Asset tracking systems were designed to help companies gain visibility of their assets no matter where they are. Of course, just like anything else, this technology comes with a cost. The question you have to consider is whether or not the cost of a given solution is worth the value it provides. There’s a lot of factors to consider to determine the answer. You need to understand the cost of the system, but also the cost of not using the system. If you choose to invest, it’s important that you receive a return on that investment to make the initial cost worth it. Today, let’s go through the different costs of asset tracking to help you determine if an asset tracking system is worth the investment for you and your company.
Increase Your ROI by Investing in AirFinder Everywhere
- Loss Prevention. Reduce the amount of loss that occurs during the supply chain process
- Location Coverage. AirFinder Everywhere uses a combination of GPS, Cellular, and WiFi to determine location everywhere
- Security Alerts. Know when a delay in shipment has occurred so the problem
can be addressed immediately.
The Cost of Not Using Asset Tracking
Before we talk about the cost of the solution, let’s first look at the cost of not using an asset tracking solution. If you’re considering investing in asset tracking technology, you probably have faced some costly challenges that have pointed you in that direction. You’re here because you want to solve one or more problems at a cost lower than what those problems are currently accruing. In order to make that decision, you have to understand the exact costs produced by common operational challenges.
Replacement Costs
Sometimes pallets are damaged and need to be replaced. Other times, they are stolen and need to be replaced. Maybe they are even simply misplaced so they can’t be located when they are needed. No matter what the reason is, every company has needed to spend money to replace something. And sometimes, replacement costs surpass the cost of the physical replacement of an asset. If you lose cargo when it’s on the way to a customer, you risk losing a customer. How much will it cost you to earn that customer’s trust back or to earn a new customer with a sullied reputation? It’s worth considering how much your company spends on replacement costs, no matter what they look like.
Unneeded Purchases
Managing a large fleet of trailers can be difficult to do properly. Sometimes, this leads to trailers going unused for months because of a lack of usage visibility. Meanwhile, companies may think they don’t have enough trailers to keep up with shipping demands and purchase more, when in reality, they have trailers in the back of the lot that haven’t been used in months or even years. Ultimately, the purchasing of these new trailers was unnecessary and the money spent on them could’ve been better spent in other areas.
Compliance Fees
If you are in charge of transporting perishable goods, you know all about the legal fees you will face for a lack of compliance. A lack of compliance also leads to a diminished brand reputation which can decrease your sales. This doesn’t even include all the time and resources you spent on the perishables that were wasted. Without a safeguard in place, your reefer trailer could fail, leading to spoilage and lost income. Consider how much you waste and how much you’ll pay in compliance fees due to a lack of compliance.
Maintenance Costs
Maintenance expenses encompass upkeep for the equipment and facilities used in logistics operations. For fleet vehicles especially, regular maintenance is necessary to ensure optimal performance and longevity, which allows you to make less replacements overall. Additionally, unexpected repairs due to vehicle breakdowns or accidents can significantly inflate maintenance expenses. Compliance with stringent safety and emission standards often requires investment in specialized equipment, periodic inspections, and adherence to strict maintenance schedules, adding to the overall maintenance costs. Not only that, but as vehicles age, their maintenance needs tend to increase, leading to higher costs for older fleet vehicles. Balancing proactive maintenance to prevent breakdowns and reactive repairs when issues arise is crucial for fleet managers in managing maintenance costs while ensuring the fleet's reliability and safety.
Labor Costs
Do you spend time searching for misplaced assets? Without proper visibility into the location and status of assets, employees spend considerable time searching for, identifying, or manually tracking down items. This results in inefficiencies, extra labor hours, and increased personnel required to handle these tasks. Additionally, the lack of visibility may lead to mistakes in inventory management, causing delays in fulfilling orders and requiring additional workforce efforts to rectify errors. Employees might also spend more time coordinating and communicating to compensate for the absence of accurate asset information. Wasted time equals wasted money. Your employee’s time can be spent in more valuable ways.
The Costs Associated with Asset Tracking
Asset tracking costs include various expenses. Some are upfront, some are continual, and others come with time. You need to be aware of these costs so that you can plan ahead and properly determine how much you need to save to get a return on your investment.
Hardware/Software Costs
The costs associated with asset tracking involve both hardware and software expenses. Hardware costs encompass the purchase of the physical asset tracking devices required to monitor assets. These devices can vary in technology and their prices depend on factors like functionality and sophistication. On the other hand, software costs are related to the platforms or applications used to manage and analyze asset data. This includes the initial purchase or subscription fees for asset tracking software, customization costs, and integration expenses if the software needs to be connected to other business systems. Ongoing software maintenance, updates, and licensing fees also contribute to the overall software costs associated with asset tracking. Depending on the complexity and scale of the tracking system, both hardware and software expenses can vary significantly.
Installation Costs
Installation costs encompass the setup, deployment, and configuration of the hardware and software components necessary for the asset tracking system and can vary based on several factors. These costs may include fees for professional services or specialized technicians who install tracking devices, set up infrastructure like antennas or receivers, and ensure proper connectivity. Additional expenses might arise from site preparation, such as modifications to physical locations or facilities to accommodate the tracking system's requirements. The complexity of the installation, the number of assets being tracked, the type of technology being used, and the scale of the deployment all contribute to determining the overall installation costs associated with implementing an asset tracking system.
Maintenance Costs
The maintenance costs associated with asset tracking involve ongoing expenses necessary to sustain the functionality and efficiency of the tracking system. These costs encompass the regular servicing, repairs, and updates required for the hardware component. A common maintenance cost you’ll see across solutions is the cost of replacing batteries. The frequency and extent of maintenance activities, the complexity of the technology used, and the size of the tracked asset inventory contribute to determining the overall maintenance costs associated with asset tracking.
What You Save with Asset Tracking
The investment you make in asset tracking software ultimately saves your company money. Even though these solutions may seem costly, what you save is well worth the investment since you’ll no longer need to waste time and money stemming from a lack of asset visibility.
Purchasing Costs
By using an asset tracker, you gain visibility of your assets and no longer have to waste time searching for them. You can see the location of pallets, cargo, and trailers, all in one place, and you’ll no longer have to spend money on replacements of lost and misplaced items. With an understanding of the usage of your assets, you can also make informed decisions when constructing purchasing plans, helping you prevent overstocking and wasted money.
Optimized Operations
Asset tracking technology streamlines workflows, reducing the time spent searching for or managing assets. This efficiency translates into saved labor costs as employees can focus on more productive tasks rather than wasting time on manual searching. Optimized operations minimize errors in inventory management, reducing costs associated with stockouts, overstocking, and obsolete inventory. The ability to track assets in real time also aids in optimizing routes and logistics, thereby reducing fuel costs, vehicle wear and tear, and associated operational expenses.
Improved Customer Service
When you have visibility of assets throughout the supply chain, you have more control over every single aspect of your supply chain operations. When you have the proper tools to manage a supply chain, you have the ability to make it better, preventing loss and reducing delivery times. The resulting improved efficiency allows you to provide your customers with a better experience overall. As a result, they’ll be more likely to return and tell others, increasing your revenue.
Will You Invest in Asset Tracking?
Investing in an asset tracking system proves to be a worthwhile endeavor for companies aiming to optimize operations and improve overall efficiency. Asset tracking systems provide real-time visibility into asset location to streamline operations, reduce errors, and enhance productivity. While the initial costs may seem significant, the long-term benefits far outweigh these expenses. The ability to accurately monitor assets leads to cost savings through minimized losses and better utilization of resources. The boost in customer service, achieved by providing accurate and timely information, contributes to increased customer satisfaction and loyalty. What you save by using an asset tracking system makes it a valuable investment for companies looking to stay competitive. Our solution, AirFinder Everywhere, is a simple and affordable solution for companies to use to improve their logistics operations. To learn about how you can reduce operational costs by using our solution, book a demo with our team.
