A 600-bed hospital managed by the Mayo Clinic was among the first to calculate and publish the results of an ROI analysis of RFID in a healthcare setting. The final number was impressive: 327% ROI over the first three years, with break-even at less than a year.
But maybe your organization isn’t in the healthcare business. You manage a professional services company, a manufacturing business, a museum, or a retail store. How do you calculate RFID’s ROI when your operations are quite different from a hospital’s operations?
ROI calculations, at their most fundamental, start with questions.
- What items are vital to your operations? Answer very specifically (e.g. “33 laptop computers with 16 gb of storage,” rather than “computers”). These items can be operational elements, or manufactured products, or a combination.
- Visibility: How many times per day/week/month does an item go missing? How often are you short on supplies?
- Intrinsic value: What does the loss of an item cost – not just the hard cost, but the cost of intangible added value? Artwork or data are examples.
- Management costs: What is the cost of periodic inventories or audits to maintain operations?
- Ancillary costs: How much income is lost due to down time when an item is missing or lost, or supplies run low? Are there costs associated with regulatory fines for lost items? How do inaccurate inventories in one department impact other departments’ finances?
With these numbers in hand, calculate two cost scenarios. One scenario is for existing conditions. The other includes the potential improvement to visibility provided by RFID. Most RFID users see visibility (loss) improvements of 60% or better.
But to truly calculate ROI, we have to project the potential savings over an extended period, usually 3 to 5 years. The Net Present Value (NPV) formula gives the most realistic ROI projections for RFID. The NPV formula shows whether the benefits outweigh the costs.
If you manage finances for your organization, you’re familiar with NPV. If you work in a less math-intensive department, you might find an NPV calculator useful. Either way, the answer will give you a strong indication of the wisdom of an investment in RFID. We’re quite confident you’ll be pleasantly surprised by the outcome!
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The benefits of digital asset management (DAM), including RFID, are a hot topic these days. RFID applications are available for any sort of business. But owners and managers of organizations in the service sectors, from finance and law to healthcare and education, may think RFID is just an inventory tool for the retail and logistics sectors.
If you think your enterprise couldn’t benefit from RFID, think again.
- Asset Tracking – Ever notice how there are never enough chairs in the conference room? Furniture, laptops, and other work tools have a way of wandering from their assigned locations. RFID tags keep tabs on the location of these peripatetic items, as well as providing information on their age and condition. Office and facility managers can easily identify aging furnishings that need repairs or replacement, and pinpoint the location of every physical asset. Plus when inventory time comes, the RFID system can deliver a document listing the assigned value of each item currently in the facility, making financial reporting quicker and simpler. What is does it cost your business to update capital inventory records by hand?
- Personnel Tracking – In busy public settings like hospitals or schools, knowing the location of key personnel can save time, or even save a life. RFID-enabled personnel badges keep track of people’s movements and current whereabouts so no time is wasted when someone is urgently needed. RFID personnel badges work with an institution’s security system to manage access to restricted areas and maintain safety. And in emergency situations, an RFID system can tell first responders who is inside and where they are. What is the dollar value of RFID-managed security and safety?
- Document Tracking – We always advocate converting paper documents to digital documents via a well-planned imaging program; imaged documents are secure, shareable with teams, and save the real estate costs of large file rooms. But in many offices there are documents that need to be retained as paper even if they have been imaged. Paper files are easy to lose or misplace (one of the advantages of imaging), but with the addition of small, inconspicuous RFID tags, the location of a file can be tracked throughout an office. Doorway RFID readers monitor the movement of files from one room to another, and files can be located with a quick look at the tracking record. PricewaterhouseCoopers estimates an average of 25 extra hours to recreate a lost document; how much would that cost your business?
Keep in mind that RFID, unlike bar codes, doesn’t require direct sight lines to record and track business assets carrying RFID tags. Once items or personnel are assigned their unique RFID tag, doorway readers track their movements automatically as they pass from one room to another. And inventory updates can be as simple as walking into a room and pressing a button on an RFID reader. You’ll instantly collect data on all the capital assets the room contains; no need to look through cabinets and underneath furniture to read bar code IDs. RFID is a timesaver, and like its other benefits, that translates into money.
RFID systems come in many shapes and sizes, and can be scaled up or down to suit your organization’s needs. When you start adding up the costs of lost documents, lost equipment, and lost time, it’s clear that you shouldn’t miss out on the benefits of RFID.
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Remember those carefree college days, hanging out in the stairwells, meeting on the quad, studying in the library, the cafeteria, the student lounge, wherever? Then you began your career and all that spatial freedom was suddenly gone, and you had to be in one place. At one desk. All day. Every day. Five days a week. It was a tough transition.
And now that newly-graduated millennials are driving the hiring market, campus-style spatial freedom is being incorporated into offices designed to attract the recent graduates. NCR’s new Atlanta headquarters is one example; it touts its “technology and tools to support the changing nature of how, when and where work is done.” Located adjacent to the Georgia Tech campus, NCR hopes to use the headquarters’ college-like environment to capture the brightest and best new graduates, with such familiar features as dining options, coffee bar, gym, informal spaces, and a large lecture hall.
Formaspace discusses how office designers and facilities managers can learn a few lessons from college campuses, including:
- Natural light and outdoor work areas – Large windows and park-like campuses are features of colleges that enhance mental health and performance; businesses too can benefit.
- “Work neighborhoods” – Colleges offer a range of options, from lounge chairs to lab workbenches to library carrels to coffeehouse tables; these can be emulated within corporate settings.
- Serendipity – College campuses provide countless opportunities to run into people who share common interests; offices with casual collaboration areas can profit from the synergy of serendipity.
- Quiet zones – College libraries are famous for their inviolable quiet; the notoriously loud open office plan should incorporate quiet spaces for focused tasks.
We would add a fifth lesson: Flexible space utilization. Colleges have perfected the concept of flex spaces that are a classroom one day, a lab the next day, and a meeting room the day after that. As businesses start to incorporate collegiate design into the workplace, the ability to experiment with space utilization is essential; what may have worked as a lounge now needs to be a quiet area, or vice versa.
Adaptive furniture and modular cabinetry make this kind of flexibility possibility. For example, adaptive-furnishings manufacturer Swiftspace offers desks that combine into semi-private “huddle spaces” or change into extended tables or workbenches.
Empowering staff to adapt the workspace as needed is another holdover from college days, and it’s one more feature that can attract sought-after millennial employees. No hiring manager wants to hear this quote, reported by design researchers speaking to a newly-hired graduate: “The thing that keeps me up at night is going to sit in my cubicle farm on Monday.”
Of course not every business workstyle can incorporate college campus features into the workplace. But for those in a competitive hiring market, a collegiate environment could be the perfect recruitment tool. Consult with your design professional about bringing some college spirit to your offices.
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At any given point in the academic year, it’s high season for one college sport or another. College recruiters know that great sports teams create a multiplier effect, attracting gifted students, prominent faculty, and noteworthy research. Building a great sports team starts with recruiting top athletes, and athletic departments are getting some recruitment help from a little-considered facility: the locker room.
Locker rooms are generally looked upon as smelly, unattractive, and damp, a necessary part of athletic endeavors but not a place associated with comfort or pleasant aesthetics. College recruiters understand that a dank, unattractive locker room isn’t in keeping with their college’s image. Locker rooms have become part of colleges’ branding efforts, helping them stand out in the fierce competition for athletic talent.
The new football locker room at the University of Texas is a jaw-dropping example, with the look of a high end hotel or exclusive athletic club. Coach Tom Herman is quoted in Business Insider as saying, “This shows we have the very best tools in the country. The lockers affect recruiting because the kids we’re recruiting are the same ones that some of the best schools in the nation are recruiting. A scholarship is a scholarship is a scholarship, no matter where you go. It’s about how you differentiate yourself.”
What about the colleges that don’t have University of Texas’ $7 million to drop on a locker room for the football team? Space optimization is the key, according to architect Jack Patton. Writing in “Athletic Business,” Patton discusses the tactic of space sharing that some colleges have put into practice. By pooling the financial resources of several different sports whose schedules don’t overlap, the schools can create a relatively plush locker room shared by various teams each during its own season.
Space sharing creates complexities of scheduling and storage systems. Facilities managers have to take into account the sizes, shapes, and quantities of equipment to be stored, and make accommodation for all. Flexiblity, such as the adjustable shelving in this high density mobile shelving system, is vital to optimizing the space; lacrosse gear, for example, takes up less room than football equipment, and more room than basketball gear. But a well-planned space sharing program can allow for surprisingly high-end locker rooms that support a college’s image and attract high-quality athletes.
Academic excellence is, of course, the foundation of every college and university, and it should be the deciding factor in any student-athlete’s choice of higher education. But when all other things are equal, a deluxe locker room might tip the scales.
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