This document provides an overview of best practices for conducting physical inventories of assets based on ASTM standards. It discusses the types of inventories including inventory by exception, statistical sampling, and wall-to-wall inventories. The document outlines what should be inventoried such as capital assets, accountable/controlled assets, and sensitive assets. It also discusses tools that can be used for inventory including automated identification techniques, metrics for analyzing inventory results, and ways to improve inventory processes. The overall message is that physical inventory provides an opportunity to improve property management.

1. Physical Inventory - Beyond
Scanning and Checking the Box
By Marla Williams, CPPM
President, Integrated Asset Management, Inc.
President, Federal Center Chapter

2. Today we will cover:
• Best Practices and ASTM Standards related to
physical inventories
• Types of Inventories and Frequency
• Types of Assets – Capitalized, Accountable or
Controlled and Sensitive Items

3. • Automated Identification Techniques – linear
bar codes, RFID, UID
• Trends towards Inventory by Exception and
how you can begin to transition
• Basic Metrics and Investigation of Losses
• Ideas for Improving your processes

4. What is a Best Practice?
a technique or methodology
that, through experience and
research, has reliably led to a
desired or optimum result

5. Where do I find best practices for
property?
• ASTM International, a Voluntary Consensus
Standards Development Organization
– Wide base of users
– Vote to
• Develop
• Amend
• Maintain

6. ASTM Committee E53
• NPMA and ASTM formed E53 in June, 2000.
• Develops criteria for the management and
administration of durable and movable assets,
including:
– Performance standards
– Practices
– Metrics
– Methods of effectiveness
• Currently 25 Standards have been developed

7. E2132-01(2007) Standard Practice for
Physical Inventory of Durable,
Moveable Property
• Visit the ASTM.com web site to join.
• Basic Individual Membership with on-line access
to the current standards for $75.00 per year.
• Sign up for Volume 4.12
• Participate in E53 Committee

8. Other Sources for Best Practices
• Join NPMA
• Attend your local Chapter’s Monthly Meetings
• Join the NPMA Special Interest Group (SIG)
– Property Inventory Management SIG
• Never miss the National Education Seminar

9. What is a Physical Inventory?
• Verify that your records match the actual
physical conditions
• Includes:
– Identifying property that is not currently in the
system
– Identifying assets that are no longer needed by
the organization.

10. Types of Inventories
• Inventory by Exception (Cyclical)
• Statistical Sampling
• Wall to Wall

11. Inventory by Exception
• Every time item is touched, it counts as
“inventoried”
– Receiving, Transfers, Repairs, Retirements
• Inventory Period Specified
– Every year or two years
• Items not “touched” are inventoried at
the end of the period

12. Statistical Sampling
• Based upon the laws of probability
• A small portion of the assets are inventoried and
the results are used to assess the entire inventory
– If results are favorable, you assume that the balance
of your assets are accurate.
– If results are unfavorable, a 100% inventory may be
required.
• The smaller the sample,
the higher the risk.

13. Wall to Wall Inventory
• Most common type of inventory
• Requires:
– All locations are visited
– All items are inventoried
• Most expensive type

14. What is inventoried?
• Capital Assets
• Accountable or Controlled Assets
–Sensitive Assets

15. Capital Assets
• Useful Life of Over One Year (sometimes two)
• Acquisition Cost Greater Than Threshold
– $500, $5,000, or $300,000 or higher, depending on
size of organization (see financial statement
definition)
• Definitions, Additions and Changes Reported on
Financial Statement
• Ultimate responsibility of the Chief Financial
Officer.

16. Accountable/Controlled or
Sensitive Assets
• Items that may be vulnerable to theft
• Computers or PDA’s with personal or sensitive
information
• Hazardous material
• Weapons

17. ASTM Standards
• ASTM E2608 Standard – Physical Inventory of
Durable, Moveable Property provides
Equipment Control Matrix
• ASTM E2131 Standard – Reporting Loss,
Damage or Destruction of Tangible Property
provides acceptable LDD rates

18. ASTM Equipment Control Level 1
• Continuous Control
– 0% Acceptable LDD Rate
• Highest Standard of Sensitivity
• Consequences of loss of control is a societal
safety/security impact
• Examples
– Firearms (duty or training)
– Munitions or Explosives
– Destructive Devices
18

19. ASTM Equipment Control Level 2
• Control While Mobile
– 0.5% Acceptable LDD Rate
• Moderate Standard of Sensitivity
• Consequences of loss of control is a personal
safety/security impact
• Examples might include:
– Vehicles
– Secure Communications, Radios
– Stun Guns, Tasers
19

20. ASTM Equipment Control Level 3
• Control by Event (e.g. Receive, Maintain, Transfer, Dispose)
– 1% Acceptable LDD Rate
• Minimal Standard of Sensitivity
• Consequences of loss of control is operational safety/security
impact
• Examples:
– Software (Compliance, Inadvertent Piracy, Fines, Bad Press)
– Desktop/Laptops and Equipment with Retainable Memory not
encrypted like PDA, Blackberry, Cameras, Thumb Drives?
– Portable, Easily Converted to Private-use and/or High Potential for
Theft like Tools, Satellite Phones, Televisions, VCR/DVD, Projectors,
Small Office Machines
20

21. ASTM Equipment Control Level 4
• Containment
– 3% Acceptable LDD Rate
• Consequences of loss of control is a compliance
safety/security impact
• Example:
– End of Life Control for monitors, copiers, fax, scanner,
printer and other peripherals where improper
disposal could result in hazardous materials being
released into the environment.
21

22. ASTM Equipment Control Level 5
• No Tracking
• Non-Accountable
• Consequences of loss of control is not
discernible, which is characterized by having
no visible or recognizable impact on the
organization.
• Example:
– Stapler, Desktop Calculator
22

23. Who Should Do the Inventory?
• Inventory is an audit
• Needs to be performed by individuals who
have no vested interest in the outcome.
• Use:
– third party vendor
– headquarters personnel
– teams from another location

24. What Tools Should You Use?
• Over 1,000 assets, should justify automated
inventory tools:
– Commercial Off-the-Shelf (COTS) Single Workstation
System with one HandHeld Computer <$10,000
– COTS Web-based and Multiple Workstation System
over a network with two HandHeld Computers
$20,000-$25,000
– Oracle or SQL-based system with customized screens
and interfaces to suit your specific needs $250,000+

25. Handheld Computers
• Old handhelds had proprietary operating
systems and limited memory
• New handhelds are portable computers
running Windows Mobile or CE operating
systems:
– Can read RFID, UID codes or bar codes
– Allow multiple configurations or prompts
– Run multiple applications (e.g. work orders,
preventative maintenance, etc.)

26. Automated Identification
• Linear Bar Codes
– Most common and affordable
• UID
– DOD Program for Equipment over $5,000
– 2d matrix codes and/or linear bar codes assign unique
identification numbers to serialized equipment
– Purchase Information is sent to a
National Registry
– Benefit to non-DOD. . .

27. Automated Identification
• RFID
– Tags can be passive (wait to be
scanned) or active (send constantly)
– Inventory with Handhelds
or Fixed Station Scanners
– Fixed Scanning at Loading Dock, Entrances, and Hallways makes
collection automatic but can be expensive
– Consider for server rooms or areas that contain sensitive or hazardous
materials that move
– Not a “real” security measure unless hidden inside equipment
– Cost Effective for High Volume Supply Chain Management Applications
like Wal Mart. . . Not common for asset management yet. . .

28. Trends
• To reduce costs, consider moving towards
Inventory by Exception Techniques:
– Use IT’s existing auto-discovery technology to
inventory network equipment and help desk
systems to record movement
– Use state inspection certificates or fleet
management fueling data to inventory vehicles

29. Trends
• Look at other existing systems and interfaces
that could supplement inventory data:
– Work Orders used by Facilities or Maintenance
staff
– Human Resource systems that track new hires,
department information, contact data and
terminations

30. Get creative!!
• Strategies for Laptops, PDA’s, Cellphones
– Create “Missed You” Flyer for inventory team to
leave when employee not present
– Host doughnut stations at elevator banks – got to
bring your equipment in to get a doughnut.
– Create Mail In Packages (Hand Receipts) for
Remote users

31. Basic Metrics
• Measure annual overage or loss rates by overall
number(count) and dollar value
• Also make these calculations for each
Organization or Department – share the
information, recognize leaders who care!
• Also calculate these values by category of
equipment
• Compare new information to previous
losses/gains for trend

32. Investigate
Generally, if your loss rate is in excess of 3%
(refer to ASTM Standards) or you have an
Organization with losses in excess of that rate,
further investigation is required.

33. Independent Review
• Form a temporary committee
• At least three people without responsibility for
property under review
• May individually or collectively examine property
and/or records.
• Determine the circumstances of a specific instance
involving, loss, damage, destruction or similar matters
• Results may indicate failure to observe procedures,
discrepancies, premature or excessive wear or requests
for early disposal

34. Possible Improvements
• Too many assets not tagged:
– Consider requiring assets to be tagged and identified in
your property system before contractors are paid.
– Consider centralized receiving
– Look at credit card purchases and monthly reconciliations
• IT assets missing:
– Consider putting scanners in the hands of IT Technicians
and provide asset data to their Help Desk system.
– Consider linking to auto-discovery tools
• Key to Success
– Get those assets tagged and identified when they arrive. . .

35. Now its up to you!
You can just rely on the physical inventory
to maintain accuracy and continue to get
the same results, or worse,
or
you can look at the physical inventory as an
opportunity to make improvements in the
property management process

36. Questions?
Marla Williams, CPPM
President
Integrated Asset Management, Inc.
marla@weinventoryassets.com
(800) 731-9569
Severna Park, Maryland
President, Federal Center Chapter