Asset Management represents a governing set of principles that must be embedded into all asset life cycle business practices.Enhancements in modern technology not withstanding, managing fixed assets efficiently are a sizable challenge. They affect a myriad of business-related activities, from financial planning to, to reporting, to budgetary control. Many separate, complex and labor-intensive tasks are involved with asset tracking, and the slightest error can have drastic implications.
Lockwood can help your organization to achieve the greatest return on investment in assets while simultaneously reducing cost and maximizing productivity throughout the asset life cycle, through its Best Practices Consulting service.
Asset Management summarizes a very broad set of principles and business practices. Asset Management can relate to most any aspect of conducting business operations including; process & procedure, information management, internal controls, compliance with regulations, return on investment, return on assets, maximization of value, preventative maintenance, utilization, cost of goods sold to name just a few.
The focus of of Lockwood’s consulting is asset management at the enterprise level across the entire spectrum of the asset life cycle.
Distributing rights and responsibilities, accompanied with rules and procedures for making decisions, directing and controlling business operations, all fall into the category of corporate governance. Corporate governance provides a framework for setting and achieving objectives and monitoring performance. Organizations evolve in terms of maturity and priority of needs concerning corporate governance. Better known as the “Maturity Model”, an enterprise will move through the model in reaction to growth, technological evolution, pressure to comply with regulation and as money and resources allow. Reacting to these demands more often than not happens at inopportune moments and is not metered consistently or pervasively. All in all producing incompatible and unreliable results that appear to be insurmountable.
The acquisition, utilization and maintenance of operational assets are a critical component of corporate governance because opportunity for waste, redundancy, error and fraud can cripple an organization.
Implementing an enterprise-wide asset management program will ease the transition through the Maturity Model. And because implementing an asset management program is a proactive action (as opposed to a reactive one) the prospects for achieving sustainable success with the least amount of disruption are much greater. As the organization becomes more mature in terms of internal controls, repeatable processes, monitoring, information sharing and accuracy, the more efficient it will become.
Asset management is nothing more than a decision to adjust business operations in support of these principles. Let’s look at designing, implementing and sustaining an asset management program from a view point of implementing “Best Practices” within an end-to-end asset tracking and management program.
The most successful companies have weathered the ordeal of keeping abreast of changes in inventories, important milestones like disposals and transfers, depreciation calculations and changes to tax laws and regulations by upgrading their fixed asset management process from a largely manual operation to a more sophisticated, automated system of checks, balances and real-time reporting. Implementing a reliable and customizable fixed-asset software solution can help automate these tasks to save time and money, without sacrificing accuracy and control. A fully integrated asset management system helps manage the complexities of the fixed-asset life cycle, from acquisition to disposal. It also offers accounting executive’s accurate asset information throughout the life cycle like current depreciation values and projected depreciation that is critical for timely decision-making as well as comprehensive internal and external reporting.
Planning for and implementing an enterprise-wide asset management program should be outsourced to experienced external sources who have advanced knowledge of “best practices”, who can navigate through roadblocks and pitfalls and who have the experience necessary to guide the enterprise through the range of trials and tribulations of implementation. Paramount to the program is access to accurate, timely information, which can be easily verified on an ongoing basis.
At one end of the spectrum lie the internal operational needs of the organization while at the other end is the profound need to be competitive and profitable. All too often these forces are at odds with each other, strengthening one often weakens the other and vice versus.
To design and implement an organization-wide asset management program three elements must be addressed:
a review of existing life cycle and associated practices
a formal implementation plan that among many things identifies; internal controls, control points, stakeholders, gatekeepers, technology and automation opportunities, data gathering, management and reporting conventions
means for measuring and sustaining results
A complete review of the critical business processes that have the greatest impact on the asset life cycle is essential. The simplest method to determine and place priority on life cycle procedures is divide the cycle into primary categories that encompass multiple actions such as; procurement, utilization and reporting. Each of these stages can be declared to form a hierarchy of related activities. For example procurement could include; budgeting, purchase order administration, shipping & receiving and accounts payable t and so forth. The goal is to establish relationships between the often-disparate procedures that together enable the organization to accomplish major acts of business. Due diligence enables review of these practices as a whole and frequently uncovers process potholes in the form of delay, error and most importantly incompatible information conventions.
Stakeholders in this flow are management personnel who have oversight responsibility corporate governance within a given business practice (or set of practices) that form a significant aspect of the life cycle. Gatekeepers are individuals who perform the actual tasks (practices) that form the life cycle. Therefore Stakeholders set policy, internal controls and conventions and have overall responsibility for implementation and governance. Gatekeepers, who report into the Stakeholders span of control and authority, have the ultimate job of performing those actual tasks while adhering to the rules (controls and conventions) that were set forth by the Stakeholders. Gatekeepers perform these activities and apply the rules at points within the asset life cycle commonly referred to as “control points”. Control points are considered critical stages within the cycle where it is both practical as well as verifiable to assert and monitor internal controls. Examples include; purchase order process, shipping and receiving and financial reporting, to name a few.