RFID opinion

Citation

Conneely, K. (2009), "RFID opinion", Assembly Automation, Vol. 29 No. 1. https://doi.org/10.1108/aa.2009.03329aaa.002

RFID opinion

Article Type: Viewpoint From: Assembly Automation, Volume 29, Issue 1

Managing corporate assets with RFID

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 USA 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, is not 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 per cent 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.

Asset management is a fundamental business process. It determines corporate value and has a direct impact on profitability. Yet, how many UK organisations are truly confident in the value of corporate assets? While most have good systems in place for recording initial investments, they pay lip service at best to managing later asset disposal.

Disturbingly, the majority of companies have very little grasp of how inaccurate the asset register can be, believing stored data could only be a maximum of 5 per cent inaccurate. It can therefore be a shocking reality check for these organisations to see the results of a complete physical asset audit. In fact, on average, physical audits reveal 40 per cent of assets are well described on the register and can be easily found; a further 40-50 per cent probably exist but are so poorly described it is impossible to prove, and the remaining 10-20 per cent are well described but cannot be found, indicating they no longer exist.

Yet, regardless of how shocking the results of a full audit can potentially be, it is far better for businesses to discover inaccuracies in the asset register at this time than during a disaster recovery exercise. During an audit, the shock can be addressed with proactive strategies to create more robust processes and information sources. Discovering the true level of asset inaccuracy as a result of a refused insurance claim or unsuccessful disaster recovery invocation can create significant business problems.

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 per cent 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. Add to this, the advantage of RFID technology being fully integrative with the SAP or Oracle general ledger and the solution really is incredibly simple, requiring no major system upheaval.

Broad appeal

With the click of a button organisations that utilise RFID technology can instantly reconcile an entire area of fixed assets. This approach radically reduces the time it takes to complete physical audits, recording assets as present, missing or relocated, and enables organisations to monitor assets in spaces where accessibility is problematic or in environments that require a high-level health and safety check. As a fully automated solution, RFID also dramatically minimises the potential for human error associated with manual input.

Immediate reductions in time and effort combined with improved traceability revolutionises business processes. Unlike traditional barcodes, the RFID reader need not scan the tags directly. Rather, the scanner interrogates all identified tags within its adjustable range, feeding back information regarding those assets it has located. Such information is then cross-referenced against the asset register and assets are instantly updated en masse.

The capabilities of the RFID chip technology also mean that the tags can be programmed to suit the specific needs of an organisation. Parameters for stored data can be set to report on details such as previous location, purchase date, cost, maintenance history and remaining economic life which reduces unnecessary capital expenditure on redundant or under-used assets.

The ability to record and be accountable for the life cycle of assets, from purchase right through to final disposal, is becoming increasingly more important, as demonstrated by the Waste Electrical and Electronic Equipment (WEEE) Directive. It may well be touted as a cost for suppliers, but unless organisations can provide accurate asset information, it will also create a significant cost for UK business.

Such policies as WEEE assume a level of asset management far beyond that achieved by the majority of UK businesses. Unless supplying a like for like replacement, suppliers will only remove and dispose of equipment they have delivered initially. Furthermore, only by linking the asset register to a document management system will they ensure a scanned WEEE certificate is linked to a disposed asset, providing the required audit trail. Each asset can be recorded alongside the supplier’s name and e-mail address, enabling swift supplier contact when disposal is due. With RFID, technology, businesses can accurately identify the location of their WEEE items within the organisation and confirm when it was purchased and from whom.

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 100 m. 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.

By tracking individual parts with RFID, the range of information stored can be extensive. Even parts embedded within complex machinery can be tracked as the “beyond the line of sight” functionality of RFID gives access to hard to reach components.

The use of RFID can extend beyond the needs of asset management. Workers of heavy machinery, such as mechanics and drivers, can gain instant insight to all the machinery parts’ maintenance history as well as information on unique identifiers including part numbers, serial numbers and manufacturers’ codes. Engineers are afforded the ability to reference and update a part’s maintenance history more quickly and easily, facilitating accurate configuration control and repairs, reducing warranty claim processing costs. Benefits even extend to accurate and efficient spare parts pooling and easier identification of rogue parts.

Recording the maintenance and inspection data in this way ensures that there is a history of all relevant units and the asset life cycle of limited life parts that require frequent inspection, repair, replacement and recycling can be kept up to date. This level of best practice will prove particularly vital during any period of due diligence, the swift automated inspection process ensuring assets are accurately valued.

The ability to accurately track movable assets eliminates the frustration of having to physically locate them and helps avoid unnecessary “just in case” purchases when “missing” assets are assumed disposed of. By placing RFID tags on the assets and readers at key entry and exit points and various other locations, movable assets will be automatically tracked and located in real time.

RFID tags are rugged, compact and inconspicuous. Even while dormant they integrate seamlessly into business processes. When activated by a very low frequency signal the tags emit an ultra high frequency radio signal, instantly uploading asset information. Tags can be read in a range from 10 up to 100 m and have a battery life of up to five years, making it easy for utilising the technology in yard management, tracking reusable transport items, and other high-value asset tracking applications. Read and write user memory also protects data integrity.

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, general ledger 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.

No excuse

Is there really any excuse for such poor control over key business assets? There are simple processes that can be followed to ensure greater information consistency. Recording serial number and asset location as well as value meets the needs of the finance team and provides the detailed information required to track asset location and status for departments.

Critically, by creating a single source of all asset data, organisations can streamline many of the processes associated with improved accuracy and financial control. Detailed information about assets can be consolidated at finance level, if required, whilst the process of asset cross-referencing is also greatly improved.

Leveraging this single data source to impose good processes, asset disposal and replacement can be input into the system locally and new depreciation values automatically calculated for the finance team, ensuring a far more accurate picture of business value. Furthermore, with good processes for recording asset disposal as well as purchase, organisations should retain far higher levels of asset data accuracy. Critically, the information required for maintenance, insurance and disaster recovery planning is available, consistent and trusted, significantly reducing business risk and supporting the growing business continuity investment.

By adopting RFID, scanning can be undertaken by line managers on a regular basis in a matter of minutes, without impacting the organisation’s core operations in any way. The tight integration with the full asset history and general ledger ensures unprecedented accuracy and auditability of the entire asset register.

Appendix

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.

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  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:

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  No business disruption. Active RFID tags can be scanned up to 100 m 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 and safety. The full audit trail of asset maintenance also ensures organisations comply with health and safety initiatives. For example, this is becoming critical within the emergency services to ensure every ambulance and fire engine is always fully equipped.

Karen ConneelyBased at Real Asset Management, Orpington, UK

Acknowledgements

© Real Asset Management