When you plan your journey, you start by looking at the options that will get you to your destination. The options depend on your implicit understanding of your location.
Owning or working for a small or medium business requires wearing many hats. There are competing demands for your attention. Many tasks, some repetitive. And, the constant rush to pursue opportunities. This can lead to making short-term decisions. And, missing out on taking a more strategic approach to growing the business.
Your fixed-assets are the backbone of your business. How well you manage them can determine how profitable you are. Your assets are very diverse and present different challenges. They include the property and the facilities where you operate. Also, all the equipment that helps you create value and deliver it to your customers. And, they all generate costs to your business.
What can you do to minimise operating costs and maximise your profits? In this article, we propose using the Institute of Asset Management’s maturity scale as a road-map to achieve excellence. The journey involves an iterative process where you assess, plan, and execute your tasks. And, re-assess your progress.
When you plan your journey, you start by looking at the options that will get you to your destination. The options depend on your implicit understanding of your location. It is that simple. So, when managing your fixed-assets, it is important to know how well are you managing them. Your strategy and the tasks to enact it will depend on it.
This road-map builds upon the Institute of Asset Management’s maturity scale. The scale helps you understand your level of competence in asset management procedures. It follows best practices and ISO-55001: 2014. It includes three main stages in your journey with two transitional ones.
Figure 1: Asset Management Maturity Stages (Based on IAM.org)
At this stage, you “know” there are things that you can do to make savings using your assets. Yet, you either lack information or don’t know where to start. It can feel overwhelming. So, your efforts are reactive and lack consistency.
SMEs find that using spreadsheets is a good way to manage their assets. Yet, when managing more than 50 assets, spreadsheets become difficult to upkeep.
Some of the challenges you might face include:
- Keep track of your operating costs (i.e. fuel/energy consumption)
- Manage repetitive administrative tasks
- Schedule maintenance or repair procedures
- Manage your contracts and warranties
- Handle your procurement process
- Prevent asset theft and loss
- Guarantee regulatory compliance
Even so, this is a good point to start collecting information about your asset use. A software application can help collect and share information in your organisation. Also, you could start looking at tags and sensors to track your assets. For more details, please read our article on Asset Tracking, Why Should You Care?
You developed a plan and are implementing it on an ad-hoc basis. Because this is a transitional stage, many of your actions are reactive. Yet, you are seeing positive results. Some are the result of behaviour changes due to active supervision. Other consequences are due to the new insights derived from your data collection.
For example, a centralised data management system could help your users collaborate. Also, it could provide transparency to your operations. Using dongles and tags helps you collect information about asset’s location and use. Automating administrative procedures can free time to work in other areas of improvement.
Even so, you are testing procedures. And, the feedback will allow you to move forward in efficient ways. But don’t despair if you have to review your assumptions and plans.
You have in place proven procedures and an appropriate data management system. You are improving by testing, measuring, and reviewing your operations. You accomplished:
- A full inventory
- Real-time management
- Use of collaborative tools
- Leverage connected assets
At this stage, you are proactive and you can be strategic.
You have a fair understanding of your operation and have collected enough data for a long time. You are using asset management as a competitive advantage over mature players. So, you are at the second transition stage in your journey.
You aim at financial optimisation through analytics. These techniques enable you to:
- Visualise trends
- Develop operational benchmarks
- Identify areas of improvement on leasing and service contracts
- Manage your procurement practices with a life-cycle perspective
- Achieve complete cost transparency
Finally, this is the stage at which you aspire to be, your destination. Yet, competition and new technologies will keep you on your toes. You will be looking for ways to improve and stay ahead.
Wherever you are in this road-map, you will want to move to the next stage or keep your level of excellence. And, a simple iterative process is your best solution to get where you want to be.
How to get to your destination?
Figure 2. Assess, plan, execute, and repeat
Step 1: Assess
Some time ago, we shared an article titled How much are your assets really costing you? We used the image of the iceberg as an analogy. Above the waterline, we can see the full extend of the ice. Yet, beneath the waterline, it is very difficult to have an idea of what lies. When you buy something, it’s easy to only consider the price tag. But what happens with the extra costs associated with an asset’s life cycle? These can bring some unfortunate surprises.
Collecting and analysing cost information is your goal. KPIs and relevant statistics are the metrics that will measure your progress. These will depend on your business and the types of assets you use.
Step 2: Plan
Depending on the available data, you can identify areas of improvement. Some will have higher returns on investments than others. You will create a set of tasks and define the metrics to measure the success of their implementation.
Step 3: Execute
Time to apply your plan. You can test technologies to improve performance based on your goals. But, the key is to collect data to measure the payback of your efforts.
Step 4: Repeat
You go back to assessing how well you did. And, start the cycle again.
The cycle allows you to build upon your experiences. Technology becomes a facilitator and repository of this process; it helps you collect information, share it in a timely fashion, and develop insights for testing again.
The general makeup of your assets depends on the business you are in. Yet, they all generate costs. Thus, keeping track of their use and performance will help you understand your margin.
Several technologies can help you with your particular asset management needs. From tracking their location to monitoring their performance. Also, centralising your data for quick retrieval is vital for analytics.
Yet, the most important thing to do, is understand where you are in your asset management stage. Once you can define your starting point, it will be easy to measure your progress.
BulbThings provides a powerful fixed-asset management platform. Designed for businesses of all sizes in a sleek and easy-to-use interface. It works with interconnected devices to collect real-time data. And, builds upon robust analytics to help you make smart decisions. The platform is the perfect companion to help you manage your assets in a competent way and beyond.
Institute of Asset Management Self-Assessment Methodology Plus
ISO 55001: 2014
BSI PAS 55: 2008