Rethink Using Your ERP for Asset Management — Part 1 of 2
Many times, when I ask someone what they use for enterprise asset management, their answer is simple: we use our ERP. For most this doesn’t come as a surprise. An ERP is of course, the integrated management of core business processes within an organization – so why wouldn’t this be used for enterprise asset management?
Well, if asset management isn’t your day-to-day job then you’re probably convinced that Fred down the hall is actually using that ERP successfully to track the entire lifecycle of your assets. But if you’re Fred down the hall, then this is probably quite a different story.
The thing is, while ERP’s are great for tracking the financial information when it comes to asset management, they are typically lacking when it comes to the actual lifecycle management piece. This is highlighted perfectly in the following quote from a white paper by Hewlett-Packard.
“An ERP’s greatest strength (in) its ability to standardize how different types of corporate assets are bought, distributed and accounted for becomes a weakness when it comes to the complex, dynamic and demanding world of [asset management]. The unfortunate result is that the bottom line can be compromised due to overpayment for and under-utilization, mismanagement and incomplete accounting of assets.”
To explore this further, let’s walk through what you should look for in your ERP to ensure you have the right tools for asset management.
As mentioned earlier, ERP’s tend to focus mostly on financials and this is what you’ll find starting at acquisition. While recording purchasing information is critical and will be something you find in an Enterprise Asset Management (EAM) system, review how easy it is to enter the location, owner, condition, usage and barcode numbers (asset ID). Furthermore, can the system generate your barcodes for you with an alpha-prefix so that you can easily print and affix to assets?
If not assigned upon acquisition, then a user needs a way to easily assign an asset to a custodian or location on a permanent or temporary basis. For most ERP’s this will come down to entering the custodian or location into a data field.
An effective asset management software system should have a way to not only easily find the assets a user is looking for (Adhoc reporting) but once found, identify where/who they would like to assign them to and decide whether it will be on a permanent or temporary basis. For temporary transfers, can you establish a due back date which will automatically alert the custodian and administrator that the item is due back for return?
The requirements for day-to-day management of assets will vary greatly from organization to organization. For this section I’d like to focus on physical inventory audits as this should be a business process for any organization.
More often than not, when comes to audits, ERP users are forced to resort back to printing inventory reports to legal length paper, walk around checking items off and noting corrections, and then entering changes into their system. For some “lucky” users, a barcode scanner can be attached to a laptop.
To maximize time efficiency, modern web-based systems should be paired with a mobile app. A complete asset management system will have a mobile app with offline sync so that users can scan assets to audit them even when without data connectivity.
There are other areas to look into when comparing ERP and EAM. We will cover those in our next blog.