RFID Tool Tracking Basics

For a technology to take a strong hold in the marketplace, it must directly solve a known challenge or support the process improvement needed to overcome this challenge. RFID moved into the spotlight when WalMart and the DoD began to push the rapid development of the technology. The goal was to improve the processes surrounding logistics, delivery and receipt of product. This was the driving factor behind the rapid technology advancement of the last 5 years.

Although RFID has made an impact on the logistics side of things, it has not been an easy road. Process improvements have been made and standards established, but I think everyone would agree it hasn’t proven to be the “pie in the sky” as it was once being billed. While the primary media focus remained the logistics side of RFID, a few innovative small companies were finding unique uses of RFID technology that did directly solve a known challenge.

In the background, many asset tracking applications were being developed to monitor high cost machines, IT equipment, hospital assets, amusement park rides, tools and MRO supplies. This “closed loop” use of RFID has become amazingly popular and has proven amazing ROI.

As a member of a company that was leading the marketplace with a robust bar-coding application to manage tool and MRO inventory, RFID began to intrigue us, and the president of our company, Mr. Larry Harper began to really see a vision. One of the challenges with having software within a tool crib was that it still left a person responsible for checking out the tools or supplies to an employee. Larry began to see how an RFID portal could eliminate the need for human interaction and still trigger the transaction. And so we went on the journey of discovering about RFID tool tracking.

The management of MRO supplies and tools is one of those areas that really has had a lack of focus. Very few processes have been defined and supply chains are also very remedial. The reality is for the average manufacturer the spend for MRO and tools is less than 10% of their overall spend. Because of this, it has not been given the attention it really deserves. Although it is less than 10% of the overall spend, the amount of processes dependent on having this product on-hand and built correctly into the manufacturing process are overwhelming. The amount of direct cost is substantial but the indirect cost is often times mind blowing.

RFID technology provides the ability to accurately track this inventory reducing costs and improving process flow resulting in substantial bottom line savings. Not only do you have an immediate direct cost of inventory savings because of increased accountability, you begin to see process time saving. Actually, you may not have even realized how much it was costing you. For example, it has been reported to us that an RFID portal used to manage a crib area can reduce wait times at the crib by 60%-90%, issue and return time can be reduced by 50%-90% and reduced labor cost by 40%-80%. These calculations are just the cost reduction based on process improvement. The software driving the system typically returns users cost savings such as: reduction in lost tools, reduced carrying cost, reduced usage based on accountability, reduction in obsolete inventory, reduction in overstock inventory, and a whole lot more.

So what do you have to do to understand if RFID can help you track tools or MRO supplies? First of all take an objective view of your current processes and look for areas of improvement. With RFID in particular, ask yourself if there is a great deal of wasted time in that process. Ask yourself if there are areas of resisted flow or areas that could benefit from automation. In particular, RFID can help you develop an unrestricted process flow which in turn returns dramatic savings based on increased production and less down time searching for material or waiting through a process that was never really well thought out.

Manufacturers who have taken this route have proven successful implementations with an average of 4 months or less to achieve their ROI. In fact, many of the customers who achieved that ROI had already defined integrated supply processes but had an unmanned shift. RFID has also produced huge savings and safety perks with foreign object debris (FOD) tracking in aerospace manufacturing facilities. RFID controlled toolboxes monitor when things are missing and where they may be. The risk of leaving a tool on an aircraft that is being assembled is greatly reduced as well as the manual process of checking each toolbox drawer to ensure tools have been returned. Integrated supply relationships have improved with RFID because now the need for the supplier to run to the facility to take counts is eliminated and replenishment is automatic.

Tool and MRO tracking is an area that can prove substantial savings in a short period of time using RFID technology. I will tell you that RFID does directly solve a known challenge and support and improve the process change needed to overcome this challenge. So, you should begin a tool and MRO tracking program today and begin to reap the awards.