One of the elements of inventory management is fixed assets. Fixed assets are items, heavy equipment, materials, vehicles, and other property that a company owns. These assets are not intended to be sold to customers and are difficult to trade in for cash. Basically, they are meant to facilitate a company’s operations.
Examples of fixed assets
There are numerous examples of fixed assets, including facilities, large structures, cranes and other equipment, warehouse shelves, and other tangible objects that are used to build and store products for consumers. As you can see, all of these assets are intended for specific purposes and are not really meant for most consumers and are primarily intended for office, or industrial use. Of course, not every asset that a company possesses, even if it is difficult to sell, can be considered a fixed asset. Patents and intellectual property are not considered fixed assets, because they are intangible.
Why track fixed assets?
Without fixed assets, a company would not have any products to sell, or any place to keep them. After all, manufacturing equipment is just as important as finished products, because equipment is a necessary part of making those finished products, and warehouses are what keep goods safely stored away and organized for people to find them.
Why is it important to keep track of fixed assets? Just like regular products, fixed assets need to be tracked in order to make the best use of them and monitor their condition over time. Despite their name, these fixed assets are not permanent fixtures. They are subject to decay, obsolescence, and other factors that require them to be repaired and replaced from time to time. So it is extremely important to know how old equipment is and how often it is used. Oftentimes, it is much less expensive to repair an item than to replace it. This is a big reason why it is so important to keep track of your fixed assets with fixed asset tracking software.
Just as it is essential to change a vehicle’s oil every so often and perform other maintenance on it to prevent problems down the line, it is also essential to perform routine maintenance on cranes, forklifts, and other pieces of heavy machinery and hardware to keep them working at optimum levels. Allowing something to wear out quickly and eventually malfunction, when it could have been preserved for a longer amount of time, is bad for business. It causes delays and increases the cost of doing business to an absurd degree. It is a much smarter idea to avoid problems before they begin, by simply taking a few precautionary steps.
Fixed asset tracking software
This is where fixed asset tracking software comes in handy. As its name suggests, fixed asset tracking software allows you to track your fixed assets wherever they might be and whatever condition they might be in, which makes fixed asset management go more smoothly. Since fixed assets are not likely to switch locations very often, it is more important that you track their condition and how long they are expected to continue to be operational. Then you can stretch out their life and usefulness by making the effort to repair them as needed and keep them in good condition. Knowledge is power, and the ability to prevent major delays, by keeping all of your fixed assets firing on all cylinders, is a key advantage you can’t afford to miss.
The product lifecycle
Another factor that must be taken into account regarding fixed assets management is the product lifecycle. It is not just the fact that equipment wears out over time and must be maintained, but from time to time, new innovations will take place that may make the old way of doing business obsolete. And with each cycle, asset depreciation goes steeper and steeper. For example, dedicated barcode scanners might give way to smartphones or tablets, which themselves can give way to something even better in the future.
Here are the four phases of the product lifecycle:
Introduction Phase: The product is just emerging onto the market and early adopters begin to take notice of it, though it has not yet hit its stride and has not yet caught on with mainstream consumers.
Growth Phase: At this point, the product experiences a huge increase in sales as it becomes well known and its popularity soars to new heights. Competition increases and market penetration grows swiftly.
Maturity Phase: Even more competitors enter the space until the point that the market becomes saturated. At the Maturity phase, sales finally begin to drop for the first time after reaching their apex.
Decline Phase: The product may still be popular for a while, but it is on the decline. Consumers are pretty much all satisfied by the product and may even be turning away from it to pursue the next big thing.
As fixed assets come to the end of their lifecycle, your company should make a strategic decision about replacing them. You can either purchase the same model as before or, if technology has improved and become more affordable, you can invest in something even more efficient. This is an important decision. It is not always obvious when a product is entering and leaving each phase of its lifecycle, so you need to choose carefully when deciding when is the appropriate to jump onto a new bandwagon.
When you use fixed asset tracking software, you have access to detailed information about both your current and fixed assets, which helps you know when to plan ahead for these major decisions. For example, if you have had the same piece of equipment for many years and you calculate that it would cost more to repair it than it would be to scrap it in favor of something new, you will know what to do.
Learn more about how fixed asset tracking software can help your company by seeing a custom demo of Fishbowl.