Efficient Asset Tracking: From Manual to Automated

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1 White Paper Efficient Asset Tracking: From Manual to Automated

2 Asset Tracking Overview: Asset Tracking Basics: The Fixed Asset Register Managing a Fixed Asset Register Asset Identification Technologies o Barcode Technology o Passive RFID Technology o Active RFID Technology Asset Tracking Basics: The Fixed Asset Register In any large organization, the task of identifying and locating a specific fixed asset can be difficult. Fixed Asset Registers (FARs) are often created and maintained to comply with legislation governing corporations; they allow a company to keep track of fixed assets, demonstrating control and preventing misappropriations. Finance departments make use of FARs to calculate the depreciation value of assets for tax and insurance purposes. FARs are meant to provide accurate, complete, and customized reports that suit the needs of management. It is not always clear which types of assets need to be tracked. Land, buildings and vehicles can be exempted from the FARs when there are independent systems of tracking (such as registration papers and survey numbers). Not all assets are capitalized; a company may have a policy to capitalize only those assets which cost more than a specified amount. In the US, government agencies are required to expense all equipment whose value is below a threshold limit. Similarly, fixed assets which have a useful life of less than one year are not capitalized. FARs may also be used to keep track of fixed assets that are not under direct ownership of the company, such as leased assets. The details to be provided in a FAR depend upon a number of factors: a) Cost of assets; greater control and security is required for costly equipment. b) Asset ownership; the extent of owned versus leased assets will dictate the details tracked regarding asset life cycle and depreciation. c) Nature of assets; PCs, servers and laptop computers may contain software, files, and data that are more valuable than the hardware itself. d) Mobility of assets; if shared and moveable assets constitute a significant portion of total fixed assets, details must be captured regarding movement between departments and cost centers. e) Business ownership; disclosure and regulatory compliance applicable to the entity. Fixed assets for publicly-traded corporations must be stated in accordance with generally accepted accounting principles (GAAP). f) Liability for assets; security aspects, prevention of loss and requirements of insurance companies. g) Multiple locations; if fixed assets can move throughout numerous locations, inventory logistics and timeliness of data needs greater attention. h) Maintenance factors; for fixed assets that require regular servicing, it may be necessary to monitor maintenance costs and dates of service. Managing a Fixed Asset Register A common element to all asset tracking systems is the assignment of identification numbers (may include alpha and numeric designators). It is advisable to use a scientific numbering technique to identify fixed assets. The process of physically marking fixed assets is called tagging. In office environments, it is often sufficient to simply print and affix a barcode ID label to the asset. Engraving the identification number on the asset is common for equipment and machinery where there is heavy wear and tear. A tag may also take the form of a small metal plate (name plate). Industrial name plate manufacturers offer a variety of different nameplates with properties that vary from application to application, including: material (aluminum, stainless steel or titanium), thickness, custom graphics, screen printing, etching, embossing, anodizing, and adhesive backing. Page 2

3 The physical tag serves to verify the existence of the asset and aids in visual identification; it also provides a common ground for communication between the accounting department and the end-users for tracking the financial value of the asset throughout its useful life. The task of documenting and locating a specific fixed asset can be difficult unless the asset identification scheme is scientific, systematic, and up-to-date. A common problem in many companies is the improper maintenance of the FAR. Physical verification of fixed assets becomes a futile exercise unless the FAR is properly maintained. The brute force inventory clipboards, legal pads, and physical audits (recording asset locations and identification numbers) is a nearly universal starting point. The recording and maintenance of the audit records can take on several degrees of complexity, depending on where the information is stored and how it is accessed. Unfortunately, physical audits are expensive and timeconsuming, the results are often obsolete within weeks, and rarely paint an accurate picture for shared and mobile assets. Different technologies are employed to enhance the maintenance of the FAR and improve the accuracy of asset inventories. Strategies overlap to some extent, and there are various pros ands cons making them suitable for some applications and not for others. In July 2007, Polivec and Mainstay Partners conducted a survey of 142 business executives and professionals in the compliance and IT fields from a broad array of industries including financial services, manufacturing, retail, and government. The following approaches were cited: 48% - Spreadsheets 41% - Server-Based Shared Folders 40% - Manual Systems and Procedures (e.g., paper) 34% - One or more Dedicated Compliance Software Products 11% - Not Sure Asset Identification Technologies Various Automatic Identification and Data Capture (AIDC) methods are used to consistently collect inventory data which can then be shared within the enterprise. 1) Barcode Technology Data accuracy can be improved by conducting regularly scheduled physical audits and constantly updating the FAR. If the asset nameplate contains a barcode, the audits can be performed more efficiently. Laser printers are capable of printing quality barcodes and the labels are cheap, typically only a few cents for an adhesive-backed label with a peel-away protective liner. Auditors can be equipped with relatively inexpensive barcode scanners and a piece of data capturing equipment. All that is needed is line of sight for the barcode ID to be read by the scanner and captured (although crawling under desks and accessing cramped areas may still be required). Barcodes reduce the chances of recording errors. It becomes easier to collect and compare inventory results versus previously collected information. In certain environments, the barcode may smear, tear, or deteriorate over time, however if the asset can be physically located, it is not difficult or expensive to apply a new barcode. 2) Passive RFID Technology Data accuracy can be improved by conducting regularly scheduled physical audits and constantly updating the FAR. If the asset nameplate contains a passive RFID tag, the physical audit can be completed about 4 times faster than a barcode audit. The Auditor can be equipped with a passive RFID reader / interrogator that does not require line of sight between the label and the reader all that is required is physical proximity. The Auditor still needs to visit each physical location of each tagged asset, but the data collection process is automatic. Passive RFID Readers in the UHF band can be purchased for a few hundred dollars. A passive tag does not have an on-board power source; it uses the radio frequency signal emitted from the reader/interrogator to energize itself and transmit its stored data to the reader. Passive RFID tags have practical read distances ranging from about 10 cm up to a few meters, depending on the radio frequency and antenna design/size. Due to their simplicity in design they are also suitable for manufacture with a printing process for the antennas. The cheapest passive tags are priced in volume from 5 to 15 cents per tag. RFID Tags in the UHF band with limited on-board memory for read-write capability can be purchased for 15 to 25 cents per tag (in volume). The lack of an onboard power supply means that the device can be quite small: commercially available products exist that can be embedded in a sticker. In certain rare circumstances, the passive tag may become damaged or unreadable, however if the asset can be physically located, it is not difficult or expensive to apply a new passive RFID tag. 3) Active RFID Technology If the asset nameplate contains an active RFID tag, the need for routine physical audits is practically eliminated. Active RFID Asset Tracking Solutions combine hardware and software products that work together to enable automated, real-time, on-demand physical asset inventory for compliance, business and security needs. FARs can be continuously updated since each tag transmission is monitored as often as every 10 seconds. Key capital assets can be instantly identified and located. Page 3

4 Active RFID Tags have an on-board power source, such as a coin cell battery, and a microprocessor for performing special tasks. Active tag data transmissions have a much longer range than passive tags; a single active RFID reader can monitor and inventory entire populations of active tags at distances exceeding 100 meters. Active RFID asset tracking systems utilize beacon tags that periodically broadcast their status using encoded radio transmissions. Readers can be permanently installed in strategic locations (e.g., offices, storage rooms, high traffic areas, exits) to report the presence and status of all tags that are beaconing within specific areas or zones. Overlapping readers and signal strength analysis is used to determine asset location with great precision. Tag transmissions are processed in real-time to immediately locate and identify tagged assets in defined areas. Active RFID readers are compatible with wired and wireless networks for integration into an organization s IT infrastructure. If real-time tracking of equipment over an extensive area is needed, then an active RFID solution is superior to passive solutions. The tags and readers are more expensive (tens of dollars for each tag, and hundreds of dollars for each reader), but active RFID technology eliminates the need for manual inventory processes. Sample audits may be performed to verify the integrity of the asset tracking system and the accuracy of the data, but 100% physical audits are no longer required. In certain circumstances, an active RFID tag may become damaged or unreadable, however, most active tags will issue a tamper or low battery alert if there is a change in their operational status. The most common maintenance task is the replacement of batteries; in some rare instances it may become necessary to replace the entire tag. Page 4

5 For information about automating your inventory process, please visit This White Paper is for information purposes only. RF CODE MAKES NO WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, AS TO THE INFORMATION IN THIS DOCUMENT. Copyright 2008 RF Code, Inc. All Rights Reserved. RF Code and the RF Code logo are either registered trademarks or trademarks of RF Code Incorporated in the United States and/or other countries. All other trademarks are the property of their respective owners Waterford Centre Suite 500 Austin, TX Tel: Fax: February 15, 2008

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