Major Risks of not using Asset Tracking System in your Organization.
It may be argued that a small size organization may not need an Asset Tracking System as long as they have only a few assets in operation. However, if there is a large volume of assets, the situation is not the same. Without asset tracking software, an organization can face several issues, e.g. an organization purchases assets and files the invoice. It can happen that the invoice is not found when it is required.
This is the story of several companies who do not have exact information on all the assets they own, how many of them are being utilized, how many assets are actually not there, how much losses they are suffering because of lack of all this information. So, what’s the way out of all this?
Here are some of the major issues an organization can face in the absence of an asset tracking software:
1. Asset Theft
According to the blog of Sheerid, approximately $50 billion of assets get stolen annually from U.S. businesses and inventory shrinkage is a big concern. As such, theft and misplacement of assets are big issues not just in the USA but across the world.
Imagine a scenario, where you need a specific asset and cannot find it. This is already a case of bad management. This is a case of a physically missing asset that is declared as available in documents. This increases your avoidable expenditure. Such assets that are not physically there but declared in the document are called ghost assets.
Asset theft impacts the business in many ways, e.g. when equipment is lost or stolen, the operations gets impacted, productivity suffers and the bottom line takes a hit.
Asset tracking software provides real-time location of each asset as it has a Check-in Check-out feature to know which asset is assigned to which user. It minimizes asset theft chances and prevents ghost assets.
2. Human Error
Humans make mistakes. In inventory management, there can be observation and calculation errors. In the medical industry, it can cost human lives.
For asset tracking system or inventory tracking system, organizations traditionally use spreadsheets assuming that it will provide correct data, e.g. there are long numbers written on assets and while making entry, data operators can make a mistake in writing the number. It becomes well-nigh impossible to track that asset anymore.
3. Lack of Asset Maintenance
Lack of asset maintenance is one of the oldest issues in many industries, e.g. work is going on at full swing and suddenly a machine halts and the work stop. This is the classic case of an unexpected breakdown.
When equipment is in good condition, it will perform better and productivity increases. Also, it will save the company an unexpected breakdown.
However, the organization may need a separate team to look out for such activities to maintain the equipment. The Asset tracking software helps in providing all information about every asset and equipment.
The system also keeps records of each asset, for instance, it informs when the last maintenance was carried out or when it needs the next maintenance. You can schedule maintenance activities without interrupting daily operations.
In the absence of effective asset tracking software, there are some consequences to be faced due to careless decisions. Some of them are:
- Production loss
- Rescheduling of whole projects
- Material wastage from resources that have not been used yet
- Over time of labour due downtime
- Disposal of machinery
- Equipment ending before the end of its useful life
4. Decreased Efficiency
When there are several operational issues faced by an organization and no action is also taken, then productivity decreases. Asset performance affects productivity in a big way. Improper functioning of assets or a lack of sight on poorly performing assets can lead to productivity loss and increased downtime period.
When an asset is not working efficiently, it not only decreases its own performance but also impacts the overall productivity.
If any organization wants to enhance efficiency, the first step is to implement asset tracking software in order to grow business.
Asset management is important because it assists in retrieving complete information during the life cycles of assets and equipment. The centralized system helps in cost control and integrates with other systems for collating all information at one location, increasing the organization’s efficiency.
5. Inventory Shortage
When there is no fixed asset management software in place, there will be never a perfect balance between production rate and inventory stocks. This means either the inventory stocks are low or too much due to overstocking.
Keeping the manual reports of inventory can increase the risk of errors. Moreover, a small error can affect an organization’s profitability. Furthermore, there may be duplicate or conflicting information. If crucial decisions are based on such data, the results can be very counter-productive.
In short, without an accurate fixed asset tracking system, you cannot handle and manage inventory effectively, besides struggling with inaccurate information.
When you use fixed asset management software in order to keep track of inventory, you have complete historical data and you can take effective decisions on how much inventory levels need to be maintained.