rfid inventory management study presentation to rfid journal live 2010 20100413
DESCRIPTION
RFID Inventory Management Study - methodology for selecting the optimal approachTRANSCRIPT
RFID Inventory Management Study
methodology for selecting the optimal approach
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In July 2009, Booz Allen Hamilton partnered with large federal agency to evaluate the feasibility of implementing RFID technologies to improve inventory management
The agency has a number of key challenges that significantly impacted the performance of inventory management across the agency– Physical inventory process requires a 9 month effort and another 3 month of
reconciliation– Nearly quarter million accountable assets are on two dozen campus within 400
buildings that contain 12 million square feet of space– Receiving processes provide loopholes to not record assets appropriately– Inventories submitted contain assets previously assigned to other organizations– Inventories submitted reveal ‘lost’ assets that are not being reported
To address these challenges, we engaged a cross-functional team with expertise in supply chain management, RFID technologies and economic business analysis
The project team employed a three (3) phase approach to conduct the study– Phase 1: Baseline Assessment– Phase 2: “To-Be” Environment– Phase 3: Economic Benefits Analysis
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The current annual inventory utilizes a four color system to identify the status and year property is inventoried
The annual inventory is an enterprise function while assets are managed by sub-agencies
The annual inventory is used to validate asset information and resolve data discrepancies
The color and number system offers a visual reference as to the status and year inventoried
There are exception handling processes for “Double Decal” and “Detached Decal”
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Accountable Capitalized Asset Overage Not Accountable
In Inventory System
Value at $5k or more and/or contains sensitive information and requires encryption
In Inventory System
Capital asset valued at $100k or more
Not In Inventory System
Requires action to determine if asset should be accounted in inventory management system or tagged as Not Accountable
Not In Inventory System
Non sensitive or non personal appeal item
* Number denotes inventory year
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In reviewing the key findings with the agency, we validated the program improvement goals and business requirements for the “To-Be” environment
Business Requirements for the “To-Be” Environment Receive all property centrally by site and sub-agency
Identify the location of accountable property in real or near-real time
Identify the location of accountable property by defined zones or building floors
Identify the accountable user for each piece of accountable property
Assign a unique property tag to each piece of accountable property and store detailed information in inventory management system
Generate automated inventory, shortages, overages and performance management reports
Program Improvement Goals for the “To-Be” Environment Improve the accuracy of accountable property, thus reducing overages and shortages
Reduce the time and resources required to conduct the inventory of accountable property
Enable agency staff to focus on mission critical functions
Establish repeatable and consistent processes across the agency
Help to ensure compliance to applicable agency and federal property management policies
Help to reduce redundant processes and adhoc systems
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Based on agency business requirements for the “To-Be” environment, we identified four viable RFID solutions that provide increased functionality compared to the current physical inventory processCandidate Process Description
RFID Assisted Inventory
RFID Assisted Inventory
On a defined basis, people will systematically move through buildings to inventory property using RFID readers that automatically identify property
On a defined basis, people will systematically move through buildings to inventory property using RFID readers that automatically identify property
This is the inventory process currently employed at agency supported by RFID instead of
barcode technology
This is the inventory process currently employed at agency supported by RFID instead of
barcode technology
Location Sensing Inventory
Location Sensing Inventory
With any desired frequency, the location of the property will be automatically sensed to a specific zone or room without the need for human involvement
With any desired frequency, the location of the property will be automatically sensed to a specific zone or room without the need for human involvement
This process provides propertylocation at all times
This process provides propertylocation at all times
Entrance/Exit Sensing
Inventory
Entrance/Exit Sensing
Inventory
When the property moves through choke-points, the property will be sensed without human involvement
When the property moves through choke-points, the property will be sensed without human involvement
This process provides read capabilities at key building security
checkpoints
This process provides read capabilities at key building security
checkpoints
Random Sweep Inventory
Random Sweep Inventory
With random (or periodic) frequency, property location will be automatically sensed to a specific zone with some passive human involvement
With random (or periodic) frequency, property location will be automatically sensed to a specific zone with some passive human involvement
This process is could possible be implemented via a RFID reader on
a mail cart
This process is could possible be implemented via a RFID reader on
a mail cart
Reference Example
PhysicalInventoryPhysicalInventory
On a defined basis, people will systematically move through buildings to visually search for property and record the identity and location of the property
On a defined basis, people will systematically move through buildings to visually search for property and record the identity and location of the property
This is the inventory process currently employed at the agency
This is the inventory process currently employed at the agency
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For each option, we defined the key attributes that would guide the selection process for the “To-Be” environment inventory process
ProcessData
CapturedSolution
ApproachSolution
SizeProcess Change
Value Proposition
Extensibility Challenges
Physical Inventory
RoomExisting barcode scanner method
Very limited infrastructure;
barcode readers for inventory staff
No change to existing process
Is a physical inventory, captures
overages, supports data correction for
property
None
Highly manual process, human
error, lengthy execution time
RFID Assisted Inventory
Room
Same process as physical
inventory; RFID readers replace
barcode scanners
Very limited infrastructure;
RFID readers for inventory staff
Supports the existing process
“work at a distance” using
RF
Faster execution time; less errors than “Physical
Inventory’ process
NoneHighly manual
process, lengthy execution time
Location Sensing
InventoryRoom / Zone
Pervasive RFID infrastructure
throughout the building
RFID infrastructure
within each room or 10’s of readers on a building floor
Physical inventory is
eliminated and replaced with full
automation
No human involvement ;
real-time or near real-time location
Has the potential to add several
additional capabilities
Significant amount of
infrastructure and solution
engineering required
Entrance/Exit Sensing
InventoryBuilding / Floor
RFID infrastructure
limited to entrance/exits or
choke-points
RFID readers at exterior doors, stairwells, and natural choke-
points
Property location is known when it passes through a
choke-point
No human involvement;
location specific to last choke-
point
Could be extended to
include a security solution
Property sensed only when making
transition, otherwise location is inferred
Random Sweep
InventoryZone
RFID reader is carried randomly
from room to room
Very limited infrastructure;
could be carried by janitorial, mail or security staff
Property is inventoried at random times
Minimal human involvement; can capture data over
time
None
Property is sensed at random times and could potentially be
missed
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2
3
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Based on business requirements for the “To-Be” environment, DLS selected the Location Sensing Inventory solution
Inve
nto
ryB
ene
fits
Physical Inventory
RFID Assisted Inventory
Location Sensing Inventory
Entrance/Exit Inventory
Increasing change to current inventory process
Random Sweep Inventory
Exi
stin
g
Ben
efi
ts Visual Inspection
Reconciliation
Shortages/Overages
Faster ProcessSignificantly Faster Process
Full Automation
Real-Time
Precise Location
Pro
per
ty
Ben
efi
ts
Security Security
New Services forProperty Mgmt.
InventoryBenefits(in scope)
Property Management
Benefits(out of scope)
Implementing central receiving and RFID technologies significantly reduces requirements for visual inspection, physical reconciliation,
and capturing of shortages/overages.
Relative CostHigh LaborLow Infrastructure
Low LaborLow Infrastructure
Low LaborMid Infrastructure
Low LaborHigh Infrastructure
High LaborMid Infrastructure
Security
Illustrative
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Inventory Solutions
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Both the Zone and RTLS methodologies supports the agencies business requirements for the “To-Be” environment
ZoneZone
Each building is blanketed with reader zones
Using a fixed reader at known positions, property location is detected as it moves about a building
Each building is blanketed with reader zones
Using a fixed reader at known positions, property location is detected as it moves about a building
Real-Time Location System (RTLS)
Real-Time Location System (RTLS)
Fixed readers are installed at known positions within each building
Property location is calculated using the tag signal reading via the multiple reader points
Fixed readers are installed at known positions within each building
Property location is calculated using the tag signal reading via the multiple reader points
Zone by Association
Zone by Association
Each building is blanketed with reader zones
Using a fixed reader and reference tags at known positions, property location is detected as it moves about the building
Each building is blanketed with reader zones
Using a fixed reader and reference tags at known positions, property location is detected as it moves about the building
Data: Exact location (automatic) Advantages: Location accuracy
can be determined within a few feet Shortcomings: Highest reader
density and greatest engineering complexity
Data: Exact location (automatic) Advantages: Location accuracy
can be determined within a few feet Shortcomings: Highest reader
density and greatest engineering complexity
Conclusion: Requires further analysis of agencies Wi-Fi infrastructure
Conclusion: Requires further analysis of agencies Wi-Fi infrastructure
Data: Room location (automatic) Advantages: Location is known at
all times without any human involvement
Shortcomings: Many carefully placed reference tags may be needed
Data: Room location (automatic) Advantages: Location is known at
all times without any human involvement
Shortcomings: Many carefully placed reference tags may be needed
Conclusion: Additional cost without significant added value
Conclusion: Additional cost without significant added value
Data: Zone location (automatic) Advantages: Location is known at
all times without any human involvement
Shortcomings: Zones could be large and potentially overlap
Data: Zone location (automatic) Advantages: Location is known at
all times without any human involvement
Shortcomings: Zones could be large and potentially overlap
Conclusion: Meets agencies business requirements
Conclusion: Meets agencies business requirements
Methodology Description Graphical Depiction Analysis of Methodology
Asset Tag AntennaReference Tag
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RiskStructure
Value Structure
Cost ElementStructure
Booz Allen took an economic benefits analysis tool based on the Value Measuring Methodology (VMM) and combined it with the detail engineering analysis tools required for the RFID solution.
Facilitates development and prioritization of a detailed quantitative benefits (performance measurement) analysis
RFID Solution CreationRFID Solution Creation
Asset and Facilities Data
Baseline quantities of property, building, and other relevant data
Forecasting of demand and rollout assumptions
Solution Demand Planning
Schedules & program planning
Vendor and professional services required
Solution engineering input used to create quantities of things to cost
Solution Cost Calculations
Cost elements
Cost allocation to organizational entities
Asset and Facilities Data
Baseline quantities of property, building, and other relevant data
Forecasting of demand and rollout assumptions
Solution Demand Planning
Schedules & program planning
Vendor and professional services required
Solution engineering input used to create quantities of things to cost
Solution Cost Calculations
Cost elements
Cost allocation to organizational entities
Identifies known factors that may impede the ability of an initiative to achieve its goals, degrading projected levels of performance and escalating estimated cost
Allows for a high-level view and Rough Order of Magnitude (ROM) estimate of the lifecycle costs to develop and deploy solution
VMM Decision Framework Components
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Within the VMM cost analysis methodology, the three-step RFID Solution Creation process transforms the business provided data to an estimated cost for the RFID solution
The Booz Allen methodology creates a completely traceable linkage between the business provided data and the resulting plan and cost estimation
Analysis and planning are performed to identify a ROM level cost estimate, but by using a detailed, comprehensive roll out plan for the RFID solution
Asset and Facility Data
Multiple data sources are combined and inconstancies resolved Tracked assets data is organized by
site, building, room, organization, etc. Facilities layout maps for site, building,
room to calculate site and location Anticipated growth & movement of
assets This consolidated data provided a baseline
year location of assets and facilities Assets assigned to org, site, and
building Assignment of org to site and buildings Square footage of buildings, distance
between sites, etc.
Solution Demand Planning
Creation of a multi-year forecast for the RFID solution Estimates of required RFID tags, RFID
readers, software and hardware products, etc.
Projecting key engineering decisions like what and when buildings need to be wired with RFID readers
Creation of a multi-year forecast of the RFID solutions operational impact Roll-out plan for each org, site,
building, etc. What location or floor space will
assets be tracked via RFID
Solution Cost Calculation
Creation of a multi-year forecast of expenditures for the deployment of the RFID solution Cost of all tags, readers, and
middleware Cost of installation Cost of maintenance
Projection of solutions effectiveness Quantity of assets that can be tracked
via RFID Incremental cost of tracking an asset
via RFID
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An RFID solution that tracks 97% of agencies property assets with RFID readers in 81 buildings should be sufficient
100% assets tracked and 100% sq. ft. / 267 buildings wired
99% assets tracked and 87% sq. ft. / 111 buildings wired
97% assets tracked and 83% sq. ft. / 81 buildings wired
94% assets tracked and 80% sq. ft. / 61 buildings wired
93% assets tracked and 80% sq. ft. / 58 buildings wired
89% assets tracked and 77% sq. ft. / 49 buildings wired
88% assets tracked and 75% sq. ft. / 45 buildings wired
85% assets tracked and 72% sq. ft. / 40 buildings wired
Observation: The knee of the curve is a transition point where the value gain becomes increasingly expensive but it also satisfies the agencies property inventory requirements. This was identified as the optimal solution and used in the
subsequent VMM analysis.
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Direct financial benefits include a positive ROI and break even point 2 to 3 years after full deployment and indirect benefits extend positive value across the agency
Return on investment ranges between 7% and 64% (based on 15%-30% reduction in property not found) and equates to a net present value between $1.8M and $16.1M of cost savings
Break even point occurs between years 2 to 3 years after full deployment
Reduce PCO support costs for property management by $3.3M during the initial five (5) years
Reduce reliance upon annual physical inventory and achieve cost savings of $3.6M
Property not found will be reduced by 15% to 30% each year after full implementation Labor savings of 15% of PCO personnel costs after year 5 Approximately 97%* of accountable assets can be tracked at the end of year five (5) by deploying RFID
infrastructure to 20% of agency buildings
Direct Financial Benefits
Key Assumptions
Cost estimates are midpoint estimates within a range that varies approximately +/- 10%.
* Note: 97% of assets are being tracked automatically via building readers and other 3% will be tracked by handhelds readers. 100% of the assets will be tagged with RFID tags.
Reduce shortages and overages Reduce the time and resources required to support
property management Improve the accuracy and completeness of
inventories Reduce reliance upon physical inventory process
and gain the capability to conduct ad-hoc queries Increase property accountability via real-time
visibility of asset location Improve reporting capabilities Enable agency to extend the value and capabilities
offered by RFID to support mission requirements and additional functionality
Indirect Benefits
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Some Key Take Always
It is best to think of your project as “process transformation” and not just leveraging RFID technology or providing visibility to an existing process– Get a complete understanding of the strengths and weakness of the existing process– Establish a clear set of objectives for the new process
You need to educated your stakeholders on the range of possibilities that a RFID solution can reasonably provide– Walkthrough the process impact a RFID solution will impose– You need to describe and compare RFID solution alternatives in easy to understand
steps
For the economic analysis, your in search of not only minimal cost but an “optimal” approach– Be prepared to examine multiple alternatives and sensitivity analysis’– Systematically eliminate alternatives early so they can be removed for further detail
analysis