Technology can help you stop the nickel-and-diming
‘Little things’ have a tendency to add up quickly in an economy where cash flow is more important than ever and operational efficiency is critical. However, those little things that you lost track of through either carelessness or theft, slowly find their way back home to your company’s bottom line. Replacement or purchase duplication costs can nickle-and-dime your company into a disadvantageous financial position. Fortunately, technology offers a variety of tools for coping with this problem.
Bar-code systems
Think of tools as miniature assets that should be protected, coded and tracked. They can be tracked just as easily as a 17,000-pound backhoe. For example, electronic bar-code systems easily and efficiently label, coordinate, trace and catalog tools in real time. These systems usually involve, as you may have guessed, bar codes displayed on polyurethane labels on each tool. These labels are designed to hold up under repeated on-the-job wear and tear.
The systems require hand scanners, which project or equipment managers use to scan the bar codes when assigning tools and accepting returns. Once the item is scanned, the tracking software sends the pertinent information to a database that you can also use for browsing, billing and running reports based on configuration settings and features of the purchased software. Programs have features to record repair histories and maintenance schedules.
The cost of bar-code technology varies, depending upon on the number of features and users that you require. How complex a system you’ll need will, of course, depend on the number of tools you’re looking to track as well as the number of job sites you typically have.
Reduced budget and liability risks
This technology also improves management efficiency. How? You can let managers know that, if the system doesn’t show tools as coming back from job sites at completion, you’ll charge the project for them. Thus, managers will more closely monitor and protect these items to avoid going over budget. No one wants to be over budget.
Bar-code technology may also reduce your legal liability. Federal regulations often require workers to wear safety gear such as goggles, hard hats and respirators to prevent possible injury on the worksite. Bar-coding systems enable you to show that you issued employees with adequate, working safety equipment that has had proper maintenance performed on it. Reports from the system could be printed, which could in turn limit your accident liability.
Accounting integration
Let’s integrate your tool tracking system into your accounting system. Doing so can boost the value of your tool-related data, streamline procurement of these assets and saving money in productivity.
For instance, you might create a real-time list of tool information, such as descriptions, warranties, purchase dates, costs and maintenance schedules. You can then generate a report of employees or job sites responsible for each of the small tools on the list. The reports are available when you scan to find out who has the tools and where they are located. The difference would be those that are left in the warehouse.
An integrated system may also enable you to assign tools by employee name, job code, project number, date, time, location or other criteria. This can give you some valuable insights into how that tool is being used and prevent it from being left lying around unused on a job site. You would be able to identify obsolete tools that could possibly be sold for additional cash flow.
In turn, you’ll foster an atmosphere of accountability by making managers and employees more responsible for these assets. There’s no better way to drive home a point about wasted assets or money than to sit down with employees and show them, in dollars and cents, how a tool is being misused.
More for you
If you’re already using some type of tool-tracking software, but you’re finding you have to perform more manual processes on the front end to make the software work for you, it’s probably time for an upgrade. If you can’t integrate to your accounting system, it’s probably time for an upgrade. At the very least, undertake an intensive review of the system and its use to see what’s going wrong.
And if you’re still managing your tools the old-fashioned way, whether through paper checklists or the honor system, now is likely a good time to step up to a higher level of tool management. Although you’ll need to invest some time and money upfront in choosing and implementing the right software — and training your staff on how to use it — the end result will probably be more nickels, dimes and dollars for you.
Missy Vaughn, CISA
Assurance Manager
