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Inventory Asset Management Basics

by gbaf
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Asset management is a strategic planning process that enables you to maximize your company’s assets. It is essential for all businesses, whether small, mid-size or large. Assets in an organization are those assets that your company needs and can easily or temporarily replace. Some common categories of assets owned by companies are fixed assets, inventory, goodwill, accounts-receivable, property, plant, and equipment. There are many different approaches and strategies used to manage these assets.

Asset management includes three important stages: prevention, maintenance, and enhancement. The first stage of asset management is preventive maintenance. This is the identification and evaluation of risks and vulnerabilities, as well as the creation of a security plan to mitigate these risks. It includes all steps necessary to decrease the chances of theft, damage, destruction, or deterioration of the security and other assets.

Asset preventive maintenance begins with the assessment of the physical condition of assets. This includes asset monitoring and evaluation, inventory, cleaning and deodorizing, repairs, replacements, etc. During this phase, it is important to identify threats and vulnerabilities as well as to establish guidelines for maintaining the condition of the assets. It is also important to develop or acquire an asset tracking system and implement it according to asset management procedures.

The next stage of asset management is asset maintenance. This involves regular evaluations of the security and cleanliness of the assets. For assets such as company equipment, computers, printers, telecommunications systems, office furniture, office supplies, etc., it is important to regularly check if these are properly maintained, in order to ensure optimum productivity, output, functionality, and availability. A company equipment maintenance contract is usually best for maintaining valuable company equipment, as well as tools and equipment for repair.

Contingency plans are essential for managing risks associated with natural disasters and events that have the potential to affect a business’s infrastructure. While disasters and events are unpredictable, it is important to prepare for them in advance by developing a business continuity policy, which details how the company will respond to such incidents. A contingency plan should also include the development of emergency procedures for managing key personnel and resources, as well as the identification of the locations of key telecommunication and computer networks. Other important things to consider in preparation of a disaster situation include establishing a business continuity plan, developing a business safety program, developing a business continuity plan for a disaster and emergency, developing an emergency evacuation plan, and preparing a business disaster plan. In addition, a good contingency plan should also include emergency financial plan, as well as insurance registration and liability documentation.

Proper organization is important to keep track of the assets and the activities of a business. One can categorize asset management procedures as four main categories, such as preventive, information exchange, control, and recovery. Preventive procedures aim at limiting the scope of any damage or destruction, whereas information exchange seeks to make sure that systems and information function optimally. Control is aimed at improving efficiency and reducing costs; and recovery aims at restoring supplies, equipment, inventory, and machinery that were lost during an incident. Proper organizational structures should be developed to effectively manage these four main areas.

Fixed assets are those assets that cannot be replaced. An example of a fixed asset is a plant, building, equipment, vehicle, or inventory. Fixed asset management seeks to reduce costs related to replacement, as well as extending the useful life of fixed assets. The life cycle of a fixed asset refers to the time it takes for an asset to return to its original state or perform its intended function after purchase. The best way to improve the life cycle of a fixed asset is through correct inventory management, efficient asset management, cost reduction, scheduling, and cost allocation.

A good inventory management system must provide for accurate inventory asset management, which refers to the collection, processing, preparation, maintenance, and reporting of data related to inventory. This requires the coordination of human and physical resources. An asset lifecycle is affected by several factors such as the type of inventory, its location, the number of stock on hand, its accessibility, the level of maintenance required, and its value. The lifecycle of a physical asset usually spans two years, while a fixed asset management process may extend up to 20 years. A successful inventory asset management process focuses on the identification, measurement, prioritization, identification, monitoring, management, distribution, and waste management of inventory.

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