Strategic asset management is important for organizations especially those organizations who like to stay ahead of the curve! In this blog, you will know what is strategic asset management and what are benefits of it! So, without wasting any time let us begin!
What Is Strategic Asset Management?
Strategic asset management is long-term planning & approach for maintenance and operations in which a long-term plan is made. This plan could be for the next 5 years or 10 years or 15 years. In this plan, it is decided, what is the objective of the company, where they want to reach, and what will be the role of asset management in these next few years!
Strategic asset management helps in estimating future goals and it helps let you know where you are and where you want to reach in the next 5-10 years.
To ensure that strategic asset management works efficiently an asset management software is essential.
An effective software will enable your team with local area-driven systems, consider the possibility that situation displaying and reporting tools that transform information into guides and objectives into realities.
An effective asset management software uses your data and information to give significant bits of knowledge in no time. This solution assists you with foreseeing the condition of your full asset portfolio into the future; make powerful live information reports that tells data and information stories to partners.
What Are the Benefits of Strategic Asset Management?
The benefits of strategic asset management are as follow:
1. Optimizing Asset Lifecycle
Several assets are not used to their full potential and the reason behind this is that they are no managed properly. When assets are not managed in the right way asset life suffers. But with strategic asset management software, managers can manage assets and equipment efficiently and increase asset life.
With automated software, you can know when assets were purchased how much asset productive life is left and it will alert you when asset life is about to be over. Furthermore, to improve asset life, the role of maintenance, operation, and finances become very crucial.
2. Asset Maintenance
Maintenance is very significant when you are planning for a long-term goal. In strategic asset management, maintenance is one of the main primaries’ focuses it helps in reducing overall downtime of assets and helpful in increasing uptime.
Most importantly, maintenance helps in making the asset more reliable. Furthermore, it decreases maintenance costs as well.
To make an effective maintenance plan, your organization and managers must focus on proactive maintenance. Proactive maintenance is a very critical part of maintenance for your strategic asset management success.
According to the 2017 capterra blog, “Businesses, on average, spend 80% of their time reacting to maintenance issues that arise rather than preventing them.”
3. Increasing Return on Asset (ROA)
If you are planning for the long term, it is significant that the asset takes less maintenance and it is more productive so that the return on the asset increases. For that asset, performance must be optimized by providing maintenance on time.
An automated software provides several indicators that help boost asset performance. For enhancing ROA, strategic asset management focuses on current asset condition, how long equipment is required for the specific purpose, asset optimization (given asset proper maintenance on time).
4. Removing Ghost Assets
Ghost assets can affect your business badly in several ways. Ghost assets are those assets that are mentioned in the accounts book but physically they are not available. It means that you are paying taxes for those assets which you are not even using. Furthermore, it creates compliance issues as well.
If during an audit it is found that your assets do not match with physical assets then the audit team will consider this as a fraud and you will be paying huge amounts of penalties.
However, strategic asset management software ensures that ghost asses do not exist in the organization. And if there are then remove them from account records in the right manner.
5. Regulatory Compliance
Compliance means you have to comply with the rules, regulations, and policies as per your business industry. If an organization does not follow rules and violate the policies of the industry then legal action can be taken against the organization.
Compliance can be divided into two categories internal and external. Rules that are made by the organization fall into internal compliance and rules that are made by government authorities need to be followed by organizations falling into the belonging industry.
Strategic asset management software ensures that organizations follow the rules and regulations made by the organization as well as government companies. When an organization does not follow the rules, this system alerts the manager about the same.
In the long term, this is one of the essential goals of organizations so that all the transactions are clean and investors do not hesitate in investing in the organization.
Choosing the best technology is only a step towards effective asset management. Strategic asset management needs detailed planning and it aims to improve daily operations, save time, giving maintenance on time, and a commitment to realize the value of effective asset management.
Overall, strategic asset management expects to improve bottom-line performance by minimizing unnecessary expenses, saving money, enhancing asset performance & taking better and smart decisions based on solid information not on assumption. All of this is not possible with effective asset management software, if you want to grow your business then this software is essential.
Frequently Asked Questions (FAQs)
Asset management helps in:
1. Regulatory compliance
2. Mitigate risk in terms of assets and pieces of equipment
3. Inventory management
4. Maintaining asset records,
5. Tracking and managing assets
6. Complete asset visibility and control
What are the basic required fields for managing assets?
1. Asset id number (UIN)
2. Asset manufacturer
3. Date of manufacturing
4. Asset model number
5. Asset serial number
6. Location of asset
7. Acquisition date
8. Acquisition cost
9. Useful asset life
10. Depreciation value
11. Salvage value
These are some essential requirements for managing assets.
Asset tags adhere to assets and pieces of equipment these tags have a unique identification number. These tags usually contain a barcode, QR Code (Quick Response code), or RFID (Radio-frequency identification). Once this barcode is scanned it fetch all the important information such as maintenance information etc. In assist organization in better management of assets.