Even if you’re not completely familiar with what physical asset management is, there’s a good chance you’re already doing it, at least in part.
Your physical assets are the tangible things that enable your organization to fulfill its mission and goals; oftentimes, it’s machinery but it could also be buildings, equipment or tools. What sets physical asset management apart is its organized approach to maintaining those assets throughout their lifecycle.
Physical Asset Management
The concept of the lifecycle is critical to understanding physical asset management. It starts the moment you identify necessary assets and progresses through procurement, usage and maintenance to removal, disposal, and replacement. Various aspects of the lifecycle are measured and analyzed to develop cost figures and budgeting, allowing for greater efficiency and more informed decision-making as it relates to physical assets.
Keys to Successful Physical Asset Management
When developing physical asset management plans, perhaps most important is keeping the idea of the lifecycle front and center, because assets are either providing value or losing value at all times. It’s an approach that stresses engaged maintenance strategies within the context of leveraging assets for maximum return. Physical asset management requires that you have an objective and strategies to meet that objective; risks will be assessed, managed, monitored, and reviewed on an on-going basis. Once the cycle is complete, it begins again, with adjustments, if needed.
Benefits of Physical Asset Management
With established physical asset management protocols in place, organizations can see improved productivity and greater efficiency through maximized cost savings.
- You can plan better. With asset management, not only will you know what needs to be managed but you’ll have the insight to know whether a particular asset is functioning optimally; if not, you’ll need to decide whether you can adjust conditions for optimal performance or whether an asset needs to be replaced with another that can meet demands. You’ll have enough information to schedule downtime for maintenance and ensure you have the staff to complete the task. It reduces sudden breakdowns and emergency repairs, including a scramble for parts. It also reduces the potential for government, legal or other non-compliance. The data you collect through physical asset management can be used to assess the long-term and future performance of an asset and enable responsible decision-making about the future of that asset.
- Improve the accuracy of your budget. By having tighter controls on the lifecycle of your assets, you’ll know when parts are due for replacement and be able to negotiate costs in advance instead of scrambling at the last minute and have to pay a premium in parts or labor. Physical asset management can also help reduce loss by improving inventory records.
- Strengthen risk management. When you can identify the potential hazards that can affect your physical assets, you can better address them by reducing or eliminating the risk. Risk is an inherent part of any business and the more robust your planning for the most likely problem, the more likely you are to be able to overcome that challenge without interruption to the rest of your organization.
Physical asset management is a reliable tool for supporting your organization’s goals and objectives by minimizing downtime and risk while improving performance and return on investment. Instead of allowing physical assets to run in the background, an organization using physical asset management can successfully leverage these often-overlooked assets with an eye for maximizing returns.