Wednesday, January 23, 2013

Sound Asset Management Lacking in Many Firms

Many firms waste resources by not having adequate asset management processes.

When I took up a senior management position with one organisation, my supervisor told me asset management for my department's assets was part of my role. I was comfortable with that, but when I asked him where I could find the asset register that recorded my department's assets, he said there was none. Nobody before me had ever gotten around to tracking assets.

Expensive software products that had been bought by my predecessors were now unable to be used because nobody knew the passwords. There were obsolete and broken down
printers, shredders, computers and other once useful pieces of equipment that were making the place look untidy. Not only was there no asset register, nobody had managed the disposal of equipment for years. There was a trail of clutter about the building.

While very large firms have Facilities Sections to manage buildings and associated maintenance of major capital equipment, quite often, the smaller assets go un-managed. To some extent this is a risk management decision; the cost of managing some assets is simply not worth the value of the asset. But there is still room for sound asset management of many assets. Here are some examples:

Key Management

It can be a nightmare trying to find specific keys for cupboards, lockers and other lockable items if there is no key register. If there are security issues, which there are in most firms, a key management process will include a key safe in which master keys and unused keys are stored, safely locked away. Personal key issues need to be recorded and keys returned when staff move from one office to another or leave the workplace. Procedures need to be in place for reporting lost or stolen keys.

One person needs to be given responsibility for the key safe, but there needs to be an alternative to opening the key safe if the key custodian reports sick for work or is on holidays etc.

Software Management

It's essential for someone to record details of software installation locations ie, to which computers it has been installed, where and when. Details of passwords and activation codes must also be recorded in a safe and secure way. Details of the licencing conditions also need to be recorded so that copyright conditions are not breached.

Valuable and Attractive Items

While it is wise to set a minumum cost below which asset management will not be implemented, any items of a valuable and attractive nature must be managed. Say for example the minumum asset management cut-off value was $1,000 and a department purchased a digital camera for $900. As a valuable and attractive item (one potentially likely to be stolen), it should be tracked in the VAI Register. Depending on how many people need to use it, some issuing and receipting process should be used also.

Without a solid system, people come and go, memories fade and when an employee leaves, the digital camera could "walk" too.

General Assets

Although good management of stationery is necessary in any organisation, it's not usually something worth tracking, although I have worked at places where you couldn't be issued with a new pen until you handed the old, expired item into some clerk. Similarly, I have worked at places where the volume of stationery use for
pads, pens, pencils, rulers, erasers etc increases around the time school children return to school after their mid-year holidays.

Included in a sound asset management system should be warranty details of anything that has a warranty. The associated warranty documents should be filed where they can be readily accessed if a warranty claim is possible should the equipment fail. If the equipment has an MTBF (Mean time before failure), that can also be recorded and assist with replacement scheduling which allows the equipment to be replaced before it breaks down and perhaps causes loss or damage in the process.

Your account department (if you have one) needs to track asset depreciation, writing off the amortised value of the assets annually where taxation laws permit.

Conclusion

Sloppy asset management can lead to substantial losses through theft, multiple purchasing of equipment that can't be found, substitution of worn-out equipment with new or better equipment, failure to obtain warranty replacement, poor security, and general inefficiency like not being able to access a computer because nobody knows the password.

No matter how big or small an organisation, there is room for some degree of asset management.

Comment and let readers know how efficient is your firm's asset management system? What are it's key points?

Robin

2 comments:

  1. My friend Peter sent this to me via email: Enjoyed your post about asset management and the need to have a register, key register etc etc. However, that's just the start. Regular maintenance and repairs are also badly neglected in many businesses and organisations. I have seen businesses such as transport companies and farming enterprises which rely on trucks, tractors and other expensive machines where lack of simple daily checks (oil, water, tyres etc) has caused major breakdowns which were not only expensive to rectify, but also caused significant loss of income, driver downtime and other losses. For example, a major tractor breakdown during the short planting window on wheat farms could result in the total loss of income for the year. A truck breakdown in a small transport company could result in the loss of contracts and subsequent bankruptcy. How much time and productivity is lost in office situations when photocopiers, printers and other pieces of equipment are inoperable? (often just a simple paper jam or empty toner cartridge which nobody sees as their responsibility to rectify). If responsibility for a piece of equipment or machinery is allocated to a person or section and that person or section is trained in simple maintenance and minor repairs, many of these major losses could be avoided.

    Thanks Peter ... very well stated.

    ReplyDelete
  2. I really like this blog, It's always nice when you can not only be informed, but also get knowledge, from these type of blog, nice entry. Thanks
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