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Benefits of RFID in tracking assets and RTIs

RFID implementation process involves several questions from those who are interested in applying the technology in their business. This article takes a closer look at some of the benefits behind RFID from RTI business and asset management perspective.

Opening up the concepts

What do we mean when we say RTI? RTI, Returnable Transport Item, is a reusable packaging asset, which is utilized in transporting goods and then returned to the original location. In practice they are roll cages, pallets, plastic crates, and so forth. The goods are packed in an RTI, then shipped to a retail store after travelling along a distribution chain, and afterwards the empty RTIs are shipped back to the original location, mostly following counter-wise the distribution chain's steps.

When talking about asset management, we mean the "coordinated activity of organization to realize value from assets" (ISO 55000). Thus, it means balancing and evaluating the existing assets in order to bring profits for the company. The core issue is to make the right decisions and optimize the delivery of value. In practice, an asset is owned by the company and it can be for instance an RTI, but also computers and office furniture are considered as a company's assets. Moreover, asset management covers a larger spectrum of actions, such as managing the RTI pool or locating documents in the archive. In the RTI business, the aim of asset management is coordinating the actual RTI pool and allocating right numbers of RTIs to customers, and also predicting the RTI pool circulation pattern. This means that a company must have a sufficiently large pool of assets circulating in order to provide the RTIs to customers and to ascertain the product deliveries.

Track and trace is used from technologies that enable goods to be followed through the delivery channel, including identifying and verifying the path. RFID is considered a track-and-trace technology as it enables a real-time monitoring of the goods - also easy, fast and efficient tracking is possible with the help of RFID. In some cases it can automatize the tracking operation.

RTI_image

What to bear in mind when planning to invest in RFID? 

Inevitably, the list of benefits that the RFID implementation brings along is remarkable. For instance, the inventory accuracy improves, also the out-of-stock situations in shops and shipping errors of outbound operations can be avoided. But, there are several things that should be taken into account when an RTI pool owner considers taking RFID into their business.

Einar Toivonen, Head of Business Unit (Postal & Logistics) at K. Hartwall Oy, suggests to carefully estimate the actual need for RFID. Some points where to start the consideration process are to think about where the potential benefits arise and if the list of benefits is long enough. When the benefits are clearly evaluated and listed, managing the assets becomes easier with real-time measurement systems. Real-time information is a large advantage, which in practice is a money-maker for the RTI pool owners.

Moreover, many business deciders keep forgetting that when considering RFID projects, asset tracking and asset management are two different business operations. Here the focus should be on the chargeable system - if the RTIs are not rolling in and out, no profit for the pool owner is created. Companies facing these kinds of problems are easily willing to exploit the automatic RFID system as they see that it can enhance their RTI processes. Another point is that the RTI pool needs to be large enough, so it would make sense to transfer the fleet under the RFID system. Here the question is that if the targeted benefits are large enough in order to invest in an IT system for the RFID.

Price tag = value given by the RFID?

The value brought by an investment can be classified variously. Financial benefits are perhaps the most common assumption, but is it the only targeted value behind RFID implementation? No, it's not.

As mentioned, the most common value is financial - RTIs are seen as an investment as they are a reusable asset, which brings financial value to the owner. But when this asset is not returning on time or not at all, the aspired value is something non-financial, urgency-related, and thus more difficult to define.

The second value is naturally avoiding downtime in other shipments, when you can better monitor the availability of an RTI. The term is intrinsic, which consists of the actual value of an asset based on an ultimate assumption of its true value, which includes both tangible and intangible aspects of the business. In RTIs, when one is not either returning on time or not at all, it causes intrinsic problems in asset management.

From the asset management perspective, the value consists of different angles or focuses. If an RTI cannot be tracked and it contains important spare parts for a certain production machine, the whole production is standing while waiting for the spare part to arrive and to be installed. The third value is mission critical value - when one fails, others fail too as a chain reaction.

Shutterstock _84213922 Warehouse Gate

How to maximize the profits brought by RFID?

Einar Toivonen suggests that in order to boost the RFID implementation process the actual RTI and the goods inside should be monitored in the same infrastructure. As the infrastructure can take advantage of the same expense as the scope enlarges, several stakeholders and interest groups benefit from the RTI tagging and it gives guidance on how to build the roadmap. By monitoring both the RTIs and the goods inside through the same RFID system the overall benefits of tracking increase. In practice this means that the whole supply chain benefits more of the tagging process if the applied RFID system tracks both the RTI and the goods inside. This way the customer, whose goods are inside the RTI, can take the best advantage of the tagging process. Moreover, besides asset tracking, also the supply chain gains benefits.

Another point that he wants to emphasize is that when the RTIs are not returning at all, who will take the responsibility of the money lost during time elapses? The end customers should be the ones, but they are not willing to take any responsibility unless their goods are the ones inside the missing RTI. The damages caused by the missing RTI should be measured in real currencies as it helps people understand the level of the losses better than any other explanations. 

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Einar Toivonen, Head of Business Unit (Postal & Logistics) at K-Hartwall Oy, is a strong professional in several successful production-scale RFID implementations and business developments in industries such as logistics, retail, and pulp and paper.

K. Hartwall Oy is a Finnish Logistics Solution provider, who has been using RFID technology for a few years. For more information about the company, please visit the K. Hartwall Oy website.

 

Sources:

http://www.confidex.com/applications/returnable-transit-item-management

http://www.gartner.com/it-glossary/track-and-trace

http://www.investopedia.com/terms/i/intrinsicvalue.asp

2 comments on “Benefits of RFID in tracking assets and RTIs”

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  2. Posted 06 September 2017 at 07:42:29

    Its a very informative post for me. Thanks.

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