Suppliers Sign On As GE Powers Up RFID Effort

How do you speed up adoption of radio-frequency identification technology? You could mandate it, as both Wal-Mart Stores Inc. and the Department of Defense have done. Or you could take a more voluntary approach, as General Electric Co. has done in its power-plant systems division.

Just a year into its project to attach active RFID tags to thousands of supplies--to track everything from modular duct work to 250-ton generators--297, or nearly all, of its suppliers are attaching tags to their shipments. The payoff: Supplies get through customs faster, projects aren't delayed, and inventories at massive job sites take less time.

It helped that GE was willing to let suppliers leverage processes they already had in place for interacting with GE's logistics systems to initiate transportation requests. "In some other supply-chain environments, suppliers are being forced to adopt new tracking systems. We took the initiative to make this voluntary," says Sean Carney, program manager for Smart Asset Management in GE's $20 billion-a-year power-plant systems division, which produces gas and steam turbines and other equipment used in utilities and power plants and provides services to build power plants.

GE absorbed costs for suppliers, providing them with the tags, which are tiny microchips that use radio waves to relay product-identification information such as shipping data. GE is using active tags, which have built-in batteries, because it needs the technology to work in large spaces that may not have electricity. At prices ranging from $7 to $50, active tags are much more expensive than passive ones, which draw power from a reader. Passive tags, which Wal-Mart is using in its initiative, cost pennies when purchased in volume. To mitigate costs, GE decided to recycle its active tags, erasing data stored on them. GE declined to name its third-party RFID vendor.

At the time of shipment, suppliers send electronic files containing package information and each tag's unique ID to a GE database that holds all of the division's asset records. That information is confirmed as tags are scanned at ports before supplies are loaded onto a ship, smoothing customs clearances. "Without proper documentation, you can lose days or even weeks," says Tahir Hamid, general manager of GE's power-plant systems. Losing even one day can have a big impact on a power-plant project. "There are huge penalties if you aren't able to finish the products and deliver the power plant on time."

Now GE has "more accurate information, more granularity, and more visibility into our supply chain," Carney says. RFID has helped cut the time it takes to do inventory on a project, which can have equipment that covers 20 acres, by 75%. Employees can drive around in golf carts using handhelds that pick up RFID signals from tags on equipment within 100 feet. In one project involving two gas turbines, one steam turbine, and three generators (3,000 cases and hundreds of tons of equipment), GE cut inventory time from 18 workweeks to five. Once the equipment made its way to the job site, GE was able to locate material there in minutes. And project managers were able to get the status of material in seconds using a Web application.

The power-plant systems division's RFID implementation has been so successful that other businesses within GE are exploring the technology.