The importance of asset management
When proper attention is given to asset management, companies can expect higher performance, greater efficiency, longer life, and reduced expenses of holding their physical or intangible assets. Those who do not implement proper asset management techniques often spend more money, have increased incidences of downtime, lack the flexibility to adapt to unforeseen events, and overall end up taking a hit on their bottom line. Sometimes, neglecting company assets can even lead to hazards. These are just a few of the numerous reasons why your business should hire a skilled asset manager, particularly if you find yourself without the proper time or expertise to manage your assets yourself.
You must engrain a culture of responsibility among your employees if you want any asset management plan to succeed. One person tasked with managing all of your assets cannot effectively do it alone. Technology has come a long way in this field, to the point where modern vehicles will alert the operator to when maintenance is required, or financial institutions will alert account holders if fraud or concerning patterns are detected in your financial accounts. While certainly helpful, this technology alone does not replace a sound asset management plan and your company should not rely on this technology entirely and exclusively to manage its assets.
This is why you must listen to your stakeholders and customers. Property managers should feel empowered to raise concerns about buildings or real estate before they become a larger issue. Operators should know how their equipment operates inside and out and should know when an issue arises that cannot be ignored. Your finance team should keep watch over your company purse and be ready to flag any concerning trends they see. Maintaining clear and constant channels of communication between the people on the ground who use or benefit from your company’s assets and those in charge of managing those assets will make everyone’s job easier. Consider making this level of communication a workplace policy.
Physical assets
If your company sells physical goods or otherwise operates in a space adjacent to the logistics industry, you already know how important inventory management is. This is a good example of asset management at work. If you don’t have an accurate, up-to-date reading on what you have in stock, what’s arriving, and what’s leaving your warehouse, your customers will suffer. Not only that, but you’ll lose money, as in-demand products will frequently be out of stock. Unless you manage your own logistics, you need a good handle on who is handling what, where it’s going, and when it will arrive.
Predictability and redundancy are the knock-on effects of proper asset management, while inventory challenges and supply chain snarls are the result of improper asset management. Disruptive global events like pandemics, war, or problems with shipping routes are out of your control, but with proper asset management, you can mitigate the problems caused by these events and even grow your business while your competition struggles to adapt.
Infrastructure
Your company also likely has a suite of physical infrastructure, whether it’s property or vehicles or heavy machinery. All of these items require maintenance and occasionally, unexpected repairs. Good asset management takes a proactive approach to equipment health, so you aren’t left losing money or operational time because your equipment is non-operational.
Not having vital components or parts on hand, regular or reliable technicians to call, or a predictable maintenance schedule (and fallback plans for when infrastructure is temporarily unavailable due to maintenance) can lead to catastrophic failure of your physical infrastructure, which can cascade into business closures, lost revenue, and potentially even legal ramifications if you fail to deliver your end of a contract or violate health and safety laws. Proper asset management, as it relates to physical infrastructure, keeps tabs on equipment health so your company isn’t scrambling to come up with alternatives to problems you should’ve long foreseen.
Financial assets
Many companies have a portfolio of financial assets, the health of which can determine everything from employee compensation to long-term growth plans to whether or not the company even opens for business the next day. Since companies cannot sustainably run on overextended credit and empty bank accounts, proper supervision of your company’s financial assets is arguably the most important benefit of asset management. This is why you often hear of extensive layoffs when the stock market is doing poorly—for many companies, financial health is inextricably tied to the health of the global financial market.
A skilled asset manager knows where to allocate a company’s finances to ensure steady growth without risking the failure of the business on precarious securities. It’s equally as important to know when to divest a company of an underperforming financial asset as it is to know where to invest the company’s finances for long-term growth. Some businesses over-invest in faddish or short-lived stocks and industries, just to be faced with a significantly poorer balance sheet when the market inevitably corrects. Good asset management can help forecast these events and prevent the company from losing a lot of money.
Asset management technology
If you’re still unsure about the benefits of asset management for your company, or you want to try your hand at managing your assets yourself, there’s an emerging field of technology dedicated to helping small- to medium-sized businesses manage their suite of assets while automating many of the daunting, time-consuming tasks of yesteryear. As mentioned before, technology can simplify many of the day-to-day tasks of asset management but should not act as a replacement for a cohesive asset management plan. Technologies like enterprise resource planning software play an increasingly prominent role in asset management and are becoming more advanced by the day.
Before the rise of this technology, an asset manager would have to manually track and assess the health of a company’s assets. As inherently inefficient as that is, it also allowed for unacceptable risk if the asset manager missed a detail or forgot a maintenance interval. Asset tracking software has simplified this process, allowing companies to “set it and forget it” when it comes to keeping track of an asset’s health or performance. An added benefit to using this software is that you will often get a dedicated rep from the company to guide you in implementing and using the product, which can minimize risk and reduce the learning curve required to operate it properly. While this technology is certainly shaking up the world of asset management, it still does not completely compare to hiring a skilled professional whose sole duty is to manage your assets (and in many cases, the professionals themselves even use the software to automate much of their job).
Given the complexity of operating a business in various industries, your company cannot afford to ignore asset management. As you’ve read, it can save you a massive headache when things go wrong, and even perhaps prevent things from going wrong in the first place. It can even contribute to proper corporate social responsibility. Whether you choose to hire a dedicated asset manager, contract out the task to an asset management firm, or are excited by the potential of asset management software and aren’t afraid to do it yourself, taking an ad-hoc approach to your company’s assets is risky and could lead to untold reputational and financial loss. Your employees and customers will thank you for having in-stock products, reliable infrastructure, a healthy balance sheet, and a prompt and effective plan for the occasional times you don’t.
