using rfid to solve the sox asset management challenge

8/6/2019 Using RFID to Solve the SOX Asset Management Challenge

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Case Study

Tagging & Verification Retail Pilot Mobile Maximo RFID Implementation

Date: 18 March 05


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Contents

1. ABSTRACT ................................................................................................................... 3

1. BACKGROUND ................................................ ....................................... ....... ........ ....... 4

2. PROJECT GOAL ................................................. ....................................................... ..... 5

3. PILOT OVERVIEW ............................................... ................................................ ....... .. 7

4. PROCESS OUTLINE ................................................ ............................................. ....... .. 8

5. TECHNOLOGY OUTLINE ...................................................... ............................. ....... 12

6. PEOPLE ........................................................ ...................................................... ....... ... 17

7. PILOT GAPS ................................................... ................................................. ........ ..... 18

8. CONCLUSIONS .................................................. ....................................................... ... 19

9. ACKNOWLEDGEMENTS AND FURTHER INFORMATION ...... ..... ...... ..... ... .... .... 20

10. APPENDIX 1 - APPLICATION SCREENSHOTS .................................. ....... ........ ... 21

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1. ABSTRACT......................................................................................

Can the use of mobile auto identification technologies solve the asset compliancechallenges that the Sarbanes-Oxley (SOX) Act requires?

Most observers would agree that the Sarbanes-Oxley (SOX) Act is the single mostimportant piece of legislation affecting corporate governance, financial disclosureand the practice of public accounting since the US securities laws of the early 1930s.In July 2002, the United States Congress passed the Sarbanes-Oxley Act into law.

The act was primarily designed to restore investor confidence following well-publicised bankruptcies that brought chief executives, audit committees, and theindependent auditors under heavy scrutiny. The act is applicable to all publiclyregistered companies under the jurisdiction of the Securities and ExchangeCommission. UK companies with a US listing, such as BP, are also subject to theSarbanes-Oxley Act.

From an asset management viewpoint, BP needs to answer the following questionssatisfactorily in order to comply with the Sarbanes-Oxley Act:

1. Do you have an accurate inventory of all your physical and intangible assets?2. Have you reconciled asset data from different systems?3. Do you have a full history and audit trail of all Asset Transactions?4. Do processes exist to detect unauthorised Acquisitions, Disposals and

Transfers?

It is apparent that asset verification projects will play critical roles in addressingthese requirements for Sarbanes-Oxley compliance. However what aboutsustainability? What about the concept of using a mobile applicationtogether with Radio Frequency Identification (RFID) tags as the basis forongoing sustainability? BP Africa, the Marketing Downstream business stretchingfrom South Africa to Tanzania recently tested such a scenario.

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1. BACKGROUND

BP Africa holds an extensive range of assets valued at approximately $700 million .In order to provide legal compliance, safety assurance and the effective managementof these assets, the business unit needs to know: What assets do we currently have? Where are these assets located? How are these assets changing over time?

Currently it is unable to do this in a standardised and consistent manner because of the problems highlighted below:

o Asset data is duplicated across several systems.

o Data held on one system is not made available to other systems.

o Reports are drawn from various sources and are inconsistent.

o No systemized verification exercises having taken place since 2000.

These problems have resulted in fundamental control weaknesses in themanagement of the fixed asset base which needs to be corrected in order to complywith the requirements within the Sarbanes-Oxley Act, which state that BP needs to:

o Ensure that it has the correct asset management policiesand procedures in place.o Ensure that its assets are to be properly labeled andclassified.o Ensure that asset data from different systems isreconciled.o Ensure that a full history and audit trail of all assettransactions is in place.o And to ensure its assets are secure.

Hence it has begun work on a comprehensive Asset Tagging and Verification project,the objective of which is to create an accurate and verified record of fixed assets withsignificantly more detail than the existing financial system is able to provide.

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2. PROJECT GOAL

In order to add value a whole new approach to verifying, tagging andmanaging a fixed asset base of approximately 180,000 items has been adopted.

This approach utilizes Automatic Identification , (Auto-ID) which is the broad termgiven to a host of technologies that are used to help machines identify objectsautomatically.

By making use of this type of technology, the identification of assets, the capture of information about them and the mechanisms of getting this data into a computersystem(s) without having employees type it in, will ultimately result in increasedefficiency, reduced data entry errors and will ensure that asset registers are easilykept up to date.

Diagram1: Illustration of Asset Tagging Technology

The projects goal has been to find that affordable, accurate and flexible method fortracking assets (and their condition) anywhere a communications link exists, whichwill result in a verified record of fixed assets. In addition to the implementation of amobile Asset Care solution that ensures that a higher level of solution sustainabilitywill exist once the verification exercise is completed.

The first phase of this process was concluded with the initial investment in theMaximo Enterprise Asset Management solution. Its build saw the creation of a seriesof generic placeholders that the real asset data, which, once collected, will replace,as illustrated in diagram 2.

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Diagram 2 Generic Asset Placeholders in Maximo

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3. PILOT OVERVIEW

Before conducting a project of this scale it was seen as prudent to first begin with apilot before emulating the process throughout the region.

The key objective of the pilot was to demonstrate how assets could beverified; and how asset tracking could be accomplished via a mobile assetcare solution utilising the applicable auto id and mobile technologies.

In addition the pilot aimed to:

o Determine appropriate workflow for the integration of Asset Care;o Determine value of tagging for reducing cost associated with Asset Churn;o Determine most appropriate forms of tagging;o Determine infrastructure needs (e.g. savant, middleware and Maximo

integration);o Determine data flow requirements;o And to determine a cost model for asset tagging.

While the projects overall scope covers the Retail, Commercial and Industrial (C&I)and Logistics businesses in South Africa, Namibia, Botswana, Mozambique, Zambia,Malawi and Tanzania excluding Zimbabwe, the pilot was conducted in CapeTown, South Africa and its scope included the following:

o In Scope

Completely tag and record asset data at two full convenience andthree fuel sites

The duration was to be no longer than two months

And to be concluded before year-end December 04 i.e. a projecttimeline of five months with the work effort being completed Sept- Dec04 and pilot performance monitoring Dec -Jan 05 (two months).

o Out of Scope

Sanitising (data cleansing) of the Asset this area of work would bescoped and designed in Define.

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4. PROCESS OUTLINE

RFID will not solve bad processes but has the ability to improve those that exist evenproviding the impetus for realigning these processes with an RFID benefits drivenapproach. The pilot attempted to outline two key processes with this in mind:

o On site Asset Tagging and Data Collectiono Ongoing Asset Verification

Because both of these where to a large degree new the predominant focus of theprocess mapping involved how the target audience would react to what wasproposed i.e. did it fit in with their current workload and expertise.

Diagram 3: High Level Process Map - Click on the diagram and zoom 200

The overall process started with the communication of the project and continuedthrough training, initial tagging of the assets and on to the regular monthly scanningof the assets by the sales managers (SMs). This is graphically illustrated above bydiagram 3.

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Mapping:To-Be

Version:1.0

Page:5

Title:Level A4 : Track assets

Level:3

Status:DONE

Date:09/2004

1

A41

CommunicatePlans

3

A43

Tag ExistingAssets

2

A42

Train DeliveryStaff

4

A44

Perform ongoingtracking

5

A45

HandleExceptionsDeployment Schedule

Training Schedule

Asset PlannersInstallation ContractorsMaximo A dministrators

Mobile Support Staff Sales Managers

Trainers

Arrival ChecklistAsset List

Asset List TemplateDefined Processes

Exception SheetFeedback Form

New Work Order typesScanning Guide

Tagging GuidelinesTagging Rules

Training ManualTarget AudienceWrap Up Sheet

Trained Sales ManagersTrained support organization

Trained contract organization.Trained support organization

Arrival ChecklistAsset List Template

Job Card Safety GuidelinesTagging Guidelines

Tagging RulesWrap Up Sheet

Connectivity SettingsSynch Guide

Rollout ScheduleWork Order System

Exception Sheets

BP AdminDealer

Contractor Data Capturer

Sales Manager Dealer

BP Admin

Updated Asset ListJob Cards

Exception SheetsData Verification Errors

Job Cards

Asset List

Asset ChecklistConnection SettingsPlanned Branch Visit

Synchronization GuideScanning Guide

Deployment ScheduleProject Goals

Defined Processes

Planning Team

Target Audience

Informed staff

New Work Order typesTagging Rules

BP AdminData Capturer

Updatedprocesses


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1

A431F

Prepare for sitevisit

2

A432F

Perform Site Visit

3

A433F

Perform weekly

data checks

4

A434F

Handleinstallation

issues

Rolloutschedule

Work order creation rules

BP Admin

dealer

contractor

work-order system

dealer

contractor

arrival checklistasset list template

job card safety guidelinestagging guidelines

tagging ruleswrap up sheet

connectivity settingssynch guide

feedback formforecourt mapcolour stickers

RFID tagsscanner

exception sheetconnectivity to BP

BP Admin

exception sheet

TaggedAsset data

Dataverification

errors

Operational data store

updated scheduleupdated g uidelines

updated sales manager pupdated validation rules

data capturer BP Admin

logged jobcard

Informal feedback

5.1 On Site Tagging and Data Collection

A turnkey contractor with the relevant experience and skill level was appointed toperform this task with the aid of an internal Assets Tagging co-ordinator who wouldplay a liaison role between the role-players Dealer; BP Sales Manager; TurnkeyContractor and Technical Back-office. In this process the turnkey tagging contractor

(In-site Info) together with BPs project co-ordinator would:o Schedule Pilot sites.o Confirm visits with the Dealero Ensure that all work done would start with the standard BP Asset Care work

order

This key process is described in more detail below and illustrated in diagram 4.

Diagram 4: Asset Tagging Process Map - Click on the diagram and zoom 200

When the contractor arrived on site, they would be required to approach the dealeror site owner with the work order in hand and introduce themselves. The contractorwould go through a short interview and a checklist with the dealer to understand theassets on the site. The checklist covers items such as stolen assets, brokenequipment, third party equipment (e.g. Coke sponsored fridges) and dealer ownedequipment.

Regardless of ownership each asset is tagged and recorded. To minimise thedisruption on site the process recommended that the contractor walk around the sitewith the dealer and identify each asset and its owner individually. The contractorcould use coloured stickers to mark ownership (e.g. green=BP, red=third party,blue=dealer, white=unknown, etc.) during the site walk-through.

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Using the template document that describes the assets that are typically found onthe site and which BP are interested in tagging. All assets whether they are owned byBP, the dealer or a third party are to be tagged. BP is responsible for the safety of itssites and any third party equipment must conform to BPs Health and Safety trackingrequirements. Certain fixed assets (as specified by the catalogue list) such as thecanopy or coldroom which are high value, are not tagged because their status is

unlikely to change. Whether assets are tagged or not their static and performancedata is collected for analysis in the back office.

Once the assets have been identified and marked, the contractor can begin to tagand record each asset. When the tagging is complete, the contractor will confirm theasset list with the dealer and get signoff of the work order.

Finally, the contractor will need to synchronise the handheld to return the capturedasset information back to BP. Any paper forms, such as exception sheets or insurancerecords (in the case of stolen assets) will either be faxed for mailed back to BP.

5.2 On-Going Scanning

The Sales Manager (SM) manages the relationship between the business and theDealer as part of their normal management activities they perform regular visits totheir sites. Part of their responsibility is the maintenance of the asset list, whichforms part of the lease agreement between the Dealer and BP.

The SM would still do their normal sales-related activities at the branch as beforewith the addition of recording of the existing assets on site. They would thus bedoing the continuous monitoring of the state of the assets as they visiteach branch at least once a quarter as part of their regular sales activitie s.

The intention is to simplify the asset recording process and with the aid of the RFIDtechnology to minimise the amount of disruption to the Sales Managers job (15-30minutes extra).

In preparation for their visit, the Sales Manager would connect to BP and downloadthe current asset list from the server to the handheld. They should also download theBusiness Objects (Data Warehousing Software) report for a copy of the latestoutstanding job cards for the site. These two lists should be reviewed in preparationfor the visit.

At the end of the visit, the Sales Manager will record any exceptions that werediscovered as described in the scanning guidelines document. They would also createany new work requests, either by calling in to the call center or directly on thehandheld (when this service is available). Once the visit has been completed theywould synchronize the handheld with the BP server when they connected to the BPLAN.

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D e a

l e r

S a

l e s

M a n a g e r

exception report

scan and recordassets

performregular site

visit activities

discussdiscrepancies with

dealer

performasset review

asset list job cardsassetchecklistscanning guide

feedback form

scan in branch tag scan out branchtag

Diagram 5: Swim lane View of the Verification Process Map - Click on the diagram and zoom200

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5. TECHNOLOGY OUTLINE

In an effort to define the architecture for the project, three solution proposals whererequested and submitted by:

o IBMo SAIC ando Syclo

These proposals (Technical Infrastructure Plans) were submitted in relation to thepilot phase of the project with the expectation that the solution piloted would have ahigh degree of fit for the production solution.

Following an initial one-day workshop held in London (July 04), a morecomprehensive two-day workshop was held in Cape Town (Sept 04). IBM and SAICwere present but not Syclo who were briefed by Brian ORegan (INTEL) in his capacityas Technical Advisor to the project.

6.1 Evaluation Format

As part of the workshop a matrix of key issues was developed which formed the basisfor the evaluation. These included:

o Tag suitabilityo Support networko Standards complianceo Solution component availabilityo Solution flexibility; compatibility and integrationo Scalability

Two issues, Cost and Partnership Aspects which were not covered in the technical

evaluation were dealt with by the selection panel.

6.2 Overall Conclusions

On purely technical merits, it was concluded that any of the three proposals wouldhave supported the business need. Implicit in the evaluation was however, areference to time as per the project Terms of Reference that stated that the pilotwould be completed by end-2004.

In this regard the Syclo option provided the most immediately available solution. Theonly potential downside to this solution was a considerable degree of lock-in. TheSyclo solution was the least flexible in terms of application integration and potentialdevelopment.

If the decision horizon was strategic rather than tactical, then either the SAIC or theIBM solution became more attractive. Differentiating between these two would needto be made within a broader context and as part of a separate evaluation.

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6.3 Syclo Back-End Solution

Diagram 6: Syclo Back-end Technical Solution

The backend solution comprised of:

o Audit and Work Order Application: Syclo (Mobile Maximo)o Front-End application middleware: Agentryo Back-end Application (Maximo) interface: Agentry.

Agentry is the underlying architecture that supports these applications. It has a GUIbased development environment that allows for rapid modifications of base screensand business logic; it essentially serves as the middleware solution onto which theMaximo Mobile Suite and RFID integration has been built.

Once the backend architecture was in place attention was then given to getting thefront-end right.

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6.4 Front End Technical Solution

The following technical selections where made with regard to getting the front endcorrect.

TAGS Factors Piloted TypeLow Frequency(134 Mhz)

Successfully used inLPG pilot in Holland;Robust;Very Stable;Short Read Range

Yes Low Frequency 30mmDisk TransponderManufactured by TexasInstruments ( RI-TRP-R9QL)Operating frequency of 134.2 kHzEst. read range < 60 mm

Typical read time : 70msDimensions : 29.4 mm x8.4 mmWeight : 8 gram

Middle hole allows tag to bescrew mounted

HighFrequency(13.56 Mhz)

Good

tactical fitRead range 0.5 -1.0 mStableAvailable

Yes High Frequency13.56MHz LaundryTransponderManufactured by TexasInstruments ( RF-HDT-DVBB-N0)Compatible with ISO15693standard for 13.56MHztagsEst. read range 12-14mm(on a steel structure with

3mm adhesive backing)Data retention time: morethan 10 yearsDimensions: 22 mm x 3mm

Weight: 1.6 gramUltra HF (913Mhz)

Potentially the beststrategic fit but 915Mhzband is currently notavailable in South Africa

No

RFIDREADERS

Factors Piloted Type

TSL 134 Mhz

puck

Rugged

Size of a matchboxATEX 1

Yes RFID Wireless Bluetoothhandheld tag scannerOperates on both 134.2kHz and 13.56 MHzSupplied by TechnologySolutions UK LimitedDimensions: 56 x 41 x 21mmWeight: 51gIntrinsically safe for use on

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the forecourt - ATEX 1Bluetooth range: 10 meters

TSL 13.56 Mhzpuck

RuggedSize of a matchboxATEX 1

Yes Same as above.

HANDHELDS Factors Piloted TypeSymbol MC9000

RuggedBluetoothWLAN

GPRSVery Industrial andexpensive

No Rejected because it wasnot end user friendly.

Symbol PPT8860

Good tactical fitRuggedBluetoothWLAN but no GPRSSafe for use onforecourtNice look and feelExpensive

Yes Symbol PPT 8800 SeriesManufactured by Symbol

TechnologiesDimensions 33 H x 80 W x146 L (mm)Weight (with wireless lan):306gDisplay: TFT-LCD, 65K colors,

240x320 ScreenIntel XScale 300/400 MHzprocessorWindows Mobile 2003Memory: 32Mb / 64MbRAMSerial, USB and IrDAConnectivity

IPAQ 6340 Good strategic fitNot rugged (two screenswent down in less thantwo weeks)Not safe for use on theforecourt

Telephone; GPRS;BluetoothNice look and feelCheapest option

No Not safe for use on theforecourtVery fragile.

Table 1: Front end Technology Selections

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When all the components were pieced together this is what the front-end technicalsolution looked like:

Diagram 7: integrated Front-end Technical Solution

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6. PEOPLE

The development of capabilities in a consistent and standardised way did not occurbecause both the process and technology solutions where being developed in paralleland at a very high rate. The resultant training was often via show and tell; learningby playing and participating; some trial and error and via open channels of communication. As a result much of the time was spent in trying to design thepotential training templates that would be needed rather than formally presentingspecific courses to the respective audiences, this was a restriction encountered as aresult of a tight timeline and a global project team who often had other projectcommitments.

Diagram 8: Training and Communication Plan Summary

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7. PILOT GAPS

The pilot produced the following GAPs:

No TECHNOLOGY GAP IMPACT FIX/MITIGATION8.1 Handheld battery life

approximately three-fourhours.

LOW Double size battery; CarCharger; Additional Batteries tobe carried by TurnkeyContractor.

8.2 Battery life of the puck LOW Battery should lastapproximately 16 hours. Nopower indicator but can berecharged using a NokiaCellphone charger. Additionalpucks to be carried andinvestigate a non blue-toothadd-in.

8.3 No Reads of Low Frequency Tags off metal surfaces.

LOW High Frequency tags moreappropriate and will be used forthe full roll-out.

8.4 Partial Reads of HighFrequency Tags off metalsurfaces.

HIGH Investigate and test a tag with aplastic backing which will workin this environment.

8.5 Application enhancements MEDIUM Minimal, involved reworkingsome of the data templates andembedding the application intothe PDA RAM, so that it wouldauto install if the battery wentdown.

No PROCESS GAP IMPACT FIX/MITIGATION

8.6 Process conformance by Asset Tagging Contractor and SMswhere minimal.

MEDIUM Once technical solution is robustand tags are giving 100% read.Process training will formally begiven to all parties.

No PEOPLE GAP IMPACT FIX/MITIGATION8.7 Capability with regard to use

of the handheld.HIGH Proper training material has

been developed to close thisGAP. It deals with wider topicsnot just the use of theapplication.

8.8 Support for Handheld andApplication.

HIGH Process and subsequentagreements/contracts will needto be in place prior to a full roll-

out.

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8. CONCLUSIONS

The use of RFID technology on the Asset Tagging and Verification pilot providedenough evidence that increased RFID network connectivity to a broad range of highvalue assets translates to better control and management and ultimately moreefficient asset tracking.

Once the GAPs have been closed the pilot goes a long way to satisfying the SOXrequirements with regard to asset management. The use of RFID will enable theBusiness Unit to improve its sensing capabilities within the technologys actuallimitations as well as the business readiness.

It should be noted that the RFID will not make bad Asset Management processesbetter, or miraculously clean bad data in the Asset Register, but with the correctupskilling of the user base will make a good practice better and allow for moreaccurate asset management at far less cost and complexity.

Looking forward the Model now offers the BU a platform a strong electronic back-bone - todevelop its asset verification and tagging strategy. The era of using spreadsheetsand bar-codingto control assets over a wide and diverse area, will soon be over for complex, assetintensive, Business Units within the Group, and with an asset base of $8bn, it is vitalthat BP begins using auto identification technology to extract value, and to extendthe useful and safe life of its assets.

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9. ACKNOWLEDGEMENTS AND FURTHER INFORMATION

This paper was written by Robin Golding (BP Assets Project Manager, BP Africa),David Mooney (IBM Business Consulting Services), Brian o Reagan (Intel, SolutionsArchitect) and Neil McKinley (SAIC).

With assistance from Curt Smith (BP US Application Director, CTO); James Neophytou(IBM Business Consulting Services), Nick Waller (SAIC Business Consulting Services),

David Evans (TSL), Tom Altergott (Syclo) and Emily Woffod (IT BusinessConsultant/Project Manager).

For further information on the project please contact: [email protected]

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10. APPENDIX 1 - APPLICATION SCREENSHOTS

Logging On Screen Pilot Sites with RFID tag type

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Establishing the bluetooth connection Scanning the tag and capturing other information from drop down lists.

Equipment details and specifications Setting up two blue tooth readers using thefavourites option.

using rfid to solve the sox asset management challenge

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