Businesses in various industries need to have a clear picture of all their assets, mainly where they are and what is their status. Electronic asset tracking proved to be an efficient, streamlined process that facilitates this need.
Asset tracking is steadily growing with the market size for asset tracking and inventory management expected to reach $40 billion by 2027. It is definitely a topic worth discussing.
By the end of this article, we will explain:
what asset tracking incorporates
the difference between asset tracking and inventory management
benefits of asset tracking
common asset tracking tools
how to develop and implement a simple asset tracking strategy
What is asset tracking?
Asset tracking is the process of tracking the location and status of physical assets. It is an important aspect of asset management and aims to increase business accountability while reducing the likelihood of assets being neglected, lost, or stolen. It is often implemented as one of the features in asset management solutions.
Examples of typically tracked assets range from industrial machines and essential equipment to computers and office furniture. This is because the types of assets tracked are company-specific. In other words, every business for itself has to decide which of their assets are important enough to be tracked.
Some specific industries that use a lot of asset tracking are:
Manufacturing: To keep track of equipment and machines for maintenance.
Transportation and logistics: Fleet tracking is vital to have a real-time view of whether targets are being met during deliveries and if there are unforeseen delays.
Construction: Large, expensive equipment on construction sites risk being stolen if adequate protection measures are not in place to prevent this. Asset tracking can be applied to both large and small equipment.
There is a variety of information you can track and it is up to you to decide which information is relevant for your business. Commonly tracked information include:
standard information about the asset (asset description, model)
usage history (to identify where, when and who used the asset)
One way to decide which information you want to track is by considering what data you and your team could use when generating different reports and doing any cost optimizations.
Inventory management vs asset tracking
The concept of asset tracking is sometimes incorrectly interchanged with inventory tracking and inventory management in general. However, these are two separate concepts.
Inventory tracking is applied to assets that will be sold and usually have not undergone any degree of depreciation). For example, a light bulb manufacturer will have various lightbulbs in inventory that are eventually sold to make a profit.
The same manufacturer, however, will have different machines that are used to make the lightbulbs. These machines are not destined for sale (they are not inventory items) until they have reached their useful life. These will be designated as assets in the manufacturer’s books.
An easy way to distinguish between inventory items and company assets is to think about inventory as consumable items that sit on the shelves until they are used or sold. In contrast, you can think about assets as machines and equipment that you regularly use for daily operations (which is why they should be on a proactive maintenance plan).
Benefits of proper asset tracking
Assets get moved around, new ones are bought, maintenance is performed on equipment, damages occur, and depreciated assets are written off or sold. These changes modify the overall blueprint of onsite assets.
Having access to accurate, real-time information can determine whether a company is profitable or if it gets drowned in administrative procedures.
With that in mind, let’s look at the key benefits of asset tracking.
1) Ensures adherence to regulatory requirements
Not all assets are created equal, and this also applies to the regulations governing them. For example, in some companies, a fire extinguisher should have an updated inspection certificate during specific time intervals.
The process of knowing where to look, how many fire extinguishers are on the property, and the types, becomes difficult without a proper asset tracking system in place. What’s more, is that some fire extinguishers could be overlooked during inspection checks. In these circumstances, the property risks non-adherence to regulatory requirements and the consequences that follow.
2) Saves time and money
When done correctly, electronic asset tracking:
provides real-time, systematic information that provides better asset accountability
lowers the likelihood of items being misplaced
lowers administrative costs by eliminating fragmented paperwork that is prone to human error
ensures that damaged assets are removed from the books
All of this translates to saved time and improved bottom line.
3) Improves asset lifecycle monitoring
As time progresses, assets undergo wear and tear that change their innate productivity levels. Knowing which assets are near the end of their useful life and which ones should be scheduled for routine maintenance helps lower the number of unplanned breakdowns and associated costs.
In other words, when you have an up-to-date overview of all of your assets and their conditions, it is much easier to have the “repair or replace” debate.
Common asset tracking “tools”
Below, we provide a list of specific software solutions and items (like asset tags) used for asset tracking.
RFID and barcode tags
RFID and barcodes are both a quick way to uniquely mark an asset we want to track. When we read the tag with a mobile device we immediately access certain information about that particular asset.
Radio Frequency Identification (RFID) uses near-field technology to capture encoded data in smart labels or RFID tags affixed to an asset. In some circles, RFID is considered a step above barcode technology because of the possibility to read and write information, therefore facilitating storage, updating, and data removal.
Barcodes are something we are all familiar with. It is a simple technology that uses numbers and a series of parallel lines to capture the desired data. The main advantage of barcode technology is that it is cheaper to implement as barcode labels are inexpensive to design and print.
GPS asset tracking
Global Positioning System (GPS) is a radio-navigation system that uses satellites and microwave signals to identify a target’s location. Information such as time, speed, historic location data can be provided through GPS asset tracking. The technology works by installing a tracking device on an asset that is then tracked by a satellite.
Examples of use include industries where equipment theft is rampant (such as the construction industry) and in fleet management where real-time tracking is necessary to provide users with information regarding delivery time frame and general info about asset utilization.
Fleet management and asset tracking software
Advanced asset tracking rarely comes as a standalone solution and it is commonly implemented as a part of fleet management software.
Besides storing maintenance-related information about your fleet, it can connect to a tracking device that is installed to a vehicle which enables you to track asset location at all times (alongside other user-defined information like fuel levels, usage, temperature and humidity changes, etc.).
CMMS software (asset management software)
CMMS system is a software package that is specifically designed for maintenance management. It offers a wide range of features that is not limited to asset tracking like planning and scheduling maintenance work, tracking spare parts inventory, work order management, and much more.
In the context of asset and equipment tracking, we have to take a closer look at its asset management features. When you enter an asset into your CMMS, you will usually have the option to include details like asset description, location, model, associated barcode, and similar.
The bonus of having a CMMS is that it automatically tracks maintenance history so you can know the status and health of a particular asset in just a few clicks. If you use condition-monitoring sensors, you can connect them with your CMMS and get real-time asset data.
How to create a reliable asset tracking strategy
Successful asset tracking requires a strategic approach, regardless of the number of assets you want to track. Below, we highlight a few important points you should keep in mind if you want to implement a reliable and cost-effective asset tracking strategy.
Step #1: Prioritize critical assets
Make a list of all of the assets that could be tracked. After that, talk with the team and narrow the list down to your “top priority assets”. Top priority assets are usually those that are very expensive to repair and replace, as well as those critical to business operations (they might not be particularly expensive, but people can’t perform their daily work without them).
Once you have made the distinction between very important and less important assets, assess the type of budget you can allocate for asset tracking and to see if you’ll need to refine your list any further.
Step #2: Choose an asset tracking method
The types of assets you select will determine the type of asset tracking system you use and the way the data will be logged. For example, if you operate a logistics company, you may want to choose a GPS tracking to track your fleet. The same applies to renting equipment to a construction site.
On the other hand, if you are a manufacturing facility, you can have all of the necessary information about your fixed assets inside your CMMS software. A proper CMMS should store everything from the location of the asset and serial numbers to asset description and maintenance history.
Step #3: Perform a test run
Whenever you are trying something new, it’s not a bad idea to have a test run on a small sample.
Implement the chosen method and do a test run on one or two assets. After enough time has passed, see if you are satisfied with the scope of the information you were able to track and how accurate the system was.
If something was off, tweak the system so you get what you want. When you are satisfied, implement the strategy on all other assets.
Step #4: Scale and optimize
Asset tracking is a work in progress. Even after scaling up to all assets, check to see if other adjustments can be made for even better results. After a while, you might need to track more information (or less) so you’ll need to adjust the things you want to track.
Asset tracking is an essential subset of decision processes in asset management. Whether in the transportation, manufacturing, health, or construction sectors, the benefits of gathering real-time information about particular assets can be very valuable.
Some industries will use the information to streamline maintenance workflows for fixed assets, some will use it to optimize the purchasing of new assets, and others will use it to track the location and performance of moving assets.
Whatever the case might be, knowing the health and location of critical assets is important for every business.