFID Middleware RFID Middleware
Reader Protocol Reader Protocol
RFID RFID RFID RFID

Reader Reader Reader Reader
UHF C1 G2 Air Interface UHF C1 G2 Air Interface
Tag Data
Standard RFID RFID
Steel Manufacturer Steel Customer
35
These key components are described in The Filter Value indicates the level of A 96-bit EPC can be used for identifi-
more detail in the following. aggregation that the EPC represents cation of up to 10 million product cate-
(for example, an item, a box or a gories (object class) and over 274 billion
pallet) unique instances (serial number) within
6.2.1 Electronic Product Code (EPC) each of those categories.
The Partition designates the bit-posi-
The Electronic Product Code (EPC) is a tion within the EPC at which the This system provides more than enough
generic license-plate type identifier EPC Manager partition ends and the room to uniquely identify any slab and
that uniquely identifies any item in a Object Class partition begins (while coil produced, even over a very long
supply chain. It is a simple, compact the total length of both partitions period of time.
scheme that can generate an extremely added together is constant, their size
large number of unique identifiers. The may vary depending on the Partition
scheme offers a low barrier to entry value) 6.2.2 Discovery and Object Naming
since a company can embed existing Services (DS and ONS)
serial numbers into the corresponding The EPC Manager represents a
partition of the EPC. Even if this specific company or domain (for Discovery Services (DS) are a suite of
approach is not feasible given company example, Perfect Steel) services that provide the link from prod-
standards, a single database table asso- ucts with RFID tags to product-related
ciating existing product IDs with EPC The Object Class stands for the type of tracking information residing on
numbers would work to resolve the product being tagged (for example, a different IT-systems.
problem. slab or coil)
The Object Naming Service (ONS) is a
Header Filter Partition EPC Manager Object Class Serial Number key part of the DS capability. It is a public
length 8 bits 3 bits 3 bits 20-40 bits 24-4 bits 38 bits
service that can be used to find tracking
data about a product from a registered
value 0011 0000 001 5 4000001 001659 274877906943
(decimal) (decimal) (decimal) (decimal) EPCIS server.
Any EPC is made of six different The Serial Number corresponds to the The ONS is very similar to DNS that used
sections (see Figure 20), each of which actual item number (for example, the today to look up the associated host for
may vary in size, making the numbering internal serial number of the slab or a particular Internet address or web site.
scheme flexible and highly scalable: coil) With respect to the EPCglobal Network,
ONS is an extremely rapid and reliable
The Header denotes the version of the Depending on the version indicated by global database lookup service available
EPC used, allowing for different EPC- the header, EPCs may vary in length, to any product manufacturer.
types and facilitating future extensi- with 96 bits being the most common to
bility of the scheme date.
8
The term license plate is referring to a unique identi-
fier being used as a key in order to obtain product-
related information from an IT-system / database, as
opposed to embedding the information about the
product together with the identifier (e.g. as part of a
barcode or in an RFID-tags user memory).
9
Discovery Services do not yet exist. They are in the
process of being defined by EPCglobal.
36
6.2.3 EPC Information Services (EPCIS) Warehouse Management Systems first operational implementations of the
(WMS), enterprise resource planning EPCglobal Network in pilots of
Instances of EPCIS are essentially gate- systems (ERP), and homegrown national, international, and global scale.
ways to information about products systems.
tagged with EPCs. Multiple EPCIS Other companies, including some of the
instances can contain different parts of Access to the EPCIS instance(s) of a steel industrys major customers, are
information corresponding to a single company can be shared with supply joining the EPCglobal initiative to
EPC-tagged product. This means chain partners such as suppliers, logistics benefit from its advantages and to
tracking information for any EPC- companies and customers, to provide ensure they influence the way that the
tagged product is distributed by nature. the enhanced collaboration and visibility service evolves.
In the future, data from several EPCIS that is the benefit and very promise of
servers will be automatically extracted RFID-technology. Although the EPCglobal Network is not
and merged to provide a global view for fully built, it is poised to take off in the
a particular product. short term because of widespread
6.3 The suggested standardization support such as the growing number of
EPCIS today is all about sharing tracking approach EPCIS implementations that are being
information. In future, it could easily be launched by many well-established soft-
extended to act as a faade to As of this writing, many companies ware companies.
different business back-ends, such as across different industries are testing
37
To define and build what is needed to pating members will retain exclusive Sign a mutual Non Disclosure Agree-
address the specifics of the steel access to the specifications for a spec- ment (NDA) that protects confidential
industry, in addition to the provisions of ified time following ratification, information exchanged among parties
EPC technology, and to make this potentially giving them a competitive in the context of this standardization
initiative a success, we have set a advantage. Only active members will effort.
number of standardization ground rules. be allowed to participate in, and learn
firsthand, from pilot implementations. Share the costs of common projects
with the others should a company opt
6.3.1 Ground rules for standardization to participate in those projects.
6.4 How steel companies can
The following are the key ground rules participate In return for participation, steel compa-
that ThyssenKrupp Steel and Accenture nies will receive:
believe will contribute to the joint By participating in this global initiative,
success and proactive engagement of steel companies will gain many benefits. Access to exclusive information such
steel industry players that aim to stan- as specifications, test results, pilot
dardize RFID technology for the benefit The early introduction of RFID tech- documentation, management reports
of their own companies, their customers nology will enable companies to and the like.
and the industry as a whole: realize many of the potential cost
reductions mentioned in this docu- The right to vote on the ratification of
Scope: The scope of this initiative is to ment ahead of competitors, making proposed standards and other deci-
develop standards for RFID-based slab processes more transparent, visible sions voted by the interest group, to
and coil logistics for the steel industry and secure. ensure their companys interests are
and its customers. In particular this taken into account.
will include the specification of phys- Implementing working solutions for
ical aspects (for example, the types of RFID-based slab and coil identification, The right to propose new standardiza-
RFID tags to be used, their application aligned with other key-providers in tion initiatives around the use of RFID
and positioning, and any imprinted the steel industry, will not only allow technology in the steel industry.
human-readable information) as well steel companies to streamline internal
as the logical aspects of how RFID data processes but also enable provision of The potential to gain firsthand experi-
is to be exchanged). better services to customers, ulti- ence with RFID technology through
mately increasing customer loyalty or participation in pilots with other
Inclusiveness: Admission to join and even helping to secure new interest group members.
participate in the creation of the stan- customers.
dards is open to all steel manufac- In order to obtain further information
turers, steel customers, relevant Finally, the hands-on knowledge steel about this initiative, please contact
industry bodies, standardization orga- companies gain by introducing RFID either of the following persons:
nizations and RFID vendors. solutions for slabs and coils will help in
the evaluation of this technology in
Alignment with EPCglobal: Because other business areas. Loc FEINBIER (ThyssenKrupp Steel)
EPCglobal represents the most
advanced RFID standards and the only As with all such initiatives, standards +49 (203) 52 47906
off-the-shelf infrastructure option for development requires fiscal and human +49 (173) 7000 90 2
RFID to date, it would be wasteful to resources, and involves the exchange of loic.feinbier@thyssenkrupp.com
develop something from scratch, potentially confidential information.
seeking to address many of the same When signing up for participation, Lars SCHITTKO (Accenture)
objectives. This initiative will there- companies will therefore be asked to:
fore tightly align with EPCglobal and +49 (6173) 94 66691
its concepts. Assign a dedicated representative as +49 (175) 57 66691
single point of contact. This person will lars.schittko@accenture.com
Freedom of use: Any specifications be expected to participate in regular
resulting from this initiative will be standardization meetings (in person,
made available to anybody free of via phone or video conference) and in 10
As this initiative grows, it may at some time become
an option to formally establish an EPCglobal Industry
charge or for a share of the develop- the development of specifications and Action Group (IAG) for the Steel industry.
ment cost but at no profit. Partici- other relevant documentation. 11
Duration to be decided case by case.
38
39
7_Authors
Loc Feinbier Lars Schittko Guillaume Gallais

Head of Competence Center RFID Manager Supply Chain Management System Integration & RFID Technology
(ThyssenKrupp Steel) and Metals RFID Lead (Accenture) Lead EALA (Accenture)
Loc Feinbier is a senior manager at Lars Schittko is a supply chain manager Guillaume Gallais is a senior manager
ThyssenKrupp Steel and heading the with Accentures Metals Practice in ASG with Accenture's Mobile Solutions group
competence center for RFID technology. (Austria, Switzerland and Germany) and which he is leading for France and
Mr. Feinbier has 7 years of experience currently leading Accentures global BeNeLux. His background is in manag-
with RFID-technology and worked for RFID for Metals initiative. ing the delivery of large-scale interna-
many companies across different indus- tional IT projects. Mr. Gallais has 5 years
tries to define, pilot and implement of RFID experience and is also heading
their RFID strategy. Accentures RFID specialty
40
8_Contributors
Dr. Wolfgang Rasim Gerhard Thiel Yasemin Yaslar

Director of Corporate Planning / Head of Information Systems for RFID-Specialist
Systems Order Management Transport Logistics / Quality Process Competence Center RFID (ThyssenKrupp
(ThyssenKrupp Steel) (ThyssenKrupp Steel) Steel)
Dr. Wolfgang Rasim is a Senior Vice Gerhard Thiel is a senior manager and Yasemin Yaslar is an RFID-Specialist
President and Director of the Corporate the head of the Transport Logistics / working for the Competence Center
Planning / Systems Order Management Quality Process information systems RFID at ThyssenKrupp Steel. Mrs Yaslars
division at ThyssenKrupp Steel. Dr. department at ThyssenKrupp Steel. Mr. main focus currently lies on the process
Rasim has more than 30 years of expe- Thiel has 35 years of experience in the definition and solution implementation
rience in the Steel industry, having lead Steel industry. Among other IT projects, aspects of ThyssenKrupp Steels RFID-
several production functions such as the he has been leading ThyssenKrupp based slab-identification solution.
melting shop & continuous casting. Dr. Steel's RFID-pilot around slab-logistics.
Rasim is also the initiator of
ThyssenKrupp Steels RFID activities.
Rik Vervisch Javier Cortina Peter Berggren

Managing Partner Supply Chain Managing Partner Metals Industry EMEA Partner Resources /
Management (Accenture) (Accenture) Metals Industry (Accenture)
Rik Vervisch is a senior executive with Javier Cortina is a senior executive with Peter Berggren is a senior executive
Accenture and leading Accentures Accenture and responsible for with Accenture in its Natural Resources
Natural Resources Supply Chain Practice Accentures SAP for Metals Solution. Mr. Supply Chain Practice, with a particular
globally. Cortina leads Accentures Metals Center focus on the Energy and Metals indus-
of Excellence and is the overall Metals tries.
Industry Lead for EMEA.
41
9_Sources
1 The EPCglobal Architecture Frame- and across enterprises. Ultimately, this 4 Die Zukunft spricht EPC
work sharing is aimed at enabling partici-
pants in the EPCglobal Network to Add-on flyer to German RFID im Blick
Defines and describes the EPCglobal gain a shared view of the disposition of journals December 07 edition, regarding
Architecture Framework, a collection of EPC-bearing objects within a relevant the uptake of EPC in the automotive
hardware, software, and data stan- business context. industry, including a special report on the
dards, together with core services with www.epcglobalinc.org membership of Daimler AG.
the common goal of enhancing busi- www.gs1-germany.de
ness flows and computer applications
through the use of Electronic Product 3 The EPC Tag Data Standards (TDS)
Codes (EPCs). Specification 5 RFID im Handel
www.epcglobalinc.org
Defines the portion of EPC tag data Diploma thesis on the application and a
that is standardized, including how that project methodology for RFID in the
2 The EPC Information Services data is encoded on the EPC tag itself retail sector.
(EPCIS) Specification (i.e. the EPC Tag Encodings), as well as ISBN: 978-3-8364-4505-4
how it is encoded for use in the infor-
Defines the EPC Information Services mation systems layers of the EPC
(EPCIS) with the goal to enable Systems Network (i.e. the EPC URI or
disparate applications to leverage Elec- Uniform Resource Identifier Encodings).
tronic Product Code (EPC) data via www.epcglobalinc.org
EPC-related data sharing, both within
42
43
About ThyssenKrupp Steel About Accenture
ThyssenKrupp Steel AG, headquartered Accenture is a global management

in Duisburg, is the holding company consulting, technology services and
and largest single operating company outsourcing company. Combining
in the Steel segment of the unparalleled experience, comprehen-
ThyssenKrupp Group. The segment sive capabilities across all industries
produces around 14.5 million tons of and business functions, and extensive
crude steel and has sales of more research on the worlds most success-
than 13 billion euros. Including sub- ful companies, Accenture collaborates
sidiaries in the processing, finishing with clients to help them become
and steel service sectors, it employs high-performance businesses and
almost 40.000 people. Companies governments. With more than
which belong to the Steel segment 175,000 people in 49 countries, the
include Rasselstein GmbH, operators company generated net revenues
of the worlds largest tinplate site in of 19.7 billion US dollars for the
Andernach, and the Duisburg-based fiscal year ended August 31, 2007.
ThyssenKrupp Tailored Blanks GmbH, Accentures homepage is
a technology leader in laser-welded www.accenture.com.
blanks for the automotive industry.
ThyssenKrupp Steels homepage is
www.thyssenkrupp-steel.com.
44

Benefits of RFID in Slab and Coil Logistics

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Benefits of RFID in Slab and Coil Logistics

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ThyssenKrupp

The Benefits of RFID for Slab-

By Loc Feinbier, Lars Schittko and Guillaume Gallais

Preface 4 4.1.3 Battery-assisted passive spacer tag 27

Figure 1 Benefits of using RFID in slab and coil logistics

Maximized Usage of Handling Equipment

Asset Utilization Maximized Usage of Transport Vehicles

Reduction of Safety Stocks

Improved Stock Management

Improved Supply Chain Visibility

Improved Worker Safety

Faster Receiving Process

Internal Material FlowCold, Material Flow to customer

Steel Tandem Temper

Casting Slab HRM HRM CRM CRM

Slab Production Hot Milling Cold Milling

Surface Coating / Temper

Finishing Finishing Finishing Final

Finishing Packaging and Dispatch

Figure 3 Estimated potential and effort of

Packaging and Shipping

Perfect Steel processes 352 thousand General Assumptions Slabs

From these slabs, Perfect Steel pro- General Assumptions Coils

Figure 5 General assumptions coils

Figure 6 General assumptions assets

With a supply chain similar to the

Location Type Equipped Inbound Outbound RFID RFID

Figure 7 Perfect Steels RFID hardware needs

We have incorporated average deploy- Average Deployment Costs

Figure 10 Perfect Steels annual need for RFID-tags at full rollout

We include percentages for annual General Assumptions Financial Factors

Figure 13 Asset use scenario business case

This scenario describes handling Specific Assumptions Operational Efficiency Scenario

Total Annual Savings 992.200 1.041.810 1.093.901 1.148.596 1.206.025

Figure 15 Operational efficiency scenario business case

Figure 16 Specific assumptions for the Safety & Security scenario

Figure 17 Safety & Security scenario business case

Figure 18 Combined business case

Local ONS Local ONS

Event Authentication Event

Application Level Events Application Level Events

RFID Middleware RFID Middleware

Reader Protocol Reader Protocol

RFID RFID RFID RFID

UHF C1 G2 Air Interface UHF C1 G2 Air Interface

Steel Manufacturer Steel Customer

Loc Feinbier Lars Schittko Guillaume Gallais

Dr. Wolfgang Rasim Gerhard Thiel Yasemin Yaslar

Rik Vervisch Javier Cortina Peter Berggren

ThyssenKrupp Steel AG, headquartered Accenture is a global management

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