The following is a case study from one of the first asset projects our Chief Technology Officer managed as part of a global information technology company. We will review the problem and the logical but ultimately unfeasible initial solution. Finally, we will describe how RFID technology transformed that expensive and unfeasible solution into a practical, affordable and efficient asset management process.
A global IT company had a contractual requirement to maintain a high degree of inventory accuracy for its client’s IT equipment. When a spot audit was conducted by the client, the accuracy of the inventory yielded less than a 50% accuracy rate, far below what was contractually mandated. The cost of the manual inventory process required to reach that required accuracy rate was an estimated $7M in staff time and data management costs. The client asked the IT company to craft a solution for the problem to improve the accuracy of tracking the estimated 80,000 IT assets without having to perform the costly and slow manual inventory process.
The initial solution implemented by the IT company involved each of the field engineers or technicians completing a small local inventory check when they were out at various locations completing a support visit. The objective was that each small check, that happened as part of the field techs’ daily work, would provide an ongoing location spot check on the IT assets, theoretically improving asset management accuracy rates.
The Problem with the Initial Solution:
After a month of completing the local inventory checks, the IT company found that the average time to collect data for each device at the location was five minutes, or an average one hour per 12 devices. Since the assessment was collected manually, the data had to be entered into the Asset Tracking System at a later date, resulting in one additional hour per 12 devices. Once entered, an asset management quality control team had to standardize the inputs to prevent duplicates in the database which resulted in another hour per 12 devices. The total process caused an average of three effort hours per 12 devices. Considering the quantity of assets, this added an additional 20,000 hours of work annually, estimated to cost at least $600,000 in just labor costs. While a seemingly simple idea, when put into practice, it was obviously not a sufficient solution.
The Ultimate Solution with RFID:
Our CTO, who was then working as a project manager for the global IT company, was tasked with providing a more efficient solution. The solution he developed was one of “Continuous Asset Validation” or “CAV, which built off the idea that maintaining a periodic physical inventory process was necessary to ensure asset tracking accuracy. By using RFID with this theory, efficient inventory data points could be collected in real time. RFID tags were affixed to each IT asset and the same field engineers/technicians where given mobile RFID readers to use during any site visit. The RFID data collection process reduced data collection to a matter of minutes for an entire site location. Since the data was collected electronically, upload was reduced to an automatic internal system process and the need for auditing by the Asset Management quality control group was completely eliminated. Since the data is collected from the pre-identified tags every time, no duplicates could be created. The overall RFID process was THE solution for this project.
Results of integrating RFID into a CAV system:
The IT company was able to meet and exceed its contractual obligations without incurring thousands of labor hours. The net result was the elimination of 95% of the effort to conduct an effective efficient CAV process. Moreover, the overall accuracy increased to 98%. This CAV model is a vital cornerstone in any total inventory/asset system such as IPMAS’ “Holistic Asset Management System™”.
Continuous Asset Validation is a useful process in an overall asset management system. In order to make that process viable, efficient technology tools must be utilized. There are multiple possibilities for asset tracking tags, readers and back-office software. At the current time passive RFID is the most effective, efficient affordable technology available.