Today's business landscape is marked by supply chain disruptions, labor shortages, and uncertain demand. Tools that efficiently track your most important products and assets are essential for meeting customer demand, navigating supply chain issues, and optimizing labor productivity. A significant portion of warehouse and manufacturing leaders, upwards of 80%, are looking to invest in new technologies for competitiveness, yet about two-thirds are at a loss about where to start.
In this guide, we will explore the fundamentals of inventory and asset tracking, break down the building blocks of well-functioning systems, cover ways you can address common pain points, and provide some best practices to consider when you decide to implement a tracking system.
Inventory vs. Asset Tracking Systems
Both inventory and asset tracking systems involve developing processes and adopting tools to monitor the location, quantity, and status of the items you need to do business. The systems serve distinct roles but the basic infrastructure and considerations needed for both systems overlap. Building either system with the other in mind ensures you’re creating a more flexible and long-lasting solution.
Inventory Tracking
Inventory Management Systems (IMS) track overall inventory levels across a warehouse or manufacturing plant's different locations. They keep track of stock levels and perform demand forecasting reporting. It's most effective for consumables, raw materials, and finished goods intended for sale or consumption in regular business operations.
Asset Tracking
Asset Management Systems (AMS) focus on monitoring the tools and physical assets that an organization uses in the course of business. This tracking aids in loss prevention, maintenance, and financial reporting. Commonly used for tools, machinery, computers, and other items typically not for sale but crucial for daily operations.
As an organization grows, they might adopt a purpose-built Warehouse Management System (WMS). These systems monitor and dictate the movement of inventory from the moment goods and materials enter a distribution or fulfillment center until the moment they leave. Unlike an IMS, a WMS can ensure that specific inventory items are reserved for specific orders at precise locations within the facility. Additionally, a WMS extends its functionalities to managing various warehouse operations, such as receiving, order picking, packing and shipping, and cycle counting. In this way, most WMSs are IMSs. It is important to note, however, that some IMS systems support features associated with WMSs, especially things like cycle counting.
Another type of system you might see is an Enterprise Resource Planning (ERP) system. ERP software are advanced applications that can connect a company’s accounting, orders, supply chain, and warehouse operations into a single platform. ERPs are able to integrate existing WMS, AMS, or IMS software into a single system. ERPs are powerful tools but are expensive to set up and maintain. Recent estimates put the cost anywhere from $1500 per user to $9000 per user depending on your needs. As a company grows, it may hit a point where an ERP system makes sense, but for many small businesses, the investment doesn’t make sense.
This guide will primarily be talking about setting up an IMS or AMS but will occasionally talk about features found in WMS systems.
Pain Points Solved By Asset & Inventory Systems
With so many inventory and asset tracking options available on the market, it can be tough to figure out what is actually best for your business. We encourage our clients to focus on pain points and then line up software features that solve those pain points.
Your front-line employees might have a unique insight into problems that you might not have considered so getting their feedback is important. Additionally, involving your team throughout the process will help them feel like their voices are valued, ultimately resulting in better buy-in with whatever solution you choose. A tracking system, regardless of how many features it has, is only as good as the people who are using it. Getting that early buy-in is critical for maximizing your solution’s ROI.
We’ve covered some of the most common pain points our clients have experienced and the features that helped solve those pain points.
Too many tools & equipment are going missing or are hard to find.
Using software that introduces accountability measures when tools and equipment are checked out can create a transparent chain of custody that fosters accountability and discourages unauthorized transfers.
These tools are even more powerful when you pair them with Mobile Device Management (MDM) software. This software can be loaded onto Internet-connected devices and give real-time data on usage and GPS location. This type of software also tends to come with a host of security features that protect your business from cybersecurity threats.
Location & Use History
Keep a detailed record of everyone who has used that equipment and where it’s been, making it easier to locate missing equipment and get to the bottom of recurring issues. Some software, especially those built for field-service applications, feature GPS tracking support.
Asset Check In & Check Out Mode
This feature is especially important for field service-focused organizations where tools are being moved quickly from location to location, and from person to person. Many software’s have dedicated check in and check out modes that streamline the documentation of these transitions without relying on paper filing systems that can get lost or damaged. Really good software will allow you to create custom forms and collect any extra data that’s required for each type of tool.
Paying too much in taxes.
Almost every business needs to pay a personal property tax each year on the assets they own. Are you paying taxes on assets you no longer have? You might be surprised to know that about 70% of organizations have at least a 30% discrepancy between their reported fixed assets and what they actually have, according to research done by Gartner. These are assets that are either lost, stolen, or unusable but remain listed as taxable assets. A good asset tracking system will be able to reduce this disparity.
Asset Depreciation & Total Value Calculations
Keeping an accurate record of the reduction in value of an asset over time helps with tax reporting and can actually save you money in the long run. Good software will allow you to automatically calculate this depreciation. The same Gartner study found that by keeping a detailed record of asset usage, and retiring unused or redundant assets, companies may be able to reduce their tax bill by as much as 20-30%. This topic can be an entire guide on its own, but this FAQ sheet from the IRS is a good starting point.
You keep running out of stock for orders or projects.
There are generally two causes for this issue. The first is that a business doesn’t have an accurate measure of what they currently have in stock. The second is because a business is having trouble accurately forecasting usage.
Low Inventory Levels Alerts
Set a minimum stock level and be notified when you reach a certain point. This becomes more powerful when you pair it with a system that can generate and autofill purchase orders using supplier information when stock reaches that pre-defined level.
Stock Take & Cycle Count Audit
Occasional audits ensure your actual on-hand stock is aligned with your financial and database inventory counts.These audits usually entail doing a physical count of either your entire inventory or a portion of your inventory. You generally want to do this for both your raw materials and finished goods on hand.
A Stock Take is an audit of all inventory items in a warehouse. Cycle Counts are counts of specific products, locations, or batches. Good inventory software will have purpose-built tools for facilitating both of these activities and then helping you reconcile inventory by either adding or removing erroneous items. Since a complete stock rake often entails shutting down part of your operation, any tool that speeds up the process has an obvious benefit.
Demand Forecasting
Generate reports that tell you how much of a certain finished product has sold or how much raw material you use in any given quarter, month, or week. You can use that data to forecast what your expected run-rate is for any given future period.
Accurate forecasting is especially useful for small businesses in the process of quickly growing where it can be harder to predict variations in demand. Stock too little of a raw material and you risk not being able to fulfill
Item Kitting Management & Bills of Material Management
In manufacturing operations, a finished good is often made up of many smaller raw materials. It can be a hassle to manually reduce stock on a bunch of smaller items in your inventory when you want to create a finished product. Most inventory management software will have some sort of kitting system to help you define all the raw materials that go into a finished product, and then automatically remove those items when you add or remove the SKU for the finished product into your inventory.
More advanced software will create a Bill of Material (or BOM) — though this is generally where you get into ERP or advanced WMS territory. A BOM typically includes the name of the finished product, its part numbers, a breakdown of all the raw materials and subcomponents that make up the product, and along with the total cost of the items. Some software can also keep track of machinery and labor capacity, dozens of sub-assembly process, and automatically generate work orders for needed subcomponents
Using software with BOM management is useful because it allows you to stay ahead of materials shortages and supply chain issues, better understand what your labor and equipment capacity is at any given time, and reduce material overages. These things allow your company to better plan for supply chain disruptions and ultimately save money.
Your equipment keeps breaking down when you need it most.
Things break. There’s no way around that. But good maintenance keeps equipment from breaking down as often. Good asset tracking software can keep track of prior maintenance and can even schedule out preventative maintenance.
Mobile Device Management (MDM) software is also great for situations where you need to manage IT assets like computers, company-owned cell phones, printers, and more. This is because MDMs often come with remote-control functions, automated security updates, and real-time alerts and notifications about device status and performance. These all allow businesses to quickly identify and resolve issues.
Maintenance Contract & Repair Tracking
Reduce equipment downtime and ensure regulatory/business compliance by creating a history of how often an asset has been serviced and setting up notifications for future routine maintenance. Software can also keep track of when maintenance contracts expire, allowing you to renew them before coverage lapses. The same functions can be used to track software licenses.
Some software have integrated ticket/work-order management system that allows everyone involved in the maintenance and usage of equipment to have visibility on repair status, eliminating mis-communication and speeding up repair.
Document & Photo Attachments
Being able to attach photos of each asset allows you to identify assets quicker. Additionally, being able to attach user manuals, signed contracts, and other documents will make keeping up with maintenance and compliance reporting easier.
Products expire or spoil before they leave your warehouse
First-In First-Out Tracking
FIFO (First In First Out) warehousing is an inventory control method that ensures the first items to enter the warehouse are the first to leave. This is especially crucial for industries dealing with perishable goods like food or pharmaceuticals. Outside of those industries, FIFO tracking is also important for accurate financial reporting. If the cost of raw materials goes up and you have different quantities of materials with different prices, you’ll want to be able to account for the differences in material costs when reporting on the cost of goods sold. This gives a clearer picture of profitability and helps you make informed business decisions.
Lot Tracking
Lot tracking is a system used to trace parts or ingredients associated with a group of products back to a manufacturer or supplier. Good software often enables you to track multiple quantities of perishable, time-sensitive items by manufacturer expiration date with traceable lot numbers. It can also help you manage recalls by keeping track of which batches of product came from which manufacture at certain times.
Slowdowns and delays caused by miscommunication
This a pertinent issue for fast growing businesses that might have 20 or 30 employees but are still using systems developed for use by two or three people.
Inventory and asset tracking software creates a single source of information for everyone in your organization. Instead of having to share spreadsheets with co-workers and sending out mass messages to the entire company (that probably won’t be read by half the people who receive them), everyone can reference the same information and watch it be updated in real-time as inventory levels and asset locations change. This eliminates gatekeeping and siloing of information that might put business operations at risk.
Different Types Of Tracking Technology
All tracking systems depend on being able to assign an identification number to each item you need to keep track of and then building a system that lets you quickly access information about that number. The way you assign and track that number can vary quite a bit. The three most common methods for keeping track of these numbers and information are spreadsheets, barcoding systems, or RFID systems.
Spreadsheets / Pen & Paper
Manual spreadsheet tracking involves using software like Excel or Google Sheets to record and manage inventory or assets. Users often manually hand-input information but some companies may combine this with barcoded labels. We built a free inventory management tool using Google Sheets a few years ago that some of our clients have used in the past.
Pros
Low Cost & User-Friendly: This method only requires basic software, which is often readily available and comes with a familiar, user-friendly interface, accelerating the training process.
Customization & Integration Capabilities: Users can tailor spreadsheets to align with their organizational workflow. Integration with business-centric software like Quickbooks is possible and many other software applications support importing CSV files which can be easily exported from spreadsheet software.
Cons
Prone to Human Error: Manual data entry is susceptible to errors. A study in 2004 found the average human makes a data-entry error once every 300 keystrokes, while a barcode scanner might error once every million scans. Some businesses combine this with barcode identification systems to reduce these errors — and we’ve actually built some mobile barcode scanning applications that help these types of businesses by easily converying barcode data into a CSV file that can be imported into applications — but at the end of the day, these tools can only help so much and even more accurate data entry only solves one of many challenges.
Time-Consuming & Limited Automation: Updating large datasets manually is labor-intensive. The lack of extensive automation, despite the use of formulas and macros, means that users still need to enter data manually and ensure correct formula setup, which can be prone to mistakes.
Barcode-Based
Barcode systems are the most prevalent tracking technology today. With this system, identification numbers are printed as a barcode on a label and then scanned using a barcode scanner. These systems are often coupled with dedicated asset or inventory tracking software, which automates data compilation into a comprehensive dashboard.
Pros
Improve Data Accuracy: Barcodes automate data entry and dramatically lowers the chance that someone will misenter data.
Real-Time Updates: If used with a good tracking software, a barcode system can provide instant updates on inventory and asset movements.
Cost-Effective: Implementing a barcode system is relatively budget-friendly. A basic operational system can sometimes be established for under $1000.
Cons
Dependency on Line of Sight: Scanning requires visibility of barcodes which can slow down data capture if items are loaded tightly together or stacked high up on shelves. It can also be hard to locate an item if you’re unable to actually see it.
Initial Setup & On-Going Support: Requires an initial investment in barcode scanners and labels plus enough expertise to set up the devices and manage them. Working with a value-added reseller is one way to alleviate the knowledge needed for this. In any case, far less technical know-how is needed for barcode scanning equipment when compared to some other tracking solutions.
RFID (Radio Frequency Identification)
RFID technology is a rapidly emerging trend in data-capture and tracking with major retailers like Walmart starting to mandate its integration. RFID systems use tags or labels embedded with microchips that encode an item’s identification information and transmit data over radio waves similar to how Bluetooth works (with some exceptions). RFID eliminates more areas for human error and studies have shown that implementing RFID can improve inventory accuracy by about 13%.
Pros
Quicker Scanning & Accuracy: RFID tags eliminate the need to have a direct line-of-site with the barcode before it’s scanned. This is helpful if you need to scan items that are hard to reach, far away, or packaged in a box. A RFID reader can scan hundreds of tags at once, dramatically speeding up data collection when compared to a barcode setup.
Real-Time Location Tracking & Re-encodable Tags: RFID readers offer real-time location data, aiding in locating assets or inventory within a warehouse. The tags can be re-encoded, unlike barcodes which necessitate new labels for updates.
Cons
Higher Initial and Ongoing Costs: Setting up an RFID system is more expensive than a barcode system. A single RFID tag is around 10-15 cents on the low end and can balloon up to dollars per tag. A typical label costs fractions of a cent on the low end to about 8 cents on the high end. That’s before you factor in RFID printers and readers which can be thousands of dollars a piece.
Complexity in Setup and Use: The intricacy of RFID technology demands outside expertise for installation and ongoing management.
Here’s a few questions to ask when deciding if RFID is right for you:
What are you trying to track? Sometimes the value of an inventory item or quantity of assets in a facility might not be enough to make RFID a cost-effective solution. RFID is ideal if you’re tracking small or highly-valuable objects like specialized medical equipment or precious gems. An RFID system with location tracking can help quickly locate anything that’s gone missing. That same location tracking system can also be used to track the movement of people and assets throughout an organization if an RFID chip is used in ID badges or wristbands. Additionally, metallic and liquid-filled items can disrupt a tag’s ability to send and receive information, making accurate data collection difficult without expensive specialized tags.
Who is going to support this solution once implemented? Will you have someone in your operation who can devote the time to learn how to support your equipment? If not, are you willing to pay for a third party company to support your solution?
Who are you supplying?If you are a vendor for a major retailer, it’s possible that an RFID mandate similar to Walmart’s is right around the corner. Doing the work to implement RFID infrastructure right now will better prepare you in the case that it comes. Likewise, if you supply to small local or regional locations, you may never see a mandate.
What problems are you trying to solve with RFID? While RFID is capable of solving a lot of problems, more often than not a well–designed barcode-based system is enough. Avoid the temptation to throw many at a solution if there's a bigger issue like employee compliance that might be the root of the issue.
IN CONCLUSION: RFID is a powerful technology that can solve a lot of business pain points. But for many owners, a barcoding system with decent inventory or asset tracking software is enough - especially if they’re not able to make the financial investment. If you think an RFID system is right for your business, we have solution engineers on call ready to help answer any questions you might have.
OUT-OF-THE-BOX KITS MAKE IT EASY
Get all the software and hardware you need to start tracking inventory and assets in one kit. All items come with FREE ground shipping and LIFETIME hardware trouble-shooting support.
Complete Inventory Tracking Kit
Complete Fixed-Asset Tracking Kit
Redbeam Asset Tracking Software
Choosing the Right Hardware - Tips & Tricks
Your tracking systems are only as good as the hardware you’re using to run them. Here are some tips when selecting hardware.
Barcode Scanners
Consider how far away your assets/inventory will be when trying to scan them. Is there a chance that they’ll be on high shelves or other hard-to-reach locations? If so, make sure you buy barcode scanners with enough range. Durability is another consideration. Most barcode scanners are built to withstand the occasional fall. But if you’re in a warehouse environment where employees might be working in high locations, or where moisture is a concern, it might make sense to upgrade to an industrial scanner with a better drop spec and environmental sealing.
Computer Terminals & Mobile Computers
If your inventory and assets are in a small location, you may be able to use a single computer with a Bluetooth barcode scanner to handle all your tracking needs. If you have a larger warehouse or manufacturing operation, you may want to consider investing in a solution where employees can use the tracking software on a mobile device.
Mobile devices greatly vary in price and function. At the low end, you have consumer cell phones and tablets. On the higher end, you have heavy-duty industrial mobile computers with keypads that can handle just about any abuse an employee might put them through. In the middle, you have rugged enterprise mobile devices. These devices tend to be more durable than a consumer device (so you spend less on repairs) and typically come with features like integrated barcode scanners (so you don’t need to worry about buying a separate scanner), warm swappable batteries (so you don’t need to power down your device and lose work when changing batteries), and improved network connectivity options for a more stable device.
In general, rugged mobile devices cost more up front but tend to have a lower total cost of ownership and less lost worker productivity when compared to consumer devices. Even so, these effects might not be felt by an organization running only a few devices. Additionally, a rugged device might not make sense for a low-volume back-of-house but it probably makes sense for a device being sent out to a construction site. At the end of the day it’s up to you to determine whether the investment is worth it.
Regardless of the choice you make, if you have a larger operation and intend to use mobile devices, make sure your network infrastructure is ready to handle it. Make sure your Wi-Fi network is stable and strong enough. There are companies that specialize in wireless networking and conducting radio frequency site surveys. They can help you upgrade or install the right wireless infrastructure to support your mobile devices.
Labels & Label Printers
A barcode is only as good as the label it’s printed on. If the label falls off or is damaged to the point it’s no longer readable, your tracking system may grind to a halt
There are two types of labels you can use: direct thermal and thermal transfer. Direct thermal labels are usually made of paper and are coated with a heat-reactive material. Thermal Transfer labels are usually plastic-based and use a special roll of ink-covered ribbon to apply a thin-layer of text over the label.
We generally recommend you use thermal transfer labels for tracking assets, especially if the assets are going to be moved around a lot or may be exposed to sun or moisture. If an asset may be exposed to extreme heat (say being left in a truck in a very hot environment), exposed to extreme cold (being used in a freeze environment), or may come into contact with corrosive substances (cleaning chemicals and industrial lubricants), you may need to use specialized labels to ensure they hold up.
If you’re labeling inventory that is designed to move through your interior operation quickly, you can probably get away with a direct thermal label. These labels tend to be cheaper than a thermal transfer label so labeling potentially thousands of products at a time is a much more economical practice. Some direct thermal labels are also designed to be somewhat moisture resistant in the short term.
Don’t forget about the barcode itself! We recently made a guide going over some things you should consider when making barcodes.
How To Make Building an Inventory & Tracking System Easy
Whew - that was a lot! It’s normal to feel a little overwhelmed right now. Do you still have some questions? Do you want to make the entire process a little easier? That’s where working with value-added resellers like POSGuys can help!
Why work with a partner like us?
We can provide you with peace of mind and confidence when building your solution.
We know what questions to ask, what technology is best for certain applications, and will be by your side through every step of the journey. For over 21 years, we’ve helped hundreds of organizations design and implement systems that have saved their operations time and money.
You maintain freedom of choice.
When you reach out to a manufacturer or software developer, you’re going to be sold a single solution that promises to solve all your issues. Value-added resellers like us work with many different providers at once, so we can help you compare and contrast the features and strong points of the different solutions on the market. We will make a recommendation, but our goal is to give you the information you need to make an informed choice.
You’ll be supported.
Some companies focus only on software, others only on hardware. We can do both. We operate a U.S-Based technical support team that provides lifetime troubleshooting support on all the hardware we sell. This ensures that no matter what happens, you have a single point of contact who can help resolve the issue. We also have a custom software development department, ensuring that no matter what you need, we can provide a solution that fits your needs.