Guide to Asset Tracking for Businesses- Definition, Methods, and More
Reports predict that the number of businesses using asset tracking solutions will reach 90 million users by the end of 2020 and breach the 114 million mark by 2025 - a growth of 27% over the past 5 years.
This surge should not come as a surprise. Given the high cost of enterprise and industrial assets, businesses need a system for monitoring these objects at all times. Fortunately, the rise of asset tracking software has made it possible for managers to have a centralized view of their assets' locations and statuses in real-time.
What Is Asset Tracking?
In a nutshell, asset tracking is the process of monitoring an organization's physical assets using scanning devices to read the barcode or QR code attached to these items. Assets can also be tracked with more advanced communications tools, such as RFID and NFC tags, which use radio waves to broadcast their location in a warehouse, fulfillment center, or distribution facility.
At its simplest, an asset is a company-owned resource with economic value that can be expressed in dollar amounts. Assets are divided into two main categories-
- Tangible or physical assets, such as machinery, computers, and vehicles
- Intangible assets, such as contracts, patents, licenses, and trademarks among others
While the terms asset and inventory tend to be conflated in business, they are not always the same. Inventory, while technically an asset, is meant to be sold, consumed, or distributed in one way or another. On the other hand, assets refer to the objects that help the company to sell inventory.
Businesses use asset tracking to improve the transparency and security of their most valuable resources throughout the supply chain. This is how they keep tabs on their assets' location, condition, and, in the case of equipment, their maintenance schedule. Above all, it's how businesses determine the total value of their assets - a crucial requirement for compliance purposes (e.g., accounting and tax payments).
Common Asset Tracking Methods
There are many options and solutions for asset tracking, each one with a unique set of advantages. Here's a quick rundown of each asset tracking method.
1. Pen and Paper
The simplicity of the pen and paper method for tracking assets is why small businesses and startups continue to use it today. As the traditional and simplest method for keeping records of assets and financial information, the pen and paper method has a relatively low learning curve. It also does not require the business to invest in technology and/or train employees to use asset management software.
However, this approach comes with several disadvantages. For starters, every time an employee has to find information about an asset, they may need to spend several minutes digging through paper files. These minutes can quickly add up over time, resulting in decreased productivity and wastage of labor hours.
Spreadsheet platforms like Excel remain popular due to their flexibility and relative ease of use. Its ability to digitize information about a company's assets makes it a superior tool over the traditional pen and paper method. Files no longer have to be kept in filing cabinets and users can quickly search for assets by name, location, or category.
However, the spreadsheet is far from perfect. For one, the process of updating spreadsheets is still done manually, which takes time. This also leaves the entire system vulnerable to human error. And all it takes is one spreadsheet typo to cascade into a series of errors that affect inventory and accounting teams.
3. Barcodes and QR Codes
The advent of barcodes and QR codes has introduced a more reliable way for businesses to store and monitor their assets. A barcode, as the name suggests, is a machine-readable code in the form of parallel lines and numbers. The barcode is integrated into an asset's label and, after being scanned by a barcode scanner, instantly pulls up the asset's pertinent information.
On the other hand, QR codes are two-dimensional codes that can be read both vertically and horizontally. And unlike barcodes, which are sensitive to tampering (scanners can't detect a barcode if it is defaced), QR codes have correction abilities and can still be read.
Either way, QR and barcode scanning eliminates the need to use spreadsheets and make it possible to locate and retrieve assets in seconds.
4. RFID Tags
Radio-frequency identification (RFID) tags work almost the same way as barcodes. However, RFID tags are faster because they use near-field technology to transmit encrypted asset information using radio waves. This data can only be read by a secure reading device.
Unlike barcodes, which can only be scanned while maintaining a direct line-of-sight with the scanner, RFID tags simply have to be in range of the scanner to be read. A scanner can also detect multiple RFID tags simultaneously. In contrast, barcodes and QR codes can only be scanned one at a time.
5. NFC Tags
Like RFID tags, near-field communication (NFC) tags use near field technology to wirelessly transmit information. Specifically, NFC is a subset of RFID technology that's compatible with many consumer-grade devices that support NFC technology. This includes smartphones, tablet devices, and even smartwatches.
However, NFC tags only have a few inches of range. But they are easily detected by holding a compatible device over the tag. Users simply need to use a mobile app to turn their smartphones into NFC-enabled asset tracking solutions.
6. Bluetooth Low Energy
In recent years, Bluetooth Low Energy (BLE) technology, also known as Bluetooth Smart, has gained momentum in the world of asset, equipment, and inventory tracking. Based on traditional Bluetooth technology, BLE devices are designed to periodically broadcast data in small packets to use as little energy as possible.
By using BLE-enabled tags, beacons, and receivers, businesses can periodically track assets both indoors and outdoors, providing real-time visibility of their location and condition. Depending on the company's needs and budget, their BLE devices can track assets automatically (with no human intervention) or semi-automatically (involving people with smartphones).
7. Global Positioning System (GPS)
GPS systems are commonly used in fleet management, helping businesses monitor the location of company cars and trucks. But the technology has also made its way into asset tracking and inventory management, allowing companies to track their assets around the world.
This gives them an eye in the sky - a way to get complete visibility of all their assets in real-time. GPS-based asset tracking solutions, however, can be energy-intensive and expensive.
Why Businesses Should Invest in Asset Tracking
Knowing where the company's assets are and being able to retrieve relevant information about them offers many compelling business benefits.
- Workforce Efficiency - Asset tracking allows businesses to know exactly where their assets are at all times, eliminating the need to assign employees to track them down manually. By using asset management software, companies can reduce human error and free up time for staff to focus on value-generating tasks.
- Cost Savings - Failing to track assets puts the company at risk of experiencing losses without even knowing it. Asset tracking prevents product loss and helps ensure that items such as manufacturing equipment, computers, and vehicles are used efficiently. Asset tracking helps ensure assets are protected and used responsibly, reducing costs without negatively affecting service quality.
- Better Customer Service - Optimizing business functions through asset tracking leads to better service quality, which, in turn, leads to satisfied customers. Whether it's having sufficient inventory in stock or having more efficient operations, customers ultimately benefit from these internal improvements.
- Supporting Future Growth - Using asset tracking systems allows businesses to scale their organizations for growth much faster than using paper files and spreadsheets. An automated asset tracking platform with built-in analytics will help managers spot asset usage trends and identify growth opportunities.
- Compliance and Certification - Asset tracking can be the key to maintaining compliance with accounting regulations and achieving certifications.
- Accuracy - An automated asset tracking platform can be a company's single source of business intelligence for its assets, providing data about utilization, maintenance, and costs. Software and analytics remove the need to do any guesswork when tracking assets, making it easier to make informed business decisions.
3 Functions to Expect from Asset Tracking Software
Although there is a wide variety of asset tracking systems on the market, most software products are ultimately designed to do 3 things-
1. Track Assets
Accounting regulations like the FASB lease accounting standards require businesses to keep detailed records of their leased assets. Asset tracking platforms can maintain a real-time database of all information about these assets, including, but not limited to, contract terms, product manuals, troubleshooting guides, and pictures.
2. Provide Access to Asset Information Anywhere
The best asset tracking solutions provide portability, allowing users to access asset information on traditional desktop computers as well as mobile devices like smartphones and tablet devices.
These cloud-based asset tracking systems can be accessed through the Internet, which makes it easy for inventory managers, for example, to scan goods using regular smartphones. They can also use their phones to retrieve information about assets on the go.
3. Provide Custom Reports
Finally, an asset tracking platform must have the ability to quickly generate custom reports that drill down to metrics such as mean time between failure (MTBF), asset availability, stolen or missing equipment, and even employee productivity.
Managers can also use software to pull up reports about contract terms, lease information, and maintenance. Some systems will even trigger notifications when contracts are due for renewal or when scheduled maintenance is approaching.
How Different Industries Leverage Asset Tracking
Asset tracking is an important process in virtually all kinds of industries, from retail and food and beverage to healthcare and construction. Here is a closer look at how different industries drive value through asset tracking.
- Logistics and Warehousing - Asset tracking is used to scan goods as they enter the warehouse and as they are loaded into trucks and moved to another location. Carriers are outfitted with GPS technology to track their location and ensure the safety of assets being transported. In warehouses, commodities are equipped with barcodes, QR codes, RFID tags, or NFC tags to make it easy to find and retrieve them at any time
- IT - Asset tracking is a key component of IT inventory and asset management. It allows businesses to gather and maintain detailed information about all of their IT assets, which includes company-owned information, software, hardware, and systems used in the course of business activities.
- Healthcare - RFID technology is revolutionizing asset management in healthcare. In the UK, the country's National Health Services has saved thousands of dollars by attaching active RFID tags on 10,000 pieces of medical equipment in a hospital in Scotland.
When done right, asset tracking can provide transparency and actionable insights into the performance of a business's physical spaces, equipment, facilities, and value-generating resources. From here, managers can identify connections between the way these assets are being used and brainstorm ways to streamline business operations.