Asset management is an essential business task which involves practices and processes that impact operational efficiency, overall company expenses, and customer satisfaction. It goes beyond managing physical assets, but also includes every tangible piece of equipment and materials necessary to get the job done.

Understanding the importance of asset management in an organisation leads to a better approach to addressing and resolving challenges. The five tips outlined below will help in the effective implementation of an asset management plan.

Make sound decisions in asset procurement

Every company relies on a variety of equipment, vehicles, and other machinery to provide for the needs of each department. If a company uses asset management software, making decisions on which assets need to be acquired becomes a collaborative effort between departments. The decision should come from the stakeholders involved, and not only from the management.

Another benefit of using asset management software is being able to identify the need first before making the final decision to purchase. Using a single platform to manage all company assets is a more focused approach to keeping track of functioning assets and those that require replacement.

Minimise downtime and boost utilisation

Getting the most value out of each asset owned by the company means reducing all possible downtime. The longer an asset is not in use, the more money it will cost the company in the long run. For example, if the company maintains a fleet of vehicles, the cost of maintaining these vehicles will double if not in use. If equipment and assets are already out of service, the company needs to decide whether there is value in keeping the assets or it is a more sound business decision to dispose of them.

Implement an effective replacement cycle

Across all departments within the company, there needs to be an asset replacement cycle in place. Some of the considerations to implement this cycle includes the purchase process, projected acquisition, and cost of maintenance, and resale value.

In some cases, a company puts in place a fixed replacement plan. But depending on the needs of the organisation, sometimes it is more effective to use a more flexible asset replacement cycle. One strategy that can be used to reduce expenses is to consider a short-term lease for specific equipment.

Managing ownership cost

The total ownership cost of each asset throughout its life cycle should also be analysed and considered before coming up with a replacement cycle. This information also helps in making crucial decisions such as when is the optimal time to tag items for resale and when it is best to rent instead of purchase.

Keeping a systematic approach to asset management

Asset management should not be isolated from other essential business processes. In this sense, asset management offers the most value because it can provide necessary data which becomes the basis of decisions. Asset management, when fully integrated into the organisation’s core principles, becomes less of a challenge for managers. It is easier to identify possible issues and come up with the necessary solution.