Asset Management

What is Asset Management?

Asset management involves strategically managing, maintaining, and optimizing the use of an organization’s physical and non-physical assets. Examples of physical assets include buildings and equipment, while examples of non-physical assets include software, intellectual property, and certain financial assets.

The asset management process includes all stages of asset handling, from acquisition to disposal. The goal is to maximize each asset’s value and mitigate potential risks throughout each phase of its lifecycle.

Asset managers work to help facilities meet these goals. Many organizations will also leverage technology to make the process simpler and more effective. That’s because asset management tools centralize asset data. Therefore, asset information is easier to find and less prone to human error.

The Purpose of Facility Asset Management

Lifecycle Management

Lifecycle management involves overseeing the entire lifecycle of an asset to ensure optimal performance and value retention. This process helps ensure that a facility makes the most of their investments in each asset.

Cost Control

Effective cost management ensures that your organizations can save money without compromising asset performance quality. The goal is to keep the cost of managing each asset at or below an acceptable level based on specific financial situations.

Risk Management

Risk management in facility asset management involves identifying and mitigating possible asset risks. Examples of potential risks include asset obsolescence, operational downtime, and non-compliance with laws and/or industry regulations.

Inventory Management

Inventory management involves keeping an accurate inventory of assets and tracking their location, condition, and performance. These records are invaluable to a broad range of employees who rely on your inventory to do their jobs.

Strategic Planning

Asset management involves long-term planning to align the asset portfolio with the organization’s strategic objectives. This process ensures that every asset purchase and maintenance decision supports broader business and financial goals.

Operational Efficiency

It’s important to ensure your organization’s assets are always in good working condition and available for use. This practice minimizes downtime, boosts productivity, and helps you save money.

Performance Monitoring

Performance monitoring involves continuously tracking and assessing asset performance. This practice helps facilities quickly identify potential areas for improvement and optimization.

Maintenance Scheduling

Planning and conducting routine maintenance to prevent unexpected failures will significantly enhance each asset’s reliability and lifespan. Less wear means more usability, which will boost the ROI of your investments.

Capital Planning

Capital planning involves preparing for future investments based on performance data and predictive analytics. This strategic approach helps organizations allocate resources efficiently and plan their long-term strategy.

Key Considerations in Facility Asset Management

Budgetary Needs

To secure a good return on investment, make sure your facility’s asset management strategy involves financial and tax planning. Doing so ensures your facility and asset manager can practice asset management effectively without unexpected financial burdens.

If you don’t have an in-house financial advisor, consider consulting a financial institution to assess your options.

Safety and Security Measures

Consider security measures for your assets that will protect them from theft, damage, and other potential risks. Various asset classes will require various security measures. For instance, you will need a solid cybersecurity plan for digital asset management, which is irrelevant to most physical assets.

Quality Assurance

Ensure that all of your facility’s assets perform according to set standards. Implementing thorough inspection and testing routines is key to maintaining these standards. Add this inspection routine to your asset management strategy.

Scalability

Plan for the growth or reduction of asset needs in response to changes in facility demand or business conditions. Otherwise, your company may end up paying higher fees than necessary. Planning ahead for potential changes also ensures that you use your resources efficiently based on conditions.

Vendor Relations

Maintaining strong relationships with your vendors supports successful asset management. Investing time into good relationships can lead to better pricing, priority service, and access to higher-quality resources.

Sustainability

Integrating sustainability into your asset management practices helps minimize environmental impact and supports corporate social responsibility initiatives. Sustainable practices help you save money while enhancing your company’s public image. It can also attract individual investors if your company is publicly traded.

Active vs. Passive Asset Management

Active asset management involves fund managers actively making investment decisions and frequently trading to outperform the market. Financial advisors analyze various factors and pick investments on a client’s behalf that they believe will perform well.

On the other hand, passive asset management involves tracking a market index or investment portfolio to match a specified performance benchmark without frequent trading. Passive management of investment portfolios is generally ideal for investors with a lower risk tolerance.

These concepts are not directly related to managing an organization’s assets, other than their financial assets. However, this distinction is good to know as it does directly impact your facility’s wealth management strategy planning.

Implementing Asset Management at Your Facility

1. Establish an Asset Management Policy

Start by developing a policy that sets the principles and objectives of your organization’s asset management strategy. This policy promotes consistency and accountability among team members. Your policy may also highlight your facility’s investment needs to support financial planning.

2. Select an Asset Management System

Choose an asset management system that helps your team track, manage, and assess all assets throughout their lifecycle. Consider whether you need to support digital asset management, or only physical asset management. This consideration impacts which system will be the best for your needs.

3. Training and Development

Provide training for staff involved in asset management to ensure they have the necessary skills and knowledge. Proper training ensures that your team can effectively use and manage your chosen system in a way that adheres to your established policy.

4. Audit and Review

Conduct regular audits of your asset management processes and review their performance to identify areas for improvement. These reviews help your team better manage assets even when business changes occur. It’s also a way to verify that all investments into your asset management strategy pay off.