Effective asset management is the coordinated activity of an organisation to realise value from its assets and is dependent on accurate, up-to-date, and quality asset information. This requires asset management to interact with many functions and departments of an organisation as assets can touch many areas.
Comprehensive Asset Management Includes A Range Of Functions
Governance can be best described as the process and structures used to direct and manage the business and affairs of an organisation in a planned and ethical manner, with the ultimate goal of achieving financial viability and creating value for the business.
Risk is a set of recognised potential events that will prevent the company from achieving its objectives.
Compliance involves understanding and delivering on the expectations and obligations of all internal and external stakeholders, taking both legal obligations and voluntary standards into consideration.
Four Primary Risks to Effective Asset Management
A sustainable GRC organisation should have a framework and management structure that include clearly defined roles, responsibilities, activities, and systems to analyse and manage each recognised aspect of GRC.
The objective is to transform these activities from a costly burden into a strategic management tool, enabling the company to respond flexibly and effectively to changing stakeholder demands and lay a solid foundation for business success.
1. Not knowing what you have
In common manufacturing industry jargon, this is known as the FDH (Fat, Dumb and Happy) approach to asset management. While it might seem intuitively obvious, many organisations either don’t appreciate the need to know with an elevated level of confidence, the assets that they have, or they choose not to take the time to do so.
2. Over or under maintenance
During the operational phase of the asset life cycle, there can be a problem of over-maintaining as well as under-maintaining. The key issue regarding maintenance typically involves two issues that will make the asset management system ineffective. Firstly, there is a significant cost associated with the execution of non-value-added maintenance. In this regard, the cost can be loosely used as a guideline since there are well-documented industry benchmarks for maintenance spending that can be followed. Secondly, the typical organisation that can be accused of over-maintaining its assets will be performing intrusive maintenance tasks more frequently.
Maintenance is often viewed as a business expense open to cutting like any other to maximise profits. With these pressures, maintenance departments are constantly struggling with how to balance cost with the performance requirements for the assets such as reliability and uptime.
3. Improper operation
Many organisations suffer first of all from a lack of understanding of the inherent design capabilities of their assets and secondly, how best to operate within their ranges to optimise the asset life cycle. For some assets, either operating below or above the design range adversely affects the life of the asset.
4. Improper risk management
The basic tenet of best practices asset management dictates that a plan is implemented that not only manages the operation and maintenance of an organisation’s assets but also manages the risks associated with the ownership and use of the assets. Risk, in its most elementary form, is a function of consequences and the likelihood of such an event taking place. Risk management takes place on two major fronts: 1) assessment or identification; and 2) management and controls. Each area, when not done well, is a continued contributor to ineffective asset management.
Enterprise Asset Management and Computerised Maintenance Management Systems (EAM and CMMS) in recent years have become more popularly used within medium to large organisations to manage assets and maintenance. Some systems have inherent deficiencies that prevent holistic management of all the required areas of the plan. That being said, of the features that are available from most EAMs, many organisations are guilty of not fully utilising them.
Value of Effective Asset Management
Improved financial performance
Improving the return on investments and reducing costs can be achieved while preserving asset value and without sacrificing the short or long-term realisation of organisational objectives.
Informed asset investment decisions
Enabling the organisation to improve its decision-making and effectively balance costs, risks, opportunities, and performance.
Managed risk
Reducing financial losses, improving health and safety, goodwill and reputation, and minimising environmental and social impact, can result in reduced liabilities such as insurance premiums, fines, and penalties.
Improved services and outputs
Assuring the performance of assets can lead to improved services or products that consistently meet or exceed the expectations of customers and stakeholders
Demonstrated social responsibility
Improving the organisation’s ability to, for example, reduce emissions, conserve resources, and adapt to climate change, enables it to demonstrate socially responsible and ethical business practices and stewardship.
Demonstrated compliance
Transparently conforming with legal, statutory, and regulatory requirements, as well as adhering to asset management standards, policies, and processes, can enable demonstration of compliance
Enhanced reputation
Through improved customer satisfaction, stakeholder awareness and confidence
Improved organisational sustainability
Effectively managing short and long- term effects, expenditures, and performance, can improve the sustainability of operations and the organisation.
Improved efficiency and effectiveness
Reviewing and improving processes, procedures and asset performance can improve efficiency and effectiveness, and the achievement of organisational objectives.
Effective asset management is an integrated approach to optimising the life cycle of your assets, tools, and equipment, beginning at purchase through to usage, decommissioning, and disposal. By acknowledging and paying attention to the risks to effective asset management you can put in place plans to mitigate the effects.
Increase stakeholder and asset value
Meet GRC objectives and plan with consistency across the entire organisation
Keep customers and other stakeholders happy
Recognise the need to replace/refurbish assets when they reach the end of the life cycle
Identify and evaluate the unusual performance of assets
Strategic asset management is established to address asset management for long-term planning of your assets, maintenance, and operations. Asset management and asset tracking is critical to a successful business strategy and builds a culture of responsibility
Getting it right the first time takes planning, resources and treating the implementation as a major change program and not just a project. This is easier said than done and is often best when supported by the services of change management professionals and asset infrastructure specialists.
We often fail to recognise that our human resources and business processes are important parts of an organisation’s asset management system. A lack of due diligence in these areas will also negatively impact the bottom line and should be planned for as well.
