Why is Asset Management Important to Fleet Managers?
If you have an effective asset management system you will be able to build a more efficient business. Here’s how it works…
So, what is asset management? In simple terms, asset management is similar to fleet management, but looks after all assets across the business from buildings to plant machinery and equipment tools.
By taking on the management of assets as well as vehicles, you will be able to tie all of the operational building blocks of your business together, creating more effectiveness and efficiency.
What is an asset manager?
An asset manager monitors and maintains things of value within a business. If you develop an effective asset management plan, you will be able to develop, operate, maintain, upgrade and dispose of assets cost effectively. To do this, you are assisting in all aspects of the administrative, financial, capital and operations of the assets within your company’s portfolio. An asset manager therefore needs a good grasp of both the strategic and operational processes within a business.
How does asset management work?
Asset management encompasses a holistic view of the lifecycle of an asset. So, in terms of a piece of machinery, this is its lifecycle from procurement and implementation through to renewal and disposal. Although asset management can be implemented through spreadsheets, the most effective systems are those that use the relevant software.
If you can collect and analyse data efficiently then decisions about the management of assets can be made. The consequences of each activity for an asset can be monitored so that a review of the cost benefit analysis can be made.
What are the benefits of asset management?
There are lots! For an asset management plan to be effective, it needs to be supported by an asset management system with the capabilities to monitor and maintain things of value – both tangible and intangible.
By working across other business departments, locations and facilities; assets such as vehicles, tools, equipment, processes and even people can be reviewed and managed efficiently from one central ‘hub’. Such collaborative working helps a business to reduce both the overall capital expenditure and operating expenditure related to your assets.
Developing an asset management plan
There are four steps to developing an effective asset management plan.
1. Set the objectives
These need to be aligned with the corporate objectives and when setting, consideration needs to be given to the asset management challenges, aims, priorities and capabilities of the business.
Ask yourself, what is the business trying to achieve and how should objectives in the asset management plan help achieve this?
When setting objectives, always make sure that they are SMART – Specific, Measurable, Achievable, Realistic and Time-bound. They need to be aligned with the company mission, vision and goals.
2. Create a strategy
Objectives can only be met if you have a strategy and action in place to meet them!
At this stage, it is a good opportunity to carry out an audit of your assets and create an up-to-date inventory. When reviewing your assets, consider the following questions:
- What assets belong to the business?
- Where are they?
- What condition are they in?
- What is the remaining life span?
- What is the economic value?
Once this has been completed, the next stage is to determine and plan against potential risks to the business.
3. Manage risk
There are four main reasons why an asset can fail:
- A failure to meet demand
- A failure in levels of service
- An economic failure – the operation costs exceed the cost of the asset
- End of life – it ceases to function
The level of risk can be measured against the impact on the rest of the business. The asset management plan can then prioritise between those assets that have a higher detrimental risk to the business so that they can be acted upon first – planning ahead to prevent that failure.
4. Monitor and review
The final step in the process, but once an asset management plan is operational, is to monitor the efficiency and cost effectiveness of your assets. Accurate decisions can be made against your assets such as updating or amending maintenance policies, injecting cash into upgrades or investing capital into new assets.
Effective asset management software gives a much broader, holistic overview of a business than a fleet management system alone. This in turn allows managers greater scope and transparency towards supporting growth and development across the entire business.
How can asset management software support your business?
Since information is central to any asset management approach, the system you choose must address the complete lifecycle of assets, from acquisition to disposal, and incorporate all your fixed costs and variable operating expenses, as well as details of utilisation, maintenance and compliance.