Managing corporate assets with RFID

Category: Research Articles

Radio Frequency ID (RFID) may have failed, as yet, to reach its full potential in the retail environment, but that is no reason to write off the technology. With growing pressure in both the private and public sector for improved asset management and accountability, RFID has an important role to play, argues Karen Conneely, Group Commercial Manager of Real Asset Management.

Making Waves

RFID has been making waves for over a decade as organisations throughout the supply chain look to leverage unprecedented ease and accuracy of goods tracking to drive down costs and improve product availability. But, as yet, the technology has not achieved optimal results. This is particularly relevant within the retail environment where RFID tag costs make it impractical to take the technology beyond pallet level, undermining the vision of individual product tracking from manufacture to store shelf.

However, the technology has gained significant traction in other areas, most notably passports – with countries such as the US including RFID tags in new passports as well as in transport payment systems.

Indeed, the technology has also been embraced by libraries, museums and colleges of further education to track valuable assets. The result of this diversification of RFID application is a significant reduction in unit cost over the last few years.

With increased focus on organisations across both public and private sectors to improve asset accountability and traceability, isn't it time more organisations considered the potential of RFID?

Asset Challenge

There is now a greater understanding across organisations of the value of accurate asset registers – and the potential business cost of today's endemic inaccuracy. With upwards of 50% of assets on most registers no longer in use, organisations recognise they are in danger of over-paying insurance premiums, creating mismatched disaster recovery plans and even creating inaccurate company valuations.

Furthermore, compliance to International Financial Reporting Standards (IFRS) demands fixed asset management accountability and the provision of a full audit trail. With IFRS becoming increasingly prevalent within the public sector, the spotlight is now on the widespread poor asset management processes that have resulted in these highly inaccurate asset registers.

From highly mobile items such as laptops that cannot be accurately located, to heavy machinery composed of multiple component parts that are frequently changed by maintenance without being recorded, organisations simply have no idea what happens to assets once in use.

But how many businesses can afford to periodically interrupt production to undertake a manual audit? Taking manufacturing processes offline or disrupting operations is just not a viable option for most businesses. Furthermore, manual audits can be notoriously inaccurate; horror stories abound of organisations that have embarked upon manual audits only to discover that many months into the exercise only 60% of assets have been checked.

Indeed, even those organisations that have adopted barcodes in a bid to impose greater control and visibility over their asset base still struggle to gain access to certain parts of the infrastructure – from production lines to clean environments such as hospital operating theatres.

The ability to use RFID technology to scan hundreds of assets at once, from a single point, whilst ensuring business continuity has the potential to transform the entire asset management process.

RFID in Practice

But can RFID actually deliver on this promise? Are the tags reliable and robust in production environments and just what is the possible maximum range between tag and RFID reader?

The first decision organisations need to make is whether to opt for Active or Passive RFID tags. Passive tags are significantly cheaper – between 20 and 60 pence, as opposed to £25 - £40 per Active tag. However, they have a limited read range and do not hold much information, constraining the development of a single source of all asset history.

The Active tags by comparison have their own internal power source which broadcasts the response signal to the reader. As a result, these tags have a far longer read range, typically up to one hundred metres. In addition, Active tags hold far more information about the asset, enabling organisations to transform the depth and accuracy of asset history.

The additional functionality offered by Active tags convinced leading fast moving consumer goods manufacturer, Unilever, to deploy this form of RFID technology to track 20,000 assets across several production lines at its manufacturing site in Gloucestershire.

With each piece of machinery comprising many distinct components, the ability to scan hundreds of assets simultaneously from a distance is a major benefit; many of these components are extremely hard to reach and would require the production line to be turned off to undertake a physical audit.

Real Time View

Unilever is also leveraging the additional memory on the Active tags to create a complete history of each asset, from initial purchase order number, through location, unique serial number and its child/parent relationship to other machinery and full maintenance history.

This latter point is particularly important for the management of complex equipment comprised of multiple components and for environments requiring the highest level of health and safety check and audit. With this technology, each assembly line manager can be tasked with maintaining a specific list of assets. Using a hand held PDA, scans can be undertaken regularly: information is directly input into the integrated asset register and maintenance system and exception reports highlight any missing assets.

This implementation of RFID within Unilever demonstrates the technology's potential for asset management across every industry sector. By creating a single source of asset purchase, location, maintenance and disposal information, organisations can reduce errors and attain an immediate view of maintenance status at any time. In critical environments such as the emergency services, this up-to-date information on equipment status not only saves time but minimises the risk of an ambulance or fire engine attending an incident without fully compliant equipment.

Furthermore, the process is simple and straightforward, requiring minimal resources and thus driving down costs. And this is an essential point: Despite growing pressure to deliver asset accountability and traceability, organisations simply cannot afford to undertake repeated manual audits, each of which can take months.

By adopting RFID, not only can scanning be undertaken by line managers on a regular basis in a matter of minutes, without impacting the organisation's core operations in any way, but also the tight integration with the full asset history ensures unprecedented accuracy and auditability of the entire asset register.

Dispelling the RFID Myths

• Safety: Radio waves will not affect equipment; RFID is perfectly safe for use in any production environment, from manufacture to hospitals.
• Reliability: Both Active and Passive RFID tags have a life span of at least five years and can operate in difficult environments including high humidity.
• Cost: The cost of RFID tags has dropped significantly in recent years, making the technology increasingly viable.

Delivering value with RFID

• No business disruption: Active RFID tags can be scanned up to 100 metres away, enabling organisations to undertake regular asset audits without any impact on core operations or the need to enter clean environments.
• Audit trail: Storing information on RFID tags, from location to serial number and maintenance history, enables organisations to create a full asset audit trail, supporting the move towards IFRS.
• Health & Safety: The full audit trail of asset maintenance also ensures organisations comply with health & safety initiatives. For example, this is becoming critical within the emergency services to ensure every ambulance and fire engine is always fully equipped.