Determining TCO for An RFID Application

by Neil Jones on 2011-04-08 17:36:37

To decide on the expenditure required for installing radio frequency identification (RFID) system and keeping it in good condition is not trivial issue. There will be various factors which will determine the scale of your investment, which may or may not influence the investment needed for other components within the set-up.

The scheme of RFID application comes in a whole package. It comprises of the RFID network which includes hardware, chips, software and other components. It also deals with workforce, infrastructure for information technology, business procedures and the conditions suitable for setting up the application.

It is not easy to work out a final budget for installing an RFID system since there are numerous components associated with the system which keeps on changing as per the industry standards. So the objective of this article is to turn your attention on the key factors which should be kept in mind while determining the total cost of ownership (TCO) of an RFID system.

Components of an RFID System
Fixed, portable and hand-held RFID readers, antennas, RFID printers and RFID portals are the hardware components of a RFID system. The function of RFID middleware is that it helps the captured information to flow from the reader to the folders or specified software for storage or analysis. There are various types of readers but your choice of hardware should not be based on budget alone. It should fulfill your business requirements. For example, it is not wise to install huge RFID portals in front of your dock doors. Instead, you will prefer movable and flexible portable readers. You should also take into account the price of software and middleware which meets your hardware requirements. You need to personalize the middleware and software to your application, otherwise they cannot be operated. To do this, you will require programmers and if your company cannot find them internally, you have to hire them from outside.

There are lots of vendors willing to sell their RFID components. If you search for RFID hardware online, you will get their contacts. But you should not take an impromptu decision. Before purchasing it, you should be confident that the hardware, software and the middleware components of your system are well-matched with each other. You should also inquire about the effect that this system will have on your computer set up in detail. It is beneficial for you or your specialist to possess knowledge about the mechanism of RFID because it will help you to set up your RFID system properly. Often the choice of hardware depends upon the natural environmental conditions of the place selected for setting up the RFID system.

Investment is generally made once for an RFID apparatus. But you may also have to bear recurring costs like getting license, upgrading wares or maintenance expenses.

RFID Tags
The price of an RFID tag is determined by its kind and the amount purchased. The active RFID tags are self powered like the ones with batteries and are expensive than the passive RFID tags which shares power from the reader to send information. When you buy an item in large quantity, it costs you a little less. The price of each tag is five cents approximately and you may need to buy several millions of them, so now you can determine your budget.

The budget of RFID chips also depends upon the fact that whether you want to reuse them. But that again is determined by your application. Some RFID systems in companies dealing with motor vehicles do not permit the reuse of tags since it encloses essential data which must stick to the vehicles always like the VIN or vehicle identification number. Reprocessing and reusing of RFID tags may seem to be a cost-effective means apparently, but it is always not so. Extra workforce and time is required to recycle the chips. Training should be imparted to the workers so that they handle the chips with care and do not damage them. Reprocessing of chips is apt for those companies which are based at a particular location than the ones which has branches all over.

Business Procedures
Without doubt, there will some effect of the RFID application on your business procedures after it is installed. Though the primary motive of many companies behind implementing this propitious technology is to enhance efficiency, yet RFID may upset business procedures in its initial days. It requires some time to operate the system and get acquainted with it, identify the errors and integrate the RFID application into the present business procedures. For example, you may have to alter the loading speed of the delivery trucks or a conveyer belt. The optimized processes may require re-optimization after the RFID is installed. So it is evident that it will be time-consuming and involves extra workforce.

Services
You must have understood by now that setting up an RFID system is not a work of an individual. Instead you need support from skilled and capable professionals. They will be able to guide you and ensure whether your RFID antennas, controllers and readers are linked and installed in a proper way. You may have to alter your existing network patterns or construct new structures where the readers can be placed. After setting up the system successfully, you have to adjust the hardware components so that it operates effectively. Lastly, this miniature system should be examined thoroughly before it is implemented on a large manufacturing scale.

Training and Education
You should take into account the training and education factor while deciding on your cost-effective budget. The RFID experts will certify whether your system is accurately installed or not, but it is also a good decision to form a group of in-house consultants who will be responsible for keeping the system in good condition and educate other employees about its usage. You may recruit some RFID experts before taking the decision to use this application, so that they can help in setting up and testing processes.

Maintenance
The maintenance cost of an RFID system forms a major part of the TCO. Expenses are incurred for purchasing RFID chips even if they are reprocessed and used. To deal with hardware failure, you have to keep standby readers, controllers, antennas and other wares. Upgrading your IT infrastructure, removing viruses from system and obtaining technical assistance from product retailers might add up to other costs.