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Asset management is critical for almost every business. Not knowing the whereabouts of critical assets can cause downtime that wastes labor, money and operational efficiencies. Traditional asset management methods relied upon manually searching for an asset and recording a barcode with pen and paper. Today, radio frequency identification (RFID) tags can replace barcodes, allowing RFID readers to automatically scan these tags without the need for line-of-sight viewing. With this infrastructure in place, what is needed are tools that can show enterprises how, when and where their assets are deployed and provide alerts and analytics to improve business decision-making.
Enterprise Asset Management Drivers
In general, larger enterprises are turning to IIoT, big data, and digital transformation as the means to increase operational efficiencies and reduce costs. But for enterprises of all sizes, we believe three key drivers are causing them to adopt asset management solutions:
First, the cost of tracking hardware has declined (Exhibit 1), making it affordable for the smallest enterprises. Equally important is scalability; enterprises want front-end solutions that allow new device plug-and-play installations that are agnostic of the devices’ tracking technologies. Second, cloud services like Amazon (AMZN) Web Services and Microsoft (MSFT) Azure have lowered computing costs and removed the need for IT services on-premise. Third, cloud services bring data security, which is a concern for several verticals, especially manufacturers where reluctance to network assets was driven by fear of data theft.
Exhibit: RFID Cost Decline Makes Enterprise Adoption Affordable
- A $9.43 billion asset management system market in 2015, growing at 15.2% CAGR between 2016 and 2022 (over $25 billion) (MarketsandMarkets)
- A real-time location system (RTLS) market worth $1.42 billion in 2015, possibly an $8.09 billion market by 2022 (MarketsandMarkets)
- A $5 billion RTLS market by 2020 (Technavio)
- A 2015 RTLS market worth $956 million that could reach $3.6 billion in 2020 (Mordor Intelligence)
- The total RFID technology market in 2015 was $10.1 billion, up from $9.5 billion in 2014. A potential 2020 market of $13.2 billion (IDTechEX)
High-Value Information Technology Assets
The financial industry has some of the most complex information technology (IT) systems of any sector and can serve as a proxy for several verticals. Legacy methods of manual tracking IT these assets can lead to misplaced and missing data center assets. This can include thousands of servers and storage drives, which if misplaced or missing can create security and regulatory issues, requiring banks to determine the status of these assets immediately.
Underpinning these factors is the Sarbanes-Oxley Act of 2002. The Act mandated that companies create auditable processes to improve financial transparency and international operational controls to restore public and investor confidence in businesses. These practices are auditable, so companies have invested in RFID to track IT assets.
Transportation & Logistics
Train cars are especially difficult to track since a car may pass through several yards, disconnect from an engine and reconnect with another as it makes its way to the destination. Similarly, many containers move through shipyards, board freighters, and are hauled by different trucks before reaching their destinations. Yard operations assets are especially difficult to monitor given the volume of assets and their frequent movement inside and outside of the yard.
The US Department of Homeland Security has funded ports to increase security while minimizing disruption to the flow of goods. The Port Security Grant Program supports maritime transportation infrastructure security activities. The program budgeted $100 million in 2016, bringing the total to over $3 billion since inception. Part of the security concern is the identification and authentication of trucks entering port facilities.
Global Market Insights believes that the aviation industry consumed $300 million of printed and chipless RFID tags in 2015. Lost baggage is an aviation industry problem, one that costs $2.3 billion each year, according to industry regulators IATA and SITA. The study found that initial RFID systems created 99% accurate tracking rate. To improve baggage handling, IATA issued Resolution 753 that mandates that by June 2018, airlines identify every bag as it passes through points of transfer or routing, undergoes security screening and is loaded onto an airplane, and is unloaded and received by the customer.
Tracking beverage dispensing and cooling equipment, kegs, and crates is a key supply issue for beverage producers. Larger beverage manufacturers can have hundreds of thousands, even millions, of assets to track. Knowing where these assets are located allow beverage producers to manage their part in the supply chain so their customers receive the correct products in the correct quantities. Customers should return these assets when done, but this often doesn’t happen, requiring additional capital expenditures for the beverage manufacturer. Returnable containers get lost, damaged, and often aren’t returned, often on the order of about 10% shrinkage from an industry expert we spoke with. As well there is the issue of ensuring that returnable containers contain the correct products, the expiry date of those products are known, and scheduled maintenance occurs.
RFID Tracking Technology
RFID tracking systems use flat circuits called “tags” to wirelessly transmit data to a reader. There are two categories of RFID tags: active and passive. Active tags have an on-board power supply, allowing these tags to transmit over greater distances but come at higher costs. They can monitor a multitude of elements such as heat, light, humidity, vibration, velocity, impact, and battery longevity. Passive tags are energized by the electromagnetic waves the reader emits when it is in proximity to the tags. Although passive tags are cheaper and less complex than active tags, they can only transmit 10 to 20 feet, requiring some facilities to install several readers for automatic tracking systems.
Safety, cost reduction, transparency, compliance, and improved supply-chain logistics have always motivated enterprises to track their assets. Legacy technologies improved legacy pen-and-paper tracking, and falling RFID tag costs have caused enterprises to adopt RFID systems. Now, enterprises across all verticals are seeking global asset management solutions to capture and analyze asset data to uncover hidden value.
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