Radio frequency identification device technology can save money for companies concerned with the integrity of their supply chains.
RFID tracking is a very common application that helps identify potential counterfeit parts through rules-based management. Essentially: Did the package enter, pass through, and exit the supply chain reader checkpoints at the right places, at the right times, and in the right sequence?
RFID is also ideal for warehouse management systems and local stockroom inventory control. The various applications for accounting purposes are widespread, and in this article I want to introduce a serious money-saving potential that your company may or may not be using at this time.
The cost of renting test and production equipment can be very substantial. Outright purchases of everything from environmental chambers to bench-top test gear can seriously impair a company's cashflow. For some startups with limited available funding, renting or leasing the needed equipment is the only viable option.
With the rental option, more of the available funds can be channeled into salaries or materials required to build the prototypes and proof-of-concept models. Purchasing new equipment often has the additional issue of extensive lead-times, resulting in critical delays for R&D efforts. With rental gear, lead-times can often be eliminated through will-calls at the rental company's back door.
If the development company is trying to optimize its success by meeting a market window opportunity, then the development schedule takes the highest priority.
By utilizing RFID tagging for incoming rental equipment, a company can not only track the equipment as it moves from location to location, but by periodically polling the RFID tags and matching the returned report against an asset management database, the company can save additional money by not inadvertently paying for rental equipment that has been retained by an engineering group but no longer needed for a project.
Also, the rental asset management database can include calibration date reminders so that when the RFID tag is polled, the operator can alert an engineer and arrange for a calibration update. Paying for rental equipment that is no longer being used can be very, very expensive.
My own case study
Here is a personal case history. Being the 24th employee of a now well known company, I found myself in the position of needing all manner of test equipment, both digital and analog. Since we were involved in advanced technologies, the test equipment, like fade margin and network analyzers, did not come cheap.
We were mostly engineers, so we all needed our own benches populated with the basics like power supplies, DMMs, frequency counters, generators, and bit error rate testers (BERs). Each engineer was assigned his or her own boards for development, and so it was not convenient to try to share the equipment in real-time.
Just the BERs were $285 a month times three. The network analyzer (NA), if purchased, would have cost $125,000. The spectrum analyzer was another huge chunk of change, if purchased. We had an R&D budget for $1 million. Obviously, we had to rent the NA. It cost $2,500 a month. In rental equipment alone, we were chewing through our budget at about $40,000 a month.
As in any development progression, different equipment was being used at different stages, but when some equipment was no longer needed, the engineers were so focused on design, and fearing any kind of delays due to limited or unavailable resources, we decided to keep the rental equipment, just in case.
Over about two years of ongoing rentals and project changes, some of the earlier rental equipment went into storage cabinets to quickly make room on benches for new, additional setups. These juxtaposition moves were not discussed or planned for, but were individual decisions by individual engineers over two years of development.
One day I received a call from finance. Our rental equipment payments had burgeoned to about $110,000 per month. They asked a very reasonable question: “Do you guys really need all the equipment we are renting?” I was assigned to investigate and answer that very reasonable question.
I found about $60,000 per month worth of equipment in storage cabinets that had not been opened for over a year. I found another $25,000 per month at the factory on loan from engineering by verbal record only. Here the problem was that the factory was not using it anymore because we had built custom production test fixtures shortly after the new product introduction. That's $85,000 per month outlay for absolutely no return on investment.
To make sure this never happened again, all rental assets were RFID-tagged and polled monthly, and the assigned owners had to vouch that the equipment was still needed and was therefore a justifiable expense. Calibrations were kept-up-to-date, and our rental budget expanded and contracted in phase with the company's actual needs.
The supply chain does not exist without products and services. It all begins with R&D. The more affordable and timely the R&D, the faster products come to market. The equipment rental practice is often overlooked as being key to kick-starting the supply chain. If RFID can improve efficiencies and cost in the rental process, so much better for the supply chain.