There's plenty of talk around asset management with many saying it's vital for improving the contracting industry. But what is asset management? How can it help your business? Furthermore, do you even need to be worrying about it?
Asset management is a comprehensive process and culture directed at gaining the greatest utilisation and effectiveness from production and operating equipment. A good asset management or tracking system should keep your equipment operating effectively and ultimately increase your organisation’s bottom line.
By the very nature of its function, asset management is suited to larger organisations who have the level of assets to justify implementing such a system. However, for smaller organisations that may not be in a position to consider asset management, it is still worth understanding the basics in case circumstances change.
There are three major areas around which asset management can provide clarity:
Fleet structure
Do you know what you own down to the minute details? Without a specific tracking system, this can be difficult to measure – especially for contractors experiencing rapid growth, either organically or through acquisition. In some cases, organisations actually own more than they think they do, or decide to purchase more equipment simply because it's the latest and greatest on the market. For example, we’ve worked with customers who have had as many as nine more vehicles in a fleet than they realised. Unless you currently have optimum usage or additional equipment is required to operate your business more effectively, those funds should be allocated elsewhere.
Fleet utilisation
How much are you actually using your equipment? Asset management will take an economic assessment of your equipment and its level of utilisation. It may turn out to be more cost effective to hire or own it on a short-term basis instead but, without understanding how much you’re using your equipment and for what purpose, it’s very difficult to make an informed decision. As mentioned above, some organisations lose track of what they actually own, which is also a factor contributing to poor asset utilisation. Asset management helps you take an analytical view of your fleet, determine where assets can be best utilised and make a call on the most cost effective method of ownership.
Fleet value
Do you know what your fleet is worth? Asset management can provide you with an in-depth understanding of the value of your fleet, not just from an insurance or tax consolidation standpoint, but from a likely sale point of view as well. That is, it can help you realise what your fleet is worth should you be in a situation where it needs to be replaced or sold. We have completed valuations where we’ve found a customer's fleet to be worth considerably more than they believed, giving them additional equity.
So what does this all boil down to? It's about getting advice around having the right assets, the right approach and the purchasing power you need to get the best out of your business. An asset management system should provide comprehensive details about the structure, utilisation and value of your fleet, and be able to integrate that into your maintenance programs to ensure optimum returns on your equipment. An asset management system can give you finger tip control from beginning to end, while freeing up your time to focus on developing your business and servicing your customers.