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Fixed Asset Management – RFID Tags

November 11, 2009

 

We recently re-visited a July, 2009 article from American Chronicle (http://www.americanchronicle.com/articles/view/108068 ) and felt that it touched on some great points, but also raised the need for emphasis on additional pieces of the Fixed Asset Management (FAM) process. 

The author begins with a spot on assessment, stating that “Regardless of the effectiveness of any asset management software, they all become inefficient and unproductive without an efficient means for data collection.” The article then further explains the benefits and applications of for the most part, only Radio Frequency Identification (RFID) tags. RFIDs are a very important piece of ongoing FAM, especially for our clients that have a large amount of moveable (Fleet or Tooling) equipment. That being said, RFIDs are not always the most effective or efficient method of tracking assets, and depending on our client’s industry they may not be practical at all.  When we are working with a company that has a higher percentage of large or non-portable manufacturing equipment, we will see more of a benefit to using scannable barcode technologies. The key is to make sure that you are using the technology that is most applicable and cost effective for your client. Another important consideration is that both technologies can be used within the same environment, one complimenting the other allowing a company to use the most efficient and cost effective tag for each individual asset. One solution with which we have experience is first performing a through inventory of the fixed assets to include barcoding/tagging of every asset and then reconciling the inventory to the books of the company to ensure they are accurate. Given the cost of RFID tags, the inventory is then used to determine which assets will be assigned RFID tags and the type of RFID tag (either active or passive) to be used on an asset by asset basis.

While the type of tag is obviously an important decision for your client, the underlying necessity, regardless of the choice, is an accurate inventory of all Fixed Assets.  Even though Sarbanes-Oxely (SOX) legislation has mandated that publicly traded companies accurately account for their exact amount of owned assets, privately held companies were unaffected.  This provides a great chance for our privately owned clients to still take advantage of the opportunity on a couple of different levels.  First and foremost it is imperative for a company to have an accurate “snapshot” of their fixed assets so that the baseline can be set for the ongoing and future FAM process (regardless of technology or software choice).  Once all assets are identified, tagged (Barcode or RFID) and reconciled, disposals of old assets, acquisitions of new assets and the recording of all performed maintenance can then be streamlined and performed in the most accurate and efficient manner possible.  Secondly, most of our clients are able to recover the full cost of the inventory project through the personal property tax savings realized by the identification and disposal of nonexistent assets on their fixed asset ledger. 

Keeping track of your assets is obviously one of the most important steps to keeping your company competitive and while there are many choices for how to best go about the ongoing FAM process, it is impossible to achieve any benefit or accuracy without first having a full physical asset inventory performed.

 

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