Asset Management: Keeping Track of Business Assets to Save Money
A few months back, major media outlets ran a story on the U.S. Government and the loss of millions of dollars of ammunition in Afghanistan. Before your mind goes to all things political on this topic, it is interesting to note that the story here is actually about asset management—something all organizations, whether they are in the business of protecting a country or powering a region, should be intimately familiar with.
The story goes like this: Since 2004, the U.S. Government has supplied Afghan Security Forces with all manner of equipment, from uniforms to transport aircraft. But a new inspector general report finds that someone “might have lost track of more than 43 percent of the 474,823 small arms” sent to the fledgling security force overseas. How? A lack of inventory system integration and bad record keeping.
It seems the U.S. uses two separate systems to track weapons transfers between the states and Afghanistan. The two systems are not well-integrated and up until this point, a centralized inventory had not been conducted. According to the Washington Post, “At the Afghan army’s Central Supply Depot, the inspector general found that 551 of 4,388 weapons listed in an inventory record, or “property book,” did not match a physical count of the inventory.” How could this happen? “The inventory provided only the total count for certain weapon types and not individual serial numbers,” said a spokesperson. A “hand-written list” was all that existed for another stockpile.
The missing and miscounted weapons total $626 million dollars in assets that will, if not found, become a $626 million dollar loss for the U.S. Government. All this because an organization did not have its inventory process in order.
The lesson—and question—in all of this is: What are you not keeping up with that could cost your company serious dollars down the road?
Closing the Inventory Gap
There are a few things a business can do to avoid a costly situation like this:
- Conduct regular inventories of all assets in all locations. Inventory is not a one-and-done proposition. Routinely scheduling opportunities to scan and record identifying numbers on all assets, and record the location and stocking levels of all critical items is incredibly valuable for a variety of reasons, including basic organization, knowing the location and available volume of vital assets, and having the opportunity to take broken or missing items off the books.
- Use a single, integrated system to keep track of inventory information. As we have learned in the story above, using more than one system can be a recipe for disaster unless the systems are well-integrated. Choose a robust inventory management platform that meets your business needs, and stick with it. This will make retrieval of information easier, and ensure that items are not lost in the gap between systems.
- Just do it. Put away the excel sheets, ditch the pencil and paper, and if an inventory has not been conducted in a while, start the process. It is definitely better to do the work than regret the consequences.