5 Types of Financial Decisions Helped by Asset Tracking
Businesses track assets in the warehouse and in the yard to create data that helps inform their overall decision making. RFID, GPS, and optical tracking enable firms to efficiently locate inventory and fixed assets in addition to quantifying their behavior throughout the logistics process. With this data at hand, a business can conduct financial decisions backed by timely and accurate visibility into inventories and equipment. Here are five financial decisions helped by asset tracking.
Businesses aim to gauge how much to produce, as well as the composition of inventories needed to achieve that level of production. To determine profit-maximizing levels, firms forecast demand considering factors such as market variables. They also incorporate factors from their production functions. With production determined and estimates on the inputs needed to reach it, firms assess current inventories and project forward to see if a gap exists.
Accurately monitoring items with RFID, barcode, or optical sensor systems provides visibility into current inventory levels. This data is used as a reference point to help inform how much and what kind of inventory purchasing may be required to bridge input gaps and fulfill expected demand.
For additional efficiencies in this inventory-monitoring process, businesses also incorporate new technologies such as autonomous drones. These drones can administer the optical, RFID, or barcode scanning of items, which saves employees’ time. This automated solution also reduces scan distance and offers new vantage points for readers. It reduces the time previously spent on accessing barcodes in physically elevated locations and automates overall inventory auditing in order to support informed purchasing with accurate, up-to-date information.
Tracking equipment fleets with RFID or GPS allows firms to monitor their usage. Quantifying the usage of these fixed assets can combine with historical condition data to help gauge when various maintenance may be needed. Firms may find it valuable to track the usage of assets operating within the warehouse, yard, or road, including forklifts, hydraulic cranes, and transportation fleets. Doing so can inform maintenance budgeting as well as when it may be worthwhile to invest in new equipment.
Investment in Additional Equipment
Inventory and fixed asset data points are valuable in assessing the need for additional equipment. Beyond tracking and usage, wear, and needed repair, this information can hint at the potential need to invest in additional units to increase the efficiency of operational processes.
By looking at inventory velocities at different item locations, firms can find indications of slowdowns and where they seem to occur. The business may overlay these insights with asset usage and routing data to help determine if operations would be aided by investment in more forklifts, cranes, drones, or other equipment. This asset usage information can then be referenced against cost assessments in financial ERP applications in order to maximize ROI.
Visibility into inventory movements and asset usage may help managers allocate human capital across the warehouse and yard. Accurate data on current inventories offered by tracking technologies enables the business to assess if current labor will fulfill requirements and where various workers might be needed in order to do so. Trending inventory movements and cycles can also help forecast future labor needs.
Combining these insights with those derived from equipment tracking can add an additional layer of oversight. Underutilized equipment, in the face of inventory slowdowns, may indicate a need for more labor. On the other hand, additional equipment investments may coincide with the need to add operators.
Investment in automation
Analyses of equipment usage and inventory flow in warehouses or yards can inform the ROI proposition of investments in automation. Routing and usage data transmitted from forklifts, cranes, or trucks provides a baseline from which to compare the potential pathway, time, or labor cost efficiencies presented by autonomous versions.
Tracking inventories and equipment helps to realize trends in operational slowdowns. Slowdowns that result from waiting on human action or response present an opportunity for automated systems or robots. These technologies can decrease the need for human labor in inventory management. They can also eliminate other repetitive tasks like the inspection of goods and the operating of condition-based or schedule-based switches, gates, and doors.
Tracking solutions provide useful data to create visibility into inventories and fixed assets. This information enables firms to conduct analyses that inform several financial decisions related to input purchasing, maintenance expenses, investment, and allocation.