Extracting Asset Value in the ‘Post Throw-Away’ Economy

Why ‘track’ assets? Haven’t people and companies always kept track of things that they own?

Well, not exactly. For many years, even decades, asset tracking was not high on the list of priorities for businesses in America and the Western world, in general.

Today’s asset tracking technology, in the form of Telematics technology, does more than tell a company where its trucks or shipping containers or backhoes are at any given time. It also builds efficiency into an entire system, reduces loss and waste, and overall saves millions in what would otherwise be lost profits. But it was not always this way.

In the early 1980’s, businesses in the industrialized countries had developed a knack for discarding many different types of things, from machinery to vehicles to whatnot, when these items either broke, or we perceived them as obsolete. This behavior was mostly fed by the rate at which new, cheaper and more feature-rich products were introduced to the market. The common wisdom was that there was no need to repair something when it could be replaced, for less cost, with an up-to-date, more powerful, faster, product with more bells and whistles than the original.

The ‘throw away and replace’ attitude percolated into our business actions. We replaced needs with wants, and we became more likely to take a time/cost/feature approach towards capital expenditure and assets. But this was back when money was plentiful, before the current financial crises suddenly forced companies around the globe to change their attitudes. In many ways, it was a paradigm shift in thinking. Companies forced into survival mode began counting dollars and counting assets.

But as companies quickly learned after business got tight, all those small discarded pieces, in the aggregate, add up to big dollars. Consider shipping containers, for example. Worth a few thousand apiece; abandoned once, here and there, these objects now represented assets that companies could not afford to throw away like a plastic soft drink cup. The same was true for empty rail cars, lost, misplaced, or ignored; when the tracks connecting them to rail lines were dismantled, the cars were left where they stood, since trying to transport these heavy cars without tracks was impossible, or prohibitively expensive. The owners could afford to write them off. But it’s a different world now. Additionally, asset tracking means a lot more than simply knowing where your products or rail cars or assets are; a basic telematics device, mounted inside a shipping container or a rail car, will constantly reveal the location of that asset, but the science has evolved far beyond that. Now, asset tracking involves knowing not only where your assets are at, but how they are performing, and how their usage can be optimized in terms of distribution, routing, and more, for highest efficiency, fuel savings, and the smart allocation of limited resources.

Before 2009, companies with many assets to track were generally focused on the bottom line, and less, perhaps, on the efficiencies of their organizations and operations. It is safe to say that most of those companies would have a difficult time stating precisely where, and under what conditions, their assets were at any given moment, even though the Sarbanes-Oxley act put into legislation that publicly-traded companies must provide visibility to all of their assets at any given time.

Tracking large volumes of fixed and mobile assets is a considerable challenge, ignoring the costs associated with operating those assets; well that’s basically saying ‘I know I could spend less, but I just don’t have time for it right now’. At least that’s the way it was over a year ago. But now, times are different. Welcome to the ‘Post Throw-Away’ economy.