This refers to a simple, centralized way for you to monitor and manage all your businesses’ assets. Assets could include buildings, machinery, tools, staff – basically anything tangible or intangible can be managed from one central hub.
In fancier terms, it is the process of developing, operating, maintaining and selling assets in a cost-effective manner.
Why You Need It
Improved Acquisition and Utilization
By keeping tabs on all your assets throughout their respective life cycles, you can improve your technique of both acquiring and utilizing assets.
Asset management gives you insights into your acquisition and utilization cultures that can help you determine whether a change in methodology is needed.
Improving Compliance
All organizations are required to provide in-depth reports on how they acquire, utilize and get rid of assets. It’s all a rather tenuous process and most organizations opt to have all their asset information on a central database. That way when reports need to be compiled at the end of a financial year, accessing the information is easier.
Accountability
The whole process makes it easier for organizations to keep track of all their assets – liquid and fixed. Management will know what asset is where, how it is being utilized and the changes that have been made to it if any.
Constant monitoring of assets makes recovery of lost assets more efficient which consequently leads to higher returns.
Help Identify and Manage Risks
It covers the identification and management of risks that arise from utilization of certain assets. This coupled with a solid critical event management plan will help you to be always prepared for any risk that may come your way.
Critical Event Management
Businesses sometimes go the extra mile to prevent accidents having plan Bs to their plan Bs. However, sometimes all the contingencies fail and you need an effective way to deal with the consequent crisis. Crisis event management covers how you prepare and respond to emergencies like these.
Improves Efficacy in the Workplace
Proper management of all your assets will give you accurate and detailed reports and audits that don’t take you forever to compile.
You can also plan maintenance schedules from insights about assets’ life cycles so there aren’t any disruptions of service.
Strategy Plan
To come up with a solid asset management solution, you need to develop a strategic plan for it all. Here is a pretty solid strategy:
Complete an Asset Inventory
Before any other step, you need to take count and not of each and every one of your assets – you can’t manage that that you don’t know you have. It is impossible to effectively manage assets if you are not aware of exactly how many assets you have in your inventory. When preparing your inventory, take note of the following: total count of assets, where each asset is, value of each asset, when you acquired the assets and the expected life cycle of the assets.
Compute Life Cycle Costs
For precision, you will need to calculate the entire life cycle costs of each asset. Don’t make the mistake of only calculating the initial purchase cost.
During the life cycle of an asset, additional costs like maintenance, conditioning and disposal costs add up to the bill.
Set Levels of Service
After step two, the next step is setting levels of service. This simply means outlining the overall quality, capacity and the role of different services that assets provide.
This will allow you to determine the operating, maintenance and renewal activities that are needed to keep all the assets in good condition.
Exercise Long Term Financial Planning
Ideally, your asset management solution should easily translate into your long-term financial plans. With a good financial plan, you can assess which business objectives are feasible and which ones need to be taken care of first.