Why Track Assets? A Complete Guide
February 21, 2022
McKinsey & Company estimates that real and non-financial assets in the global balance sheet amounted to about 500 trillion dollars in 2020, about one third of total global assets held. When it comes to modern-day workplace management practices, you’re sure to hear the term asset tracking. Also referred to as asset management, it is the process of tracking a business’s physical and intangible assets.
So, is asset tracking important for small and medium sized businesses?
Let’s find out.
What is Asset Tracking?
Asset tracking allows businesses, both big and small, to keep an eye on all the assets owned by the company. It gives a clear picture of where the assets are located, how they’re being used, and any changes made to them. The data derived from asset tracking solutions will ensure better returns on the assets, especially during recovery.
Physical assets can be tracked using GPS or RFID tags or scanning the attached barcode labels. Intangible assets, on the other hand, can be tracked using accounting software.
Some of the assets you should be tracking include:
- Building Systems
- Heavy Equipment
- Manufacturing Equipment
- HVAC Equipment
- Safety Equipment
- IT Equipment
- Vehicles for Business Use
- Breakroom Appliances
- Office Furniture
- Desktops, Laptops, Tablets, and Phones
- Printers, Scanners, and Copiers
- Electrical Fixtures & Fittings
- Software Licenses
- Business Signages
Why Track Assets?
Many businesses own a significant amount of high-value assets that may be critical to their operations. Asset tracking ensures that the whereabouts and movement of these assets are strictly monitored to prevent misuse and loss, and improve business operations. It also helps a company utilize the full potential of its assets by selectively choosing assets in times of need.
And when you are a small business, it is important to keep it going. Only a third of SMBs make it to the tenth year of the business in the US, according to the U.S. Small Business Administration. Small and medium businesses may not consider asset tracking integral to their sustainability and success. But the truth is if you aren’t investing in asset tracking, you may end up losing both time and money.
Let’s understand how asset tracking can help small and mid-sized businesses.
Lowers Administrative Costs
A proper asset tracking system eliminates the need for your administrative personnel to track down assets manually, reducing errors that could lead to asset loss. With an automated tracking system, businesses could streamline processes and improve efficiency.
It also frees up your staff to focus on revenue-generating responsibilities rather than waste time trying to track assets manually.
Streamlines Business Processes
An efficient asset tracking system gives valuable insight into the performance of a business’s physical space like your office, storage facilities, etc., giving you a clear idea of how each of these assets is utilized. This helps address issues like underutilization immediately.
According to a study by Deloitte, 79% of companies with superior supply chain systems achieved above-average revenue growth within their industries as opposed to 8% of businesses with less capable supply chains.
Any improvement in business operations is immediately evident to customers, whether in terms of well-informed employees, well-managed inventory or automated logistics support. Improved customer service ensures customer engagement, loyalty, and positive word-of-mouth advertising, which indirectly helps you scale your business faster.
Investors may also want to know if you have an asset tracking system before committing to investing in your venture since it signifies your reliability.
Maintenance in business operations is a huge component of keeping the lights on and supporting high availability for your partners and customers. This can be subdivided into maintaining physical equipment and digital assets.
Asset tracking makes it easier to maintain your business equipment. For example, if you use four vehicles for your small food delivery business, it won’t be easy to keep track of their servicing schedule unless you document it. With asset tracking, you can create a system of automated servicing schedules or routine maintenance reminders. This leads to fewer unexpected problems and consequently lesser downtime.
Machines that use software or AI systems — whether a traditional computer or a smart tractor — also require memory or storage upgrades to keep running efficiently. Such upgrades can be tracked effortlessly with asset tracking.
Asset tracking also helps businesses track assets throughout their life cycle, enabling smarter decisions regarding maintaining or replacing a piece of machinery. For example, having warranty information handy will help you decide that repairs are a cost-effective alternative. Or an asset’s repair history will reveal that keeping it will require expensive maintenance in the long run, and you can immediately decide to dispose of it.
In today’s digital age, a business’s digital assets need tracking and maintenance, too, from your online advertising campaigns to your logo, website, company processes and manuals stored in the Cloud or on the Drive.
A business’s digital assets that require tracking include:
- The brand/business website, including domain name
- All content on the website
- Social media accounts across platforms and all related posts
- Business processes
- Customer or client information
- Apps created by you or your employees for the business
- Trademarks, patents, copyrights, and other intellectual property
Digital assets are crucial to any business, and SMBs need to ensure that their digital assets are secure to protect the brand and the bottom line.
For example, when it comes to security, software assets are equally crucial and need to be tracked. Businesses also need to be on top of updates, patches, and security fixes from vendors to counter ongoing or imminent threats to their systems.
Asset tracking also helps accounting and warehousing businesses maintain assets and inventory.
Reduce Losses and Improve Accountability
Asset tracking not only lets you know where your assets are deployed but also prevents instances of assets being lost, damaged, or misused.
You’d be surprised to know that workplace theft in the U.S alone amounts to nearly $50 billion per year, while thefts at construction job sites cost the industry losses of up to $1 billion each year.
A survey of 470 small businesses in Australia found that poor asset management led to the loss of physical assets amounting to $4.3 billion every year.
An asset tracking system improves the accountability of personnel responsible for the upkeep of the assets since they are aware that assets are being tracked and, in turn, reduces the risks of theft and asset misappropriation.
An effective asset tracking system ensures that the worth of the assets listed on a business’s financial statements is accurate — meaning precise balance sheets. This helps SMBs save on taxes and guards against potential allegations of fraud.
Helps Meet Certification & Compliance Requirements
Irrespective of the industry you are in or the scale of your business operations, you have to deal with an ever-increasing number of rulings and laws. Regulatory compliance is not easy, especially in the U.S, where almost 2500 to 4500 new rules are passed every year.
Compliances that received a lot of attention lately include the US Food and Drug Administration (FDA) enforced Food Safety Modernization Act (FSMA) and Unique Device Identification System, the Environmental Protection Agency (EPA) enforced Pesticide Container and Containment Structure Regulations, to name a few.
While regulatory compliance is a necessity, it is also tedious and costly. But a comprehensive tracking system makes it easier and more efficient. It is estimated that of the manufacturers and small businesses still relying on manual processes to manage compliance and traceability programs, 93 percent were unable to achieve best-in-class status.
Asset tracking will help your small business maintain the necessary certifications and comply with requisite regulations on time.
When implemented correctly, asset tracking can lower administrative costs, streamline business processes, improve availability through maintenance standardization, and allow your business to get the most out of the investments in production assets while complying with industry regulations.
Have more questions? GET IN TOUCH