Significance and Use
3.1 This practice establishes a standard calculation representing the operational fluidity of assets used by an entity.
3.2 It is intended that this practice foster and enable additional practices related to or based on AMV information.
3.3 This practice enables effective and consistent communication and trend tracking over time regarding AMV.
3.4 Calculating, recording, tracking, and comparing the computed AMV will provide comparative insight into the operational complexity of the entity. Determination of the component parts of the AMV calculation will provide information on the number of acquisition, disposition, and movement transactions and, viewed separately, will serve as a useful insight.
3.5 Clarifying Comparative Example:
3.5.1 Entity A has few assets that are of a high dollar value but have been in place for many years and seldom move. These items are tracked to the site physical location level (PLL). Entity A will have an AMV near 0.0. This will be an accurate reflection of the record keeping and transactional risk associated with the management of assets within the entity.
3.5.2 Entity B has over 5000 pieces of equipment that it tracks to the room PLL. As most of these items are information technology related, they typically have a useful life of a little over three years, after which they are donated to local schools. These items are moved from person to person and room to room very frequently for operational purposes. Entity B will have a high AMV, perhaps 3.0 or above. This will be an accurate reflection of the record keeping and transactional risk associated with the management of assets within the entity.
Scope
1.1 This practice calculates asset movement velocity (AMV) based on the movement of assets.
1.2 There is no existing, recognized practice for calculating AMV.
1.3 This practice is designed to be applicable and appropriate for all asset-holding entities.
1.4 This practice does not cover material inventory. Inventory velocity (or inventory turns) is extensively described and discussed in supply chain literature and is based on throughput rather than movement transactions.
1.5 AMV can be calculated for the entirety of the asset inventory of the entity or any defined subset, including individual assets.
1.6 This standard does not purport to address all of the safety concerns, if any, associated with its use. It is the responsibility of the user of this standard to establish appropriate safety, health, and environmental practices and determine the applicability of regulatory limitations prior to use.
1.7 This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.