Say you run a construction firm, and you have a perfectly serviceable grinder. The tool only costs you $80, and it generates a lot of value on the job. Great, right? But what happens when you need the grinder, and it’s not where it’s supposed to be?
That’s where costs start to accrue. The average hunt for a lost tool lasts about 90 minutes—an hour and a half of paying for the labor that’s not producing. You might have to delay the job until you can get a replacement; that’s more lost productivity. And if you can’t find the grinder, you have to buy a new one. Now you’re out an additional $80.
Add it all up, and that misplaced grinder can cost your company upwards of $300: four times the purchase price.
The Costs of Manual Asset Tracking
Scenarios just like this play out all the time in construction, but the problem of poor manual asset tracking extends across industries. Site services companies lose portable restrooms. Logistics firms lose trailers. Retailers lose their wares. In fact, in 2014, U.S. retailers lost $44 billion worth of merchandise to theft, fraud, and simple administrative mistakes.
As that figure suggests, the problem isn’t just theft (although that can certainly be an issue). It’s that it’s hard to keep track of where everything is. The tool you need may be at the job site, on a truck, or lost in the warehouse. Without an accurate inventory, updated in real time, you can’t keep assets where they need to be, when they need to be there.
That uncertainty is expensive. And if you track your assets manually—with paper forms, spreadsheets, or even punch cards (it happens)—you’re probably spending more than you think. Here are five hidden costs of manual asset tracking, followed by a solution that eliminates them all:
1. Lost Labor Productivity
You have to pay employees whether they’re producing value or not. Every minute they spend hunting for missing assets is a loss; the search costs money instead of generating revenue.
And with manual systems, employees are the ones doing the asset tracking. Maybe they update a paper form with the asset’s current location. Then they have to deliver that form to the office. Then someone at the office has to enter that data into a spreadsheet. From data entry to reporting to counts and recounts, manual asset tracking is a labor-heavy endeavor—and that means it’s more expensive than the alternative (which we’ll discuss at the end of this list).
2. Asset Duplication
Let’s return to our example of the grinder. One way to solve the problem is to simply buy several grinders from the start. That improves the odds that at least one of them will be when you need it. But that’s a particularly inefficient use of capital—you’re essentially doubling or tripling your potential spending.
Poor asset tracking can also lead you to accidentally buy something you already own. If your inventory isn’t up-to-date, records may show you need another grinder, even if there’s a perfectly good one already sitting in a truck. Both scenarios lead to unnecessary expenditures.
3. Assets That Only Exist on Paper
The flip side of the asset duplication problem might be called “paper assets.” Your records indicate that you have a grinder, but you don’t actually have a grinder. Maybe it’s been stolen, or maybe it’s on another job site; either way, you won’t know what you actually need if your records aren’t both accurate and up to date.
Manual asset tracking systems are almost never both of those things at once. The next hidden cost on our list is a big part of the reason why.
4. Manual Data Errors
Spreadsheets are a key element of any asset tracking system. When humans handle data entry, however, they tend to make mistakes. Those mistakes cause or compound all the costs we’ve discussed so far—and data errors are so common they’re nearly universal.
Across industries, spreadsheets fail to accurately track assets. In a 2022 survey, 98 percent of office workers said they’d seen spreadsheet errors that cost their companies money. Any manually updated asset tracking system probably does the same.
The core downside of manually tracking assets is that it’s manual: People are in charge of the program. If a single employee forgets to note an asset’s location, it can easily get lost in the system. That’s more than an inconvenience if you’re contractually or legally obligated to have that asset on the job.
The Occupational Safety and Health Administration (OSHA) requires employers to provide certain types of safety equipment. For example, OSHA standard 1926 Subpart E lists the PPE that workers must use in the construction industry, while 1926 Subpart F does the same for fire protection equipment. Failure to keep listed assets at a job site can easily lead to noncompliance—and the fines and penalties that come with it. A manual tracking system simply isn’t reliable enough to ensure compliance with OSHA, other regulatory bodies, and contractual obligations.
Taken together, these challenges add up to serious losses. Luckily, however, there’s a simple solution—all thanks to IoT technology.
Eliminating the Costs of Manual Asset Tracking with IoT
Digital asset tracking has moved past systems of scanners and barcodes (also, incidentally, manual systems; what if an employee forgets to scan the code?) Thanks to IoT connectivity, today’s asset tracking systems automate the task, providing real-time visibility without errors.
In other words, they tell you where your assets are right now. Just be sure to choose an IoT asset tracking system that’s designed for dependable service. Usually, that comes from multiple options for connectivity: GPS, cellular networks, or even a proprietary Global Observation Network.
Consider the size of the asset tracking tags, as well. Some are literally too big. Look for dependable tags that fit whatever you need to track, even if it’s as small as a handheld tool. Finally, consider the cost. Given all the hidden expenses of tracking things manually, most IoT asset trackers will provide an attractive ROI—but some have lower costs of ownership than others. You should be able to find a solution for as low as $2 per month, per asset.
With IoT tracking your assets, all those hidden costs will evaporate—and that grinder will always be there when you reach for it.