RFID Tool Tracking: 3 Advantages, 3 Disadvantages & Alternatives

Facility Management Market Leader

Updated February 23rd, 2025

Table of Contents

• 3 Benefits of Using RFID for Tool Tracking
• 3 Drawbacks of Using RFID for Tool Tracking
• Alternative Tool Tracking Solutions

Key Takeaway

While RFID technology for tool tracking offers significant advantages such as reducing foreign object damage, minimizing tool loss, and improving business continuity, it also has notable drawbacks including high implementation costs, durability issues in harsh environments, and potential impracticality for some businesses.

Tool tracking is a critical support process that every manufacturing facility must engage in. As the name suggests, “tool tracking” refers to the process of monitoring the status and location of tools so that all items are accounted for.

Over the years, many different systems and processes have been used to facilitate tool tracking. One such approach is becoming increasingly popular and involves the use of radio frequency identification tags, i.e. RFID for tool tracking.

Are RFID tags the answer that facilities managers have been searching for? Or do they fall short of expectations? While you will need to make that call for yourself, when it comes to RFID tool tracking, the three advantages and three disadvantages outlined below will help you make an informed decision.

Some potential benefits of using RFID for tool tracking include the following:

1. Reducing the risk of FOD

Foreign object damage (FOD) is a major issue in the manufacturing sector. Serious FOD impacts not only manufacturers but the clients they serve. A few of the industries regularly impacted by FOD include aerospace, construction, retail, and industrial manufacturing. The cost of FOD in the aerospace industry alone is thought to be over $3 billion.

Using an RFID system for tool tracking can reduce FOD by helping facilities managers maintain an accounting of all tools. Managers can quickly determine whether a tool was checked out and not returned before bringing recently repaired equipment back into service.

2. Protecting costly equipment

Hand and power tools can be quite expensive, especially highly specialized ones. RFID tool tracking can reduce the risk that these tools will be lost, misplaced, or stolen.

This will reduce your company’s operating and overhead expenses while ensuring that your technicians have the equipment they need to do their jobs.

3. Preserving business continuity

Lost tools can cause repair and maintenance delays. Ultimately, these delays can threaten business continuity and cost your company tens of thousands in lost profits. RFID tool tracking can insulate you from some of these risks and help you keep your equipment fully operational.

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There are plenty of potential perks to using RFID technology for tool tracking. However, there are some serious shortcomings that you need to be aware of.

1. Can be cost-prohibitive

This is especially true during initial implementation. You will need to invest in tags, programming equipment, and specialized scanners to use RFID technology.

Another concern is that RFID tags are not very secure. You can address this shortcoming by purchasing encryptable RFID tags, but doing so will drive up costs even more. The potential costs of an RFID-based tool tracking program can make it difficult for you to achieve buy-in at the executive level of your organization.

2. Lacks durability

By nature, manufacturing environments can be harsh. Your facility’s tools and equipment are constantly exposed to extreme temperatures, abrasive forces, and rigorous daily use. In light of that reality, you need a tool tracking solution that can take a beating. RFID tags are not this technology.

RFID tags are equipped with an antenna and receiver. These tiny components will easily break if the tags are smashed, bent, or exposed to other harsh conditions. This disadvantage diminishes the efficacy of RFID tags for tool-tracking purposes.

3. Is not the most pragmatic solution

The most notable drawback of RFID-based tracking is that this technology does not represent the most practical solution for your business. As a leader within your organization, you are responsible for choosing functional, cost-effective solutions that address business needs.

There is no question that your manufacturing facility needs a tool-tracking solution, but RFID tags aren’t the only option to consider.

Metalphoto® ID tags are a functional and practical alternative to RFID tool tracking, and they have been used by leading manufacturers worldwide for over 50 years. These simple tags are mounted directly to tools, equipment, and other assets in order to provide critical identification information.

Metalphoto tags are durable, easy to install, and cost-effective. They can be easily scanned using standard barcode readers, which means you won’t have to purchase specialized equipment. Offering excellent resistance to chemicals, abrasion, and solvents, Metalphoto withstands exterior exposure in the harshest environments, including extreme cold, heat and UV, for an expected exterior lifespan of 20+ years.

Contact Camcode today to learn more about our industry leading equipment tags and ID tags for every application and how you can implement a robust tool tracking solution for your business.