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RFID-Based Asset Tracking in Manufacturing
ARC Advisory Group's Chantal Polsonetti gives a number of examples of the well-documented benefits manufacturers are realizing from RFID-based asset tracking solutions. She also highlights important caveats and considerations manufacturers must weigh before moving forward with deployment.
Apr 24, 2007—This article was originally published by RFID Update.
April 24, 2007—Manufacturers' ongoing search for ROI from retailer-driven RFID implementations is well-documented. Companies have been successful, however, in identifying internal ROI-based applications for RFID. Asset tracking in its various forms is one of the focal points of this activity, due primarily to the contention that knowing the location of an asset, part, or finished good can drive better asset utilization, manufacturing process improvements, and upticks in other manufacturing performance metrics.
RFID-based asset tracking in a manufacturing setting may encompass automated tracking of fixed or capital assets, engineered assets such as process instrumentation, IT assets, and/or reusable containers. Tracking of mobile assets, such as forklift trucks or even handheld computers, is also of significant recent interest. Unlike the compliance-driven tracking of finished goods in an open loop supply chain, clear business drivers are fueling the high level of interest in this application space.
Improved asset utilization is the most obvious source of ROI for RFID-based asset tracking. Automated asset tracking systems improve asset visibility, thereby allowing manufacturers to quickly identify, locate, and deploy capital assets, indirect materials, and other asset categories. RFID-based asset tracking can optimize the availability of high value assets, thereby reducing their Total Cost of Ownership (TCO). This is of particular interest when looking at high value fixed assets that are depreciated, inventoried, and/or stored, but can also be applied to the identification of any assets that are due for preventative maintenance.
A key value proposition related to improved asset utilization and optimization is the reduced need for safety stocks, or not having to buy more of something simply because you can't find what you have. This has been a particularly strong value proposition for asset tracking in the healthcare industry, where RFID-based systems have found early success.
The ability of RFID-based asset tracking to enable process improvements is another area with significant value potential for manufacturers. Improved throughput or line speed typically leads the list of benefits in this area, with examples such as management of indirect materials where the RFID system can locate a tool critical to keeping an assembly line moving, rather than stopping the line or bypassing the station while the missing tool is sought. The issue here is whether bringing assets on-line more rapidly will enable faster throughput in your operation.
As this last caveat suggests, the choice to pursue RFID-based asset tracking must be subject to the same ROI requirements as other applications. Consequently, growth in its deployment will be tempered by whether or not the asset is shared, whether its value exceeds a certain threshold (lower value limits the ability to cost justify an implementation), and the overall criticality of automated tracking, i.e., whether misplaced assets are an issue or not. Conversely, some low value assets are tagged just by virtue of their criticality in a manufacturing process, e.g., tools that are critical to line throughput.
The wide variety of RFID-based asset tracking solutions makes selection of the right technology even more important. We find that end users may consider passive, active, and/or WiFi-based solutions when evaluating technologies to use for asset tracking. Ability to operate in a metallic environment, read range, accuracy, noise immunity, memory capacity, read/write capability, ability to operate indoors or out, and ability to integrate with higher-level systems remain key selection criteria for asset tracking applications in manufacturing.
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