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Asset Management 101
Asset management is the method that a company uses to track
fixed assets. It is the process of controlling assets throughout
their lifecycle - from procurement, through daily operations,
and finally disposal. Factory equipment, desks, chairs,
computers, and property are some examples of such assets.
Broadly speaking, asset management involves tracking the
physical location of assets, managing demand for scarce
resources, and accounting tasks such as amortization. Issues
that are part of asset management include asset value and
depreciation; purchasing requests, orders, and asset receipts;
licenses, leases, maintenance, and other contracts; vendor
performance, service levels, and warranties; departmental and
user data; and physical asset attributes. One of the purposes of
going all these lengths and putting in effort to organize all
this information is to keep track of important information such
as how much the asset costs, whom it was purchased from, who is
using it, where it is physically located, which department code
the cost should be assigned to, which vendor should be called
for support, when the lease expires, when it should be retired,
what the depreciation rate is, etc. This, in turn, provides the
basis for managing and optimizing an
organization's entire asset
portfolio.
When we speak of property management as part of asset
management, it includes property selection, implementation of
policies and performance standards for that property, and
monitoring of its performance in relation to the owner's
objectives.
Generally, there are four broad stages of the asset lifecycle:
Planning and procurement: This involves planning, ordering, and
receiving the technology. Operations: This includes managing the
day-to-day operations of the assets to maximize productivity.
Financial management: It involves ensuring accurate tax,
depreciation, and other costs. Disposal: Once it is time for
disposal, you are required to remove the asset from the
enterprise in compliance with environmental regulations.
Various tools are available for asset management. However, it is
important to realize that asset management is primarily a
process, and the tools aspect is just a small aspect of it.
Since every organization is unique, with its own unique needs
and strategies, the ideal asset management process for each
organization differs.
About the author:
Chris Tolamalu is interested in asset
management.
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