Unplanned costs are the most frustrating expenses that fleet managers experience. Planned costs can largely be accounted for with strategic budgeting. Unplanned costs, however, are far more difficult to account for. It’s incredibly easy to either overestimate or underestimate how much you’ll pay in unplanned expenses or over the course of the year, regardless of what you do to come up with an accurate prediction. Neither option is ideal. If there was a way to more accurately anticipate unplanned expenses or reduce them, would you? Location technology might provide an answer.
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.
Unplanned Cost: Lost Assets
The repercussions of lost assets extend beyond the immediate replacement expenses, encompassing a web of financial implications. When trailers or cargo are stolen, misplaced, or unaccounted for, it triggers a cascade of unforeseen costs. The first and most obvious is the direct cost of replacing the lost asset, placing an immediate burden upon the fleet's budget. Often, this loss strains financial resources earmarked for other essential purposes. This loss also causes a domino effect on productivity, as the absence of key assets disrupts operational continuity. Delays in delivery schedules or project timelines ensue, leading to lost revenue or penalties for contractual breaches. Simultaneously, there's an inherent intangible cost linked to damaged reputation and customer trust. Instances of lost assets can tarnish the fleet's reliability and credibility, resulting in dissatisfied clients or partners and impacting future business prospects. If you take action to prevent loss, you are able to reduce the costs that are associated with this unfortunate loss.
How to Reduce Lost Assets
Fleet managers can prevent the loss of valuable assets by investing in an IoT solution such as asset tracking. By tracking the location of your assets at all times, you can always verify an asset’s location and don’t have to spend time searching for or money to replace it. Instead, you can simply identify the location and retrieve the asset. This is especially helpful in cases of theft. Based on location history, you can discern when the theft occurred and where the asset was taken. Additionally, some IoT technology has the ability to alert fleet managers when unauthorized movement of assets occurs through geofencing. This way, you can be alerted in real time if an asset is moving when it shouldn’t be, instead of finding out at an inconvenient time later down the road. Taking proactive action with the use of asset tracking saves you both time and money. Ultimately, you are reducing cost in unnecessary areas so it can be better used in other more important areas.
Unplanned Cost: Unexpected Delays
From adverse weather conditions to mechanical breakdowns to unforeseen traffic congestion, a myriad of circumstances lead to unplanned fleet costs. Costs directly caused by delays can include additional fuel expenses due to idling or rerouting, increased labor costs stemming from overtime payments for drivers and staff, and potential penalties incurred for missing scheduled delivery windows or contractual obligations. Delays trigger a ripple effect on the entire supply chain, leading to secondary costs. For example, delayed shipments disrupt inventory management, potentially resulting in stockouts or excess inventory, which in turn impacts storage expenses and inventory holding costs. Customer dissatisfaction due to late deliveries might further lead to increased customer service demands or even the loss of valuable relationships, impacting future business opportunities. Prolonged delays may also necessitate last-minute accommodation arrangements for drivers, adding accommodation and subsistence costs to the already mounting financial burden. You cannot plan for every delay, but you can create a plan so you can quickly make adjustments before they lead to high financial costs.
How to Reduce Costs Caused From Unexpected Delays
Reducing costs caused by unexpected delays can be effectively managed through the strategic implementation of asset tracking technology within logistics operations. Asset tracking offers real-time visibility into the location and status of vehicles and shipments, enabling proactive measures to mitigate delays. By leveraging IoT technology, fleet managers gain immediate insights into the whereabouts of assets, allowing for efficient rerouting in response to unexpected roadblocks or traffic congestion. This capability minimizes fuel consumption and labor costs associated with idle time, as assets can be redirected along alternate routes to avoid delays. By promptly identifying delays through asset tracking systems, fleet managers can communicate updated arrival times to customers, mitigating dissatisfaction and potential customer service costs due to unexpected delays. Implementing asset tracking technologies empowers logistics operations to swiftly adapt to unforeseen circumstances within the supply chain.
Unplanned Cost: Compliance
Fleet managers contend with an array of unplanned costs resulting from compliance issues. Non-compliance with regulations, whether related to safety, environmental standards, or industry-specific mandates, triggers a cascade of unforeseen expenses. If you are transporting perishable assets, they run the risk of spoilage. If the refrigerator on the reefer trailer fails or the trailer is packed incorrectly, then the items can perish and be no longer usable. If this happens, then the resources used to produce the perishable items are wasted, they themselves are wasted, the fuel and labor costs to transport them are wasted, and you have to do it all again to try to transport a new batch. You also run the risk of penalty fines for not operating according to compliance regulations. When your company faces non-compliance fees, your brand image gets tarnished and your customers may start to lose trust in you. Failure to meet compliance standards may also result in halted operations or suspended licenses, leading to loss of revenue due to service disruptions or an inability to fulfill contractual obligations. Fleet managers grapple with these multifaceted unplanned costs to ensure strict adherence to regulations while mitigating the financial impacts on the operational budget. But this can be difficult to maintain when you often aren’t discovering the problem until it’s too late.
How to Reduce Costs Caused From Compliance
The main way to avoid compliance fees is to remain compliant. Sometimes, this is easier said than done. You’re putting in effort by transporting perishable goods in temperature controlled trailers. But how do you plan for the occurrence of a broken system? You need something to alert you when things go wrong. The solution is an IoT device with embedded sensors that monitor temperature. An asset tracking system that you’re using to gain visibility can serve more than one purpose. This system can monitor the temperature inside of your trailer. It can get as granular as you’d like, down to package level. You can set the normal range for the temperature to be and if the temperature crosses the threshold, you receive an alert immediately. This way, you can contact the driver to stop and address the situation before spoilage occurs. There isn’t much time to address a temperature problem so you need a way to act fast. With these alerts, you have the capability to respond quickly to problems. Then you can rest easy knowing that you won’t have to waste perishables, pay fines, or do damage control to your reputation.
Unplanned Cost: Storage Overages
Exceeding planned storage capacities can lead to a domino effect of unforeseen expenses. The most obvious costs are associated with additional storage space, including increased rental fees for extra warehouses or facilities. Surplus inventory can incur higher inventory holding costs, encompassing expenses like increased insurance premiums, additional security measures, and elevated depreciation costs for stored goods. The need for last-minute storage solutions due to overages often results in rush orders for storage equipment or materials, leading to inflated purchasing costs and potential installation expenses. Managing surplus inventory also demands additional labor hours for handling, organizing, and tracking the excess goods, contributing to increased personnel costs. Prolonged storage of surplus inventory can lead to inventory obsolescence, risking write-offs or markdowns to liquidate outdated or unsold goods, consequently impacting the overall profitability of the fleet.
How to Reduce Costs Caused From Storage Overages
Reducing costs incurred from storage overages can be efficiently managed through the investment of an asset tracking system. Asset tracking offers a holistic view of inventory movement and storage, allowing fleet managers to optimize space utilization and prevent overages. Getting insight into inventory levels and historical levels helps to determine patterns and enables precise forecasting, minimizing the likelihood of excessive stockpiling that leads to storage overages. Asset tracking also facilitates proactive inventory management by identifying slow-moving or redundant stock. Fleet managers can promptly take corrective actions, such as initiating targeted marketing campaigns or adjusting procurement plans to prevent the accumulation of surplus inventory. By constantly monitoring inventory levels, asset tracking systems provide insights to streamline storage layout and space allocation. This optimization ensures efficient utilization of available space, reducing the need for additional warehouses or storage facilities that incur extra rental costs. Asset tracking solutions even streamline inventory audits, reducing labor hours required for manual inventory counts and checks and eliminating human error. This efficiency leads to cost savings on personnel expenses while improving overall accuracy in inventory control.
Unexpected Cost: Labor Increases
Labor costs are one of the highest costs a company has. Based on how many employees you have and how much they make, you can fairly easily budget to ensure you have enough to pay them. However, if employees end up needing to stay behind to work unexpected overtime, you have an additional expense you didn’t plan for. Another common labor cost you may not be aware of is wasted time while on the clock. If an employee is scheduled to work 8 hours on a certain day at a normal pay, you expect them to be productive during that time period. If issues like loss occur, your employee may spend a portion of the day searching for the lost asset before they continue with their normal responsibilities. This may not look like an additional cost on the surface, but when they are set back, the project takes longer to complete which ultimately is an increased expense.
How To Reduce the Cost of Labor Increases
The best way to avoid increased labor is by avoiding the problems that lead to increased labor. The common issues that lead to labor increases can be easily addressed by use of an IoT device. Lack of asset visibility is one of the leading causes of increased labor. Time spent searching for lost assets can really set processes back. This can be especially helpful in the logistics space. Customers want to receive their order on time. So you can hurt your customer’s trust by delivering their order late, or you can increase labor to get their order there on time. Location technologies can even allow you to increase productivity so you can save on labor costs. Extra time in the normal workday can be used to get ahead on other projects so if other issues arise, you have more flexibility to address those issues.
Will You Reduce Costs with Location Technology?
Our AirFinder IoT solution provides asset visibility for logistics operations. This tool helps fleet managers reduce wasted time, money, and resources through its ability to track an asset’s location, provide historical data, and sense environmental conditions. Armed with this information, fleet managers can optimize their processes to save time and money. They can also build an informed plan for how to address problems when they arise so they don’t become costly.
Location technology is the top tool fleet managers can use to reduce the unexpected costs they face. From the visibility they provide to the optimizations they pave the way for, there is a benefit from investing in an IoT platform. To learn more about our asset tracking solution, book a demo with our team of experts.