What Is Asset Tracking and How Does It Work?
Most businesses start with an idea. To get up and running, they’ll accumulate equipment, inventory, technology, and more.
All of this property is an investment, which your company wants to get as much value from as possible. Asset tracking is essential to maintaining an accurate understanding of your property, as well as estimating future expenses, projecting productivity, and calculating profit.
In this post, we’ll explain what asset tracking really is and why it’s so important for so many businesses. We’ll cover the tools and technology you need for asset tracking, as well as best practices to help you hold on to and maintain the physical assets your business needs.
What is asset tracking?
Asset tracking simply means keeping track of your organization’s assets. But that isn’t as simple as having a general idea of what tools you have on hand. Modern asset tracking uses both old and new technology to keep up-to-date records on what you have, when you acquired it, where it is, and what condition it’s in.
Asset tracking is how businesses keep track of important property. For example, a plumbing business needs to know where its vehicles are. If they have a piece of specialty equipment that is only needed on some jobs, the company needs to know where the equipment is stored, and if it's in good working condition. Asset tracking can save hours of work and confusion, as well as money spent on unnecessary replacements.
While some businesses need to track intangible assets, like contracts, trademarks, and patents, they'll also need to track physical assets, which are often called “fixed assets.”
What are fixed assets?
Fixed assets are physical property whose use spans more than one year. They’re typically equipment or tools used by organizations to create value. For example, a restaurant’s fixed assets might include a refrigerator, a freezer, a dishwashing machine, tables, and chairs. These are all pieces of property that allow the restaurant to do business.
Just about any business will have fixed assets of some kind. Many tech companies issue a computer to all employees. Workers use these pieces of property to create business value and are used for more than one year. Without fixed assets, a business can’t perform its most important functions.
Because fixed assets are used to create business value, damaged or lost assets cost the business both the value of the property and the value it allows them to create. Lost assets mean lost work and, ultimately, lost profits. That’s why asset tracking is so important.
Benefits of asset tracking
The most obvious benefit of asset tracking is that a business will have an accurate record of what property they own. This has multiple important financial implications. Insurance companies will only cover property that you've documented and reported to them. Basic asset tracking makes it easier to acquire coverage and make claims.
Asset tracking is also a smart way to reduce your tax bill. The Internal Revenue Service (IRS) allows businesses to claim deductions on the depreciation of their fixed assets. Depreciation just means that as property gets older and is used, it loses value. For example, a used car costs less than a new car because it's depreciated in value. When you track your physical assets and their value, you’re piling up tax deductions.
Just as a piece of property might depreciate, it also collects wear and tear as a business uses it. Asset tracking makes it easier to know what maintenance has been performed on a piece of equipment, which can help businesses keep assets like vehicles in good working order. Maintenance records can also provide businesses with actionable insights. They can better understand the asset lifecycle — how long it lasts, and how much it costs to maintain — and plan for future repairs and eventual replacement.
Finally, asset tracking helps businesses prevent loss and theft. With different employees, job sites, and office locations, it’s natural that things will be misplaced. By documenting where an asset is and when, businesses can deduce where the equipment might be.
For example, let’s say that one of several retail stores borrowed a forklift from your warehouse. The next week, your warehouse workers go to use the forklift, and it’s not there. Instead of reporting it stolen or calling supervisors at all the retail stores, they’ll simply check their asset management system to see where the forklift is.
On the other hand, if some important asset has been stolen, asset tracking makes it easier to know where and when it was taken — not to mention barcodes and other identifiers that prove it’s your property.
Asset tracking examples
Let’s walk through some other examples of how different organizations can use asset tracking.
Asset tracking in schools
Schools are full of fixed assets: chairs, desks, computers, textbooks, and more. And all that property and equipment is often reallocated. For instance, when an elementary school prepares for the new school year, each class will have a certain number of children. Each classroom will need the appropriate number of chairs and desks.
Some schools lend children tablets or laptop computers. Asset tracking is vital for knowing which child has borrowed a device and whether it's been returned. Asset tracking also makes it easier for different classrooms to locate and borrow the equipment they need. When resources are limited, an effective asset tracking system can help schools make the most of their fixed assets.
Asset tracking for construction
Asset tracking is especially important for businesses in the construction industry. These firms often have lots of expensive equipment, like backhoes, power tools, and drills. Construction work can’t be done if vital assets are lost or difficult to find.
Construction companies also have to move people and assets from job site to job site and collaborate with other trade workers. Asset tracking makes sure that each team has the tools they need, helping them stay on schedule and on budget.
Many fixed assets of the construction industry are large and powerful machines. Keeping those machines well maintained is important not only for the company’s bottom line, but also for the safety of its workers. Asset tracking helps firms ensure proper maintenance of equipment.
How does asset tracking work?
Asset tracking typically requires tags, a scanner of some kind, and software or an asset management platform. Each of your fixed assets will have a unique asset tag (more on those below). You or your colleagues will then use the scanner to read the tag and pull up the asset record in your asset tracking software. And within the asset tracking software, you can record or edit the asset records to reflect the condition and location of the property.
With an asset tracking system, each tag is linked to the asset’s info, which can include item descriptions, date of purchase, condition of the asset, etc. You can also note what employee is in possession of an asset, such as laptops for remote workers.
Types of asset tags
Asset tags are an essential part of asset tracking and there are different types of tags your business can use.
Barcode tags are the simplest and most affordable option. They’re also a type of tag that most people have used in their everyday lives. The biggest advantages of barcode tags are that they are easy and affordable to buy, and you can even print them yourself. There are even mobile apps that allow you to read barcodes with your smartphone.
Barcodes look like a series of lines of different thicknesses. Barcode scanners emit a beam of light and read how the light reflects to identify a barcode. The drawback is that a scanner needs a direct line of sight to read a barcode. This means that the barcode tag has to be in a place on the asset that’s easy to find and reach.
Radio Frequency Identification (RFID) tags are more advanced but also more expensive. As their name suggests, RFID tags use radio frequencies to identify objects, and the tags themselves often look like small circuit boards with metal wires. RFID tags can store more information than barcodes.
One of the biggest advantages of RFID tags is that the scanner doesn’t need a direct line of sight to the tag. This makes it much easier to scan large quantities of assets, making RFID popular for retail inventory tracking.
RFID tags shouldn't be confused with global positioning system (GPS) technology. GPS uses satellites to track and locate objects. Whereas both barcodes and RFID tags need to be read with a scanner, GPS can be used to locate assets anywhere in the world. For example, trucking companies can put GPS tracking units in their vehicles and the dispatcher can track it remotely.
The right asset tags for your business will depend on your needs and resources. If you need to quickly track large quantities, RFID tags could be a good fit. If your stock of fixed assets is more limited, however, barcodes can be the most cost-effective way to start your tracking program.
How does asset tracking software help?
Most of us are familiar with the idea of scanning barcodes. We see it in grocery and retail stores. But fewer people have any experience with asset tracking software (also called asset management software or an asset management system). The good news is that asset management solutions exist to make asset tracking easier, not more difficult.
Asset tracking software essentially serves as a database for all the information about your assets, including what kind of item it is, its asset tag or barcode, its age, its condition, and its current location. From a computer or mobile device, you can look up a specific asset, search for an asset record, or create new records.
Typically, asset tracking software will work with whatever type of asset tags you are using. For example, if you are using barcodes, you’ll have scanners linked to your software that allow you to read or edit the asset record of whatever you just scanned.
Look for an asset tracking tool that allows you to track the specific data you need and also works with your other technology. Web-based tools mean that you can access your data anywhere and also makes sure you have the most up to date features.
Businesses also have to consider how user-friendly an asset tracking solution is for their employees. An intuitive interface, on mobile devices or computers, can have a big impact on how consistently your team uses your tracking tool.
For maximum efficiency, your asset management software should connect to your other software and tools. RedBeam, for instance, offers REST APIs, which make it easy to connect to your other tools. You can create custom fields and every time you update information, it keeps a time and user-stamped history. RedBeam also allows you to track assets in multiple locations.
Asset tracking strengthens your business
When you look closely, asset tracking is a simple concept — businesses want to document their property and get the most value out of it. The benefits include better maintenance of equipment, loss and theft prevention, and tax deductions. That’s why small businesses all the way up to enterprise companies track their physical assets.
Now that you understand how asset tracking works, some important best practices, and the best asset management technology, you can apply it to your business.
Partnering with renowned manufacturers and technology resellers in the asset tracking industry, such as Zebra Technologies, is a significant accomplishment for RedBeam.
Zebra's state-of-the-art technologies are integrated into our asset tracking technology package, fully compatible with RedBeam software. The Zebra warranty assures customers that their hardware investment is protected, and its advanced features significantly increase the speed and efficiency of asset tracking.
Our in-depth knowledge of Zebra products enables us to make tailored hardware recommendations based on your business needs and budget.
RedBeam is an industry-leading asset management platform that gives you next-level visibility into your fixed assets. Schedule a demo to see what RedBeam can do for you.