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If you want to keep a record of the location and condition of your tools, an RFID tool tracking system is an excellent solution and a common asset tracking application.
While transitioning from a manual reporting or spreadsheet-based system, companies often find it more manageable to implement barcoding solutions before delving into RFID technology. However, for those already accustomed to barcoding but eager to advance their tracking capabilities, exploring RFID becomes a logical progression. With an RFID tool tracking system, you can take preventative maintenance measures, extend the lifecycle of your equipment, and prevent theft.
This article explains what an RFID tool tracking system is, why it’s so beneficial, and how you can build your own system.
Main Takeaways from This Article:
- Radio frequency identification (RFID) is a comprehensive solution to asset management and tool inventory tracking.
- Industries like construction, manufacturing, healthcare, and education commonly use RFID tool tracking.
- An RFID system can help prevent theft, avoid operational inefficiencies, and increase tool longevity for financial savings.
- RFID tool tracking systems consist of tags, readers, and asset tracking software for reporting and documentation.
- Asset management software like RedBeam helps facilitate a stronger, more scalable, and more secure RFID system.
What Is RFID Tool Tracking?
RFID tool tracking lets you get a complete view of your business’ equipment at once. It’s a monitoring system that uses radio frequency identification tags (hence the name, RFID) to track your tools and other assets instantly.
It’s incredibly commonplace, too. Many industries, including construction, healthcare, education, and manufacturing, use RFID tags and readers to keep track of tools and equipment. No wonder the global market for RFID tags is expected to hit $16.09 billion by 2028, up from $11.67 billion in 2024.
RFID tool tracking is reasonably easy to implement, and the financial investment, while not insignificant, often pales in comparison to the value that such a solution provides. RFID tags can be placed on almost any asset, with data transferred via RFID readers and scanners to an asset management software — allowing employees to access and edit information whenever and wherever they like.
Typically, businesses use RFID tags to track the location of physical assets like tools. However, superior RFID systems, ones that incorporate asset tracking software, can also store information about the condition of assets to streamline maintenance processes and extend the lifecycle of tools.
How Different Industries Use RFID to Track Tools
RFID tool tracking isn’t one-size-fits-all. On the contrary, it’s adaptable to different industries, helping businesses improve asset visibility and reduce tool loss. Here’s how four key industries leverage RFID to improve inventory management, increase inventory accuracy, and implement access control for fixed assets:
- Construction: Contractors use RFID systems to prevent stolen or lost tools by tagging high-value equipment like excavators, motor graders, and even smaller items like power drills. RFID readers at job site entry points enable access control, ensuring only authorized personnel can operate specific tools. RFID also aids supply chain management by tracking raw materials and tool shipments between warehouses and project sites.
- Manufacturing: RFID helps factories enhance operational efficiency by automating tool check-ins and check-outs, reducing downtime caused by missing equipment. It also integrates with inventory management systems to monitor tool usage patterns, track pallets moving between production lines, and tailor maintenance schedules before breakdowns occur.
- Healthcare: Hospitals use RFID systems to track sterilized medical equipment, ensuring compliance with hygiene standards and reducing lost or misplaced instruments. An RFID tagging solution improves asset visibility, allowing staff to quickly locate and retrieve life-saving medical equipment like defibrillators, and manage mobile mobile assets like wheelchairs.
- Education: RFID asset tracking helps universities, vocational schools, and K-12 classrooms manage lab tools, calculators, and personal computers, ensuring students return borrowed equipment. RFID makes it easier to locate library books and prevent stolen material, plus, it improves access control in restricted campus areas like engineering workshops.
Top Reasons to Implement a Tool Tracking System
Physical assets come in all shapes and sizes — but when it comes to getting the job done, tools are among the most essential. However, without a reliable tracking system, they’re also the easiest to lose, misplace, or get stolen. RFID tool tracking gives businesses real-time asset visibility, ensuring that tools are always in the right place and ready for use.
Whether you want to streamline operations or make smarter purchasing decisions, an RFID asset tracking solution can completely change how you manage your tools.
Avoid Inefficiencies of Manual Tracking
Manually tracking tools with spreadsheets or paper ledgers is time-consuming, error-prone, and leaves room for fraud. Employees forget to log tool usage, records get misplaced, and reconciling missing equipment becomes a tedious process that distracts from primary operations.
An RFID tool tracking system eliminates these inefficiencies by automatically logging tool check-ins and check-outs without employees having to write anything down. This means your team spends less time searching for equipment and more time on productive, revenue-generating work. Plus, with instant access to usage data, asset managers can make faster, more informed decisions (more on this below).
Reduce Equipment Theft
The financial toll of equipment theft is staggering, with losses in industries like construction estimated to be between $300,000 and $1 million annually. Traditional security measures often fall short, as stolen tools are difficult to trace and rarely recovered.
With RFID tool tracking, real-time monitoring and automated alerts make theft prevention much more effective. Tagged tools paired with RFID entry and exit tracking create a strong deterrent, ensuring unauthorized removals are flagged immediately and minimizing the likelihood that tools will go missing in the first place.
Ensure Compliance and Accurate Audits
Beyond security measures, maintaining accurate records of tools along with their location is essential for regulatory compliance and smooth audit processes. However, manual record-keeping increases the risk of discrepancies, which can lead to compliance violations and costly fines.
An asset identification system powered by RFID helps you locate and verify tools instantly, creating accurate audit trails. With automated logs and real-time reports, you can prove compliance with industry regulations all while improving internal accountability.
Facilitate Preventative Maintenance
Every tool experiences wear and tear, but unplanned breakdowns can stall operations and increase replacement costs. Without a preventive maintenance strategy in place, you risk using equipment beyond its safe or effective lifespan. Enter RFID tracking tools. RFID-enabled asset control systems help track tool usage patterns, so maintenance is performed proactively rather than reactively.
For example, your RFID asset tracking system may highlight that a particular tool is being used at twice the recommended rate. You can use this data to carry out proactive inspections (and repairs if necessary) to keep an important tool in circulation.
Increase Tool Longevity and Financial Savings
Speaking of keeping tools in circulation, RFID doesn’t just help maintain equipment — it actively extends the lifespan of your assets. Lost, stolen, or poorly maintained tools drain budgets, but RFID tool tracking allows the equipment to stay in use longer while reducing unnecessary replacement costs.
Plus, an RFID tracking system cuts losses from theft, minimizes downtime, and eliminates manual tracking inefficiencies that all benefit your bottom line. These improvements add up fast, delivering financial benefits far beyond the cost of implementing such a system.
Make Informed Purchasing Decisions
Without accurate data, businesses often overspend on tools they don’t need or, worse, fail to replace critical equipment in time. An RFID tool tracking system provides insights into usage trends, helping asset managers determine when to retire, replace, or purchase new tools.
With asset control technology, you can compare tool performance across brands, identify underutilized (and overutilized) equipment, and optimize spending. These data-driven decisions prevent wasteful purchases and ensure your teams always have the right tools on hand.
RFID vs. Other Tool-Tracking Methods
There are several methods you could use to track your tools. Barcodes and QR codes are two of the most popular alternatives — and ones we regularly recommend companies use in their first asset tracking system.
Barcodes are an excellent choice for many asset tracking use cases since they are cheap and easy to implement. But, sometimes companies are ready to move on to RFID-based tracking solution instead.
RFID tags are incredibly easy to scan. You can use RFID tags to scan several assets simultaneously without being close to them. These tags can be scanned passively as assets pass a scanner, or if you choose active RFID tags, there’s no need to scan them. These devices have a built-in battery, which means they continuously transmit data.
RFID tags are also incredibly durable, making them an excellent choice for tools like heavy machinery stored outdoors. Because the tags can be rewritten, they are also a great choice for companies that replace tools and equipment regularly.
Finally, your data requirements may necessitate the use of RFID tags. Most RFID tags can store between 128 bits and 256 bits of data, which is considerably more than some other solutions.
Components of An RFID Asset Tracking System
An effective RFID tool tracking solution contains three core parts: the tags, a scanning solution or handheld reader, and asset tracking software to keep everything organized. Let’s take a look at each element in more detail below.
RFID Tags
There are three types of RFID asset tags: active, passive, and semi-passive.
- Active RFID tags come with their own power source, usually a battery, which continuously transmits a signal. They can transmit data over about 150 meters or 500 feet.
- Passive RFID tags don’t have an internal power source. Instead, they transmit data using antennas and RFID readers. This means the range is shorter (usually about 10 meters), but these tags tend to be cheaper and easier to maintain. These are the most commonly used tags in a tool tracking system.
- Semi-passive RFID tags use a combination of active and passive technology. They have both an internal battery and an antenna and RFID chip. You get the best of both worlds here. The signal range is lower than an active tag, but you get real-time monitoring.
The cost of implementing RFID tags will depend on your type of tag. Passive tags are significantly cheaper than active ones since they have no power source. Passive tags can cost around $1 each, but active tags can cost upwards of $50 per tag.
Active tags are easier to install, and you’ll probably be able to do this yourself. Passive tags are a little more complicated because they rely on readers and need to be connected to a server. This usually requires the help of an installer to set up the system and run tests.
Handheld Readers and Scanners
Depending on the type of tag you choose, you’ll need a set of handheld readers or fixed scanners. You can have both a fixed and handheld system, but most businesses choose one or the other.
With a fixed RFID tracking system, readers are usually placed at all entrances and exits and will scan tags as they move past. You can have scanners continuously reading all tags in an area or at regular intervals, but this is more intensive and less common. A fixed system will update your system whenever an asset is removed or returned to the area. This creates a digital accountability log that records when an asset was removed.
A handheld RFID system works a little differently. With this system, you’ll need to purchase one or more handheld readers that employees will use to manually scan tags. This should happen at regular intervals (at the end of every day), but it could also happen after milestones like the start or end of a job.
A handheld system is more labor-intensive than a fixed system, but it does let employees create more detailed notes about the location and condition of each tool.
Asset Tracking Software
No RFID tool tracking solution is complete without a piece of comprehensive asset tracking software. Asset tracking software is a scalable digital platform that manages all of the information and data conveyed by RFID tags.
Employees can use asset tracking software to get full visibility into your tools, track who has which tool and who used it last, see which tools need maintenance, and do dozens of other tasks.
How to Implement an RFID Tool Tracking System
For spreadsheet users, switching to an RFID tool tracking system may seem daunting — but breaking it down into steps makes the transition effortless. From selecting the right tags to training your team, here’s how to implement a system that keeps your tools organized, secure, and in circulation.
1. Define Your Tracking Needs
Before choosing RFID hardware, outline exactly what you need to track. Create an inventory tracking list of all tools requiring RFID tags, considering factors like size, material, and usage frequency. Are these tools used multiple times per day or sporadically throughout the month?
Next, determine how often you need tracking updates. Do you need real-time monitoring to prevent loss, or are periodic location updates sufficient? Also, assess environmental factors. Will the tools be stored indoors or used on rugged outdoor sites? These decisions help shape the ideal RFID tracking setup for your business.
2. Choose the Right RFID Tags
As we’ve outlined above, not all RFID tags are created equal. Passive RFID tags are cost-effective and great for tools that don’t require constant tracking, making them the most popular option. On the other hand, active RFID tags provide real-time updates and work best for high-value or security-sensitive equipment.
Before purchasing in bulk, test different tags in your actual work environment. Readability can vary based on materials, interference from nearby radio waves, and tag placement. A little testing upfront guarantees an RFID tool tracking system that functions well from day one.
3. Select RFID Readers and Scanners
Once you’ve chosen your tags, it’s time to pick your preferred RFID readers. Fixed RFID readers at entry and exit points allow for automated tracking, instantly creating a digital accountability log without the need for manual intervention.
For mobile tracking, handheld RFID readers offer more flexibility — ideal for on-the-go audits or job sites without fixed infrastructure. However, they will be more labor-intensive than a fixed system. No matter which readers you choose, make sure they’re fully compatible with your selected RFID tags to avoid integration issues.
4. Implement RFID Tool Tracking Software
Choosing the right asset tracking software is just as important as selecting the appropriate hardware. Your chosen RFID tool tracking system should support multiple users with tiered access, so your entire team can check tools in and out but only key personnel have administrative capabilities.
Cloud-based software with offline capabilities is also a must, ensuring seamless data access whether employees are in the field or at the office, with or without an internet connection. Likewise, features like configurable reporting help visualize data by categories like location, tool type, and employee, powering more informed decisions.
5. Tag and Register Your Tools
Once you’ve selected your hardware and software, it’s time to tag and register your tools. To protect both your investment and your operational efficiency, it’s vital to assign and attach RFID tags consistently. Place them in locations that allow for easy and reliable scanning while avoiding wear and tear.
Before launching the system, test multiple RFID tags by scanning them into the tool management database. This will confirm proper registration and prevent future tracking issues stemming from incorrect tool assignments.
6. Train Your Team
Training is important, especially if your team isn’t familiar with radio frequency identification in the first place. Employees need to know how to scan tools, check assets in and out, and update records to keep the system running smoothly. Key personnel should also understand the weight of administrative capabilities to further limit fraud and theft.
Similarly, avoid the pitfalls of your previous manual tracking methods by establishing clear protocols for tagging and registering new tools into the database, as well as for handling lost or damaged tags. A well-trained team allows for an RFID tracking process that runs like a well-oiled machine.
7. Monitor and Optimize Your System
Lastly, once your asset tracking system is in place, regular audits will help verify tool locations and detect any inconsistencies that have developed with continued use. Routine check-ins keep the system accurate and prevent small tracking errors from snowballing into major inefficiencies.
So, be sure to leverage your RFID tagging solution to analyze tool usage patterns, identify under and overutilized assets, and refine maintenance schedules. Over time, these insights help refine workflows, reduce loss, and maximize the return on your RFID investment.
Solve Your Tool Tracking Problems with RedBeam
For businesses looking to improve visibility, extend tool lifecycles, and maintain compliance, an RFID tool tracking system is the way forward. Whether you use active, passive, or semi-passive RFID tags, the game-changer is choosing the right asset tracking software — and that’s where RedBeam stands out.
RedBeam offers a comprehensive asset management solution that seamlessly integrates with your RFID tags and readers, allowing you to document, edit, and report on tool data at scale. With custom field functionality, employees can track the exact details that matter most, while role-based access empowers supervisors and managers to maintain full oversight without overcomplicating workflows.
RedBeam offers all the features your team needs for an RFID tool tracking system that’s built to last. A REST API ensures effortless integration with your existing tech stack, a web-based portal enables remote access, and a mobile app keeps teams connected with on-the-go updates, so your business remains nimble.
Start a 30-day free trial and experience scalable RFID tool tracking today.
RFID Technology FAQs
Can RFID Track Stolen Items?
Yes, but with limitations. RFID tool tracking systems help deter theft by logging when and where tools were last scanned. However, RFID tags don’t transmit location like GPS. If stolen, tools won’t be trackable unless scanned by an RFID reader. Pairing RFID with strict access controls and routine audits increases security and theft prevention.
Are RFID Scanners Legal?
Yes, RFID scanners are legal for businesses to track assets, inventory, and personnel access. However, unauthorized RFID scanning — such as skimming personal data from credit cards — is illegal in many regions. When used ethically in an RFID tool tracking system, RFID scanners provide a secure and compliant way to manage equipment and streamline operations.
How Common Is RFID Theft?
While RFID itself isn’t typically the target, RFID-tagged tools can still be stolen if security measures aren’t in place. Using access-controlled RFID readers and real-time logs significantly helps businesses reduce theft risks. However, there will also be some risk of theft, especially for valuable assets, movable assets, and specialty tools.
Is RFID Better than GPS?
Whether or not RFID is better than GPS depends on the use case. RFID tool tracking systems are ideal for short-range tracking and automated check-ins. GPS tracking, on the other hand, is better for real-time tracking and location monitoring over long distances. Many businesses use RFID for tool management and GPS for fleet management, leveraging both technologies for full asset visibility.
