Tracking the Assets

Aug. 1, 2004
Many enterprises use logistics assets that have a circular flow, meaning they are reusable with intrinsic value. Included among these are totes to deliver

Many enterprises use logistics assets that have a circular flow, meaning they are reusable with intrinsic value. Included among these are totes to deliver goods to stores, racks to deliver milk and bread to grocers, bins and roll cages to move parts from suppliers to assembly plants, shipping containers, rental equipment and refillable liquid or gas containers. These assets are a significant capital expense for the enterprise, sometimes consuming more than 10 percent of revenue.

Theft, damage and misplacement of such assets, however, can significantly erode productivity. Consequently, more companies see the effective management of these assets as differentiating and key to customer growth and retention.

A new benchmark report from Aberdeen Group, entitled "RFID-Enabled Logistics Asset-Management," examines these issues in detail. According to Aberdeen's research, one-quarter of companies lose more than 10 percent of their container fleet each year. While one-third of companies report that their existing technology-supported asset management operations have delivered more than 7 percent improvement in customer retention, 75 percent consider their current IT systems ineffective in supporting these operations. Moreover, half of the processes used for tracking and managing assets are currently manual.

As a result, 50 percent of companies plan to tag existing assets with RFID tags (today, only one-tenth have done any type of serialization on their logistics assets). This investment is coupled with two-thirds of companies that plan on investing to improve logistics asset management functions in multiple areas, such as visibility of assets in transit, availability of management assets, disruption management, transportation planning, general asset management and maintenance management solutions.

"The existing logistics asset management systems have delivered significant results through reduced costs, improved compliance and customer satisfaction, and improved fulfillment accuracy," says Tom Ryan, Aberdeen's vice president of value chain research and author of the report. "A fourth of these companies expect their new investments in systems and the application of RFID technology to double the current benefits"

The report recommends the following to those companies looking to optimize logistics asset management operations:

• Focus improvement plans on driving customer satisfaction by having assets where they are needed when they are needed;

• Use key performance improvement programs to determine the weaknesses in existing logistics asset management processes and systems;

• Address these weaknesses, RFID tag all assets and implement system and process improvements that will take advantage of RFID's capabilities.

The report is based on a survey of more than 230 senior operations, customer service and supply chain executives. It found that at least one-half of firms plan to improve asset management processes in the next 12 months. It also quantifies the business benefits inherent in logistics asset management strategies and procedures; benchmarks existing procedures for asset management operations; and recommends specific actions for maximizing asset performance.

To read the full report, visit