Do You Know Where Your Inventories Are?

March 12, 2013
It’s 2013, and it’s more important than ever to keep track of where your materials came from and where your work-in-process is going.

Knowing day and night where your materials are and what they are doing is part and parcel of profitable manufacturing these days. So, world-class manufacturers like Dow Kokam of Midland, Mich. have been continuing to invest in the latest technologies for tracking their inventories throughout their supply chains.

For example, the manufacturer of cells for automotive batteries recently put a Siemens Simatic IT manufacturing execution system (MES) at the heart of its inventory control. The move took advantage of libraries of best practices developed by the automation vendor over the years, including those for streamlining integration with other software. Through the communications channels established by these tools, the MES accesses data in the company’s enterprise resource planning (ERP) system and other software.

“The ERP tracks the raw materials on hand, and the MES traces everything [produced], back to the raw materials,” explains Chris Wunderly, senior software engineer at Hyla Soft Inc. (, the Chicago-based systems integrator that installed the MES-based tracking system. “ERP systems usually have a very broad overview of orders and inventories—how much material is in the plant and how much product is made. They, however, don’t necessarily have a detailed genealogy tracing a single lot back to all of its inputs.” That’s the job of the MES.

Dow Kokam’s new MES tracks all raw materials through the manufacturing process from the time that they arrive onsite, says SungSoo Oh, the battery maker’s process automation manager. The software also verifies that the operators are staging the correct materials at the automated machinery. As operators load the material into queues, they scan the barcodes on the containers with handheld devices so the software can perform the necessary checks. If an operator mistakenly loads the wrong container, the machine will refuse to run.

The MES uses quality-control data in a similar way through a link to a laboratory information management system (LIMS). In the course of producing lithium-ion batteries, for example, the process calls for collecting samples at various points of production and sending them to a laboratory to check key performance indicators (KPIs). As in the staging of materials, the operators and technicians use barcodes and handheld devices to keep track of each sample. Once the test is completed, the LIMS returns the results to the MES, which links them to the specific batch and releases that batch to the next operation only if the KPIs are within the specified control limits.

Meanwhile, another piece of software, an historian, collects and archives KPIs for production equipment at regular intervals. Whereas the genealogy generated by the MES traces the materials through the process, the historian tracks the status of the equipment at periodic intervals. “The historian contains contextualized information about the equipment,” says Wunderly at Hyla Soft. “Using the time stamp for when a lot was created, you can use the data in the historian for analyses when problems arise.”

Why track with MES?
The strategy of making the MES the hub of the inventory tracking system has at least two important benefits for Dow Kokam, according to SungSoo Oh. First, if quality-control checks uncover a developing problem, the data help the engineering staff to conduct a root-cause investigation and pinpoint the problem. Second, if a problem serious enough to trigger a recall were to slip through undetected, the genealogy would help focus the effort on the affected products only, thereby expediting the recall and containing its cost.

The company already knows the entire genealogy of each battery cell—from the original lots of chemicals and other raw materials to the machines that processed them and the values of the KPIs during production. “So just reading the barcode tells you not only what went into a particular cell, but also all other cells made from the same ingredients or on the same equipment,” observes Wunderly at Hyla Soft. “Once you figure out what the problem is, you can find out exactly which products were affected.”

Getting these results, however, requires a thorough understanding of the process and careful planning to skirt the technical challenges. “Although plants are becoming increasingly more automated, sometimes older equipment doesn’t have a way to report key information, such as quantities or type of material,” notes Wunderly. Machines can also give inaccurate readings for reasons as simple as the sensors or a measurement technique itself is inadequate for the task at hand.

By tending to such details, Stora Enso was able to rectify the problem when the Helsinki-based paper company received a complaint from a food processor about some container board produced at its Imatra Mill in Finland. Because governmental regulations and industry standards require being able to trace the geology of all materials that come into contact with food, the mill had contracted ABB Ltd. to enhance its ability to do so.

The Zurich-based automation vendor installed an MES that traces the genealogy of each roll or pallet of sheets from its constituent pulps and other chemicals, as well as that of the wrapping materials. Besides tracking which machines and reels were used in production, the system also links each lot to the relevant quality-control tests and any notations logged during production.

As a result, customer service was able to troubleshoot and resolve the complaint in hours instead of taking several days. “More importantly, it allowed them to determine if any other customers were affected and to be proactive in resolving those problems before they became problems,” says Marc Leroux, marketing manager for collaborative production management at ABB Inc. ( in Wickliffe, Ohio.

Exploiting better workflows
The success that that users like Stora Enso and Dow Kokum have had in tracking inventories with an MES is due in part to advances in workflow management. “The ease of creating workflows today means that it has become much easier to tailor systems to organizational needs than to modify operations to fit a specific system,” explains Leroux.

“It wasn’t so long ago,” he adds, “that the only companies successful in implementing an ERP system were those that modified their operations to cater to the system.” These users paid the high implementation costs that people still talk about. Even today, ERP systems typically will not conform to a particular manufacturing operation as easily as will an MES or other software for managing manufacturing operations, according to Leroux.

Despite the difficulties that existed in the past and still exist in some industries, ERP systems can be quite useful in tracking inventories and tracing lots over a long supply chain. “Most ERP systems have modules designed to manage this data,” notes Wolfgang Kratzenberg, marketing manager for industrial identification at Balluff Inc. ( in Florence, Ky.

>> Barcodes and RFID: On the Same Team. Click here to read how these two technologies work together more than they compete.

Some companies, however, are finding that they must jump a different kind of hurdle before they can use ERP systems to trace material through their entire supply chains: The capability often exists in loosely connected islands of automation. “Today, the degree to which material is tracked depends on the industry and organizational maturity,” says Leroux at ABB.

“Also, information on raw material usage is accumulated in the ERP system based on ‘standard’ usage and not on actual consumption,” he continues. “In many cases, material usage may be based on daily inventory updates made by production personnel directly into the ERP system on a daily or even weekly basis. So, despite the emphasis on connecting ERP systems with manufacturing that has been made over the past decade, we are still in the early days of implementing these solutions.”

Even so, Leroux reports a growing interest in developing them. In one case, a manufacturer asked his group at ABB for help in getting its ERP system to transmit production orders to its automation system, as well as in getting production to respond with appropriate messages as it finished them. “When the engineers saw that it was fairly straightforward to integrate manufacturing with ERP, they started to ask what other information could be exchanged,” Leroux recalls.

Their inquiries led to integrating raw material usage in real-time with the ERP system—a  project that resulted in lower inventory costs. The ensuing discussion also led to better reporting of the status of orders in manufacturing. Armed with this knowledge, the user can now arrange for transportation when it actually needs it, and reduce its demurrage costs significantly.

A tale of two methods
These ERP systems, MESs, and other smaller scale systems fall into a category that Kratzenberg at Balluff calls the centralized method for managing inventory data. As the name implies, software in this category stores data in a central location so a number of people can access them from a variety of locations. It typically works with barcode technology and read-only radio-frequency identification (RFID) to link individual items to the central system.

“Advances, however, in mobile device technology have allowed processing and storage to occur locally, or decentralized on the individual handheld units,” says Kratzenberg. “It is still more common, though, to transfer the data from a handheld to a centralized location at a later time.”

Hence, the more common approach to this second, decentralized method is to store the data on a read-write RFID tag. Each station reads and writes the pertinent information to the tag as the work-in-process advances through production. “In a non-networked environment, a decentralized data system is ideal for sharing traceability information by interconnecting islands of automation,” says Kratzenberg.

At Autoliv Inc., this method enforces quality standards for the safety devices that the Stockholm-based company produces for the automotive industry. Because its products can mean the difference between life and death for drivers around the world, its manufacturing operations attach RFID tags to work-in-process both to prevent mistakes and to demonstrate that its products meet specifications.

As a workpiece undergoes in-process inspections to verify the efficacy of individual manufacturing operations, the system writes the appropriate results directly on the tag. As long as the workpiece passes each inspection, the subsequent operation will accept it and go about performing its task as usual. If, however, the workpiece fails an inspection, subsequent operations will refuse to work on it. The workpiece must be removed for rework or disposal.

“Every operation is tracked along the way and documented on the tag, providing a detailed history,” says Kratzenberg. This data provides the necessary documentation that the product was produced to specification.

Some manufacturers are also putting tags on their production machinery and tools, both as set-up aids and as usage and maintenance logs. Consider what they can do for a stamping press. “Not only can an RFID tag identify the correct die for the job, but it also can hold the operating parameters for the die, preventing human input errors,” says Kratzenberg. Tags on the tool can also record the number of hits and let technicians know when it is time to pull it for preventive maintenance. A repair technician can sign off on service performed directly on the tag, and management can identify who performed repairs or service and determine when it was done.

Although the centralized and decentralized methods are different, they are not mutually exclusive of one another. Manufacturing organizations often deploy them both—often to their great advantage—to let them always know where their inventories are.

About the Author

James R. Koelsch, contributing writer | Contributing Editor

Since Jim Koelsch graduated from college with a bachelor’s degree in chemical engineering, he has spent more than 35 years reporting on various kinds of manufacturing technology. His publishing experience includes stints as a staff editor on Production Engineering (later called Automation) at Penton Publishing and as editor of Manufacturing Engineering at the Society of Manufacturing Engineers. After moving to freelance writing in 1997, Jim has contributed to many other media sites, foremost among them has been Automation World, which has been benefiting from his insights since 2004.

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