Increasing Costs Reinforce Need for Asset Tracking
The supply chain industry is currently facing some challenging issues because of the recent COVID-19 pandemic. One of these crises is the increase in shipping prices due to the higher contractual prices placed by transportation and logistics providers. Compared to supply, demand is more. So the rates for annual contracts are predicted to double. This blog helps companies understand the importance of asset tracking in improving profitability.
What Are the Reasons behind Higher Costs?
Compared to 2020, there has been an increase of about 23% in the domestic shipping rates for moving products by rail and road. Trucking companies need to consider their own higher costs. Finding a suitable job has become a real challenge for the workers, because of which they demand a much higher salary.
For one freight forwarder, the price for shipping a 40-foot container from an Asian country to the US has become $6500-$7000. It was about $1500 three years back.
When Will the Situation Become Normal?
By 2023, it is expected that the demand will ease, and the companies will be able to reload their inventories.
For a large number of companies, the number of sales and value of products is more important than the rise in transportation costs. They will not want to lose a customer despite the continuous increase in shipment costs.
That is where using asset tracking devices becomes more relevant.
What Are the Different Methods You Can Use to Save Money?
There is an extensive range of methods to handle the increased price situation and keep the cost inflation under control. Depending on your products and business type, you can consolidate loads to reduce truck trips or rent truck trailers rather than paying warehouse rents.
However, undoubtedly, the most effective method is asset tracking.
How Can Asset Tracking Help a Company Increase Profitability?
Tracking significant company assets can prove helpful in increasing profitability in several ways.
Improved Asset Maintenance
Regardless of the industry, purchasing equipment is always a costly affair. Whether renting vehicles or buying factory equipment, you may have to pay thousands of dollars. Repair costs are equally high.
But, having a proper and timely asset maintenance system can provide:
- Adequate protection to your equipment from significant damage that may lead to productivity loss.
- A disruption to your cash flow.
- Unsafe working conditions.
Asset monitoring will help you keep track of every maintenance requirement. It will also help you do planning to make sure that your company has the proper set of assets to move forward.
IoT-based asset tracking devices also help a person receive maintenance predictions. The device will send you timely alerts when your equipment needs maintenance before it becomes too late. This way, they help you save a lot on your budget.
Process Automation
Many field service businesses lose revenue because of a lack of integrated systems and processes.
But, an efficient asset monitoring system will help you make your entire management process automated from dispatch to maintenance and avoid costly errors. Automation also gives you and your team some extra time to finish higher-value tasks.
Prevention of Asset Loss
As a business owner, you must not lose any critical asset because it will substantially impact your profitability.
The consequences of asset loss are as follows.
- Lost sales: Losing even a single asset will make it difficult for you to serve your consumers. For example, you may lose a project if you do not have the proper set of assets necessary for the job.
- Costly downtime: Missing or lost assets sometimes lead to serious downtime that may affect your business. As per research by Aberdeen, an average amount of $260000 is lost per hour due to downtime. Also, every minute you invest in an asset search, you will lose profitability.
- Underutilization: When you do not adequately track your assets, you can have too many assets that do not generate significant business revenue. You may decide to sell those assets to buy more equipment, thus improving productivity.
Asset tracking allows business owners to track their assets, regardless of their location. You can check which assets are usable and which are not.
Improved Employee Safety
For any company to prosper, employees play a crucial role. So, to keep your business profitable and productive, it will be your duty to make sure that they can safely finish their tasks. An asset monitoring system will help you improve workplace safety more efficiently.
For example, asset monitoring will improve your company’s equipment maintenance. It, in turn, makes sure that your equipment is in safe and working condition. It also prevents your employees from sustaining any injury.
Improved Strategic Decision-making
Another area where asset monitoring proves beneficial is decision-making. For example, you can understand which assets your business uses most of the time and what you should invest in for more profits.
You will also know which departments require particular assets at specific times. It will allow you to make the most of them.
Real-time asset tracking data will help you cut overhead costs, reduce the number of assets needed for a project, and improve efficiency. In short, your labor force management and asset utilization will be simplified when you use proper asset monitoring.
The Bottom Line
Asset tracking devices combine unique features like automated invoicing and real-time data invoicing. Using them will help you deal with the continuous increase in transportation costs in 2022 and maintain the efficiency level for the coming years when these costs are expected to reduce.
