RFID for Asset Tracking: How the Technology Works

Key Takeaways

• Without systematic tracking, 12–18% of tool inventory in SMEs is lost annually (Nexess Solutions, 2024).
• RFID transmits data wirelessly via radio waves; passive tags do not require their own power source for this.
• Unlike barcodes, RFID allows multiple tags to be read simultaneously without requiring line of sight.
• Systematic asset tracking reduces unplanned downtime due to unavailability by up to 30% (Machine Tracking ROI Study, 2024).

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What is RFID?

RFID stands for Radio Frequency Identification and refers to a method where a transponder sends data via radio waves to a reader without requiring direct line of sight. An RFID system consists of two components: the RFID tag, which carries an object's identifier, and the RFID reader, which reads this data and transmits it to a central system. Unlike barcodes, the label does not need to be visible or individually held in front of a camera.

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How Does RFID Work?

An RFID chip uses a small metal antenna, often at a frequency of 13.56 MHz in the HF range, to transmit data wirelessly. A distinction is made between active and passive tags: Active tags have their own power source and thus achieve greater ranges, while passive tags draw their energy from the reader's electromagnetic field and do not require their own battery. For mobile asset tracking in SMEs, passive tags are usually sufficient.

RFID signals also penetrate various materials such as plastic, wood, or textiles, meaning that even dirty or unfavorably placed tags usually remain reliably readable.

What is the difference between active and passive RFID tags?

‍Active RFID tags have their own power source and thus achieve greater ranges, while passive tags draw their energy from the reader's field and do not require their own battery. For mobile asset tracking in SMEs, seventhings typically relies on passive RFID tags.

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Where do you encounter RFID in everyday life?

RFID is much more widespread than it appears at first glance. The most classic form is transponder wristbands, which were already in use in swimming pools in the early 2000s. Today, you encounter the technology in various applications, including:

• contactless payments with debit or credit cards
• Opening, starting, and locking modern vehicles without a key in the ignition
• Timekeeping at major sporting events
• passports and identity cards in Germany and Switzerland
• the identification of livestock via collars, ear tags, or implants

The underlying systems are in some cases decades old, but have received a significant boost in application possibilities due to the miniaturization of chips over the past 20 years.

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What advantage does RFID offer over barcode labels for asset tracking?

The key difference lies in what is known as bulk scanning: While a barcode must be scanned individually and with line of sight, RFID allows multiple tags to be read simultaneously. For a complete inventory across multiple rooms, this significantly saves time compared to individual scanning, but comes with higher acquisition costs per label. Which method is worthwhile depends on the number of assets and the scanning frequency, not on the technology alone.

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For which assets is RFID worthwhile for SMEs?

RFID is particularly worthwhile where large quantities of assets need to be repeatedly tracked in a short amount of time, for example, for tool distribution across multiple locations or for the annual inventory of furniture and conference technology. Without systematic tracking, 12–18% of tool inventory is lost annually (Nexess Solutions, 2024), mostly due to unreturned items or unclear location assignments.

Discussions with maintenance managers in mid-sized companies reveal a recurring pattern: Companies that strategically use RFID for frequently moved equipment and stick to simpler labels for less frequently moved assets are more cost-effective than companies that implement RFID across the board from the outset.

How many tools are lost annually without systematic tracking?

‍Without tracking, 12–18% of tool inventory is lost annually in mid-sized companies, mostly due to unreturned items or unclear location assignments (Nexess Solutions, 2024). RFID automatically makes every location change traceable. seventhings continuously maps this history for tracked assets.

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How does systematic asset tracking affect unplanned downtimes?

If a required tool or test equipment is missing at a crucial moment, an unplanned downtime occurs, the costs of which amount to over €80 billion annually across the EU (IDS, 2025). Systematic tracking, for example via RFID, reduces such downtimes due to unavailability by up to 30% (Machine Tracking ROI Study, 2024). The effect is not solely due to the label technology, but rather to the combination of comprehensive tracking and centralized data management.

Is an RFID tag considered IoT sensor technology?

‍No. A passive RFID tag only transmits its identifier when actively queried by a reader; it has no independent power supply or permanent network connection. Therefore, RFID identification falls under classic asset tracking without IoT sensor technology, which is what seventhings was developed for.

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What now?

1. Check asset movement frequency. Identify which equipment frequently changes location and is suitable for bulk scanning via RFID.
2. Audit existing identification. Clarify whether currently used labels are consistently maintained.
3. Request an asset potential analysis. A free analysis shows how much tool loss can be avoided in your company through systematic tracking.

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Frequently Asked Questions

How much does an RFID tag cost compared to a barcode label?

‍RFID tags are more expensive to purchase than barcode labels because they contain a chip and an antenna. However, with high scanning frequency and large quantities, the higher price often pays off due to the time saved with bulk scanning.

What is the range of an RFID tag?

‍Passive tags typically have a range of a few meters, depending on the frequency band, while active tags with their own power source have a significantly greater range. For mobile asset tracking in SMEs, the range of passive tags is usually sufficient.

Can RFID be used in parallel with existing barcode labels?

‍Yes, many companies combine both methods: barcode or QR code for individual, less frequently moved assets, and RFID for inventory with high scanning frequency or bulk-scan requirements.

Does seventhings require a specific RFID frequency?

‍seventhings is not tied to a fixed frequency. The most suitable RFID variant depends on the asset type and scanning frequency, and this will be clarified during the initial consultation.

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