What is asset management & why is it important?
Why is asset management important to fleet managers?
An effective asset management system allows a company to manage all assets within their portfolio to create a more efficient operation. Here’s how it works…
What is Asset Management?
So, what is asset management? In the most simplest of terms – if you consider that fleet management incorporates all aspects that correlate to managing a fleet, asset management is similar, but manages all assets across the business – and that includes those within your fleet too.
Buildings, plant machinery and equipment tools – in fact, anything that is tangible or intangible, can be effectively managed from one central point. In addition to mobility management, asset management is seen as the next step in the future of fleet management. The good news – the software technology is already in place!
What is an Asset Manager?
Quite simply, an asset manager monitors and maintains things of value within a business. By developing an effective asset management plan, they are able to develop, operate, maintain, upgrade and dispose of assets cost effectively. To do this, they assist in all aspects of the administrative, financial, capital and operations of the assets within their portfolio. An asset manager therefore needs a good grasp of both the strategic and operational processes within a company.
Alternatively, asset management companies are external specialists brought in to manage the assets on behalf of a business. They are a team of professionals that will look at the assets, cash flow and finances available to a company. From this, they can then determine how a company should reinvest to maximize the profitability of the business.
How does Asset Management work?
Asset management encompasses a holistic view of the entire life-cycle of an asset. So, in terms of a piece of machinery, this is its’ life-cycle 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.
Such software can collect and analyze data efficiently so that important 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! In order for an asset management plan to be effective, it needs to be supported by asset management software with the capabilities to monitor and maintain things of value – both tangible and intangible. They are similar to fleet management systems, but can be implemented on a much wider business scale.
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.
A correct and implemented asset management software can:
- Keep a track of all assets
- Manage assets from different locations
- Provide an opportunity to plan against financial, operational and legal risk
- Define the service levels
- Organize the asset portfolio
- Create a more efficient operation with the ability to track performance
- Improve time management
- Measure and monitor life-cycle costs
- Promote the economic stability and growth of your company
Developing an Asset Management plan
Developing an asset management plan and having asset management software to support this is instrumental in achieving the asset management objectives. But where do you start?
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 you 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
Once this task is complete, the level of risk can then be measured against the impact on the rest of the business. The asset management plan can then prioritize 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, this process is live throughout the asset life-cycle. Such a practice permits you 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?
Over the years, a number of systems have been adopted by fleet operations to address their asset management needs. Whilst some software asset management (SAM) systems provide key data and analysis capabilities, they don’t always address your specific needs as a fleet manager.
The distinguishing feature of effective asset management software for fleets is their focus on vehicle asset condition and performance. They are aimed at helping you achieve defined performance goals and results by creating
- Faster return on investment
- Measurable improvement in operational efficiency
- Lower costs
- Reduced administrative burdens
- Higher levels of compliance
- Better risk management
Since information is central to any asset management approach, the system you choose must also simplify every part of fleet, asset and workforce management – from the financial overview of vehicles and equipment to policy, monitoring of drivers, technicians and shops.
These systems also address the complete life-cycle of assets, from acquisition to disposal, and incorporate all your fixed costs and variable operating expenses, as well as details of utilization, maintenance and compliance -similar to an asset management system.
Advanced fleet management software systems continue to become increasingly complex as asset management needs require new insights and tools to help you make decisions that result in improved efficiency, lower costs, higher vehicle and equipment up-time, and employee and customer satisfaction.