Asset longevity is greatly dependent on its management. If an asset is being managed well with timely maintenance and replacement of spare parts, then it will stay productive throughout its entire lifecycle. To ensure maximum returns to asset investment, businesses can implement some guidelines and policies– labeled as asset management best practices. With proper guidelines in place, organizations can sustain consistency in asset management across departments.
What are asset management best practices?
Asset tracking best practices include a list of guidelines that define an organization’s approach toward the upkeep of its assets. These policies are a level up from the daily practices that are followed and ensure optimal performance for all resources. Such practices can be adopted and molded based on current asset requirements of a business.
Depending on the nature of the business, best practices can be defined as formal or informal. Strict rules and regulations based on government compliance and manufacturer’s warranties are mandatory, while others can be precautionary measures put in place for safety and efficiency.
Here is a table of some common asset management features and associated common best practices that are adopted by businesses:
Why should you implement asset-tracking best practices?
Asset management best practices enable you to make the most out of your assets. While general housekeeping tasks can keep the assets in working condition, they will not be able to perform at optimal value. Let’s discuss some of the reasons why your business needs to implement best practices for managing assets:
1. Structured frameworkÂ
A reliable set of do’s and don’ts for asset management helps employees use tools and equipment properly in the recommended way. Best practices provide rules and safety guidelines for using heavy machinery and vehicles that can be easily damaged if not catered to in the right manner. With a list of practices in your project management tool, there is a lesser chance of confusion as the same rules apply across locations and teams.
2. Identifies and fills management gapsÂ
Best practices can be introduced wherever deemed necessary. For example, an organization faces frequent stockouts of printing paper every month. The problem is that no minimum level of stock is defined to initiate a purchase order. Setting a best practice with a minimum threshold of quantity to generate a purchase order eliminates unexpected stockouts.
3. Encourages risk management Â
Setting a certain standard for asset practices ensures that all tasks are carried out in an optional manner. In this way, a well-defined set of rules prevents costly losses and minimizes the chances of a breakdown. According to research, 80% of the maintenance is reactive rather than preventive. This can be tackled by scheduling regular maintenance sessions for your assets.Â
Top 15 asset management best practices
A business can save significant manpower and costs by implementing best practices for asset management. These policies help improve operational efficiency by reducing recurring roadblocks. Here are the top 15 best practices for asset tracking that businesses can make use of:
1. Proper inventory and classificationÂ
The first step towards efficient asset management is the proper classification of all items. A single organization can own multiple different types of assets with particular details that need to be recorded. The best way to go about creating an inventory would be to categorize all the information you need to record about assets. For example, name, description, ID, purchase date, depreciation method.Â
There can be different lists for each category of asset. IT devices can have their own specifications, heavy equipment can have their own and so on. The best practice is to create a template for adding new assets and relevant information so that nothing important is missed out on.
2. Lifecycle trackingÂ
For maximum returns on investment, an asset should be tracked throughout its lifecycle. This includes proper inventory and classification from the moment it is acquired to maintenance, upgrades, and disposal. A business can define certain best practices for lifecycle management, including the use of automated software to tag, scan, and calculate depreciation. Such practices will ensure that the asset is accurately tracked for its condition and value.
A single software to manage the asset lifecycle makes it easier to schedule activities related to procurement and maintenance by having all critical data in one place.
3. Assess need for upgradesÂ
One step ahead of lifecycle management, another best practice for optimal performance is timely upgrades. Whether your business is dealing with small tools or heavy machinery, malfunctioned assets can be a blocker for productivity. Moreover, obsolete assets can slow employees down by causing unnecessary delays even after hours of maintenance. A good policy is to define asset behavior that indicates its time to upgrade.
4. Secure asset disposalÂ
Once assets have been categorized as obsolete, the next step is to dispose of them. Failure to get rid of obsolete assets may result in financial blocks where the item just ties up money unnecessarily. A good way would be to timely assess asset condition and figure out if it can be salvaged at some monetary value. In case, there is no salvage value, then the asset should be safely disposed of.
5. Establish compliance rules
There are certain guidelines and policies that need to be closely followed when working with machinery, medical equipment and tools. Failure to adhere to asset management compliance rules can result in heavy fines. The best way to avoid non-compliance is to attach the relevant documents along with your asset details in the tracking system.Â
For example, for heavy machinery you can attach a list of maintenance guidelines so that they can be easily accessed by anyone who is using the machine. It can also be helpful to hold training sessions for employees to brief on compliance rules so that they can follow without any confusions.
6. Set up procurement approvalsÂ
Purchase order management done in the right way can help manage costs without exceeding budgets. In a common scenario, anyone can create a purchase order and it can be forwarded for procurement. What if the asset requested is planned to be discontinued next month? The whole process will be void, ending up trying money.
To avoid such mishaps, it is a good asset management practice to set up approvals for every purchase order falling under a certain amount. This way every order big or small can be reviewed carefully by the relevant manager and then approved.
7. Define stock thresholdsÂ
Smooth business operations require a well-planned procurement cycle without any shortages. An unexpected outage can delay and even halt tasks. To avoid any roadblocks, a business can simply define minimum stock threshold levels that can trigger procurement for critical assets.
Let’s say you never want to go below 5 replacement batteries for the projector in the library. So, you set up a minimum stock threshold of 5 in your inventory tracking software. Every time the stock hits 4, you will get a low stock alert. This will act as an indication to order more batteries.Â
8. Track critical metrics
A business cannot achieve its targets and goals without setting the right metrics to measure performance. Similar is the case with asset management, without an end goal in sight it is very difficult to surpass a target. To provide a clear and structured approach, it is best to set relevant asset management metrics and KPIs that you want to focus on.Â
These metrics can be related to cost savings, overall equipment efficiency or maintenance. Setting these up enables you to record baseline performance and track it over time to meet annual and quarterly goals.
9. Run regular asset auditsÂ
Asset audits are run by organizations to verify the value and condition of items. If a business does not run regular audits, there are chances of item loss, theft and misplaced assets. When there is no certainty in the number of assets owned by the business, it also becomes difficult to calculate the net value of business assets.
To avoid such problems, audits are a critical best practice for asset tracking. Audits can be organized by location, asset group, or cost price. Depending on the nature of business assets, audits can be held annually, biannually, or even quarterly.
10. Implement access control
Tasks can get delayed if employees don’t have access to the right assets. Whereas, giving an all-pass access to sensitive information can be a security threat for the organization. The best way to overcome this challenge is to create custom roles for all members in your team. Then you can grant permissions according to the level of access required to assets. Implementing such an access control system saves time, is secure and speeds up workflows.
11. Automate workflowsÂ
Manual asset tracking involves a lot of errors and is time consuming. Sharing assets on an excel can take forever and making changes is another challenge that requires constant effort. An easy way to get past manual tracking is to automate workflows using asset management software. A cloud-based system sends out alerts, tracks maintenance schedules, records asset ownership– all in real-time. A centralized asset database with safety protocols in place is accessible to anyone working anywhere throughout the organization.Â
12. Evaluate performance reportsÂ
Asset management performance can be improved by close evaluation of critical metrics. This can be done by running regular reports to track key indicators over time. For instance, if your goal is to lower costs, then you can generate a report covering procurement, maintenance, and acquisition costs. These reports present comprehensive data that can aid in strategic decision-making.
13. Eliminate ghost assetsÂ
On average 15-30% of company assets are ghost assets, which means they show in records but don’t really exist in reality. A good practice is to physically match records with the actual assets in the warehouse to write off ghost assets from the inventory. This will help businesses clear off extra costs related to taxes and insurance.Â
14. Create asset groups
When dealing with hundreds of different types of assets, it is a good asset management best practice to classify inventory. This can be done by creating groups of related assets for easy management. Once a group of assets is created, they can be treated as a single unit for important actions such as depreciation, procurement, and retirement. An example would be a group of IT devices for laptops, printers, and more.
15. Monitor custodyÂ
Organizations operating without a tracking mechanism tend to lose out on valuable assets, resulting in costly replacements. A smart way to prevent misplacements is to track asset custody at all times. This can be easily done by enabling signature checkouts through your asset management system.
Gear your business for success with asset management practices
An organization without the right policies in place cannot meet its objectives and goals. Especially when it comes to asset management it is critical to implement the best practices in place to derive maximum returns. Having such policies in place increases operational efficiency, lowers downtime, and improves productivity. Designing a best practice for all your assets helps employees complete their tasks without delays and flag any roadblocks on time for instant rectification.
