RFID Inventory Management Study - methodology for selecting the optimal approach

2. RFID Inventory Management Study methodology for selecting the optimal approach

3. 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

5. Non sensitive or non personal appeal item

6. In Inventory System

7. Value at $5k or more and/or contains sensitive information and requires encryption

8. In Inventory System

9. Capital asset valued at $100k or more

10. Not In Inventory System

11. Requires action to determine if asset should be accounted in inventory management system or tagged as Not Accountable9 9 9 9 * Number denotes inventory year 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”

13. Reduce the time and resources required to conduct the inventory of accountable property

14. Enable agency staff to focus on mission critical functions

15. Establish repeatable and consistent processes across the agency

16. Help to ensure compliance to applicable agency and federal property management policies

18. Identify the location of accountable property in real or near-real time

19. Identify the location of accountable property by defined zones or building floors

20. Identify the accountable user for each piece of accountable property

21. Assign a unique property tag to each piece of accountable property and store detailed information in inventory management system

23. For each option, we defined the key attributes that would guide the selection process for the “To-Be” environment inventory process 1 2 3 4

24. Based on business requirements for the “To-Be” environment, DLS selected the Location Sensing Inventory solution Low Labor High Infrastructure High Labor Low Infrastructure Low Labor Low Infrastructure Low Labor Mid Infrastructure High Labor Mid Infrastructure Relative Cost Security Security Property Management Benefits (out of scope) Property Benefits Illustrative New Services for Property Mgmt. Security Precise Location Real-Time Inventory Benefits Full Automation Inventory Benefits (in scope) Significantly Faster Process Faster Process Visual Inspection Implementing central receiving and RFID technologies significantly reduces requirements for visual inspection, physical reconciliation,and capturing of shortages/overages. Existing Benefits Reconciliation Shortages/Overages 1 2 3 4 RFID Assisted Inventory Location Sensing Inventory Entrance/Exit Inventory Random Sweep Inventory Physical Inventory Inventory Solutions Increasing change to current inventory process

26. Using a fixed reader at known positions, property location is detected as it moves about a building

27. Data: Zone location (automatic)

28. Advantages: Location is known at all times without any human involvement

30. Property location is calculated using the tag signal reading via the multiple reader points

31. Data: Exact location (automatic)

32. Advantages: Location accuracy can be determined within a few feet

34. Using a fixed reader and reference tags at known positions, property location is detected as it moves about the building

35. Data: Room location (automatic)

36. Advantages: Location is known at all times without any human involvement

37. Shortcomings: Many carefully placed reference tags may be neededConclusion: Additional cost without significant added value Asset Tag Antenna Reference Tag

40. Vendor and professional services required

42. Cost allocation to organizational entitiesFacilitates development and prioritization of a detailed quantitative benefits (performance measurement) analysis Value Structure Allows for a high-level view and Rough Order of Magnitude (ROM) estimate of the lifecycle costs to develop and deploy solution Cost Element Structure Identifies known factors that may impede the ability of an initiative to achieve its goals, degrading projected levels of performance and escalating estimated cost Risk Structure

44. Tracked assets data is organized by site, building, room, organization, etc.

45. Facilities layout maps for site, building, room to calculate site and location

46. Anticipated growth & movement of assets

47. This consolidated data provided a baseline year location of assets and facilities

48. Assets assigned to org, site, and building

49. Assignment of org to site and buildings

50. Square footage of buildings, distance between sites, etc.

51. Creation of a multi-year forecast for the RFID solution

52. Estimates of required RFID tags, RFID readers, software and hardware products, etc.

53. Projecting key engineering decisions like what and when buildings need to be wired with RFID readers

54. Creation of a multi-year forecast of the RFID solutions operational impact

55. Roll-out plan for each org, site, building, etc.

56. What location or floor space will assets be tracked via RFID

57. Creation of a multi-year forecast of expenditures for the deployment of the RFID solution

58. Cost of all tags, readers, and middleware

59. Cost of installation

60. Cost of maintenance

61. Projection of solutions effectiveness

62. Quantity of assets that can be tracked via RFID

65. Break even point occurs between years 2 to 3 years after full deployment

66. Reduce PCO support costs for property management by $3.3M during the initial five (5) years

67. Reduce reliance upon annual physical inventory and achieve cost savings of $3.6M

68. Reduce shortages and overages

69. Reduce the time and resources required to support property management

70. Improve the accuracy and completeness of inventories

71. Reduce reliance upon physical inventory process and gain the capability to conduct ad-hoc queries

72. Increase property accountability via real-time visibility of asset location

73. Improve reporting capabilities

75. Labor savings of 15% of PCO personnel costs after year 5

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* 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. Cost estimates are midpoint estimates within a range that varies approximately +/- 10%.

77. 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