Fixed assets are items, heavy equipment, materials, vehicles, and other property that a company owns, but 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 and move products from one location to another and one condition to another rather than being the end products themselves.
EXAMPLES OF FIXED ASSETS
There are numerous examples of fixed assets that could be considered as such. These include 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 so are primarily intended for 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 they are a necessary part of making those finished products in the first place. 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 such things as 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. 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.
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. 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 LIFE CYCLE
Another factor that must be taken into account is the product life cycle. 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. 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 life cycle:
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 life cycle, 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 it life cycle, 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 signing up for a free trial of Fishbowl right now.
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Fixed assets include big pieces of equipment you use in your operations and that you expect to stay in your possession for a long time. It’s important to track fixed assets to keep them in good working condition. Fixed asset tracking software facilitates this process across each phase of the product lifecycle.