How Asset Tracking Solutions Inform Financial Decisions
The asset tracking and inventory management industry is expected to become a $30 billion global market by 2026. Firms incorporate RFID and GPS technology to capture information on assets that helps measure their supply chain operations and conduct more accurate analyses. Generating data on inventory movements, locations of individual items, and the functioning of a plant and its equipment can help inform financial decisions in the supply chain and beyond.
With asset tracking solutions in place, firms monitor their inventories to inform working capital decisions. RFID and optical tracking technologies can generate insights into the number of items at various locations in a warehouse or supply chain, increasing monitoring accuracy as they do so. Clearer visibility into inventory levels also increases decision-making power regarding when to purchase additional materials or inputs. Firms may dynamically adjust their purchasing or material investment in accordance with real-time inventory levels. This helps avoid unnecessary backlogs or shortages and the associated costs or missed opportunities such circumstances can create.
Inventory movements may follow straight-line trends, periodically speed up or slow down, fluctuate in cycles, or even vary based on combinations of factors throughout the supply chain and end-purchase funnels. Tracking items with RFID tags or labelling zones allows a business to understand the behavior of its inventory movements, generating trends and insights on which working capital decisions can be based. Firms may also feed this information to ERP systems that connect working capital data to tools for purchasing and accounting.
Process and Equipment Investment
Visibility into inventory movements allows firms to better assess potential investments in different processes or logistical equipment. Tracking asset movements can reveal bottlenecks and, after realizing potential efficiencies, the business may consider allocating funds to further research and analyze that specific area in the supply chain. Such assessments can work in tandem with insights from an RFID software system and plant controls, as the business determines and addresses various contributing factors.
Malfunctioning equipment, suboptimal design or ordering of processes, or event-driven external shocks may all contribute to supply chain breakdowns. Asset tracking can help to identify and address malfunctioning equipment or logistical design inefficiencies.
Depending on where and how items are impacted in the supply chain, the firm can pinpoint locations of stress or failure, and from there, evaluate investments in adding or replacing machinery, new processes, or adjustments to the design of facilities. Asset-level visibility into impacts of any external events may also help firms evaluate expenditure on logistical modifications to that can accommodate the supply chain in the interim.
Tracking assets offers insight into demand, and therefore, informs production expenditures and potential investments in product features. Seeing trends in the movement of different types of inventory, firms can gauge the relative demand of products and their underlying components. Using this for projections enables the firm to plan production and inventory management with the market, reducing or eliminating overstock or out-of-stock scenarios.
RFID tags can also offer visibility into customer-driven inventory movements. Customers may pick items up, try them on, carry them around in the store, and put them down in new places. This all occurs before a potential purchase, and the data it creates can be extremely valuable.
Digging into this information allows a business to tease out consumer preferences. A piece of clothing that commonly looks good enough to try on, but is rarely purchased, may hint at an undesirable aspect regarding fit. The stories from this data may sometimes be complex, but tracking consumer-facing inventory behavior helps provide businesses another avenue to begin gauging product desirability or features in need of improvement. With asset tracking solutions providing insight into the buying experience or perceptions of the product, firms can better direct investments into product improvement, marketing campaigns, or sales efforts.
Firms generally want to track their fleet and the movement of assets within it. Visibility into these assets enable fleet managers to monitor, assess, and improve the efficiency of their operations and routing. Whether it be forklifts on the warehouse floor or trucks on the road, if there are better routes or sequencing of stops, firms will seek them out to reduce time, fuel, repair, maintenance, and labor costs. Tracking facility assets with RFID and road assets with GPS, provides a base for making route decisions to minimize costs. Such information also informs financial decisions regarding the need to add or remove fleet members.
Tracking these assets further informs the value proposition of autonomous fleets. Using existing routing information as a baseline, and data from self-driving fleets as the alternative, a firm can compare the cost savings derived from more efficient driving (24-hour operation, less crashes, no sleep, food, or restroom breaks) and weigh that against the cost of acquiring autonomous fleet members.
Asset tracking solutions provide visibility into the movement of inventories and operation of equipment in the supply chain. This visibility and information helps businesses craft data-informed financial decisions.