5 Common Asset Management Challenges & Tips To Overcome Them
Once the importance of asset management is understood, the next stage is to develop an understanding of some of the asset management challenges that need to be faced.
Employing best practices to address asset management can make a real difference in terms of operational efficiency, lower costs, reduced vehicle and equipment downtime and increased employee and customer satisfaction.
More than just a fleet management process, addressing asset management problems is a business process. It is a systematic and strategic means of meeting objectives. Such a process can be daunting – just where do you start?
These five tips can help you implement an effective asset management plan:
Challenge #1: Choosing the Right Assets
With a fleet operation that requires a wide range of vehicles and equipment to meet the needs of different users, a good starting point of any asset procurement decision is to go fact finding right at the source. This tactic helps determine the needs of a fleet and incorporates the relevant discussions with department leaders and actual operators to reveal how both vehicles and equipment are, and should be, being used.
Amongst the things to consider at the earliest stage of any vehicle or equipment procurement initiative is the purpose of a vehicle. For example, what is the carrying capacity and size based on the types and amounts of goods or tools it is required to carry? Knowledge of where and how the vehicle will be used is another consideration. Long journeys verses stop-and-go commutes usually require different vehicle fuel types to ensure economical driving.
A focus on required vehicle features and capabilities can lead to more effective choices. Selecting the engine and fuel type can lower costs, improve fuel economy and reduce CO2 emissions as part of a company’s sustainability efforts. Making safety a part of any vehicle or equipment decision can lower the potential for accidents.
Challenge #2: Reducing Downtime & Keeping Assets Available
With the right vehicles and equipment in place, a significant part of getting the most value from your fleet is about reducing downtime. Although it is difficult to calculate the costs of vehicle downtime, in the average fleet, it costs $1,000 a day to not have a vehicle running within a fleet. Unavailable vehicles not only increase costs but are also a cause of revenue loss. This in turn drives up employee frustration and creates a drop in customer satisfaction.
It’s important to identify asset management challenges that keep vehicles and equipment out of service. Such analysis drives an understanding of best practices that can lead to company- wide improvement.
Unscheduled downtime for repairs also needs to be addressed. Should a group of vehicles be out of service due to specific parts failures or driver related issues on a regular basis, an ability to address inspection and maintenance practices or poor driving behaviors can lead to measurable improvements in utilization.
Challenge #3: How to Replace Your Assets
It is rarely simple to find the most effective replacement cycle for fleet vehicles and equipment. Across any operation, consideration should include vehicle mileage variances, the purchasing process, financial rates and incentives for new purchases or leases, projected maintenance costs and the resale value of used assets.
Most fleets use such factors to establish fixed replacement policies. To effectively assess whether a flexible vehicle and equipment replacement strategy could lead to longer-term benefits, it’s essential to consider new alternatives. This can involve extending or reducing vehicle life cycles or using short-term rental programs to meet specific operational needs. Consider alternatives such as relocating out of commission higher mileage vehicles with low operating and maintenance costs might to other parts of your operation.
Whether buying, financing or leasing your fleet operation’s vehicles and equipment; effective replacement programs can go a long way towards lowering a company’s overall cost of doing business.
Challenge #4: Understanding Your Costs
No asset management plan is complete without a full understanding of vehicle and equipment life-cycle costs. Analyzing the total cost of assets in your operation – from initial purchase through operations and maintenance to resale – presents a financial picture that leads to the most cost-effective choices.
With an effective cost analysis approach, strengths in asset management can be leveraged and weaknesses can be addressed. Drilling down into costs of vehicles and equipment, maintenance overheads, labor and parts, fuel and drivers leads to a better understanding of everything from acquisition to disposal of vehicles and equipment.
Managing a fleet’s total cost of ownership leads to a more productive, cost-effective operation that meets its efficiency goals.
Challenge #5: Taking a Systematic Approach
Ultimately, effective asset management is a business process. Solving asset management challenges requires accurate and actionable information. The ability to make fact-based decisions about what works best for your operation is where fleet asset management software has its true value.
Advanced enterprise asset management software provides a means of considering all of the factors about operations and costs that you need to know. These solutions drive the development of reports that in turn provides the insight you need to effectively optimize the use of your fleet.
Meeting asset management challenges leads to a higher level of customer satisfaction, improved vehicle and equipment productivity, lower costs, revenue growth and profitability.