The Importance of Asset Management
Asset management is important because it helps a company monitor and manage their assets using a systemised approach. Managed effectively, the benefits include improvements to productivity and efficiency which places a business in a better position to increase their return on investment.
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 evolution of fleet management. The good news – the software technology is already in place!
Why asset management?
Having such a system in place allows managers to track the overall performance of their assets. This helps to ensure that they’re being utilised efficiently, allowing for performance to be reviewed and helping to prevent any unnecessary, additional costs being incurred due to incidents such as unscheduled downtime.
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 maximise the profitability of the business.
How does asset management work?
Asset management encompasses a holistic view of the entire 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.
Such software can collect and analyse data efficiently so that 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 an asset management system 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
Organise 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 your assets and create an up to date inventory. When reviewing your assets, consider the following questions:
What assets belongs 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 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, this process is live throughout the asset lifecycle. 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
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 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 -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 uptime, and employee and customer satisfaction.