Understanding the lifecycle of company assets is crucial for effective asset management. Every asset that your company owns, from computers and software to machinery and office furniture, goes through several stages from acquisition to disposal. This article will walk you through the five primary stages of an asset's lifecycle and why understanding these stages is critical for maximizing the value of your assets.
The lifecycle of a company asset begins with acquisition. During this phase, the company identifies the need for a new asset and procures it. Procurement involves not just purchasing the asset but also making decisions about the specifications, vendor, and financing. The acquisition cost of the asset is recorded, which is essential for depreciation and tax purposes.
Once the asset is procured, it is deployed. Deployment involves assigning the asset to a specific department or employee, installing any necessary software or features, and recording the location and status of the asset. Accurate records of asset deployment help ensure accountability and facilitate efficient asset tracking.
3. Use and Maintenance
The longest phase of the asset lifecycle is the use and maintenance stage. During this phase, the asset is used to carry out company operations. Regular maintenance is performed to ensure the asset remains in good working condition. This phase also involves tracking the use and performance of the asset, as well as any repairs or upgrades it may undergo.
As an asset ages, it may need to be upgraded to continue meeting company needs. Upgrades might involve adding new features or software, expanding capacity, or improving speed or performance. Alternatively, the asset may be reallocated to a different department or user. Reallocation can occur for various reasons, such as changes in departmental needs, staff changes, or the purchase of new assets.
The final phase of the asset lifecycle is disposal. Eventually, every asset reaches a point where it is no longer useful to the company, either due to obsolescence, breakdown, or changing business needs. Disposal involves deciding how to get rid of the asset in a way that complies with laws and regulations, minimizes environmental impact, and recoups some of the asset's residual value, if possible.
Understanding these stages can help your company manage its assets more effectively. It allows for better planning and decision-making regarding asset acquisition, use, maintenance, and disposal. It also facilitates accurate record-keeping, efficient resource allocation, and comprehensive asset tracking.
Asset management tools, such as AssetPad, can greatly simplify the process of managing the lifecycle of your assets. By providing a centralized platform for tracking assets from acquisition to disposal, these tools can help your company maximize the value of your assets, improve operational efficiency, and make informed, data-driven decisions.