How to prevent asset blow-outs
The round trip costs of asset purchase and management may be more than an organization first bargained for. It is therefore imperative to have a full understanding of the asset, its operational costs and the impacts of poor asset performance.
Careful planning and coordination of organisational infrastructure is fundamental to the economic wellbeing of a business and its workforce. Choosing the right assets for your business is thus crucial to its success. However, when an asset is acquired or purchased there are often information gaps when it comes to operations and procedures.
The unfortunate thing for many businesses is that their current asset management processes fail to provide for the true management costs to be accurately captured and evaluated on a uniform reporting basis.
The wisest course of action for anyone to take is to create an asset management framework and reporting system that captures problems and prevents any major impacts on productivity.
The cost of poor asset management
Firstly, let’s look at how poor asset management can affect a business. A non--‐fully operational asset can have major impacts upon any businesses productivity. Non-performing assets will cause the following problems:
- A reduction in business productivity
- Reduced staff retention
- Indirect maintenance costs and spending requirements
- Reduced revenue
- Loss of clients and business
If those five problems aren’t enough to sting you into preparing a proper asset management plan, then you may also need to conduct an overview of management practices.
Of course one of the problems when it comes to asset management and maintenance is the justification for maintenance plans which are often dictated by prudence and commercial conservatism. However, in this case, commercial conservatism may actually cost you money. Cutting maintenance efforts jeopardizes equipment condition, slows productivity and may even put a staff member’s life in danger. If that occurs, you can add the cost of medical bills and the loss of staff seeking better working environments to your bottom line.
Change your thinking
Businesses should be ready to not only to adapt to change, but more importantly, to anticipate and proactively plan for change. An asset management program or guidelines will help facilitate this move and create sound asset management practices.
You asset management plan should do the following:
- Ensure the asset base contributes to the strategic objectives of the business by providing the required levels of service
- Ensure infrastructure is maintained at a safe and functional standard
- Ensure the inspection and maintenance plans for all business assets are sufficient to meet the legislative and operational requirements in order to deliver the required levels of service to the client base.
What to consider when implementing your plan
Having an asset management plan, asset management software, data collection software, and condition assessments can significantly help in the performance of your assets and help you manage things effectively.
Take for example the implementation of an Asset Register. An Asset Register provides in depth assessment of your property that consistently and accurately captures information regarding the properties’ characteristics. What this means is you may calculate for depreciation and tax offsets as well as allocate funding where and when required thus maximising the potential for long-term savings.
Condition assessment and property data collection will also help you manage and maintain your assets. Condition assessment measures the actual and required condition of an asset and therefore identifies the actions needed to maintain that asset to its required standard. At Aston Industries our Data Tool applications can better plan corrective measures and improve your assets’ overall efficiencies leading to less disruption and decreasing the possibility of asset failure.
When managers are asked what the most important asset of their business is, they will invariably answer staff. However, equipment and property play an equally important role. When assets break down, the whole operation grinds to a halt and no matter how good your staff is, they will have a difficult time doing their jobs to optimum levels. An asset management plan will prevent the loss of optimisation.