5 Greatest Challenges of Effective Asset Management
Asset management is a “systematic and coordinated activity through which an organization optimally and sustainably manages its assets and asset systems.”
Those assets could be physical, financial, human, information or intangible. Regardless, your business’s profitability depends on how effectively you optimize them. Here we discuss some of the challenges of asset management.
RELATED ARTICLE: 5 TIPS FOR MORE EFFICIENT WAREHOUSE MANAGEMENT
1. Not Knowing What You Have
Bar none, one of the biggest challenges in having a plethora of assets is not knowing exactly what you have at any one time. Therefore, it’s worth knowing that an Asset Tracker can help take care of this issue.
To ensure that your management program is effective, having an easy-to-use tracking management system takes the headaches out.
Not knowing what you have is like playing Russian roulette with your organization. Therefore, it is essential—if you haven’t done so already—to streamline your processes wherever possible. To get started:
- List all of your assets
- Establish a hierarchy of those physical assets
- Create evaluation criteria and use it to verify the base of your assets
2. Poor Maintenance
Is over-maintenance worse than under-maintenance? It’s hard to say, and it depends on your particular industry.
However, one thing we can agree on is that either one spells a world of troubles for your organization. Even with an effective management system in place for your assets, maintenance could still be a problem.
I’ve known some managers who, in a fit of paranoia, skyrocketed their maintenance costs while they blindly operated under the assumption that everything needed to be re-evaluated. This reduces productivity. What’s more, it can be a significant business expense. Then there are managers who are too confident that their system is fully operational and functional.
3. Ignoring Design Capabilities
One of the biggest risks comes when we continuously operate assets at speeds they’re not meant to be operated at. This is due to ignorance about the design capabilities of those assets.
By operating solely within the ranges of each asset, we not only optimize their life cycles, but we also ensure they run as smoothly as possible for the remainder of that life cycle.
Managing assets includes knowing how each asset is run, at what ranges those assets should be operated, and what the risks are if those assets are operated outside those ranges.
4. Failure to Manage Risks
Without a system for assessing risks, you will have no way of controlling your assets. What’s more, you’ll have no ability to prevent those risks.
The bottom line is that if you don’t have risk management in place, you lose money. To prevent this problem, follow the proper asset management guidelines as outlined by the ISO 55000 standard.
5. Not Using EAM
Enterprise Asset Management (EAM) systems, for some reason, are not fully utilized by numerous organizations. This makes no sense, as these systems include the scope of assets across the entire organization. This holds true whether those assets are buildings, plants, vehicles, equipment, or any other asset. And it includes all departments, facilities, and locations.
To give an example, we often don’t recognize that our HR departments and business processes are just as important in our asset management systems as the software we use for asset tracking. This is challenging, considering an organization-wide unity is necessary. Only in this way can we ensure that the management of assets is as fully operational and effective as possible.
At the end of the day, effective asset management is about optimizing your assets’ life cycles. Furthermore, it must start right at the beginning, and it must include the development and usage of those assets as well as the proper disposal of them once they’ve outlived their usefulness.
Paying attention to these risks, regardless of the management system you use, keeps the challenges—and their severity—to as bare a minimum as possible.