The Complete Guide to RFID Asset Tracking: How it Works, How to Implement it, and Costs

With the number of assets increasing monumentally everyday, there’s a higher need for enterprises to accurately track assets’ existence, location and condition.

Though barcode tracking is still common across many industries and asset types, the need for a line of sight to complete an asset’s tracking has always been its primary limitation.

That’s where RFID asset tracking makes a huge difference.

With RFID, you’re not required to stay at a close proximity to the asset or even have the scanner parallel to the tag. You may be far away or even behind a wall and the RFID reader will still be able to read the data from the tag affixed on the asset. This characteristic of the RFID technology completely transforms asset tracking.

That’s why RFID’s adoption has increased dramatically in the last decade and it is projected to reach USD 40.9 billion by 2032. More importantly, enterprises switching to RFID asset tracking have increased their inventory count accuracy from 63% to 95%.

Nonetheless, the implementation of RFID involves careful consideration of the tracking objectives and goals to be successful.

So let’s look at how RFID asset tracking works, its use cases and when is the best time to implement this system in your enterprise.

 

What is RFID Asset Tracking?

RFID asset tracking is a method of physically tracking assets using RFID technology (radio waves), which enables faster identification and inventory. 

In simple words, there’s an RFID tag attached to your asset and the RFID reader communicates with the tag from a distance, even without a line of sight, to confirm the existence of the asset. This information is immediately sent to your ERP or asset tracking software to update the inventory results and location of the asset.

To break it down,

• RFID asset tracking uses RFID tags and readers to track assets.
• It makes tracking faster as it doesn’t need line of sight and multiple assets can be tracked at the same time from a distance.
• It enables automatically updating the availability and location of the asset in your asset register without human intervention.

 

Two Types of RFID Asset Tracking – Passive and Active 

There are two types of RFID tracking technologies and both have proven benefits in automation of asset tracking. 

• Passive RFID  
• Active RFID

Passive RFID Tracking

Generally, passive RFID tracking technology is better suited for the majority of asset tracking requirements. Passive RFID tracking uses passive RFID tags. These are tags that communicate or act based on the signals they receive from the RFID readers. They do not have their own battery or power source, and therefore cannot send active signals.

Passive RFID technology  primarily has 2 asset tracking applications:

1. Automating asset inventory – Passive RFID tags are attached to assets and asset inventory is conducted using mobile hand-held readers for. It enables faster & streamlined asset inventory.
2. Monitoring and recording checkin-checkout of assets – Passive tags are attached to assets that are frequently moved and their movement is read & recorded at the entry/exit gates using fixed readers. This helps gain better control over asset movements.

Pros:

• Low cost.
• Long lifespan (decades).
• Maintenance free asset tags 
• Very good ROI.

Cons:

• Shorter read range compared to Active tags.

Active RFID Tracking

Active RFID tracking helps track assets in real-time using active RFID tags. Active RFID tags use their internal battery to power the tag and broadcast signals to RFID readers. This functionality makes them suitable for environments where real-time tracking and data transmission are essential. For example, if you need to know the live location of assets indoors, active RFID tracking could be a go-to technology.

As they have their own internal power and transmitter, they actively broadcast data signals.

Pros:

• Longest read range (up to 1500 feet).
• Can store a large amount of data.
• Ideal for high-value or frequently moved assets.

Cons:

• Long implementation cycle time
• Expensive compared to other types.
• Battery life is limited (3-5 years), requiring change.

 

Core Components of RFID Asset Tracking

An RFID asset tracking system consists of three main components:

1. RFID Tags: These are attached to the assets and come in two forms as discussed above:
   • Active Tags: Equipped with batteries and transmitters, these tags provide long-range capabilities and are suited for real-time tracking of high-value or frequently moved assets.
   • Passive Tags: These tags do not have a battery but can communicate with the reader when the reader comes within its range. Passive tags are more cost-effective, though they have a shorter range.
2. RFID Readers: Devices that receive signals from RFID tags. They can be:
   • Handheld Readers: Portable and versatile, these readers are ideal for asset inventory in case of passive tags.
   • Fixed Readers: Installed at specific locations, such as entry/exit points, these readers automatically scan RFID tags as they pass through the area. These readers are generally installed to monitor and record asset movements in certain areas.
   • Mobile Readers: Mobile readers are similar to handheld readers but are mounted on vehicles or robots. Mobile readers are used for tracking assets across larger areas or in transit.

The main components of an RFID reader are:

• RF Signal Generator: Produces the radio waves transmitted by the antenna.
• Receiver/Signal Detector: Receives the feedback signal from the RFID tag.
• Microcontroller: Processes the information from the RFID tag. In some cases, the reader is connected directly to a computer. 
• Antennas and Other Hardware: Includes antennas that capture RFID signals and other supporting equipment like mounting brackets and cables.

1. RFID-ready Asset Tracking Software: Systems that come with the capability of asset tracking automation, like AssetCues.
   • Data Collection and Management: AssetCues helps faster collection of data from RFID tags, analyses and suggests quick action based on the data. Through its proprietary technologies, it automates the asset inventory and asset location tracking
   • Integration with Existing Systems (ERP, CMMS) – AssetCues seamlessly integrates with your ERP and CMMS to ensure data sanctity and hygiene. 

 

How RFID Asset Tracking Works

We now know that both Active RFID and Passive RFID leverage radio waves for asset tracking, but they operate in distinct ways. 

Let’s look at the differences between them.

How Active RFID Works

Active RFID tags are like mini electronic beacons with their own power source—usually a battery. This means they can actively send out signals to RFID readers without needing to be powered by an external source. Here’s how it breaks down:

1. Power Source: The tag’s built-in battery powers the microchip and antenna.
2. Signal Transmission: The tag regularly broadcasts its unique ID and other data to any nearby RFID reader.
3. Data Capture: RFID readers pick up these signals, even from hundreds of feet away, depending on the tag’s power and the reader’s sensitivity.

This active broadcasting enables real-time location tracking and monitoring, perfect for applications where you need continuous data updates, like tracking vehicles in a large facility or monitoring high-value assets indoors where GPS does not work or is not feasible.

How Passive RFID Works

Passive RFID tags are a bit like superheroes in disguise—they might seem simple and powerless at first, but they come alive in the presence of an RFID reader. Here’s the scoop:

1. Power Source: Unlike their active counterparts, passive RFID tags don’t have a battery. They draw power from the RFID reader’s signal.
2. Energy Harvesting: When a reader sends out a radio wave, the tag’s antenna captures the energy from this signal.
3. Data Transmission: The harvested energy powers up the tag’s microchip, which then sends back its unique ID and any other stored information to the reader.

These tags are typically used where you do not intend to track the asset location real time.

Comparison Table: Active RFID vs. Passive RFID

Aspect	Active RFID	Passive RFID
Power Source	Internal battery	No internal battery; powered by reader’s signal
Signal Transmission	Active (broadcasts signals)	Passive (reflects back reader’s signal)
Range	Up to several hundred meters	Typically a few centimeters to a few meters
Data Transmission	Continuous or on-demand	On-demand, when within reader’s range
Lifespan	Limited by battery life	Virtually unlimited; no battery required
Size and Cost	Larger, more expensive	Smaller, less expensive
Best Use Cases	High-value asset tracking, real-time location systems	Retail, access control, inventory management
Durability	Good, but dependent on battery	Generally more rugged due to fewer components
Data Storage	Can store more data	Limited data storage
Environmental Suitability	Suitable for harsh environments, but battery life can be affected	Often robust, but range can be affected by materials and environment

This breakdown highlights the strengths and ideal applications of both Active and Passive RFID, helping you choose the right technology for your specific needs. Whether you need active, real time monitoring or a short range passive monitoring, understanding these differences is key to making an informed decision.

 

Step-by-Step Implementation of RFID Asset Tracking

Steps involved in RFID asset tracking depend on the asset tracking use cases. Primarily there are three use cases where RFID is widely used.

• Automating Asset Inventory
• Monitoring Asset Movements (Check-in/Check-out)
• Real-time Location tracking (RTLS) within Premises

Application 1 – Automating Asset Inventory

Automating asset inventory using RFID is one of the simplest and most cost-effective ways to enhance asset management. By affixing passive RFID tags to assets, companies can significantly reduce the time and effort required to conduct asset inventories using mobile RFID readers.

Steps to Implement:

1. 1. Identify the assets where RFID tracking needs to be and can be implemented
      • Identify the assets you need to track with RFID technology. Not all assets can be tracked with the help of RFID technology. Assets such as intangibles, vehicles, land and buildings are generally kept out of the scope. Physical assets such as machines, tools, office equipment, IT hardware, are best suited for RFID based tracking.
   2. Identifying the best RFID tags for each asset type

• Consider the best RFID asset tags that can be affixed to your asset. It’s dependent on various factors such as surface (metal or nonmetal, curvy or straight), Environment, Life of the asset, Nature of its use.

1. Affixing Tags on Assets
   • Once you have identified and shortlisted the type of tags you need, start affixing RFID tags to each asset. The tags have a unique number which can be linked with the asset number in the ERP. This is a critical activity and needs to be done carefully and tags need to be fixed in a way that they sustain through the life of the asset.
2. Implement Asset Inventory software
   • You need a mobile based asset inventory software which has the capability of reading the tag during asset inventory and updating the information back in your ERP with comments and date. It should also have a proper reconciliation module where the discrepancies can be reviewed and acted upon. Also, it should have workflows and reporting features.
3. Review and Optimize
   • Keep tracking insights generated by the asset inventory software, tag new assets, perform periodic asset inventories, etc.

Application 2 – Monitoring Asset Movements (Check-in/Check-out)

RFID technology has the capability to automatically record the check in and check out of assets  streamlining the asset tracking. This capability is particularly beneficial for environments where assets frequently move and movement needs to be tracked. RFID can help prevent unauthorized movements of the asset and reduce theft and misappropriation

Steps to Implement:

1. Define the asset movement policy
   • Identify the assets and locations where the movements need to be monitored. Typically, this policy lays down the critical assets whose movements need restriction as well as designation of the areas where these movements are restricted. Examples – Laptops moving out of the location or a machine moving in certain highly reactive areas
2. Affix tags on the assets

• Affix passive RFID tags on the assets whose movements need to be tracked.

1. Deploy Fixed Readers at Entry and Exit points
   • Place fixed RFID readers at entry and exit points of the areas where tracking is required. Antennas are connected to these readers to enhance their range and accuracy.
2. Implement Asset Tracking Solution
   • As assets pass through entry or exit points, the RFID system automatically records their movement. This data is logged in your asset tracking software, which immediately checks if the asset is authorized. If not, it will send the message to the reader and the reader will buzz. All this happens in a fraction of second providing real-time alerts.
3. Periodic review and Insights for improvements
   • Set up automated alerts and reports. If an asset is checked out but not returned within a specified period, the system can automatically notify the responsible parties. Keep reviewing the exceptions for better asset management practices.

Application 3 – Real-Time Location System (RTLS) within Premises

For Implementing an Real-time location system, you need active RFID tags as it provides a more sophisticated solution for organizations that need to track high-value assets in real-time across large or complex environments. This system is ideal for industries like healthcare, manufacturing, or logistics, where knowing the exact location of assets is critical. Ofcourse, there are other RTLS technologies but in this blog, we will limit ourselves to Active RFID.

Steps to Implement:

1. Determine RTLS Requirements
   • Assess the size of your facility and the type of assets that need tracking. Consider the level of location accuracy required—are you tracking assets down to a few centimeters , or do you need to know their position within a few meters?
2. Install Active RFID Tags
   • Affix active RFID tags to high-value assets. These tags are battery-powered and can transmit signals over longer distances compared to passive tags.
3. Set Up Wall-Mounted Readers
   • Install RFID readers on walls and ceilings throughout the facility. These readers function like Wi-Fi routers, continuously scanning for signals from the active RFID tags.
4. Enable Real-Time Tracking
   • Use triangulation methods to pinpoint the exact location of assets. The readers capture signals from multiple tags, allowing the system to calculate their position in real-time.
5. Integrate with Asset Management Software
   • Ensure that the RTLS data is integrated with your asset management software. This will enable you to view asset locations in real-time, generate movement history reports, and set up geofencing alerts for unauthorized asset movement.

Each of these use cases highlights how RFID can be tailored to different needs, whether you’re looking to streamline basic asset inventory tasks or implement complex real-time asset tracking systems. By choosing the right approach, businesses can improve efficiency, reduce costs, and ensure better control over their assets.

 

 

Costs Involved in Implementing RFID Asset Tracking

When evaluating RFID systems, several cost factors should be considered.

These costs can be broadly categorized into several areas, including equipment, installation, tags, software, ongoing maintenance, licenses, and integration. You need to identify a consulting partner that can provide a turnkey solution. You should not hire a hardware vendor or a software vendor who can provide hardware and software respectively in silo and not a complete solution.

At AssetCues, we not only consult various enterprises but also help establish end-to-end asset tracking solutions. 

Here’s a detailed breakdown:

1. Equipment Costs

a. Passive RFID Systems:

• Mobile RFID Readers: Mobile RFID Readers typically cost between $1,000 to $3,000 each, depending on features and capabilities.
• Fixed RFID Readers – Most fixed readers with UHF (ultra high frequency) cost about $500 to $2,000. When it comes to fixed RFID readers, you should also consider the costs of Antennas & cabling, and infrastructure.
  • Antennas and Cabling: Essential for extending the range and accuracy of the readers. Costs can vary widely based on the number and type of antennas required, potentially adding up to $ 500 or more per reader setup.
  • Infrastructure: The need for extensive cabling and networking equipment, including Power over Ethernet (PoE) to power devices, adds to the total cost.

b. Active RFID Systems:

• Access Points and Readers: Generally less expensive than passive systems, costing around $200 to $800 per unit, as they require less sophisticated technology to communicate with active tags. But as you need to cover a larger area, you need more of them. 

2. Installation Costs

a. Passive RFID Systems:

• Professional Installation: Due to the complexity of setting up readers, antennas, and cabling, professional installation is often necessary. Costs can vary significantly but expect to budget about 15-35% of the hardware cost for a comprehensive installation.
• Calibration and Testing: Additional costs for ensuring the system is properly calibrated and functioning.

b. Active RFID Systems:

• Professional Installation: Installing Active RFID system is a complex process as it needs very careful planning and mapping of the area to be covered. The installation needs cabling and installation of multiple units across a facility that is intended to be covered. The costs range from a few hundred to a few thousand dollars depending upon the area to be covered and the number of units to be installed.

3. Tag Costs

a. Passive RFID Tags:

• Basic Tags: Generally cost between $0.20 to $1.50 each.
• Specialized Tags: Tags designed for specific environments, such as on-metal tags or rugged tags for harsh conditions, can be more expensive, ranging from $1 to $5 each.

b. Active RFID Tags:

• Standard Active Tags: Typically cost between $5 to $15 each, depending on the features (e.g., battery life, durability).

4. Software Costs

Advanced Software: For comprehensive management, integration with ERP systems, or real-time analytics, costs can range from thousands to hundreds of thousands of dollars, depending on complexity and scale. Some active systems, such as AssetCues, include software costs as part of a Software as a Service (SaaS) model, with ongoing subscription fees and generate significantly better ROI.

 

Benefits of RFID Asset Tracking

Compliance and Control

• Meeting Regulatory Requirements – AssetCues’ RFID solution helps organizations comply with corporate laws with regard to conducting periodic asset audits and maintaining accurate fixed asset registers by providing accurate records of asset availability, location and movement.
• Accurate Asset Tracking and Reporting – RFID technology ensures precise asset tracking, reducing the likelihood of discrepancies in asset management. This accuracy supports reliable reporting and compliance with internal and external audits.

Improved Operational Efficiency

• Streamlining Asset Management Processes – RFID automates many asset management tasks, such as asset inventory and asset movement tracking, which traditionally require significant manual effort. This automation frees up staff to focus on more strategic activities.
• Automating Inventory Counts and Asset Audits – By implementing AssetCues’ RFID system, companies can automate inventory counts and asset audits, significantly reducing the time and labor required. This automation minimizes manual intervention, thereby decreasing the risk of human errors.
• Reduced Time and Labor Costs – The efficiency gains from automated processes translate directly into cost savings. By reducing the time needed for manual tasks, organizations can lower labor costs and allocate resources more effectively.

Increased Visibility and Accountability

• Real-Time Asset Tracking and Monitoring – AssetCues’ RFID system provides real-time visibility into asset locations and statuses, allowing organizations to monitor assets continuously. This real-time data is crucial for maintaining operational control and accountability.
• Improved Asset Utilization – With comprehensive data on asset usage, organizations can optimize the deployment and utilization of their assets, ensuring they are used to their fullest potential.
• Reduced Losses and Theft – The robust tracking capabilities of RFID systems help reduce asset losses and theft by providing a detailed log of asset movements, enhancing security and accountability.

Enhanced Decision Making

• Data-Driven Insights for Better Asset Management – RFID technology, coupled with AssetCues’ analytical tools, provides valuable insights into asset usage, maintenance needs, and lifecycle stages. These insights enable better decision-making and strategic planning.
• Predictive Maintenance and Lifecycle Management – By tracking asset conditions and usage, RFID systems enable predictive maintenance, helping organizations address potential issues before they escalate. This proactive approach extends the lifespan of assets and reduces maintenance costs.

 

RFID vs. Other Tracking Technologies

1. RFID vs. Barcode Tracking

   • Speed and Efficiency: RFID can scan multiple items simultaneously without requiring line-of-sight, making it faster and more efficient than barcode systems, which need direct scanning and can only handle one item at a time.
   • Durability: RFID tags are more durable and resistant to physical damage compared to barcodes.
   • Cost: Barcodes are generally cheaper to produce, but RFID tags provide greater value with enhanced functionality and durability.

2. RFID vs. GPS Tracking

   • Range: GPS tracking offers real-time location and movement tracking outdoors whereas RFID tracking is limited to specific read ranges and generally used to track assets indoors. GPS can track assets globally, while RFID is typically used for local or facility-level tracking.
   • Data Transmission: GPS trackers can provide more detailed data, including location updates, engine status, and driving behavior. RFID is more focused on asset management within a defined area.
   • Cost and Power: GPS trackers are more expensive and power-intensive compared to RFID tags. RFID tags are cost-effective for managing a large volume of items within a facility, whereas GPS is suited for high-value assets in transit. GPS trackers do not need installation of readers.

 

Frequently Asked Questions (FAQs)

What are some Challenges and Considerations in RFID asset tracking?

1. Cost:
   • Initial Investment: RFID systems, particularly active tags and high-end readers, can be costly. However, they offer a return on investment through enhanced efficiency and reduced labor costs.
2. Interference:
   • Signal Disruption: RFID signals can be affected by metals, liquids, and certain electronic devices. Careful selection of tag types and placement strategies can mitigate these issues.
3. Battery Life:
   • Active Tags: While providing long-range capabilities, active tags have limited battery life, which can lead to additional maintenance costs.
4. Customization:
   • Tag Selection: Choosing the right RFID tag depends on various factors like signal range, size, surface type, environment, and security needs. Incorrect tag selection can lead to inefficiencies and additional costs.

What are the different models and types of RFID Tags?

1. Standard RFID Tags:
   • Best for Non-Metal Surfaces: Read ranges up to 20 feet. Suitable for plastic surfaces.
2. Metal Mount RFID Tags:
   • For Metal Surfaces: Use foam adhesive to reduce interference, with read ranges of 5-6 feet.
3. RFID Hang Tags:
   • Flexible Attachment: Can be easily attached and removed using plastic ties.
4. RFID Windshield Tags:
   • Long Range: Used for access control and toll collection, with read ranges over 18 feet.
5. RFID Folded Tab Tags:
   • Compact and Versatile: Suitable for limited space applications, with read ranges up to 20 feet.
6. RFID Hard Tags:
   • Durable and Long-Range: Designed for harsh environments, offering robust performance and extended signal range.

What’s the difference between RFID and NFC?

NFC is a subset of RFID technology that allows devices to share data using high-frequency short-range radio waves. Here are the key differences:

• Distance:
  • RFID: Long-range capabilities, suitable for tracking over greater distances.
  • NFC: Short-range, requiring close proximity for communication.
• Communication:
  • RFID: One-way from tag to reader.
  • NFC: Two-way communication between devices.
• Data Handling:
  • RFID: Limited to simple identification data.
  • NFC: Can store and transmit a variety of data types.

What Information is Stored in RFID Tags?

RFID tags store information such as unique identification numbers, asset descriptions, maintenance history, and more. This data can be read by RFID readers and integrated into the asset tracking software, like AssetCues, for comprehensive asset management.

What are the operating principles of RFID asset tracking?

RFID asset tracking systems work based on two primary principles:

1. Load Modulation: Used mainly for low and high-frequency RFID tags, this involves the tag modulating its load to send data back to the reader by changing the impedance of the circuit, which affects the current and generates a detectable signal in the reader.
2. Backscattered Modulation: Used in ultra-high frequency RFID systems, where the tag sends a weak signal back to the reader by reflecting radio waves. The intensity of this signal varies based on load matching, allowing data to be sent.

What are the operating frequencies of RFID asset tracking?

RFID tags operate on different frequencies, each suited for specific uses:

1. Low-Frequency (LF):
   • Range: 125kHz – 134kHz
   • Features: Short reading distance, lower data transfer rates.
   • Applications: Animal tracking, access control.
2. High-Frequency (HF):
   • Range: 13.56MHz
   • Features: Moderate reading distance (up to 30 cm), can read multiple tags simultaneously.
   • Applications: Library books, ID cards, airline baggage.
3. Ultra-High Frequency (UHF):
   • Passive: 860MHz – 960MHz, up to 25 meters range, used in supply chain management and manufacturing.
   • Active: 433MHz, ranges from 30 to over 100 meters, used in vehicle tracking and large-scale asset management.

What is the difference between passive and active RFID tags?

Passive RFID tags do not have a power source and rely on the reader’s energy to transmit data, suitable for short-range applications. Active RFID tags have a built-in battery, allowing them to transmit data over longer distances and suitable for real-time tracking.

What are the best practices for RFID tag placement?

Best practices include ensuring tags are placed in areas with minimal interference, securely attached, and positioned for optimal reader access. Proper placement is crucial for accurate data collection.

How secure is RFID data transmission?

RFID data transmission can be secured through encryption, secure communication protocols, and robust access control measures, ensuring the protection of sensitive information.

What is a RFID key fob?

A RFID (Radio-Frequency Identification) key fob is a single part of an RFID system that has two components: a microchip that stores the data and an antenna to receive and transmit data.