What is Asset Management?

what is asset management

Asset management can be a boon for equipment-intensive businesses wanting to streamline operations and lower costs. This blog gives a detailed description of asset management, including its functions, types, and some best practices relating to it.

What is asset management?

Organizations aiming towards improving performance and achieving higher targets tend to focus on optimizing asset use. Based on strategic decision making, these optimizations focus on logging and tracking various tools from acquisition, deployment, utilization, maintenance, all the way to their disposal. Being a multi-faceted technique, this practice gives you the ability to oversee and successfully carry out responsibilities relating to procurement, budgeting, servicing, and more.

So, what is asset management? It is precisely the set of activities outlined above. It lets you control excessive costs by eliminating ghost assets and derive maximum returns by investing in timely service sessions. Doing so is critical for companies to if they want to optimally allocate available resources.

But why do it all manually? Using an easily accessible, cloud-based asset management system leads to better collaboration and speeds up the decision-making process. It uses metadata and login enabled records to monitor and categorize asset movements. Let’s learn more about asset management – software based and otherwise – below.

What is asset management

What are the functions of asset management?

Properly structured asset management enables organizations to maximize gains on capital investments. Here is a list of activities entailed in asset management:

  • Scheduling services: What’s better than having your equipment serviced on time to avoid unnecessary breakdowns? Schedule all your maintenance appointments beforehand to cut down on repair costs. 
  • Drafting purchase orders: Make sure your stock isn’t finished when you need it by setting thresholds. An asset manager can draft purchase orders whenever these limits are about to be reached.
  • Record asset locations: For firms operating at multiple job-sites or offices, it is crucial to enter asset locations. You can do this easily every time a tool is checked out for use.
  • Make timely reservations: Having limited inventory can be challenging, especially if you have complex work routines. Asset management can help you plan tasks in advance by booking the required equipment.
  • Maintain compliance: To keep up with government regulations, companies need to organize regular audits. A huge host of asset manager activities are geared towards achieving compliance of this sort. 
  • Send alerts: Looking for a way to inform all employees and staff about certain asset-related activities? Design and send out customized notifications and emails to your staff, or do it all manually to make sure everyone’s in the loop.
  • Streamline procurement: Choose from a list of vendors for your desired inventory purchases. You might also need to store the details of warranties provided to you by manufacturers.
  • Run actionable reports: Organize data according to your needs to summarize business growth over the years. You may also need to add customized details about the assets you wish to monitor closely for performance.

How can asset management help your business?

By providing a range of facilities to cater to your everyday tasks, asset control techniques help you overcome common challenges, tackle malpractice, and gear your business towards a path of accelerated growth. To really unpack the question ‘what is asset management?’, let us consider some benefits of asset management software first:

1. Ensure asset traceability

A barcode label on all items in your inventory enables you to enter locations even while working on off-site projects. This comes in extremely handy for construction companies and healthcare institutions. Firms often end up losing tools through misplacement, due to a lack of robust security mechanisms. An updated database on asset positioning lets you easily trace ownership in cases of theft and loss.

Such practices allow you to cut back on excessive money spent trying to look for missing equipment. Readily available information regarding asset placement streamlines warehouse management by allowing faster retrieval at the time of checkouts!

2. Improve reliability with timely maintenance

According to research, around 81% of organizations reported a loss of around $300,000 due to a single hour of downtime. While this number is shocking, companies can opt for preventive maintenance to control unexpected breakdowns and prolong the useful life of their equipment.

With asset management software installed, pre-scheduled service sessions let you take care of any broken parts to avoid downtime during work operations. Doing this has a positive impact on overall efficiency and increases asset reliability for seamless business tasks.

Did you know? The number of companies not looking at supply chain management dropped from 40% to just 17% in 2018.

3. Optimize supply chain management 

Maintaining the right amount of inventory is key to the successful execution of daily work tasks. It is quite common for companies to stock up on tools to take advantage of wholesale prices. But is this the right move?

Every type of asset has a useful life during which it needs to be properly maintained. Failure to do so will just add to the company’s burden to dispose of it due to faster depreciation. To avoid over-stocking, firms need to automate procurement through an asset management program. This allows you to order new stock before you run out as well. Optimal inventory quantities allow you to allocate resources more effectively by minimizing waste.

4. Raise productivity by defining user roles 

One way to improve overall work progress is to constantly monitor employee participation. This can easily be done through work order management, where you can assign and supervise workflows. Vital tasks can also be scheduled in advance to avoid any last minute confusions. Sometimes, organizations need to differentiate between asset usage for various departments due to security reasons. To this end, you can set user roles to restrict unauthorized access. 

Strict measures of security allow you to control fraudulent asset practices and ensure that assets only change hands or leave the premises when they’re meant to.

5. Take mass actions on asset labels

Institutions like healthcare centers and construction companies tend to check out huge numbers of tools and equipment daily. Urgent operations require hasty actions, and delays can lead to more than just financial costs. The best way to tackle these challenges is to prepare frequently used toolkits for checkouts.

Asset management software lets you take mass actions by scanning large quantities of items in a single go. Prompt checkouts allow employees to meet deadlines and carry out seamless workflows.   

Asset management with RFID tags

Source: Statista

Of course, even if your asset management isn’t automated, following the basic principles of organizing, logging and reporting on asset management data can really help businesses amp up their efficiency.

Different types of asset management

Companies from different industries can specialize in distinct asset-oriented work. So, what is asset management for these firms? Due to unique specializations, such organizations need features that cater specifically to their workflows. Let’s look at some types of management strategies and how companies implement them:  

1. IT asset management

Today, most firms store most of their data online. This means you need to have a reliable IT base for your business. Every laptop, printer and hard-disk should have a backup. Tight security is only possible if you have a warranty and license management program. Manufacturers often give you warranties along with the purchase of new items. By scheduling service sessions, you can always get your IT equipment repaired or refurbished.

In addition to this, all kinds of IT hardware and software need to get their licenses updated. By setting calibration deadlines, you can choose suitable repair mechanics for this job. Our blog on IT asset management has more details.

2. Fixed asset management 

Every company has both fixed and variable assets. These two require different management routines due to the frequency and nature of use. Some examples of fixed assets owned by firms include land, transport and furniture. Depending on how rigorously these items are used, they are likely to experience wear and tear over time. The inability to take into account the depreciation of your fixed assets is a financial flaw which can have serious repercussions.

An asset management program allows you to run devaluation reports to seek out repairs whenever required. Such preventive maintenance ensures that only reliable equipment is used in daily work tasks. You can check our piece on fixed asset accounting for more details.

3. Asset maintenance management

While most organizations have their own maintenance routines, there are some companies which need to follow a very specific maintenance program. For instance, fleet management firms work with vehicle financing, maintenance and telematics. To cater to such companies, a cloud-based asset management program comes with a combination of features to carry out repair activities.

For example, it lets you log hundreds of custom details about your equipment, and remind your crew of impending maintenance. It also allows you to store a list of service vendors so that you can schedule services on time and enables you to generate a preventive maintenance checklist for ease.  

Did you know? According to Gartner, IT firms which practice lifecycle management lower their costs by 30% in their first business year.

4. Warehouse asset management

This entails storing and retrieving thousands of assets for sale or use in production elsewhere. To enable ease of access, companies often devise smart asset labelling practices. Barcodes and QR Codes with product serial numbers are readily designed, and the tags are scanned through a third party scanner. This setup allows you to easily enter the relevant information into your database. This saves time and lets you locate the required tools and equipment faster.

Asset management programs also come with a mobile integrated application which lets employees scan items on the go. Doing this allows you to process checkouts and check-ins in an accurate and timely manner.  

5 crucial asset management tips

Now that we have a basic idea about what asset management is, the next step involves working towards establishing some ground rules on how to go about it. All companies have certain goals and objectives on their agenda and the best way to achieve them is to harness your assets for better performance. Here are a few tips on how to customize asset management according to your business priorities:  

1. Organize assets according to your workflow

Most companies have particular guidelines on how they administer daily tasks. Some firms tend to be spread across different locations. In such situations, it becomes critical to record where assets are positioned.  An ideal way to organize tools in this scenario would be through location-based tracking. On the other hand, if your firm is demarcated by departments, creating different groups for departmental assets would be a better option. You can customize fields like ‘IT department’, “Finance department’ and so on.  Such divisions make it easier for employees to retrieve tools for daily work operations.

2. Tag your assets

As easy as it sounds, asset tagging actually requires focused planning. To start off, you need to decide which tools you want to label. After doing that, think about what sort of tags you want to use? There are plenty of options available depending upon the frequency of asset use and your budget. If you have high-value assets, you want to go for secure labels like tamper evident barcodes, whereas two-part tags work best for mobile tools.

The next step is to consider what you want to put on the label. You can choose serial numbers, location/department initials. Moving on, you can also color code your tags for easy reference. If you’re new to all this, you can take a look at our blog on asset tagging best practices.

3. Appoint asset managers 

In order to ensure optimized asset utilization, it is essential to appoint asset managers. Such personnel are usually accountable for asset movements in and out of the office, and for running reports relating to company assets. In case of any unauthorized practices, a pre-established hierarchy makes it easier to trace ownership and pinpoint the individuals responsible for the damage. Robust asset management through directed staff lets you strengthen security.

Did you know? Cloud computing is expected to grow from $67B in 2015 to $162B in 2020, attaining a CAGR of 19%.

4. Centralize data 

While using a cloud-based program for asset management, you can store all important data in a single place.  A centralized database allows you to boost integrity and minimize redundancy as the available set of information is taken as the primary record. Being online, all asset documentation can be accessed by employees anywhere, anytime.

This is extremely helpful as all inter-related activities like maintenance, check-in, checkout and procurement records are conveniently stored in a single software program. For instance, if a tool has been repeatedly checked out for repair, you can decide to create a purchase order for its replacement, especially if the period maintenance costs are higher than the actual one-time purchase cost.

5. Use cloud-based software

What is asset management without cloud-based software for maximum convenience? This kind of solution has the following benefits for your firm:

  • Cost effective: It easily scales up as your business grows. You can, therefore, save all your data in one place without having to relocate every time your team expands.
  • Customizable to your workflow: You have the option to add unique fields, filters, and specifications for all your assets.  
  • Timely feature updates: Get each feature regularly updated according to the latest business needs and compliance rules.
  • Easy access: Multiple users can log into cloud-based software and access the required information when needed.

Draft a thorough asset management strategy

Businesses must possess a strong asset base if they wish to succeed. Doing so is only possible if you have a robust asset management program implemented. This helps you record minute details to maintain an accurate database. You can revert back to this information to forecast future business consumption trends and practices.

Automate procurement and maintenance activities to improve asset reliability and gain operational efficacy. The smart business strategy would be to devise a customized management routine which takes into account the nature of your workflows. This can be done by investing in cloud-based software for streamlined tracking to gain a higher rate of return.   

Learn more about EZOfficeInventory!

EZOfficeInventory is the asset management software that helps thousands of companies manage asset workflows, cut costs, and streamline processes the world over. We offer a free 15-day trial – no credit card required!