When considering if a RFID system cost is worth the investment your business must first assess its current system. When it comes to solutions such as asset tracking typically businesses will be moving from a barcode solution. So when considering the cost of a RFID system, your business must take the time to analyze the cost of their current barcode system in comparison to a potential RFID system.
In some cases there may be no automated system in place as a solution. In these cases your business should take into account the labor costs that are wasted as a result of having no automated solution. The value RFID will bring will be the cost savings that your company will incur from a reduction in wasted labor costs.
Running the Numbers: RFID System Cost vs a Barcode Based System
RFID solutions can be extremely varied. RFID is such a flexible technology it can be applied to various industries and use cases. In this blog post we will outline a straight comparison between an RFID solution and a barcode based solution. Then we will review some real world case studies of solutions.
The Danby Group provides an excellent cost comparison between RFID and barcodes with their asset tracking solution experiment. In this experiment they tracked 100,000 assets with each technology and measured the impact on labor costs. Take a look at the results below.
For a business with 100,000 assets the annual cost savings of an RFID solution would be $150,000. The true savings of RFID is in the automation of processes that would normally spike labor costs. When considering an RFID solution it may be useful to think about any processes in your business that are an unnecessary time waste for your employees.
Case Study: When a Library Moves Away From Barcodes to RFID
Use of barcodes in library management is the standard currently. This type of management system always requires a line-of-sight, meaning that when items are borrowed and returned, each item needs to be processed separately.
As barcodes are nothing more than 2d-images other means are needed for security measures. This is where electro magnetic (EM) tags come into play. These tags work by creating an electromagnetic field to which the security gate system will react to when an active tag comes close enough to the gate.
When an item is borrowed the tag is desensitized and when returned the tag is activated again. Barcodes do not offer any benefits for collection management. Even though check-in units can be barcode based the returned items still need to be sorted by hand before returning them back to their shelves. It can be said that the defining characteristic of barcode based library management is the lack of efficiency.
RFID offers a better system for libraries. RFID readers can recognize several books at once where as with barcodes each book needs to be read separately. By installing a separate sorting machine, which will read the tag information from the returned items and sort them into corresponding carts, it is possible to make the check-in unit even smarter. This will save time as the library staff can straight deliver the books back to their shelves without first spending time on sorting the items.
With RFID it is possible to make it so that the library patrons return their items straight back to the shelves by themselves instead of using the self-service check-in.
Misplaced and missing items are a common problem in libraries. By using handheld readers a librarian can check if a shelf has missing or misplaced items, resulting in quicker inventory control. Shelves can also be equipped with an RFID, reader making this whole process automatic.
Example Case: Turku City Library System
Turku City Library System has 150-170 employees with 14 library branches and 2 mobile libraries. There are approximately 1 million collections, 2 million visits and 3 million loans per year. The following is a break down of their costs in adopting RFID:
RFID is a substantial investment for this library system. Although considering that this system is for 14 library branches with over 150 employees the cost is less staggering.
3 million loans per year mean that in the old barcode system each one of these loans would need to be scanned by a library employee. Consider if each loan only took 2 seconds to scan manually that would result in 100,000 hours wasted in one year. With the new RFID system the library is able to save $1,000,000 per year in labor costs alone. This pays off the whole system in just 13 months, without factoring in the savings from a decrease in theft and loss.