Asset Management Company

A Leading Multi-Location Food Processor Institutes a Three-Year Cycle Inventory of Their Fixed Assets and Maintains Their Competitive Advantage

A leading multi-location food processing company has an internal accounting policy mandating a fixed asset inventory and reconciliation of their fixed asset ledger every three years. The scope for the most recent development included approximately 17,000 assets at nine facilities with a capitalized cost of $400,100,000. Management deemed that any independent service provider had to be SAS 70 Type II Certified to ensure financial integrity for future reporting.

The Challenge

The food processor had previously attempted this project internally. Prior minimization of internal financial staff jeopardized the timely adherence to this corporate mandate.

AMR Inventory and Reconciliation Service

AMR provided a comprehensive solution that has proven to satisfy this customer's requirements. This customer develops a yearly timetable and AMR works with the specified facilities to achieve a timely resolution. This solution follows AMR's proven delivery model focused on accurate, verifiable results delivered in a professionally executed manner.

Planning

AMR dedicates significant resources during the planning phase of all projects to ensure that all client objectives are achieved. This client prefers tight timetables of no more than two weeks per facility. AMR achieved project completion (planning, inventory and reconciliation) of one week for 75% of the facilities during the three-year cycle.

Physical Inventory

The circumstances of food processing preclude affixing barcoded asset tags to equipment during the physical inventory. AMR's proven process and technology allow adherence to this requirement with no disruption to the workflow or schedule.

The AMR Model Financial Reconciliation

Upon completion of the inventory, AMR began the financial reconciliation phase of the project. Our methodology includes proven methods that provide superior results in any inventory engagement:

  • Determine project specifics
  • Review available data
  • Frequent communication
  • Methodical inventory tactics
  • Key demographic information collected for each asset
  • Technological solutions
  • Stringent quality control process
  • Disciplined reconciliation procedures
  • Data deliverable in hard and/or soft formats AMR completed seven of the nine facilities, each within one week.

The Results

AMR Delivered The independently provided fixed asset and inventory projects produce the following results for the food processing company:

  • The three phases of Planning, Inventory and Reconciliation were completed within one week for 75% of the visited facilities.
  • AMR provided a non-disruptive cost-effective service to help meet a corporate mandate.
  • The reconciliation process accounted for 100% of the fixed assets at the visited facilities.
  • The AMR reconciliation identified 4.3% of the assets worth 2.1% of total gross book value (GBV) that were no longer owned by the food processing company yet were still maintained on the company's financial ledger as "active" assets.
  • The AMR reconciliation continuously improved/fortified the company's fixed asset data.
  • AMR's cyclical inventories enhanced the fixed asset management by minimizing unbooked retirements.

Conclusions

The food processing company realized the value of AMR's ability to complete the cyclical inventory and reconciliation in a timely manner. AMR's reconciliation accounted for 100% of a facility's assets and minimized unrecorded retirements:

  • Multi-location (approx 30 sites in U.S.)
  • Cyclical inventory (every three years)
  • No barcode tags applied due to the food processing nature of the equipment
  • Inventory, reconciliation, and close meeting held within one week of inventory rollout for 75% of the plants, two weeks for others (larger facilities 3,000+ assets)
  • Reconciliation efforts produced 4.3% ghost assets that were on the general ledger. These assets had an original GBV of 2.1% and a net book value (NBV) of 0.05% of total assets.
  • Cyclical inventory enhanced the asset management at each facility with improved data and enforcement of asset management processes. AMR has been the cycle inventory provider since 1997. Each time has resulted in finding fewer ghost assets.
  • Over seven years experience with this client has produced over 80 individual inventory projects. AMR has successfully migrated our food processing experience to other accounts and has delivered strong value in this industry segment.