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Celestica Launches
RFID Service
Laurie Sullivan
November 15, 2004
$6.7 billion Canadian assembly and engineering company integrates RFID
into Mexican fulfillment-center operations; global rollout may follow
Many electronics vendors have unloaded their manufacturing facilities
and now outsource production to services companies, which assemble and
fulfill computer and router orders. It's a job that requires a close
watch on supply-chain and production processes--and some say it's a
perfect fit for up-and-coming radio-frequency identification
technology.
That's what Celestica Inc. is betting on. The $6.7 billion-a-year
Canadian assembly and engineering company is integrating RFID into its
Reynosa, Mexico, fulfillment center to track its customers' orders as
they're shipped to retailers. The service will launch in the first
quarter of 2005 and will use Matrics AR400 readers and Matrics class
0+ passive tags that operate on a 915-950 MHz frequency. (Symbol
Technologies Inc. acquired Matrics for its RFID business earlier this
year.)
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The North American facility is the first to deploy the service, but
Celestica says it may roll it out globally to more than 40
manufacturing facilities worldwide that serve customers such as Cisco
Systems, Hewlett-Packard, IBM, and Lucent Technologies.
The RFID deployment follows an aggressive, two-year IT strategy that
was designed to cut costs, simplify business processes, and improve
operations. In 2002, Celestica began consolidating about 20
enterprise-resource-planning platforms used in its operations around
the world.
Through platform consolidation, Celestica's IT spending has been cut
by about 30%, says Iain Kennedy, Celestica's CIO.
Through platform consolidation, Celestica's IT spending has been cut
by about 30%, CIO Kennedy says.
"The overhead to maintain data convergence, data warehouses, training,
and business processes required for that many systems is mind
boggling," says Iain Kennedy, Celestica's CIO.
Now the company uses SAP's ERP platform, MatrixOne's Matrix10
product-life-cycle management software, and i2 Technologies' Aspect
database, which has been renamed i2 Electronics Database.
As a result, IT spending has been reduced by a little more than 30% in
the last two years. The RFID initiative won't add too much to that
tightened budget because the application suites Celestica uses already
support RFID, Kennedy says.
The ongoing IT projects also are squeezing costs out of other places.
The company has been able to shrink inventory and cut out excess costs
in overhead by reducing the number of on-hand components required to
build products.
There are other benefits. Celestica can offer its customers a service
designed to help electronics companies monitor hazardous material used
in electronic components. Called Green Services, it helps companies
comply with environmental directives in Asia, the United States, and
Europe, such as the European Union's Restriction of Hazardous
Substances and Waste Electrical and Electronic Equipment. These two
directives include bans on high levels of certain hazardous materials
and require companies to report information on raw material compounds
used in finished products. Parts of them will take effect in 2005.
To abide by the reporting directive, companies that build electronic
equipment must have access to auditing and reporting tools that can
track product numbers and chemical percentages that each product
contains. These reports must follow the product through all cycles,
from design and manufacturing to final assembly, test, and
fulfillment. The combination of Celestica's new IT
systems--particularly its project-life-cycle-management system--will
make it easier to track that data throughout the manufacturing
process, Kennedy says.
Though it's far into its IT overhaul, Celestica still has work to do.
SAP's ERP suite--which includes supply-chain, finance, and
human-resources applications and customer and supplier portals--is
more than 85% deployed. All of Asia and Europe run on SAP. Integration
is about one-third complete in the Americas, with roughly 12 months to
go.
"The greatest difficulty is during the early stages of implementation
because business processes must be recognized and developed, and
capabilities defined and enabled," Kennedy says. And the RFID
deployment, which is only just beginning, will likely take a few
years. |
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