RFID Inventory Management Study<br />methodology for selecting the optimal approach<br />
In July 2009, Booz Allen Hamilton partnered with large federal agency to evaluate the feasibility of implementing RFID tec...
The current annual inventory utilizes a four color system to identify the status and year property is inventoried<br />Not...
Non sensitive or non personal appeal item
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</li>...
In reviewing the key findings with the agency, we validated the program improvement goals and business requirements for th...
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
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Rfid Inventory Management Study Presentation To Rfid Journal Live 2010 20100413

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RFID Inventory Management Study - methodology for selecting the optimal approach

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  • The key findings of the baseline assessment centered on the current annual inventory, property management, operational support resources, and IT infrastructureAnnual InventoryThe annual inventory is an enterprise function while assets are procured and managed by sub-agenciesThe annual inventory utilizes a four color and numbering system to identify the current status and year inventoriedThe annual inventory is used to validate asset information and resolve data discrepanciesThe current annual inventory process is very labor intensive, includes access restrictions (height, line of sight), and requires significant coordination between organizations and staffProperty ManagementThere is a broad range of property (computers to firearms) and locations (bio-safety labs to office cubicles) that have unique business requirementsPrimarily driven by the need for data encryption, IT assets are the only property that are consistently centrally received by sub-aganciesProperty that moves between locations is not always updated in the inventory management system or other offline systemsResources and IT InfrastructureMost staff are not dedicated to the position full timeStaff spend a significant amount of time researching overages and shortagesSome sub-agencies have employed offline solutions (e.g., spreadsheets) outside of the inventory management system to track assetsThere is a lot of enthusiasm for RFID technology and desire to improve asset visibility and tracking
  • We were looking for the knee of the curve to settle in on as a recommendation. In the absence of a specific goal (e.g. must track %98 of assets or cover all buildings with more than 200 assets), we feel the knee represents a transition point where the value gain becomes too expensive. This is a judgment call and the point we picked is our approximation to the knee location. This is only one of the many variables the agencies should consider when developing a final rollout plan. Our analysis assumes a rolling out by big sub-agencies first. The “optimal” roll out (i.e. and we do not have a clear definition of optimal) is likely to be a combination of sub-agencies size and building asset density.  Also, we need to keep all this in perspective. We are talking about %94 vs. %96 and a cost variation estimate of about $500K (2% of the total cost). Therefore, regardless of these observation, we have a good ROM level analysis.
  • Rfid Inventory Management Study Presentation To Rfid Journal Live 2010 20100413

    1. 1.
    2. 2. RFID Inventory Management Study<br />methodology for selecting the optimal approach<br />
    3. 3. In July 2009, Booz Allen Hamilton partnered with large federal agency to evaluate the feasibility of implementing RFID technologies to improve inventory management<br />The agency has a number of key challenges that significantly impacted the performance of inventory management across the agency<br />Physical inventory process requires a 9 month effort and another 3 month of reconciliation<br />Nearly quarter million accountable assets are on two dozen campus within 400 buildings that contain 12 million square feet of space<br />Receiving processes provide loopholes to not record assets appropriately<br />Inventories submitted contain assets previously assigned to other organizations<br />Inventories submitted reveal ‘lost’ assets that are not being reported<br />To address these challenges, we engaged a cross-functional team with expertise in supply chain management, RFID technologies and economic business analysis<br />The project team employed a three (3) phase approach to conduct the study<br />Phase 1: Baseline Assessment<br />Phase 2: “To-Be” Environment<br />Phase 3: Economic Benefits Analysis<br />
    4. 4. The current annual inventory utilizes a four color system to identify the status and year property is inventoried<br />Not Accountable<br />Accountable<br />Capitalized Asset<br />Overage<br /><ul><li>Not In Inventory System
    5. 5. Non sensitive or non personal appeal item
    6. 6. In Inventory System
    7. 7. Value at $5k or more and/or contains sensitive information and requires encryption
    8. 8. In Inventory System
    9. 9. Capital asset valued at $100k or more
    10. 10. Not In Inventory System
    11. 11. Requires action to determine if asset should be accounted in inventory management system or tagged as Not Accountable</li></ul>9<br />9<br />9<br />9<br />* Number denotes inventory year<br />The annual inventory is an enterprise function while assets are managed by sub-agencies<br />The annual inventory is used to validate asset information and resolve data discrepancies<br />The color and number system offers a visual reference as to the status and year inventoried<br />There are exception handling processes for “Double Decal” and “Detached Decal”<br />
    12. 12. In reviewing the key findings with the agency, we validated the program improvement goals and business requirements for the “To-Be” environment<br />Program Improvement Goals for the “To-Be” Environment<br /><ul><li>Improve the accuracy of accountable property, thus reducing overages and shortages
    13. 13. Reduce the time and resources required to conduct the inventory of accountable property
    14. 14. Enable agency staff to focus on mission critical functions
    15. 15. Establish repeatable and consistent processes across the agency
    16. 16. Help to ensure compliance to applicable agency and federal property management policies
    17. 17. Help to reduce redundant processes and adhoc systems</li></ul>Business Requirements for the “To-Be” Environment<br /><ul><li>Receive all property centrally by site and sub-agency
    18. 18. Identify the location of accountable property in real or near-real time
    19. 19. Identify the location of accountable property by defined zones or building floors
    20. 20. Identify the accountable user for each piece of accountable property
    21. 21. Assign a unique property tag to each piece of accountable property and store detailed information in inventory management system
    22. 22. Generate automated inventory, shortages, overages and performance management reports</li></li></ul><li>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 process<br />Description<br />Candidate Process<br />Reference Example<br />On a defined basis, people will systematically move through buildings to visually search for property and record the identity and location of the property<br />PhysicalInventory<br />This is the inventory process currently employed at the agency<br />1<br />RFID Assisted Inventory<br />On a defined basis, people will systematically move through buildings to inventory property using RFID readers that automatically identify property<br />This is the inventory process currently employed at agency supported by RFID instead of barcode technology<br />2<br />Location Sensing Inventory<br />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<br />This process provides propertylocation at all times<br />3<br />Entrance/Exit Sensing Inventory<br />When the property moves through choke-points, the property will be sensed without human involvement<br />This process provides read capabilities at key building security checkpoints<br />4<br />Random Sweep Inventory<br />With random (or periodic) frequency, property location will be automatically sensed to a specific zone with some passive human involvement<br />This process is could possible be implemented via a RFID reader on a mail cart<br />
    23. 23. For each option, we defined the key attributes that would guide the selection process for the “To-Be” environment inventory process<br />1<br />2<br />3<br />4<br />
    24. 24. Based on business requirements for the “To-Be” environment, DLS selected the Location Sensing Inventory solution<br />Low Labor<br />High Infrastructure<br />High Labor<br />Low Infrastructure<br />Low Labor<br />Low Infrastructure<br />Low Labor<br />Mid Infrastructure<br />High Labor<br />Mid Infrastructure<br />Relative Cost<br />Security<br />Security<br />Property Management Benefits<br />(out of scope)<br />Property Benefits<br />Illustrative<br />New Services for<br />Property Mgmt.<br />Security<br />Precise Location<br />Real-Time<br />Inventory<br />Benefits<br />Full Automation<br />Inventory<br />Benefits<br />(in scope)<br />Significantly Faster Process<br />Faster Process<br />Visual Inspection<br />Implementing central receiving and RFID technologies significantly reduces requirements for visual inspection, physical reconciliation,and capturing of shortages/overages.<br />Existing Benefits<br />Reconciliation<br />Shortages/Overages<br />1<br />2<br />3<br />4<br />RFID Assisted Inventory<br />Location Sensing Inventory<br />Entrance/Exit Inventory<br />Random Sweep Inventory<br />Physical Inventory<br />Inventory Solutions<br />Increasing change to current inventory process<br />
    25. 25. Methodology<br />Description<br />Graphical Depiction<br />Analysis of Methodology<br />Both the Zone and RTLS methodologies supports the agencies business requirements for the “To-Be” environment<br />Zone<br /><ul><li>Each building is blanketed with reader zones
    26. 26. Using a fixed reader at known positions, property location is detected as it moves about a building
    27. 27. Data: Zone location (automatic)
    28. 28. Advantages: Location is known at all times without any human involvement
    29. 29. Shortcomings: Zones could be large and potentially overlap</li></ul>Conclusion: Meets agencies business requirements<br />Real-Time Location System (RTLS)<br /><ul><li>Fixed readers are installed at known positions within each building
    30. 30. Property location is calculated using the tag signal reading via the multiple reader points
    31. 31. Data: Exact location (automatic)
    32. 32. Advantages: Location accuracy can be determined within a few feet
    33. 33. Shortcomings: Highest reader density and greatest engineering complexity</li></ul>Conclusion: Requires further analysis of agencies Wi-Fi infrastructure<br />Zone by Association<br /><ul><li>Each building is blanketed with reader zones
    34. 34. Using a fixed reader and reference tags at known positions, property location is detected as it moves about the building
    35. 35. Data: Room location (automatic)
    36. 36. Advantages: Location is known at all times without any human involvement
    37. 37. Shortcomings: Many carefully placed reference tags may be needed</li></ul>Conclusion: Additional cost without significant added value<br />Asset Tag<br />Antenna<br />Reference Tag<br />
    38. 38. 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.<br />RFID Solution Creation<br />VMM Decision Framework Components<br />Asset and Facilities Data<br /><ul><li>Baseline quantities of property, building, and other relevant data
    39. 39. Forecasting of demand and rollout assumptions</li></ul>Solution Demand Planning<br /><ul><li>Schedules & program planning
    40. 40. Vendor and professional services required
    41. 41. Solution engineering input used to create quantities of things to cost</li></ul>Solution Cost Calculations<br /><ul><li>Cost elements
    42. 42. Cost allocation to organizational entities</li></ul>Facilitates development and prioritization of a detailed quantitative benefits (performance measurement) analysis <br />Value <br />Structure<br />Allows for a high-level view and Rough Order of Magnitude (ROM) estimate of the lifecycle costs to develop and deploy solution<br />Cost Element<br />Structure<br />Identifies known factors that may impede the ability of an initiative to achieve its goals, degrading projected levels of performance and escalating estimated cost<br />Risk<br />Structure<br />
    43. 43. 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<br />The Booz Allen methodology creates a completely traceable linkage between the business provided data and the resulting plan and cost estimation<br />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<br />Asset and Facility Data<br />Solution Demand Planning<br />Solution Cost Calculation<br /><ul><li>Multiple data sources are combined and inconstancies resolved
    44. 44. Tracked assets data is organized by site, building, room, organization, etc.
    45. 45. Facilities layout maps for site, building, room to calculate site and location
    46. 46. Anticipated growth & movement of assets
    47. 47. This consolidated data provided a baseline year location of assets and facilities
    48. 48. Assets assigned to org, site, and building
    49. 49. Assignment of org to site and buildings
    50. 50. Square footage of buildings, distance between sites, etc.
    51. 51. Creation of a multi-year forecast for the RFID solution
    52. 52. Estimates of required RFID tags, RFID readers, software and hardware products, etc.
    53. 53. Projecting key engineering decisions like what and when buildings need to be wired with RFID readers
    54. 54. Creation of a multi-year forecast of the RFID solutions operational impact
    55. 55. Roll-out plan for each org, site, building, etc.
    56. 56. What location or floor space will assets be tracked via RFID
    57. 57. Creation of a multi-year forecast of expenditures for the deployment of the RFID solution
    58. 58. Cost of all tags, readers, and middleware
    59. 59. Cost of installation
    60. 60. Cost of maintenance
    61. 61. Projection of solutions effectiveness
    62. 62. Quantity of assets that can be tracked via RFID
    63. 63. Incremental cost of tracking an asset via RFID</li></li></ul><li>An RFID solution that tracks 97% of agencies property assets with RFID readers in 81 buildings should be sufficient <br />100% assets tracked and 100% sq. ft. / 267 buildings wired <br />99% assets tracked and 87% sq. ft. / 111 buildings wired <br />97% assets tracked and 83% sq. ft. / 81 buildings wired <br />89% assets tracked and 77% sq. ft. / 49 buildings wired <br />94% assets tracked and 80% sq. ft. / 61 buildings wired <br />93% assets tracked and 80% sq. ft. / 58 buildings wired <br />88% assets tracked and 75% sq. ft. / 45 buildings wired <br />85% assets tracked and 72% sq. ft. / 40 buildings wired <br />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.<br />
    64. 64. 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<br />Direct Financial Benefits<br />Indirect Benefits<br /><ul><li>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
    65. 65. Break even point occurs between years 2 to 3 years after full deployment
    66. 66. Reduce PCO support costs for property management by $3.3M during the initial five (5) years
    67. 67. Reduce reliance upon annual physical inventory and achieve cost savings of $3.6M
    68. 68. Reduce shortages and overages
    69. 69. Reduce the time and resources required to support property management
    70. 70. Improve the accuracy and completeness of inventories
    71. 71. Reduce reliance upon physical inventory process and gain the capability to conduct ad-hoc queries
    72. 72. Increase property accountability via real-time visibility of asset location
    73. 73. Improve reporting capabilities
    74. 74. Enable agency to extend the value and capabilities offered by RFID to support mission requirements and additional functionality</li></ul>Key Assumptions<br /><ul><li>Property not found will be reduced by 15% to 30% each year after full implementation
    75. 75. Labor savings of 15% of PCO personnel costs after year 5
    76. 76. Approximately 97%* of accountable assets can be tracked at the end of year five (5) by deploying RFID infrastructure to 20% of agency buildings</li></ul>* 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.<br />Cost estimates are midpoint estimates within a range that varies approximately +/- 10%.<br />
    77. 77. Some Key Take Always<br />It is best to think of your project as “process transformation” and not just leveraging RFID technology or providing visibility to an existing process<br />Get a complete understanding of the strengths and weakness of the existing process<br />Establish a clear set of objectives for the new process<br />You need to educated your stakeholders on the range of possibilities that a RFID solution can reasonably provide<br />Walkthrough the process impact a RFID solution will impose<br />You need to describe and compare RFID solution alternatives in easy to understand steps<br />For the economic analysis, your in search of not only minimal cost but an “optimal” approach<br />Be prepared to examine multiple alternatives and sensitivity analysis’<br />Systematically eliminate alternatives early so they can be removed for further detail analysis<br />

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