There are times when a company wishes to discard some assets and equipment used in its business. There must be some factors, which prompted the company to dispose of these machines. Some of the factors for discarding the assets – assets that are old and they cannot produce the minimum required quantity, assets that are no longer useful for the business, assets that are totally malfunctioned and they cannot be repaired anymore, and assets that have their net asset value (NAV) drop to nearly zero.
Asset retirement and the required remedies
Consider that your company has been using a freight truck in the logistics department for more than three decades. The business has been using the truck for transporting the goods. In the course of time, the vehicle has lost its sheen and became less productive during the past few years. You have also spent a huge amount of cash on repairing and maintenance service of the truck during the past thirty years. Eventually, you have had enough of this obsolete vehicle and the only option you have in hands is to get rid of it.
Track the breakdown and maintenance activities of your assets
Equipment failure occurs when a machine cannot produce the required capacity and we know it cannot repair. If your truck is still usable but you are aware that the vehicle will stop working at a certain time, this time during which your vehicle is expected to break down is Mean Time To Failure (MTTF).
The average time between one breakdown to the next is referred to as Mean Time Between Failure (MTBF).
Assume that the vehicle has been running for 100 hours, it has broken down 5 times, and the total downtime is 10 hours.
Here, MTBF = (Total running time) / (number of breakdowns) = 100/5 = 20
The average amount of time taken in repairing the truck and make it functional again is Mean Time To Repair (MTTR).
MTTR = (Total downtime) / (number of breakdowns) = 10/5 = 2
Asset Infinity has a complaint and ticket option for maintenance service. You can create a group of users who work as a helpdesk for a different type of tickets. For example, the user group “Machine” will have users responsible for breakdowns of machines. Users or admins can raise tickets based on location and user group. You can also request inventory items while raising a ticket.
You can view the history of maintenance activities carried out on equipment. The report highlights the fields like Asset, Location, User Group, Assignee, Priority, Status, Reported Date Range and Closure Date Range, and a free-text search. With all the record of maintenance services in your hands, you can obtain the character of specific equipment and their durability.
Review the depreciation cost using asset management software
The depreciation cost is the value of an asset that has been reducing from time to time until the value becomes zero. A company is required to record the revenue and expenses related to the specific assets. This recorded data will help the company to calculate its depreciation cost. The data may include the original cost of the asset, the value of the asset’s productivity period, maintenance cost, and the value of the asset after it is useless.
With asset management software, you can easily audit the history of the specific asset by tracking the activities performed by the assets. Asset Infinity is a dynamic application that allows you to carry out various activities related to the assets of your company. With this asset tracking software, you can schedule a preventive maintenance program. From the record of maintenance activities conducted over a period, the cloud-based app will indicate the maintenance cost of the truck. With this method, you can determine the whole transaction of revenue generated by the assets.
Sell the old asset to scrap vendor, purchase a new one
When a retired asset is left untouched in your business compound, its whole body would decay and nothing would remain. You need to remove the unused asset and replace it with the new one. You can sell the old vehicle to the asset scrap dealer. The scrapping of the vehicle is important in a business. This process is to ensure that the particular old vehicle has no longer existed. Finally, you can deregister the vehicle form the government transport department of your region.
Now, you can order a brand new freight truck to help improve your business. Make sure you record all the details of the vehicle in Asset Infinity. Simplify your business with this comprehensive asset management system.
Asset Infinity is a leading b2b cloud-based enterprise asset tracking software & asset management app, serving top global enterprises in various industries.