With growing pressure in the public and private sector for improved asset management, organisations undoubtedly need to improve the quality, accuracy and timeliness of asset information. Relying on an annual audit – at best – is simply not good enough. Whilst many have been deterred from more frequent checks by the laborious and costly task of a manual audit, the latest generation of Radio Frequency (RFID) technology fundamentally changes the time/cost equation.
Active RFID tags are still unaffordable and unrealistic for all but the most expensive assets; but passive RFID tags cost little more than barcodes. Requiring no line of sight, the tags transform the speed and ease of scanning; organisations can both simplify the process and embark upon the more frequent audits required to improve asset management decision making.
Finance departments are becoming increasingly more accountable for the fixed asset base, says Karen Conneely, Group Commercial Manager at Real Asset Management and can benefit greatly from the use of today’s technology. From reducing annual audit fees to enabling better decision making regarding the acquisition of new assets and driving down insurance premiums, RFID tags can provide a platform for transforming the management of the asset register.
Maximising Value
As the recession continues, maximising asset value has become a core component of business planning. Any business that can minimise asset duplication, extend the lifespan of key items and reduce wastage through theft or damage can demonstrate measurable bottom line benefits.
This improvement can only be achieved with effective asset management processes; yet many organisations still struggle to routinely check and locate critical items. For the finance team tasked with valuing the asset base, changes in location, usage and disposals will often only come to light during a physical audit – which is often too late to improve asset management decision making or flag up trends in behaviour that may be resulting in asset damage or loss.
There is clearly a strong argument for improving the frequency and accuracy of the physical audit. But the traditional tool for this process – the barcode – has limitations that undoubtedly result in fewer audits being conducted.
Line of Sight
To read a barcode demands line of sight, either requiring it to be located in a highly visible position on the asset – which is not always ideal – or demanding the auditor crawls underneath furniture or interrupts individuals using equipment. Indeed, in many schools and offices, organisations have had to move barcodes from a visible location on the front of IT equipment, for example, due to risk of damage – both wilful and accidental. Yet this then means anyone undertaking a physical audit must interrupt the user to scan the barcode – either affecting productivity or, more likely, resulting in an incomplete audit. Similar problems affect care homes or the leisure industry, where organisations prefer not to publicise the use of barcodes for aesthetic reasons and opt for a less obtrusive location on valuable assets.
The time taken to complete the audit, as a result, is longer than desired. In contrast, the latest generation of affordable passive RFID tags does not require line of sight; nor is it affected by the spills and scratches that damage barcodes. And whilst organisations have been deterred from adopting RFID due to the high costs associated with active tags, the cost of passive RFID tags is now almost on a par with barcodes.
The leap forward in usability and control is significant. Depending on the quality of the scanner, a single scan can pick up all tagged items within a 2 to 3 square metre space, enabling an individual to rapidly audit each room, registering multiple assets without any interruption of staff, patients or guests. The RFID tags can be located anywhere on the asset, removing the risk of damage; and with no need for line of sight, the process is up to ten times faster than a barcode based audit, significantly reducing the cost. In addition, as each item is scanned, it can be matched with the asset register to verify not only its existence but its correct location.
Audit Frequency
When combined with effective asset management software, the passive RFID tag also provides the chance to impose control over the audit process. Organisations can lock down the system, preventing any amendments being made during the audit. By taking this approach, a company can provide scanning tools to junior personnel who can walk and scan around the building, hospital or retail store with no requirements other than the ability to provide basic location information to the system. The collected information can then be validated at a later date, using the asset management software to highlight missing or moved assets.
Alternatively, a company can empower an individual to add information during the audit process, such as the serial number of a laptop, to build a more detailed asset register. Both models have value; by providing a proactive, easy to use way of verifying asset status and location, finance can devolve the responsibility for asset management to department heads, ensuring that asset information is regularly updated and accurate to drive better decision making.
Financial Incentive
The benefits associated with more frequent physical audits extend beyond creating an opportunity to maximise asset value. With accurate, provable information on asset status and location organisations can negotiate better insurance premiums and, critically, minimise delay when placing an insurance claim. Accurate asset information also plays an important role in company acquisition and merger negotiations, ensuring the business is correctly valued.
With an accurate, up to date asset register, companies will also see the cost of compliance reduce. The ability to demonstrate that a high proportion of the assets on the balance sheet are not only on the register but actually in the expected location is a key requirement in driving down the annual audit fee.
However, the key benefit is, without doubt, the opportunity to increase asset insight. Exploiting RFID passive tags enables organisations to de-skill the process and embark on far more regular audits without incurring additional costs. With organisations across every sector, from the NHS to education, leisure to manufacturing, looking once again at opportunities for reducing costs, the spotlight is on maximising asset value: and it is those organisations that can transform improved accuracy and timeliness of asset information into better decisions that will extend asset life, reduce wastage and deliver measurable bottom line value.