By Kim Koster, VP of Industry Marketing at Unanet
As the public sector navigates increasingly complex acquisition and inventory policies for handling government property, inventory and asset tracking has become a challenging area for government contractors to manage.
Growing GovCons are concentrating on automating accounting practices and being compliant, which in and of itself is a tall order. After that is complete, a company normally wants to limit the use of spreadsheets in multiple areas — and one area they often use spreadsheets for is tracking inventory and assets.
That’s why, in recent times, there’s been a resonating call for a comprehensive shift from archaic systems relying on disjointed spreadsheets to more unified and secure software solutions.
In compliance-driven industries particularly, data accuracy and control are not just business imperatives. They’re vital for maintaining operational efficiency, fostering trust and ensuring continued eligibility for government contracts.
Let’s take a closer look at how your GovCon can modernize its approach to inventory and asset tracking by ditching the spreadsheets.
The risks of using spreadsheets for your inventory and asset tracking
Many GovCons in the past have used multiple spreadsheets to track inventory and assets. This is a problematic, disorganized approach to a process that requires precision and accuracy. Spreadsheets can leave you with data scattered across multiple digital touchpoints. They can leave you floundering for accurate numbers in critical areas (asset utilization, equipment, inventory) when you need them most – such as when you’re the subject of an audit. As CFO consultant and accounting professor Richard Block noted, “It’s easy to make errors in spreadsheets, because you’re just putting in formulas. It’s not a system; it’s more like writing on a piece of paper.”
Not only is there a direct financial impact from lost or mislaid government-furnished equipment, a.k.a. GFE, or government-furnished property, or GFP, but there are also other implications. Billing withholds can be levied and you may find your contract terminated due to non-compliance or find yourself at a risk of inefficiently using taxpayer money due to asset duplication.
These risks may sound like worst case scenarios, and in many cases they are. But even the best-case scenario when using spreadsheets doesn’t paint a rosy picture. You’ll still be left scrambling to find, manage and track your data.
The question then becomes: how can GovCons mitigate these risks? The answer lies in taking a tech-forward approach, embracing modern, integrated, easy-to-use solutions.
Best practices for inventory and asset tracking in government contracting
The first step in improving the way your GovCon tracks inventory and assets is to develop a strategy. This strategy should include unique inventory and asset identification as well as regular internal audits.
In a recent eBook from Unanet, we discuss why a move away from spreadsheets and toward a unified, central software solution to manage and track all inventory and assets can ensure everyone on your team is coordinated, giving them real-time access to accurate data. Once you pick a solution, training your employees on this software is key to increasing adoption.
Your organization should take measures to ensure that physically commingled inventories (which may include material for which costs are charge to fixed-price, cost-reimbursement and commercial contracts) do not compromise Material Management Accounting System, or MMAS, standards. Having controls in place ensures cost-plus and fixed-price or commercial inventory are not compromised. That helps you avoid physically commingling any government-furnished material with any commercial materials.
Finally, you’ll want to think beyond procurement. Have a well-defined workflow for all of your tracking procedures, overseeing the movement of your inventory and assets. This will come in handy when it’s time to prove compliance or if you undergo an audit.
Ensuring data accuracy in inventory and asset tracking
It’s difficult to effectively track your inventory and assets when your data is unreliable. That’s why using multiple spreadsheets to track them is so unmanageable. When your inventory control and asset tracking is done manually, you make it impossible to update that data in real-time.
Maintaining data accuracy is the foundational challenge faced by all those GovCons overseeing government inventory and asset management, especially when managing high-value assets or sensitive inventory. To achieve this, having a unified software system can provide advantages such as real-time updates on inventory and levels. It can also help integrate your financial systems to ensure complete and accurate reporting. Automating data entry will decrease the chances data is entered incorrectly. And you’ll have an enhanced ability to create an audit trail, an essential component for any compliance review.
Transparency and accountability: A unified tracking system’s forte
To foster public trust and meet stringent standards, transparency and accountability should be non-negotiable. A unified tracking system can serve as the bastion of these values. Your system can offer a detailed inventory and asset history, available at a moment’s notice. It should also be able to deliver automatically generated reports that help your organization maintain visibility.
Transparency is only available when you can clearly document the journey of each asset or piece of your inventory. It’s much harder using a spreadsheet.
Optimizing resource allocation and utilization
The role of inventory and asset tracking isn’t merely to ensure compliance or prevent losses; it should be a strategic tool for optimizing the utilization of resources across the board.
Analyzing data from an integrated system can lead to better forecasting, the recognition of underutilized assets, an identification of trends to optimize stock levels, and more informed decision-making when it comes to procurement.
As the public sector moves toward performance-based contracts, the ability to demonstrate resource optimization will become a critical metric in winning new business.
The value of inventory and asset management software
Inventory and asset management software is more than just a digital substitute for a spreadsheet — it’s a strategic enhancement at the organizational level.
Its core advantages include:
- Centralized and standardized inventory and asset information. Allow everyone who needs access to your inventory and asset data to access it in real-time.
- Streamlined cost management. View financial information in one centralized location.
- Integration data. There’s no need for sending documents back and forth; all data across the enterprise is integrated in a single place.
Investing in robust inventory and asset management software offers not just a jumpstart to your operations, but also potential savings through proactive maintenance and life cycle management.
The relationship between inventory and asset tracking software and compliance
Compliance with inventory and asset tracking requirements is a complex but non-negotiable aspect for government contractors. Ensuring compliance involves understanding and implementing regulatory mandates. It also means responding to regular internal and external audits. This can require training your teams on the nuances of maintaining compliance.
The right inventory and asset management solution can empower you in the event of an audit, giving you access to the data you need to comply.
As regulations evolve, any system you use for inventory and asset tracking must be adaptable to accommodate these changes, underscoring the need for continuous improvement and integration of industry standards.
Step into the future of inventory and asset tracking
For GovCons, precision and accountability in managing inventory and assets are the hallmarks of successful and reputable operations. By adhering to best practices for inventory and asset tracking — including adopting a unified software solution that encapsulates clear processes and a strict system of compliance — contractors can navigate these unique challenges with confidence.
Amidst the digital revolution that’s redefining governance across the globe, it’s clear that the future of government contracting depends on the agility and accuracy of its inventory and asset tracking systems. It’s incumbent on you to steer the conversation and conversion toward these innovative solutions that not only meet the current challenges head-on, but also pave the way for a reliably secure future.
To learn more about how you can adapt for the future, download our eBook “Life without spreadsheets: A guide to modern inventory management.”
