Barcode_Proposal

ELIMINATING AIRCRAFT MAINTENANCE WAREHOUSE’S HAZARDOUS MATERIALS TRACKING ISSUES Prepared for Warehouse General Manager Aircraft Maintenance, Conair Corp. Prepared by Supervisor Aircraft Maintenance Conair Corp. MEMORANDUM TO: Warehouse General Manager FROM: Aircraft Maintenance Supervisor DATE: Today SUBJECT: Eliminating Aircraft Maintenance Warehouse’s Hazardous Materials (HAZMAT) Tracking Issues Here is the report you requested November , 2009 on implementing a barcode system for tracking HAZMAT in the warehouse. As noted by my maintenance folks, the manual system of tracking for HAZMAT in your warehouse is not working and these items are expiring on the shelves. We cannot use expired chemicals on aircraft and caused us to lose maintenance time waiting for new chemicals to arrive. These expired HAZMAT chemicals have also caused additional challenges and costs for disposal for your warehouse. This cannot continue this costly oversight. The solution to this problem is a more efficient tracking system for HAZMAT. A barcode tracking system is the answer to this issue. It will provide a means of automatically tracking each HAZMAT item through its lifetime from the moment it arrives to its disposal. It will automatically keep records in the database, generate reports as needed, and automatically remind your workers when items are coming close to their expiration date. Finally, the tracking software will automatically place an order when stock levels get low or an item is two weeks from expiring. Your folks are already trained on using the manual database, which is very complicated. The barcode system promises to be very user friendly and will not only ease the burden of for your employees, but it will also keep aircraft maintenance on-track and eliminate the added costs of disposing expired HAZMAT. I sincerely appreciate Dan Smith’s help, the Quality Assurance Supervisor for gathering the quality assurance statistics on HAZMAT inspections for the last two years. His efforts were truly superb. Thanks for allowing me the opportunity to work on this assignment. It has been a real eye-opener. If you have any questions concerning this report, please call me. CONTENTS PAGE Executive Summary……………………………………………………………………………. iv Introduction……………………………………………………………………………………. 1 The High Cost of Inadequate HAZMAT Tracking……………………………………………. 1 Expired HAZMAT on the Shelves…………………………………………………….. 1 The Empty Shelf Syndrome……………………………………….…………………... 2 Expired HAZMAT Disposal Costs……………………………………………………. 3 The Barcode/RFID Tracking System…………………………………………………………. 3 Barcode/RFID Benefits……………………………………………………………….. 3 How It Works………………………………………………………………………….. 4 Initial and Operational Costs……………………………………………..……….….... 4 Conclusions and Recommendations…………………………………………………………… 5 References……………………………………………………………………………………… 6 LIST OF ILLUSTRATIONS FIGURES PAGE 1. Quality Assurance Inspection Data for Expired HAZMAT Items 2008-2009…………… 2 2. Quality Assurance Maintenance Delay Tracker (HAZMAT) 2008-2009………………… 2 3. Quality Assurance Expired HAZMAT Disposal Costs 2008-2009………………………. 3 iii EXECUTIVE SUMMARY This report examines AMS Warehouse’s HAZMAT tracking issues and presents the recommendation to implement a barcode tracking system as the solution to the tracking issues. Current System for Tracking HAZMAT is Inefficient There are 120 HAMAT items in the AMS Warehouse inventory that are currently being used by mechanics in aircraft maintenance operations. The twenty seven warehouse employees are currently using an old, manual database system for tracking 120 HAZMAT items’ life cycle. This system is ineffective and has led to three main issues. One problem is that items were forgotten and expired on the shelves, which could not be issued to maintainers causing delays in operations. Another issue is that HAZMAT items were not replenished in a timely manner, which again resulted in maintenance delays. Finally, there is an increase in cost for disposing of expired HAZMAT. This has resulted in high operational costs for the AMS Warehouse. A New HAZMAT Tracking System is Necessary It has become apparent by looking at the Quality Assurance data for the past two years that the AMS Warehouse needs a better system to track HAZMAT items through their life cycle. The solution is a Barcode Radio Frequency Identifier (RFID) Tracking System. This automation will virtually eliminate all three HAZMAT tracing issues the warehouse is currently experiencing. For the cost of disposing of one expired HAZMAT item, the warehouse could purchase such a system. Since the employees are already proficient with the old/manual database system, the new/user-friendly barcode system will be much simpler to use, which will not only streamline tracking but also produce data reports automatically. Benefits include regular email notifications of approaching expiration dates as well as automatically placing orders when an item falls below a predetermined stock level or within two weeks of expiring. Since items will no longer be forgotten and left to expire, there will also be a decrease in warehouse operational costs—no more paying for expensive disposal services of expired HAZMAT. This is a win-win solution. iv ELIMINATING AIRCRAFT MAINTENANCE WAREHOUSE’S HAZARDOUS MATERIALS TRACKING ISSUES INTRODUCTION The Aircraft Maintenance Warehouse has always had a great impact on the Aircraft Maintenance Corporation. They oversee the purchase, stocking and delivery/issue of over 18,000 aircraft components and 120 Hazardous Materials (HAZMAT) items, which are critical assets used in maintaining aircraft. Since the inception of our corporation, the warehouse has experienced problems with tracking HAZMAT through their life cycle, from purchase to delivery/issue. This on-going issue has caused several problems to our corporation as a whole in lost time and finances. If this will continue, it will lead to more of the same losses. Due to the competitive market and decreasing profits, Mr. Jason Thorpe, the Warehouse General Manager, has asked maintenance supervision to explore options for improving tracking of HAZMAT at the warehouse. As the supervisor, I gladly accepted his request. In preparing this report, I analyzed Conair’s Quality Assurance Inspection data, time delays caused to maintenance as well as disposal cost data for expired HAZMAT items. I also researched barcode tracking systems and looked at how other corporations have used this technology and the effects it had on their operations. THE HIGH COST OF INADEQUATE HAZMAT TRACKING Since our corporation has been in the business of maintaining aircraft, Conair’s warehouse has experienced difficulties in tracking the 120 HAZMAT it is responsible to stock in support of maintenance operations. This problem has caused several issues and losses to our corporation in the form of lost production time as well as added expenses/financial losses. Warehouse employees are proficient in using the current manual database, but with over 18,000 items for 27 personnel to track, is an enormous challenge. This issue must be addressed in order to maintain a competitive edge in today’s fast-paced market. Expired Hazmat On The Shelves The main issue the warehouse is having is that HAZMAT items expiration dates are not adequately tracked and these items that are critical for maintainers end up expiring while still on the warehouse’s shelves. Figure 1 illustrates the Quality Assurance inspection data from 2008 and 2009. This data clearly shows that HAZMAT items have been found expired in the warehouse during bi-month scheduled inspections on a regular basis. 1 2 Figure 1 de Quality Assurance Inspection Data for Expired HAZMAT Items 2008-2009 de Quality Assurance Inspection Data for Expired HAZMAT Items 2008-2009 The Empty Shelf Syndrome Another reason that clearly points to the need to improve HAZMAT tracking is the problem of not keeping-up with stock levels. On several occasions, maintenance was unable to be performed because when the HAZMAT item was requested, the warehouse specialist discovered that the item was out of stock and had to be ordered. Both the expired items along with the “empty shelf syndrome” have caused a significant loss in time production for Conair; 788 production hours in two years. Figure 2 depicts the Quality Assurance time data which clearly shows the number of man-hours lost in 2008 and 2009. Figure 2 Quality Assurance Maintenance Delay Tracker (HAZMAT) 2008-2009 Quality Assurance Maintenance Delay Tracker (HAZMAT) 2008-2009 These two reasons should be enough to show that there is an urgent need to upgrade the tracking capabilities of the warehouse for these items. There is however one more reason—financial. 3 Expired Hazmat Disposal Costs The financial aspect that plays a role in depicting the need for improved HAZMAT tracking is the cost enquired for having to properly dispose of HAZMAT materials that have expired. This is not a cheap endeavor--$185,000 in two years is an astronomical amount for a small corporation like Conair. Figure 3 shows the expenditures acquired by Conair because of this expiration issue. Figure 3 HAZMAT Disposal Cost 2008-2009 HAZMAT Disposal Cost 2008-2009 THE BARCODE/RFID TRACKING SYSTEM We have established that there is a need to improve our warehouse’s capabilities for tracking HAZMAT items through their life cycle. The lost production time and high costs of disposing expired items has shown that there is a real need to update our old/manual tracking system. There is one feasible answer to this problem--the barcode/RFID computerized tracking system. Barcode/RFID Benefits This automation provides the capability for accurate and timely tracking items in the supply system. Barcode systems enable warehouse supply personnel to effectively track HAZMAT items through their life cycle, providing visibility for each item (Drum, 2009). It also provides the capability for automatic reminders of items that have expiration dates or whenever stock levels get low. Finally, these systems can be set up to automatically place orders with the source company when stock levels reach a specified low level (Zebra, 2007). RFID technology expands barcode capabilities by adding tiny chips to the barcode label, expanding the amount of information and the range of the system (Trebilcock, 2009). There is also a long-term financial benefit of using a barcode/RFID tracking system for the 4 HAZMAT items in our warehouse. By eliminating the problems associated with expired and out-of-stock HAZMAT will enable Conair to better utilize the funds recuperated from the elimination of disposal fees for expired HAZMAT and elimination of lost maintenance production time. Additionally, this system is also capable to create reports and inventory data instantly, saving man-hours spent in research. On the same note, data collected and maintained using barcode and RFID is 99% accurate, which significantly reduces the chance for errors (Zebra, 2007). “Product codes, lot numbers, invoice data, order numbers and other information can be recorded in less than a second with a bar code scan” (Zebra, 2007). How It Works The barcode system has three basic components: the software, barcode printer and wireless scanner. After initial set-up, when an item comes in to the warehouse, the system printer will print a barcode label, which identifies that item in the computer software. The label will be placed on the item before placed in its warehouse location. The software has a “profile” associated with that item. Whenever the stock level falls below a predetermined level, the software will bring-up a notification for the warehouse personnel informing them of the stock level issue, while at the same time automatically placing an order with the source company for that item. The software will also bring-up notifications for items that are two weeks from expiring, while at the same time pacing an order for replacements. It will continue to bring-up reminder of the expiring item until that item is either expended or as a reminder to workers to recycle the item before it expires (McCathie, & Michael, 2005). Reports and inventories are easily generated by the software upon request, saving time, allowing employees to redirect their efforts to other functions (Zebra, 2007). Initial and Operational Costs Since our warehouse is a small-scale operation and maintains only 120 HAZMAT items, the system requirements are relatively small. Wasp Technologies offers a system that is suitable for our warehouse needs (Wasp, 2010). This system costs less than the disposal costs of one expired HAZMAT item; it is approximately $1300. The system comes complete, ready for use. The company also offers 24 hour technical assistance for any issues that may arise. The continued cost of operating the system will be cartridges and label rolls for the printer, which would be approximately $120 quarterly, based on current warehouse HAZMAT needs. This pales in comparison to the costs we are currently incurring in lost productivity and expired HAZMAT disposal fees. 5 CONCLUSIONS AND RECOMMENDATIONS Conair is has lost in the last two years $185,000 in disposal fees for expired HAZMAT and 788 man-hours in production delays because of the unavailability of HAZMAT items for aircraft maintenance. Warehouse employees are doing their best trying to keep up with the 120 HAZMAT items using an old/outdated/inefficient/ manual database. In order to correct the current tracking issues, a new barcode/IFRD inventory tracking system is necessary. Replacing the current system with a Wasp barcode system will increase the warehouse’s tracking accuracy 100% and eliminate financial losses that Conair is currently incurring due to HAZMAT tracking inefficiencies. 6 REFERENCES Drum, D. (2009). Asset Tracking: Material Handling Benefits. Material Handling Management,64(6), 36-39. Retrieved from Computers & Applied Sciences Complete database. McCathie, L., & Michael, K. (2005). Is it the end of barcodes in supply chain management'. Manuscript submitted for publication, Information Systems and Technology, University of Wollongong, Talca, Chile. Retrieved from http://works.bepress.com/kmichael/41/ Trebilcock, B. (2009). RFID: against the grain. Modern Materials Handling, 64(11), 23-25. Retrieved from Computers & Applied Sciences Complete database. Wasp, Technologies. (2010). Inventory control. Retrieved from http://www.waspbarcode.com/inventory_control/inventory_control_combo_500_305.asp Zebra, Technologies. (2007). Bar coding and rfid: the key to traceability and safety in the foodservice supply chain. Zebra Black and White Paper, Retrieved from www.zebra.com/../rfid_traceability_foodservice../WP13455_FoodServiceR1.pdf'..Bar%2 Coding%20and%20RFID