Automotive suppliers have a problem.
Yes, there is the uncertainty surrounding renegotiation of NAFTA and unrelenting increases in raw material costs. But this problem has to do with boxes or, more specifically, returnable shipping containers that are, well, not returned.
The nonprofit Automotive Industry Action Group (AIAG), headquartered in Southfield, Mich., estimates that the automotive industry shells out more than $750 million annually to cover the issues related to reusable packaging and pallets in North America alone. That includes the direct cost to replace lost containers as well as softer costs, such as the lag in production when a reusable box container is not available and the incremental price of cardboard or other disposable packaging needed to temporarily replace missing reusables, according to Lang Ware, AIAG director of supply chain products and services.
Adding to the expense, Ware said, is the increased risks for damage from the use of expendable packaging. Many automotive components have very specific packaging requirements to protect them during transport. Often, the disposable version of the packaging is simply not as effective.
And for original equipment manufacturers and their suppliers looking to better track returnable containers, there’s the expense of manual cycle counts, meaning someone is physically counting packaging units.
“It is something that takes days and sometimes weeks and multiple people, because they might not know where the containers are inside or they may be outside,” said David Zingery, vice president of global client solutions at Surgere Inc. in Green. “You just don’t know where these things are until you send people out find them.”
Last month, Surgere announced the commercial launch of a robot designed to take some of the sting out of reusable containers. The robot itself, an autonomous mobile unit, is produced by Fetch Robotics of San Jose, Calif., which creates a range of robotic machines that roam warehouse floors helping human workers locate and pull products. Surgere’s contribution is a proprietary data acquisition and analytics platform that allows this particular robot — equipped with an array of scanners — to scan radio-frequency identification, or RFID, tags on containers and transmit location data to a cloud-based management system.
ROBi, short for Robotically Optimized and Balanced Inventory product, moves on pre-programmed routes, Zingery said, and can capture RFID label information from all angles and directions. It is the latest iteration of Surgere’s dive into harnessing location data for better inventory visibility.
“Coming up with different types of technology over time has really kind of positioned us as leader in the asset management space, primarily in automotive but bleeding into other manufacturing areas like appliance manufacturing with clients like Whirlpool and Electrolux,” Zingery said.
Yet asset management was not where the company started. Surgere began in 2004 in the package engineering space. It optimized the design of reusable shipping containers for auto suppliers. The company noticed pretty early on, Zingery said, that workers had little regard for the specialized boxes it carefully crafted.
Whether it was a plastic tote, collapsible large bulk bin or metal rack, “people just pulled the stuff out of it to make the part,” he said, “and the container would get lost. They get used for the wrong things. They would get stored out back. They would get left in tractor trailers or just disappear.”
Soon, Surgere began putting its engineering expertise to work on software to manage reusable containers and acquired an RFID tagging system to create location data points. Knowing where containers are, manufacturers can better manage their returnables in-house, stop stockpiling surplus containers and perhaps even charge partners who fail to return them, Zingery said. The shift to more comprehensive asset management services was more or less organic.
“These containers, they touch the people, the part or parts, the process, the transportation, so there are all kind of things you can learn just by watching them travel,” he said. ” We found ourselves not only addressing the loss mitigation piece of it, but it quickly turned into an opportunity to provide some real analytics and data around what is happening in your supply chain — things like how fast materials are moving, where they are going, if they are sent to the wrong location, how long there are at a given location, etc.”
ROBi provides one more way for data to be fed into the system, eliminating the need for employees to scan containers with hand-held devices or, worse yet, count them manually.
Surgere’s roster of big-name clients includes Johnson Controls, the Timken Company, MAHLE, Alcoa Corp. and Nissan North America. The private company of about 40 employees does not publicly share revenue data.
Zingery did say, however, that ROBi is one of a series of new applications currently under development to be announced formally over the next year or so.
“As small as we are, we play really, really large,” he said. “We are doing business with some of the biggest companies in the world, and here we are just this little technology company next to the Akron airport. It’s really cool.”