the impact of networked rfid on product remanufacturing · the impact of networked rfid on product...

The Impact of Networked RFIDon Product Remanufacturing

Anand [email protected]

Doctoral Student (Final Year)Cambridge Auto-ID Labs

United Kingdom

10 October 2005

Overview

• Who we are• What we do• Research focus and aim• Product remanufacturing: Current scenario• Product Information requirements for product remanufacturing• Product remanufacturing: Networked RFID scenario• Quantifying benefits of networked RFID in remanufacturing• Findings• Concluding remarks

Who we Are

MIT USCambridge UK

St. GallenSwitzerland

Fudan China Keio Japan

ICU South Korea

Adelaide Australia

A global network of academic research laboratories in the field of RFID

What we do

Business Processes and Applicationse.g. Retailing, Product end-of-life management, Anti-counterfeiting

Lead Labs: Cambridge, MIT, Keio, St. Gallen

Software and NetworkDevelop future architecture of EPC Network

Lead Labs: Cambridge, MIT and Keio

HardwareDevelopment of higher tags and enhancement of read rates

Lead Labs: MIT and Keio

To investigate practical and economic feasibility of networked RFIDsystems in product remanufacturing.

Manufacturing

Product Recovery Management

Research Focus and Aim

Retailing Product End-of-life

What is the availability and requirements of product returns information during product remanufacturing?

How can we provide requisite product returns information for improving product remanufacturing process?

How can we quantify the impact of ready availability of product returns information on product remanufacturing?

Research Questions

Collection Centre

Product Returns

ProductDemand

Visual Inspection

Recycle

Product Yield

Disassembly

Cleaning andTesting

Recycle

ComponentYield

Product Assembly And Testing

External supplier

Remanufacturing Facility

Product Remanufacturing

Collection Centre Visual

Inspection

Product Returns

ProductDemand

Recycle

Product Yield

Disassembly

Cleaning andTesting

Recycle

ComponentYield


External supplier


Product Remanufacturing Product Information

Product TypeQuantityPhysical conditionNumber of copies

Product Information

Product TypeQuantityAssembly BOM

Product Information

Product TypeQuantityCurrent BOMPhysical conditionNumber of copiesEstimated comp. yield

Product Information

Product TypeQuantityCurrent BOMPhysical conditionNumber of copiesActual comp. yield


Inspection

Product Returns

ProductDemand

Recycle

Product Yield

Disassembly

Cleaning andTesting

Recycle

ComponentYield


External supplier


Product Remanufacturing

How much to buy from external suppliers

What fraction of demandwill be satisfied fromreturned products?

InventoryDecisions

Product uncertaintiesProduct yieldComponent yield

Product InformationProduct returns historyPart failure history

No information available about quality of returned products. Components missing Quality of components

Holding and shortage situations are very common due to lack of returned product information.

High remanufacturing costs due to uncertain yield of returned products.

Current Remanufacturing Issues

Quality of Product Information Requiredfor Product Remanufacturing

UniquenessEnables to identify each product/component uniquely throughout its lifecycle and across whole supply chain.=> Variety of products=> Customised products


TimelinessEnsures that information is readily available for decision-making andproduct/component recovery with minimal need for costly inspection and testing.

Value

Decision – Cost/Revenue

Time

Threshold


Completeness Ensures that all relevant information is available for effective recovery of products/components.

AccuracyReduces or eliminates discrepancies between current state of a product/comp. and the estimated state of the product/comp. given by information.


How can we provide requisite product returns information forimproving product remanufacturing process?


Research Questions

The role of Networked RFID inRemanufacturing

D584.S421.CC21.AA21D584.S421.CC21.A22

D584.S421.CC21.AA23

D584.S421.CC21.AA24

D584.S421.CC21.AA25

RFID Tag

Look up Directory

Networked RFID for ProductLifecycle Information Management

Database1. Model/Type2. BOM3. Disassembly4. Reliability

Manufacture Sales Usage/Maintenance Remanufacturing


Look up Directory


Database1. Model/Type2. Assembly BOM3. Disassembly4. Reliability

Database1. Date of Sale2. Customer Detail3. Transaction ID4. Warranty Detail

Look up Directory




Database1. Current BOM2. Maint. History3. Replace History4. Usage life


Look up Directory





Database1. Parts identified2. Replaced parts3. Recovery Detail4. Reliability


Look up service

IDxyz

IDxyz“Where can I find informationabout IDxyz?”

1

2 “Tell me which part was replaced”

“Imaging Unit”

Look up Directory





Database1. Parts identified2. Replaced parts3. Recovery Detail4. Reliability


The Role of Networked RFID in ProductRemanufacturing

Remanufacturing less stochastic due to endogenous quality of returnedproductsDecisions as well process improvementsLess remanufacturing costs.

Endogenous Quality

Customers

Product InformationNetworked RFID

Recycle

Remanufacturing Facility Collection Centre


Inspection

Product Returns

ProductDemand

Recycle

Product Yield

Disassembly

Cleaning andTesting

Recycle

ComponentYield


External supplier


Product Remanufacturing with RFID Product Information

Product TypeQuantityActual Carcass BOMEstimated comp. yieldPhysical condition

Product Information

Product TypeQuantityCurrent BOMPhysical conditionNumber of copiesActual comp. yield

Product Information

Product TypeQuantityActual Carcass BOMEstimated comp. yield

Product Information

Product TypeQuantityCurrent BOMPhysical conditionNumber of copiesEstimated comp. yield


Inspection

Product Returns

ProductDemand

Recycle

Product Yield

Disassembly

Cleaning andTesting

Recycle

ComponentYield


External supplier


How much to buy from external suppliers

What fraction of demandWill be satisfied fromreturned products?

InventoryDecisions

Reduced product uncertainties

Product InformationActual product yieldEstimated component yield

Product Remanufacturing with RFID

However,

RFID based product information is not without costs.

RFID BenefitsRFID Costs


How can we provide requisite product returns information for improving product remanufacturing process?


Research Questions

Single Period - Single RecoverableComponent Model

end product: A

C1 - New component to be procured from outside supplier

C2 - Recovered component obtained from returned products

=> 1 quantity of each component is used for building an endproduct A

A

C2 (1)C1 (1)

Assumptionsa. Remanufacturing is economical.

b. The quantity of returned products A collected at collection centre isknown before making inventory decisions.

c. Demand of end-product A is normally distributed.

d. There are some new components (C1 in our case) to be procured fromoutside supplier. For example: belts, toner assembly. Thus, aremanufactured product is assembled using new components andrecovered components.

e. Product and component yields are uniformly distributed.

Single Period - Single RecoverableComponent Model

Sequence of Events and CostsIncurred in Each Period

Remanufacturing

Inv. Decisions

How many End-product (A) to assemble

Demand Uncertain

HoldShortCost

Re-Process

cost

Reprocess

Inspect

Transport

Disassemble

Recover

Ready availabilityof product info.

Total Remanufacturing costs

Product &Component

Yield uncertain

How many Componentsto order (LfL)

HoldShortCost

1. Obtain information about returned products manually (skilledtechnician) so that there will be reduced uncertainty about productyield of returned products.

⇒ Reduce holding and shortage costs⇒ Reduce transportation costs, disassembly, recovery costs

2. Obtain information about returned products from networked RFID sothat there will be reduced uncertainty about product yield andcomponent yield of returned products.

⇒ Reduce holding and shortage costs⇒ Reduce remanufacturing costs (inspection, disassembly and recovery

costs, transportation costs)

How To Reduce Total Costs inRemanufacturing

Comparing total Costs in 3 Scenarios

Expected Hold/Short cost of End-product

Expected Hold/Short cost of recovered comp.

Expected Reprocessing costs

H. σD.K+(H+S). σD.L(d)

Ci.R+Ct.R+Cd.R +Cr.R.

Current Scenario(I)

!

Hc2 (Qc2 + R.Y " X) f (Y )dYY=Y

Y=Y b

#

+Sc2 (X "Qc2 " R.Y ) f (Y )dYY=Y a

Y=Y

#

!

"c2

Ci.R+ Ct.R. +Cd.R .+ Cr. R.

Manual Product YieldInfo. Scenario(II)

!

Hc2{ (Qc2 + R."C 2.#C 2#C 2= #C 2

#C 2= #C 2b

$"C 2="C 2

a

"C 2="C 2b

$

%X) f (#C 2)d#C 2} f ("C 2)d"C 2 +

Sc2{ (X %Qc2 % R"C 2#C 2#C 2= #C 2

a

#C 2= #C 2

$ )

"C 2="C 2a

"C 2="C 2b

$

f (#C 2)d#C 2} f ("C 2)d"C 2


!

"c2

!

"c2

!

"c2

(Ci.R+Ct.R+Cd.R +Cr.R)

Networked RFID Product and Component YieldInfo. Scenario(III)


!

"c2

!

"c2

Value of Manual Product = 1 - Total costs in Manual Information ScenarioYield Information Total costs in Current Scenario

Value of RFID = 1 - Total costs in RFID ScenarioProduct and Comp. Total costs in Current ScenarioYield Information

Value of Product Returns Information

!

= 1"

H .#D .k+ (H + S).#D.L(d)+($c2

b " $c2 )(% c2b " % c2

a )

($c2b " $c2

a )

Hc2.(Qc2 " X )+R

4.Hc2.(% c2

b+% c2

a ).($c2b

+ $c2 )

+SC 2(X "QC 2 )"R

4.SC 2.(3$c2 " $c2

b ).(% c2b

+% c2a )

&

'

( ( ( (

)

*

+ + + +

,

-

. .

/

.

.

0

1

. .

2

.

.

+R.(Ci +Ct .% c2 +Cd .% c2 +Cr .% c2 )

Hc2{ (X "Qc2 " R.Y )log(Y )dY}+ Sc2{ (Qc2 + R.Y " X )log(Y )dY}Y =$c 2

a .% c2a

Y =$ c2 .% c 2

3 + R.{Ci +Ct +Cd +Cr .% c2}Y =$ c 2 .% c2

Y =$c2b .% c 2

b

3

!

= 1"H .#D.k+ (H + S).#D .L(d)+ R.$c2.% c2(Ci +Ct +Cd +Cr )

Hc2{ (X "Qc2 " R.Y )log(Y )dY}+ Sc2{ (Qc2 + R.Y " X )log(Y )dY}Y =$c 2

a .% c2a

Y =$ c2 .% c 2

& + R.{Ci +Ct +Cd +Cr .% c2}Y =$ c 2 .% c2

Y =$c2b .% c 2

b

&

Holding/Shortage costs of recovered comp.

Reprocessing costs

Reprocessing costs


Value of Manual Product Yield Information (VOI) = (Total costs I - Total costs II)/ Total costs I

Value of RFID Product Yield and comp. yield = (Total costs I - Total costs III)/ Total costs IInformation (VOI)

VOI decreases with increase in demand uncertainty of end-product.

Impact of Demand Uncertainty on VOI

Hold/ShortEnd-product

Hold/ShortComponent

Reprocess

Total Remanufacturing costsDemand Uncertainty of end product

VOI

0 10 20 30 40 50 60 70 80 90 1000.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Demand Uncertainty

Value of Product returns information

Plot of VOI vs Demand Uncertainty

Manual Product Information

Networked RFID Information

VOI increases with increase in returns ratio of returned products.

Impact of Returns Ratio on VOI


Reprocess

Total Remanufacturing costsNumber of Returns (Returns Ratio)

VOI

Hold/ShortComponent

0 10 20 30 40 50 60 70 80 90 1000

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Number of returns

Value of product returns information

Number of returns Vs VOI


Networked RFID Product Information

VOI increases with increase in returns ratio of returned products.

Impact of Returns Ratio on VOI


Reprocess

Total Remanufacturing costsNumber of Returns (Returns Ratio)

VOI Hold/ShortComponent

0 10 20 30 40 50 60 70 80 90 1000

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Number of returns


Number of returns Vs VOI


Networked RFID Product Information

VOI increases with increase in reprocessing costs of returned products.

Impact of Reprocessing costs on VOI

Reprocessing costs

VOI


Reprocess

Hold/ShortComponent


0.5 1 1.5 2 2.5 3 3.5 4 4.5 50.2

0.25

0.3

0.35

0.4

0.45

0.5

0.55

0.6

0.65

Remanufacturing Costs


Remanufacturing costs vs VOI

Manual Product returns Informaton


VOI increases with increase in reprocessing costs of returned products.

Impact of Reprocessing Costs on VOI

Reprocessing costs

VOI


Reprocess

Hold/ShortComponent


0.5 1 1.5 2 2.5 3 3.5 4 4.5 50.2

0.25

0.3

0.35

0.4

0.45

0.5

0.55

0.6

0.65

Remanufacturing Costs


Remanufacturing costs vs VOI

Manual Product returns Informaton


0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.0935

40

45

50

55

60

65

Yield Uncertainty


Plot of VOI vs Yield Uncertainty

0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

x 10-3

5

10

15

20

25

30

Yield Uncertainty



Yield Uncertainty (Std. Deviation)Yield Uncertainty (Std. Deviation)

VOIVOI

Average product & comp. yield = 0.8Product & comp yield uncertainty = [0.6-1]

Average product & comp. yield = 0.5Product & comp yield uncertainty = [0-1]


Reprocess

Hold/ShortComponent


Networked RFID


Networked RFID


VOI increases with increase in yield uncertainty of returned products.VOI decreases with increase in yield of returned products.

Impact of Yield and YieldUncertainty on VOI

0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.0935

40

45

50

55

60

65

Yield Uncertainty



0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

x 10-3

5

10

15

20

25

30

Yield Uncertainty



Yield Uncertainty (Std. Deviation)Yield Uncertainty (Std. Deviation)

VOI

VOI increases with increase in yield uncertainty of returned products.VOI decreases with increase in yield of returned products.


Reprocess

Hold/ShortComponent


Yield uncertain

Yield

Networked RFID


Networked RFID

Average product & comp. yield = 0.5Product & comp yield uncertainty = [0-1]

Impact of Yield and YieldUncertainty on VOI


Average product & comp. yield = 0.8Product & comp yield uncertainty = [0.6-1]

VOI

VOI increases with increase in holding costs of returned components.

Impact of Holding Costs ofReturned Components on VOI


Reprocess

Hold/ShortComponent

Total Remanufacturing costsHolding costs of returned components

VOI

0 100 200 300 400 500 600 700 8000.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

Holding cost of components


Product and Component Holding costs Vs VOI

Hold costs of A = 1000,

Std.dev of demand = 3



Hold costs of A =1000,






Findings

Networked RFID information is valuable under the following setting:

1. low demand uncertainty of end products2. High returns3. Relatively low product and component yield4. High uncertainty in product and component yield5. High Holding costs of recovered components6. High reprocessing costs

How to determine economic feasibility ofInformation System (IS) in remanufacturing

What are different

cost elements & how much

they contribute?

Limited Applicability

YES

No

IS has potential to be

economically feasible Total Remanufacturing costs

Holding/Shortage costs of recovered comp

Reprocessing costs (Inspection, transportation, disassembly and component recovery)

Holding/Shortage costs of end-productHold/ShortEnd-product

Reprocess

Hold/ShortComponent

Cost ElementsContribution

IS reduces

higher cost elements

significantly?

Concluding Remarks

1. Product remanufacturing is characterised by returns uncertainty interms of quality of returned products due to lack of product information.

2. Networked RFID Systems not only bring about decision improvementsbut also process improvements in remanufacturing.

3. However, it is necessary to analyse economic benefits vis-à-visinvestments in such automated product identification technologies.

Thank Youwww.autoidlabs.org

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