Dec 15, 2016The end of the year is coming, and millions of dollars will be spent on asset valuation, traditionally performed via bar-code labels and badges. Much of the expense will be in outsourcing the inventory process, and in the consolidation or realization of repeated inventories of physical assets to comply with tax legislation.
Most companies insist on using only a single method of identifying goods—often bar-code labels. Sometimes, they use two or more bar-code tags so that they are not lost during asset counting.
This decision, typically made by a company's financial department, allows for physical asset control with minimal cost, and avoids deviations detectable by accounting auditors who analyze balance sheets and only monitor the systemic updating process, as a rule, using enterprise management software (from SAP, Oracle or Microsoft) or another internal system. The focus is on the depreciation of assets and the best possible reporting of physical assets' health.
With this narrow vision, companies lose the opportunity to take an integrated view based on logistics processes and, thus, to meet the level of services demanded by customers.
One week after outsourced companies are contracted to take inventory counts, a new cycle of uncertainty typically begins: determining whether physical assets are, in fact, present and in good condition. The "almost certainties" will come at the end of the following year, once a new contract is made to revise the asset bar-code tags and generate a new consolidated Microsoft Excel file.
I believe the vision of asset management with radio frequency identification must be an integrated one that drastically simplifies the inventory process at multiple locations. One advantage of this management proposal is the use of multiple goods-identification technologies, including includes RFID tags, beacons, bar codes and typing. In addition, importing the current labels via Excel allows inventory operations to be carried out within a matter of days.
With little training, multiple inventory points can work together at the same company. The immediate result is a reduction in costs required to send employees to every location to register assets, confirm their status and take photographs.
Imagine the cost of inventorying the assets of a chain store or bank, from California to Florida, with dozens of employees pasting labels and confirming that every item is present. With RFID, inventory time drops dramatically.
In addition, an RFID technology partner must ensure that tags are correctly sent to each location, with or without a previous imported record of the assets in the software tool, and make equipment available only at the time of reading at each site. The entire software infrastructure, as well as tags and readers, can be shared.
The cost of the asset-consolidation process can fall by up to 70 percent, and accuracy can reach values higher than the current ones. This is because RFID allows companies to perform inventory counts daily, weekly, monthly or however they wish.
In addition, a security staff member or other employee, armed with a cell phone and a small, low-cost reader, can audit an area containing more than 200 items within as little as 15 minutes. A worker could simply read the floor tags and then begin scanning items without having to perform manual tasks.
In this way, external-audit or asset-evaluation companies can carry out quality- and inventory-verification processes remotely, requiring fewer labor hours and much lower travel expenses. These outside firms have the advantage of monitoring, in real time, each restocking or movement of assets at the company, and can trigger a remote audit action to curb any deviations.
Another advantage is that an operations manager can not only inventory the assets, but also manage them—for example, controlling the processes of sending assets out for maintenance, loans, custody or discarding. RFID, in this case, ensures an integrated and updated view of information in a single system.
Tracking assets via RFID in this way is only the beginning. Once the foundation is established, a company can proceed with implementing fixed reader portals and alarm systems, in order to control the flow and movement of every asset, using an internet interface and mobile applications or data collectors.
Another possible step, following the inventory rollout, is to customize RFID tags for special business cases. This includes fixing processes, protection against chemical attacks and tag recording.
With an RFID system in place, a company can import an existing list or create a new one, execute physical consolidation, evaluate the results, and carry out asset management daily using, for example, a smartphone connected to a small reading device. The answer to the question, "Can I take inventory with RFID technology?" is "Yes, in a simple, practical and integrated way."
Carlos Ribeiro is the CEO of SmartX of America.