Huge enterprises need to maintain a lot of assets to continue their operations, whether they be IT assets, manufacturing equipment, and machines, packaging materials, vehicles for delivery of goods and supplies, or daily use consumables/inventories. Typically, a business entity holds all of these. The assets deliver great value to an organization as they spell economic benefits for future existence and expansion.
Business assets are explained as items of value that strengthen and support consistent production as well as continued growth. They may include machines, property, raw materials, inventory, patents, etc.
In this blog, we shall discuss some of the important questions that arise in business in regards asset management system, its implementation, its importance, and so forth.
What is Asset Management?
Asset management is important for an organization as it helps to manage and monitor assets using a systematic methodology.
Asset management is the process of operating, maintaining, and disposing of assets in the most cost-effective way.
According to Wikipedia, it is a systematic approach to govern and realize value from things that an organization is responsible for, over their whole life-cycles.
How is Asset Management done?
Asset management comprises the integral life cycle of an asset - from an asset's procurement and operation until its final disposal and renewal.
The main objective of asset management is achieving the least overall life cycle cost of assets which are likely to be affected by other parameters such as business continuity or risk during the decision-making process.
It also comprises opportunities, balancing costs, and negotiating threats against the level of performance of assets. This evidently demands the maximum return on investment and reaching the organizational objectives.
What are the Features provided by Asset Management System?
Unbiased to the nature of the industry, an asset tracking system drives value to enhance the functioning and efficiency of assets and equipment.
Below are some of the features of an asset tracking system and how it is useful:
1. Asset Tracking
Asset tracking is the method to track an organizations' physical assets, using several techniques such as Barcode, RFID, NFC tags, etc.
Asset tracking is important for any commercial enterprise - for its continuity and compliance. It provides actionable information on all assets as also those which have reached the end of their lifecycle.
Asset tracking solves several business challenges. Its framework enables companies to become more efficient and boosts their bottom line by making optimized use of existing resources to achieve the best results.
Any kind of change in the movement of devices is recorded for future reference if needed. These changes in movement may include:
- IP Address change of IT devices;
- Physical relocation of assets;
- Asset removed from network;
- Installation and uninstallation of assets;
- Expiration of asset license.
The main objective of an asset tracking system is to maximize asset control and minimize equipment loss.
Enterprises should implement asset tracking management software in conjunction with asset management solutions and automated tracking methods like fixed scanners, Barcodes, asset tags. This will help generate reports to effectively manage and track all assets.
Here are a few things that organizations can do to manage their assets in a better way:
- Finds Ghost Assets;
- Extend Life Cycle;
- Minimizing Asset/Equipment Loss;
- Precise Asset Information;
- Save Time & Money;
- Scheduled Maintenance;
- Maximize Asset Efficiency;
- Establish Compliance.
Check-in/Check-out system is focused on circulatory records of the assets owned by an organization. It involves the information like who has the asset currently and when it will be returned.
This check-in/check-out of assets can be checked through the barcode label attached to the asset. The system creates a library in the database which records the information such as, to whom the asset has been issued and its returning date.
Benefits of Check-in/Check-out System are:
- Accuracy - Complete information about where each and every asset is and with whom;
- Simplicity - Quick process with few scans;
- Efficiency - Less time required to locate items;
- Accountability - Hold each user responsible for all the items they use.
3. Maintenance Management
Regular maintenance of the assets is mandatory to keep the business growing as the word maintenance does not always mean to repair.
What maintenance really means is to follow up with the regular or methodological processes to keep the equipment and asset up to date and in a healthy working condition. It does not only mean to repair a piece of equipment only when it is broken.
The equipment should be lined and labeled, its wearing surfaces should be examined and replaced, oil schedules should be lined up at regular intervals.
Hence, the equipment with good working conditions requires regular inspection and adjustment to continue to produce good quality products for a long time.
Without or in the absence of equipment management, it might be possible to face some consequences in revert of careless decisions. Some of them are:
- Production loss;
- Rescheduling of whole projects;
- Material wastage from resources that have not been used yet;
- Over time of labor because of downtime;
- Disposal of machinery and equipment before the end of its useful life.
You can ignore any kind of mishappening by strategizing an equipment maintenance software in your organization.
There are few intents you will need to know and remember while programming equipment maintenance in your business, like:
- To plan and set some quality and usage standards for the staff internally, that too based upon your asset type.
- To conduct careful repairing, when proper consultation is done from the side of the concerned department.
- To document all the activities thoroughly. It will make it easier for you to track the repair history and calculate depreciation for timely disposal.
- To complete all the daily tasks and more, within their deadlines in order to stick to the maintenance plan.
4. Re-order Management
An inventory management system helps you to track and control the company's supply so that you can optimize your inventory and manage them without spending extra time and money.
The most integral part of the inventory management system is to evaluate your business on a regular basis to ensure your path towards the success track.
Inventory Management is a technique through which stocked goods, inventories, and non-capitalized assets are kept in a proper manner according to their specific shape and placement.
It is a process of ordering, storing, and using inventories. This stock management includes generating the lead on raw materials, components, and finished products, alongside warehousing and processing of such items in your company.
The objectives of inventory management are as follows:
- To ensure a continuous supply of materials and stock so that production should not suffer;
- To avoid both overstocking and under-stocking of inventory;
- To maintain the availability of materials whenever and wherever required in enough quantity;
- To optimize various costs indulged with inventories like purchase cost, carrying a cost, storage cost, etc;
- To keep material cost under control as they contribute to reducing the cost of production;
- To eliminate duplication in ordering stocks;
- To minimize loss through deterioration, pilferage, wastages, and damages;
- To ensure everlasting inventory control so that materials shown in stock ledgers should be physically lying in the warehouse;
- To facilitate furnishing of data for short and long-term planning with a controlled inventory;
- To supply the required material continuously;
- To maintain a systematic record of inventory;
- To make stability in price.
5. Depreciation Management
It is crucial to analyze how your organization utilizes depreciation. It can be regarded as an important part of the expenses on a company's income statement.
Each association has a fixed asset that bookkeeping teams take into consideration when concluding the overall worth value of the association annually. An asset may incorporate a vehicle, machine, and equipment that is expected to be owned by an organization for a long time.
The overall value of each asset decreases as time goes by and utilization is done regularly. Thus, it is important for companies to re-evaluate their assets continuously. This is where depreciation comes into play.
As per Investopedia, “Depreciation is an accounting method of allocating the cost of a tangible or physical asset over its useful life or life expectancy.
Depreciation represents how much of an asset's value has been used up. Depreciating assets helps companies earn revenue from an asset while expensing a portion of its cost each year the asset is in use. If not taken into account, it can greatly affect profits.”
- Precise asset evaluation & account keeping
- Tax benefit
- Well informed financial decision
6. Audit and Physical Verification
Physical verification of assets is done by auditors to check and verify the number of assets that actually exist in an organization. The process involves the verification of each assets' existence, location, and condition.
At the end of the financial year, it is a business requirement to know how many assets they have, where they are located, when were they purchased, currently they are in use or not, etc.
Benefits of audit and physical verification are:
- Ensure the existence of all the assets;
- Manage internal compliance;
- Automated verification of asset tags and serial numbers;
- Verification of information like description, location, etc.
Advantages of Asset Management System in Business
Asset management allows the organization to discover the value from the assets with respect to the organization's objectives.
Asset management assists the realization of asset value, balancing all the financial, environmental, social costs, risks, quality service, and asset performance.
Here are a few advantages of asset management:
- Improved Finances:
Asset management can improve return on investment and reduce the costs without giving up on short and long-term realization of organizational objectives.
- Improved Asset related Decisions:
Asset management allows the organization to improve its decision making and effectively balance the costs, risks, opportunities, and performance.
- Risk Management:
The managed risk will reduce financial losses, improve the health and safety of assets, less environmental and social impact will result in decreased liabilities like insurance premiums, fines, and penalties.
- Improved Services and Outputs:
Proper management of assets assures the performance of assets leading to their improved services and efficient product demand or the expectations of the customers.
- Demonstrated Social Responsibility:
Asset management demonstrates the social responsibility of reducing emissions, conserve resources, and ethical business practices.
- Demonstrated Compliance:
Demonstration of compliance can be enabled by strictly obeying legal, statutory, regulatory requirements, and following the business asset management system standards, policies, and processes.
- Enhanced Reputation:
The reputation of an organization can be increased by increasing customer satisfaction, stakeholder awareness, and confidence.
- Improved Organizational Sustainability:
Effective management of short and long-term effects, expenditures, and performance can enhance the feasibility of operations in an organization.
- Improved Efficiency and Effectiveness:
Proper improvement in processes, procedures, asset performance can improve the efficiency and effectiveness of asset management.
The asset management system has become an important part of any business regardless of the industry.
Understanding the life-cycle of an Asset is very important. It is useful from the procuring stage to the end-stage that is the disposal stage. Where maintenance & repairing can increase the life & efficiency of an asset.
Therefore, the asset management system helps you a lot with tracking and monitoring your business assets. Asset Infinity is an asset management and tracking system provider if you want you can also get a 14-days free trial.