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Asset Tracking

Updated on February 23, 2024
Article byPriya Choubey
Reviewed byDheeraj Vaidya, CFA, FRM

What Is Asset Tracking?

Asset Tracking refers to a systematic process of monitoring and managing physical assets within an organization through technologies like radio frequency identification (RFID) tags, barcodes, or the global positioning system (GPS). These trackers help to identify an asset’s location, status, and usage.

Asset Tracking

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It is a crucial element of the asset management strategy that facilitates real-time locating of corporate assets both within and outside the company’s premises to streamline production and logistic activities. It enables surveillance of the asset’s condition. It is also considered a technological approach that assists organizations in optimizing asset utilization, minimizing losses, and improving overall operational efficiency

Key Takeaways

  • Asset tracking is a technological and systematic approach to real-time tracing of an asset’s location, condition, and usage, both inside and outside the organization, using software and interfaces like GPS, RFID tags, barcodes, and QR codes.
  • Such a process contributes to organizational success by offering benefits such as cost savings, greater efficiency, regulatory compliance, and strategic decision-making.
  • An asset tracking system differs from the asset management concept that emphasizes the maintenance of an asset throughout its lifecycle, i.e., from its purchase to its disposition.

How Does Asset Tracking Work?

Asset tracking involves the use of technology to monitor and manage physical assets. The process includes assigning unique identifiers, such as barcodes, RFID tags, or QR codes, to each asset for easy identification. Data, including location and status, is then captured using devices like scanners or smartphones.

Captured data is stored in a centralized database or cloud-based system for accessibility and analysis. Real-time monitoring, often through GPS or RFID technology, allows for tracking an asset’s location and condition. Communication channels are established between tracking devices and the central system for seamless data transfer.

Integration with management software is crucial to generate reports, alerts, and analytics, aiding in informed decision-making. Alerts can be set up for events like unauthorized movement or maintenance schedules. Historical data is utilized for preventive maintenance scheduling, reducing downtime, and extending asset lifespans.

The system should be designed for scalability, accommodating a growing number of assets, and adapting to changing business needs. By following these steps, organizations can achieve improved visibility into their assets, streamline operations, reduce losses, and enhance overall efficiency.

Methods

Asset tracking employs diverse methods. However, the selection of a specific one depends on the nature of the assets, desired accuracy, and the organization’s tracking requirements. Some of the standard asset tracking techniques include:

  1. Barcodes: The barcodes are the unique codes printed on assets that can be scanned with handheld devices or smartphones for tracking purposes.
  2. QR Codes: An advanced version of the barcode method, QR codes are more user-friendly and allow for easy encryption, readability, GPS tracking, rapid information transfer, and correction of errors.
  3. Radio-Frequency Identification (RFID): The RFID systems comprise electromagnetic tags, scanners, and readers to transmit data, enabling efficient and real-time wireless asset tracking.
  4. Global Positioning System (GPS): The GPS technology functions on in-orbit satellites that monitor moving assets such as vehicles or equipment to monitor their location and movement accurately.
  5. Bluetooth Low Energy (BLE): The BLE uses low-power Bluetooth signals for short-range tracking and identification on Bluetooth-enabled mobile devices.
  6. Near Field Communication (NFC): This is a more efficient asset-tracking device than RFID. It facilitates close-range communication between devices commonly used for tracking smaller items.
  7. Wi-Fi Asset Tracking: Under this strategy, the user connects assets to the wireless internet to collect and transmit real-time data and enable remote monitoring and control.

Examples

One often comes across various tracking software and devices. Some of these examples illustrating their significance in the business context are discussed below:

Example #1

Suppose ABC Ltd.’s four different assembly units use the same logistic trucks for the transportation of goods. Due to this, it took more work for them to locate and track these trucks, which used to delay their operations. As a result, the company installed an asset tracking GPS in the trucks to find their location and optimize the supply chain process. GPS vehicle tracking help them collect valuable data for a variety of situations where they can think of increasing the compliance, effectiveness, and safety of the fleet.

The company benefited greatly from the GPS installation in terms of both cost and time savings. Increased asset visibility, reduced costs associated with lost or
stolen property, and data availability when needed are all benefits.

Example #2

Lufthansa Technik, a maintenance, production, and development organization, has introduced the GSE 4.0 Project for all its ground staff to track their equipment efficiently. This technology utilizes real-time tracking of their equipment to localize and allocate anywhere on their premises.

This ground support equipment (GSE) offered various benefits to the organization:

  • Time and cost-efficient: This feature will help standardize and simplify its process, which efficiently reduces time and cost.
  • Efficient location tracking: Locating all networked GSEs both outside and inside the hangars would become possible at anytime and anywhere.
  • Transparency in processes: The project’s primary goal is to make GSE’s availability, use, and requirements more transparent.

Importance

Asset tracking programs have been in demand in recent scenarios due to the growing significance of assets in operational and logistic optimization. It is considered to be imperative for the following reasons:

  • Optimizes Resource Utilization: Efficiently managing the location and status of assets helps organizations to use them effectively, avoiding unnecessary expenses on re-purchases or rentals.
  • Offers Time and Cost Savings: An efficient asset tracking system enables the users to keep a timely record of assets when required, thus saving the cost of replacing them. It also aids in preventing unnecessary maintenance or repairs through timely interventions.
  • Ensures Security: It also minimizes the risk of items being stolen or lost, hence strengthening the security system. It also helps monitor access to sensitive or high-value items.
  • Improves Productivity:  It offers quick and easy access to asset information, streamlines workflow, reduces downtime and enhances the firm’s overall productivity and operational efficiency.
  • Improves Auditing: Tracking supports regulatory compliance by ensuring assets adhere to policies and regulations. It establishes accountability since any discrepancies result in the questioning of individuals responsible for each asset.
  • Risk Mitigation: Identifying potential issues with assets in advance helps curtail the associated uncertainties. It includes monitoring equipment health, ensuring proper maintenance, and preventing unexpected failures.
  • Data-Driven Decision-Making: The data gathered through the tracking system provides insights for strategic decisions, such as optimizing asset distribution, forecasting future needs, or evaluating its performance.
  • Enhances Customer Service: Efficient tracking ensures timely service and minimizes disruptions in production and supply of goods and services, leading to improved customer satisfaction.

Difference Between Asset Tracking and Asset Management

The organizations employ different tools and strategies in real-time throughout their lifecycle. While tacking serves as a critical factor of an organization’s asset management strategy, the various dissimilarities between the two concepts are discussed below:

BasisAsset TrackingAsset Management
MeaningIt is a systematic approach to locating an asset and gauging its condition and usage in real time.It is a comprehensive process of handling the company’s assets or equipment for overall production efficiency throughout its lifetime.
ScopeReal-time monitoring of asset location and movement. It is a broader spectrum, including tracking, maintenance, depreciation, and strategic planning for optimal asset utilization.
PurposeAddress immediate concerns and losses.It aims to optimize asset performance, reduce downtime, and maximize return on investment over the asset’s lifespan.
ComponentsIt consists of GPS, RFID, QR codes, or barcodes.Integrates asset tracking technologies but also includes software for planning, budgeting, and decision-making.
TimeframeCurrent periodLong-term perspective usually for the whole asset lifecycle.
FunctionalityTrack the physical location, status, and usage of the asset.It helps in lifecycle planning, scheduling maintenance, financial considerations, asset repairs, and replacement.
Data UsedReal-time dataHistorical, current, and estimated data.
Decision MakingImmediateStrategic
Lifecycle ConsiderationAssets are traced when in use.Assets are managed throughout their lifecycle right from acquisition, operation, maintenance, and disposal.

Frequently Asked Questions (FAQs)

1. What is asset tracking software?

Asset tracking software is a system designed to help organizations monitor and manage their physical assets effectively. Utilizing technologies like barcode scanning, RFID (Radio-Frequency Identification), or GPS enables the tracking of assets such as equipment, vehicles, or inventory. This software plays a crucial role in optimizing operations, minimizing manual errors, ensuring accountability, and providing comprehensive visibility into asset lifecycles.

2. What is IoT asset tracking?

IoT asset tracking involves employing Internet of Things (IoT) technology to monitor and manage physical assets in real-time. It includes attaching IoT devices like sensors or RFID tags to assets, such as vehicles, equipment, or inventory items. These devices collect and transmit data on the asset’s location, condition, and other pertinent information. The collected data is then analyzed to offer insights, optimize operations, enhance security, and improve overall efficiency in asset management.

3. What is fixed asset tracking?

Fixed asset tracking is a crucial organizational practice for monitoring and managing tangible assets, often known as fixed or capital assets. These include items like buildings, machinery, vehicles, and office equipment. The primary objective is to maintain accurate records of these assets throughout their lifecycle.

This article has been a guide to what is Asset Tracking. We explain the concept along with its examples, methods, importance, and comparison with asset management. You may also take a look at the useful articles below –

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