While the financial value of physical assets can be divided into three categories: (1) the purchase price, (2) the current replacement value, and (3) the salvage or residual value, the true worth of any asset lies in its ability to generate revenue for your organization. Therefore, having a good understanding of your assets, their attributes, health status, and location is vital for the development of an effective physical asset verification strategy that positively contributes to your organization’s growth and profitability.
Physical Asset Verification Objectives
In order to develop and implement a fit-for-purpose physical asset verification strategy, organizations need to be clear on the objectives of Physical Asset Verification. These objectives include:
- Better compliance with statutory requirements and internal organizational processes.
- Internal Organizational Compliance.
- Monitoring of asset movement between locations.
- Confirm asset ownership.
- Real-time fixed asset tracking to prevent theft, pilferage, equipment failure, and downtime.
- Minimize discrepancy between physical assets and financial records. Asset lifecycle costing and analysis.
- Latest and accurate record of physical assets in a consistent manner.
- Verify and Confirm the existence of physical Assets, their location, and condition.
- Eliminate ghost assets to cut down on insurance and maintenance costs.
- Asset life extension and improved visibility on asset availability, condition, maintenance, replacement, and asset performance management.
- Ensure that the files used in maintaining records are current, complete, consistent, and available when needed.
- Expedited asset verification through tagging with Bar Code, QR Code, RIFD, or tags.
- Access to standard asset checklists to support consistency and repeatability.
By implementing a standardized cyclic process, asset owners can be sure that asset information is up to date and decision-making and asset maintenance strategy can be based on factual information to maximize benefit.
Types of Assets in Need of Verification
Organizations own hundreds of assets that may be distributed across multiple geographic locations. While capital fixed assets are often located at the same site, some movable assets may be reassigned to other locations based on operational requirements. It is therefore vital for the organization to verify all of its assets. However, based on the scope of the business, organizational strategy, and maintenance strategy approach, organizations need to decide the hierarchy level at which information is to be captured to ensure that a balance is maintained between effort and value of data captured. Some of the common asset types are given below:
- Infrastructure assets
- Inventory assets – spares, replacement parts
- Office Equipment
- Machinery and equipment
- Information technology (IT) systems (computers, software)
- Vehicles – trucks, cars, and fleet management
While all of these asset fall under the scope of physical asset verification, the solutions available for capturing asset data and monitoring asset movements are different. Some examples include specialized fleet management software for vehicles and inventory management software for spares and replacement parts.
Techniques for Physical Asset Verification
Physical Asset Verification can be done in a number of ways depending on organizational objectives, the nature of the assets, and their geographical distribution. It is, therefore, essential that the objectives of the physical asset verification project are clearly outlined from the start along with broader organizational buy-in. Two of the commonly used methods are briefly discussed below.
- Book to Floor
The book-to-floor verification method involves collaboration between the asset verification team and the departmental point of contact to identify specific assets against the available records. In order to be able to follow this method, the organization needs to have a well-defined and structured asset register in place with detailed information available at the line-item level. At the start of the project, the existing asset register is cleansed by the asset verification team to ensure that asset nomenclature across the asset classes is standardized. Once ready, field verification engineers and the departmental point of contact identify, verify and tag the assets. Specific asset attributes based on organizational requirements are captured/updated and digitized. These normally include manufacturer, model, asset health, specifications, installation date, maintenance data, asset code, type, criticality, Inspection date, serial number, geographic location, etc. These assets are then mapped into the existing asset register to inform the asset maintenance strategy and any discrepancies are documented and reported.
- Floor to Book
This method primarily assumes that the existing asset register is not up to date and authenticity of the available information within the Computerised Maintenance Management System (EAM)/ Enterprise Asset Management (EAM) system cannot be trusted and the register may not have asset information available at the line-item level. This method is most suited for organizations that have either never carried out an asset verification project in the past or the assets are being verified after an extended period. This method also allows organizations to redefine the asset attributes within their asset register so that additional information can also be captured. In this method, the verification teams conduct an initial inspection of the assets in the defined asset categories. Once done, assets for each category are verified and tagged and asset attributes such as manufacturer, model, maintenance data, specifications, installation date, asset code, type, asset health, criticality, Inspection date, serial number, and geographic location are captured. Financial information of the asset such as purchase values, depreciated value, and/or salvage value can also be digitized and allocated to the asset to support mapping.
For both the methods discussed above, there are some key factors that must always be considered from a process perspective. These factors are:
- Asset tracking, which is the process of recording and monitoring the location of an asset from its acquisition through its disposition. This is also known as “asset location or tracking.”
- Asset identification, which is the process of determining what something is by examining it and then assigning a unique identifier to it. This can be used to identify assets that have been modified or repaired. It’s important to note that some assets are already “identified” (such as cars), so additional methods must be used if you’re trying to verify those assets’ identities.
- Asset hierarchy, which refers to the way your organization groups similar or related items together into categories based on their purpose and function. Assets that belong in different hierarchies may not have much in common with each other except for their classification within an organizational structure. Therefore, having a well-defined strategy and adhering to an internationally recognized standard such as RDS-PP, BS-8544, ISO 14224, ISO 8000 etc. is vital to ensure consistency and alignment throughout the organization.
Clarifying the scope, organizational alignment, and skilled resources armed with the latest asset verification tools can improve asset visibility and traceability and significantly reduce execution time. At Optimal, through our Asset Reliability as a Service (ARaaS) suite of solutions, our team of experts and field engineers works with our clients to first identify the key objectives and requirements and then design a targeted solution that is aligned with organizational goals. Our specialized data capture solutions have advanced field functionalities such as geospatial mapping, EAM / CMMS integration, and offline operation that not only improve transparency and reduce execution time but also increase the value proposition for our clients. With extensive experience in a diverse range of sectors including mining, solar, Oil & Gas, Nuclear, and Hospitality, our team has the right solution for you. If you have any questions about what systems we have available and how we can help your organization, get in touch today for more information – firstname.lastname@example.org.