Fixed Asset Software Eliminates Costly Mistakes in Asset Tracking
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Enterprise and Strategic Asset Management is a business process, that when measured correctly, recovers significant dollar savings throughout the enterprise. Like any business process, to be effective requires selecting key performance indicators (KPIs) that can be measured and accurately reported. Measured Asset Management processes over a four year period show where companies succeed, and pointing out where they fail.
There are three costly mistakes that are commonly made by many companies which have led to failed attempts at starting a process, or failure in realizing savings of a good process.
Mistake 1: Failure to Centralize Asset Management.
Lack of centralization is the single most costly mistake a business can make. Maintaining separate databases has implicit costs. Aside from the labor costs of keeping this database updated, we have found numerous companies have duplicated the asset management process throughout the company. This duplication is more expensive if the company is spread out across multiple locations in cities. Every business process has both a cost-in-labor and a cost-in-time. Every inventory only represents those items within the departmental control. Having this process duplicated, multiplies this cost each time a process is repeated. Often these labor hours go unmeasured or rolled into other labor costs which hide the true dollar amount.
Failure to centralize the asset management process causes the business to expend capital resources frivolously. When equipment is leased, this lack of centralization leads to added costs when leased items are lost or improperly tracked.
Mistake 2: Failure to put Asset Management in a Workflow.
The second costly mistake a business can make is to allow the asset management database to become stale. The most accurate databases are those that are updated frequently. If a database reflects the current status of company equipment, it is vital that this database be updated when this equipment is moved. The only way to do this is to enable asset management as part of the normal facilities or IT management workflow. The most effective asset delivery process is illustrated by UPS or Fedex as they deliver packages. By using a barcode scanner and scanning the barcode label of the package, it is immediately synched back to the server, which allows the user to have accurate information on the location of the package. As equipment is being moved or delivered, it needs to be tracked. The simplest approach is to scan the barcode on the equipment, and scan the current location. Most RFID implementations do this automatically, as they read the RFID tag and note the current location. E-ISG’s software has an audit tool used when equipment is relocated. The ideal asset management database is highly transactional, and is updated frequently. The more transactional the database, the more accurate it is, and the less costly to maintain.
Failure to manage assets in a workflow means that your database becomes stale and out of date. This will ultimately require an audit of in all items in your inventory, not just those that are out-of-date. Obviously, the larger the required audit, the longer and more labor intensive this audit becomes.
Mistake 3: Failure to Make Asset Management a Key Business Process.
The third most costly mistake is the failure to treat Asset Management as a key business process. Key business processes require planning and coordination, which also require accountability. This mistake is so costly because a business will purchase an asset management solution to centralize the database, incorporate it into IT management, but will not stress the utilization of the process. They have purchased the tool, but provided no training and have not incorporated into the corporate culture. Without training and proper analysis of the problem that an Asset Management solution is supposed to solve, often expensive tools are later abandoned as tools that are hard to use will not be used.
Each point in the process creates savings for the organization. In our case study, the cost saving was significant due to reduction of labor costs, the elimination of inventory activity due to the transactional process, and the creation of donation tax write-offs from retired assets. In adopting the lease tracking process, the elimination of lost items on a lease schedule was a significant cost saving (far greater than the fee paid to E-ISG). By building in ROI immediately into the process, it is easy to save 30% of the asset budget per year, and have that savings directed towards strengthening the asset process. It is essential, in difficult economic times to make every expense worth the investment. In this case, a start up cost of a centralized asset management system and proper adoption of said system can yield immediate savings. It is worth the effort.
Please feel free to leave your comments here or join us on Facebook, Twitter or LinkedIn to discuss your lessons learned from inventory mistakes. Also, take a look at our website to learn more about Asset Manager Workbench and Mobile Inventory solutions from E-ISG and Psion Teklogix.