Indirect benefits often contribute more to the bottom line than direct benefits. Improvements in operations, control, customer service and satisfaction are sometimes hard to quantity. However, companies that ignore these areas may not be around in the near future to regret their oversight. If you want to see Direct Benefits click the link.

Inventory Savings With AIDC

Most logistics people are familiar with the acronyms LIFO (last in, first out) and FIFO (first in, first out). They're also familiar with the terms FISH (first in, still here), ASWO (aw, shoot, we're out), and JIC (just in case).

In today's "lean and mean" environment, having too much or too little of critical materials spells trouble. And with increased demands by customers for JIT (Just in Time) deliveries, many managers keep "safety" inventory Just in Case (JIC). That's a tremendous waste of time, space, and money. Today, JIT is recognized as one piece in an overall process flow strategy that saves all parties money, if it's properly implemented through the distribution channel.

The same is true of using bar code labels for receiving. Incoming shipments with bar code identification (particularly when the shipment has been preceded by an EDI ship notification), can be quickly routed to inventory or production -- or even cross-docked and shipped to a customer -- as required.

But even assuming your trading partners are still dealing with an ASAP (as soon as possible) mentality, that doesn't mean you can't save money.

Some warehouse managers will claim to know where everything is but, when pressed, will also admit that it's just a general idea -- a sort of "over there somewhere" idea. That means there there's probably a lot of material "over there" that hasn't been, and won't be, used; material that's misidentified or "lost;" material that's not where it's supposed to be. Accurate inventories mean knowing exactly what you have, how much of it you have, and where it is (specifically). It also means you can sell, pick, pack, and ship products (or pull for use) without a lot of fuss.

One specialty wire manufacturer instituted a bar code labeling program simply because it didn't know what it had or where it was. Shipping errors were common because of misidentified products. Worse, material sometimes have to be produced on a "rush" basis to meet a customer order -- even though the material was already in inventory. It's just that nobody knew it.

By increasing the accuracy of your inventory, you can safely reduce the amount of material you have in inventory -- and better utilize what you do have.

Cycle Counting Savings with AIDC

Accurate inventories usually start with someone counting things. Quarterly inventories usually mean shutting down the facility for up to a week while droves of people with clipboards roam through the facility, counting, checking, recounting, rechecking. Then, of course, there's the key entry time....

An AIDC system typically reduced this quarterly agony to a few people taking a few days -- without shutting down the facility -- and results in higher accuracy. Typically implemented with bar code identification of items and locations (and sometimes quantities), scanning items reduces time and increases accuracy. It also means that key entry is eliminated entirely. And because each location's count can be time-stamped (or the inventory can be taken in real-time), the location can be picked immediately after it's been counted without affecting accuracy.

One company that implemented a bar code inventory system was surprised to find that the quarterly inventory went from being a "punishment" for employees to being "easy" (desirable) work.

Real savings can come if a well-designed bar code system is implemented (and used) to track every pick, putaway, and move. Who says so? Some of the Big 6 accounting firms, that's who. They've eliminated requirements for quarterly counts for a number of companies that have instituted sound bar-code driven perpetual inventories. Those are savings you can take to the bank.

Savings on wages and down-time typically pay off a bar code inventory system in about 10 months. That's not including the materials found during system implementation or the savings from reduced inventories. We tend not to include those savings because, in some cases, the system could be paid off a year before it's implemented. And that looks funny.

Improved Quality with AIDC

There are two ways to put quality into a product (or service): build it in or inspect it in. AIDC can help in both cases.

First, vision systems can automatically check dimensions of machined parts, closure of packaging, labeling, and contents.

Radio frequency identification (RFID), bar code, or vision systems can identify and track products through QC inspections and even carry information from QC to rework so that there's no doubt about what needs to be done. These systems can then be used to record corrective action so that subsequent steps can be taken with assurance that an "in spec" item is being worked on.

RFID tags can automatically identify cutting tools and track their useful life -- eliminating incorrect tool placement and greatly reducing the liklihood of broken tools damaging the part.

Inspectors can use voice recognition to identify and enter defects into a computer record -- without interrupting the inspection.

Second, the simple act of tracking a product through manufacture or assembly can provide a wealth of data. This is particularly true in flexible or parallel manufacturing.

Knowing a product's "history" can help track quality problems back to the source quickly. In-plant problems can usually be rectified immediately. Outsourced parts that exhibit problems can be traced to a lot or batch and pulled from production (or finished products with that component held for further inspection).

Collecting this "historical" data can help improve the entire process -- and lead to better quality.

Productivity Increases With AIDC

The most obvious increases in productivity comes when your skilled employees spend their time working and not writing things down. By freeing them from manual data collection tasks, they can concentrate on doing their real jobs. In some cases, such as final inspection, having an AIDC system can allow them to really concentrate on their jobs. Voice recognition systems, for example, frees an employees eyes and hands for critical tasks by removing the pencil and clipboard or even bar code scanner.

Productivity increases come in less obvious ways as well. For example, by linking lift truck operators to the central database via mobile data collection terminals and radio frequency data collection, picking and putaway operations can be done much more efficiently. And if pick/putaway are tied to a good bar code inventory system, then improved inventory accuracy means that you won't necessarily have to waste time moving and consolidating items just to keep them conveniently located. And if you have less inventory because of increased accuracy, there's less to handle and store.

Tool room or file folder checkout with AIDC systems also means employees spend less time waiting for a tool or file -- and virtually no "lost" items to chase after or replace.

Improved quality can also lead to increased productivity: less time in rework, less time producing excess product just to keep rework full, and less time dealing with customer complaints, reshipments, and restocking.

Productivity increases can also come by automating tasks that had to be done manually before. Parts inspection, for example, can be done quickly, accurately, and automatically with machine vision systems -- 100% inspection in a fraction of the time required even for statistical sampling.

But increases in productivity also come from improved management through improved data collection. With good information, accurate and timely information, everyone can make better decisions. And that, without doubt, leads to increased productivity.

AIDC Expands Your Data Collection Options

If you take a minute right now to think about it, you'll probably come up with at least two areas where you'd love to be able to collect data -- but couldn't because of time, cost, or feasibility constraints.

Now, think of whether one of the AIDC technologies could overcome those limitations. Applications such as 100% inspection, up-to-the-minute production data, 99.9% accurate inventories, 100% verification of shipments...I could go on, but I won't.

The fact is, many "blue sky" data collection projects are well within reach with the right AIDC technology. AIDC often allows you to collect data as an "artifact" of other activities. Employee time and attendance data, for example, can be used for payroll, personnel records, and production planning. Looking at production data in light of personnel absences can tell you who the key employees are -- without monitoring them directly.

Given a quick and accurate way to collect daily business data, there may be no end to the ways you can (ethically) use it.

So, maybe you should take a minute (off-line) and think about how AIDC could help you realize some of your "blue sky" projects.

Improved Responsiveness with AIDC

Knowing what you have (and where it is), knowing what's in production and when to expect it, knowing that orders will be shipped quickly and correctly -- all these factors lead to increased responsiveness. And these are just internal factors.

Linking to customers and suppliers through AIDC and EDI systems increases the speed and accuracy with which data is exchanged -- and it increases you ability to respond to customers needs. And with the increased number of Web-based tools available for instant information, AIDC provides the perfect engine to feed the data hunger of Web-based communications.

The best example of this is the retail/textile/apparel industries where, with cooperation from all sectors, lead times were cut from months to weeks. The results were reduced waste and increased profits for all parties.

A single transaction with a customer begins with an order and ends with a paid invoice. Reducing the time between those two points means increased profits. Reducing that time means increasing responsiveness. Increasing responsiveness depends on knowledge. And that knowledge can only come from improved data collection.

Simplified ISO 9000 Documentation With AIDC

Whether you're a big fan of ISO 9000 or not, it's a requirement for some customers. Developing all the procedures and job descriptions is a major task. But developing ways to document adherence to those procedures may be equally daunting.

AIDC technologies can help you document compliance.

From manufacturing and QC to order taking and customer service, AIDC technologies can record procedures, problems, and actions quickly and accurately. Because there are a limited number of choices (those that you decide are valid), there's no question of one employee writing down "machined part" and another writing down "turned shaft." There's a menu choice on a touch screen, a bar code "menu," or in a voice recognition "vocabulary." No questions, no ambiguity.

And if you really want to use ISO 9000 as a tool to improve quality, this data is a gold mine. Because it can be available real-time, is accurate, and is consistent, you can make sound day-to-day decisions based on problems and actions. No questions, no ambiguity.

It's true that "A little knowledge is a dangerous thing." It's equally true that "Good data is priceless."