Author: Ing. Mayuly Rodríguez, May 31, 2023.
Introduction
In industrial sectors, where efficiency, productivity and safety are key, there is a critical factor that often goes unnoticed: asset management . Ignoring it can have significant economic consequences for companies, both directly and indirectly. You know the different costs associated with the mismanagement of assets and how they can affect organizations. Can you afford to ignore them?
Asset management is the set of strategies and practices focused on maximizing the value and performance of a company’s assets throughout their life cycle. However, when it is neglected or poorly addressed, the economic consequences can be disastrous. From maintenance and repair costs to downtime costs and premature equipment replacements, every aspect of poor asset management has a direct impact on profitability and operational performance.
The reality is that every time a needed repair is postponed or preventative maintenance is overlooked, you are piling up a bill that will ultimately have to be paid.
Understanding asset management in the industry
Do you know the assets that your company owns ? The assets of a company are denominated in physical, technological and financial resources that an organization possesses, and are considered of great importance because they are used to carry out its operational activities; these include machinery, equipment, infrastructure, computer systems, and more.
Asset control allows knowing the value of the assets owned by the company and their useful life and involves efficiently supervising and managing these resources, ensuring their availability, reliability, and optimal performance. It also contributes to security and regulatory compliance, to ensure assets meet required standards.
A fundamental aspect in this management is the life cycle of the assets. This refers to the set of stages that an asset goes through from its acquisition to its retirement. These stages include planning, design, acquisition, operation and maintenance, and the eventual disposition of the asset. Effective management involves making informed decisions at each stage to maximize economic value and minimize the risks associated with them.
Direct costs of poor asset management
Inadequate asset management entails a series of direct costs that significantly affect the profitability and operational efficiency of an organization. Among the additional costs are:
Maintenance and repair costs are important factors to consider. Inefficient management would lead to recurring problems that require frequent repairs. This not only represents a significant expense in terms of financial resources, but also negatively impacts the assigned budget and the company’s production system. Proactively identifying and addressing these issues is crucial to optimizing asset availability and reliability.
Downtime is another costly factor in poor asset management . When these are not properly maintained or experience frequent failures, it results in lost productivity and business opportunities. This time not only has a direct impact on production efficiency, but also negatively affects customer satisfaction and the organization’s reputation. It is essential to implement preventive and predictive maintenance strategies to minimize downtime and maximize asset utilization.
Also, poor asset management could result in premature equipment replacement. When these are not properly supervised and maintained or are used beyond their optimal useful life, unnecessary expenses are incurred and financial risks are generated. Accurately and regularly assessing useful life, as well as implementing appropriate maintenance programs, is essential to avoid premature replacement and optimize the utilization of assets throughout their useful life.
Misguided asset management has very significant direct costs. Identifying and proactively addressing costs is essential to ensure efficient management and maximize the economic value of the business in the highly competitive industrial environment.
Indirect costs of poor asset management
Poor management is tangible to generate a series of indirect costs that go beyond operational aspects. These costs include those related to security risks and regulatory non-compliance, as well as lost opportunity costs.
Regarding the costs of security and regulatory compliance, they are direct consequences of deficient control of assets. Outdated or poorly maintained equipment increases the risks related to the operation, which can result in work accidents and property damage. These incidents not only pose a danger to the health and safety of employees, but can also result in fines, legal penalties, and damage to the company’s reputation.
The inadequate implementation of asset management can lead to lost opportunities and decreased competitiveness in the market. Lack of ability to seize new market opportunities due to inefficient or unavailable assets results in lost share and decreased competitive advantage. Competitors who manage their assets effectively seize opportunities in bulk and gain a strong position in the market, thereby maximizing business growth potential.
Tools and best practices for effective asset management
When an asset management system is implemented, it is necessary to propose a solid structure and a specific frame of reference to manage them efficiently. This system allows the identification, evaluation and monitoring of assets, as well as the planning and execution of maintenance strategies, performance monitoring and logical decision making.
The adoption of new systems, the use of technology and specialized programs is an increasingly relevant practice in asset management. Technological solutions, such as the Internet of Things (IoT), predictive maintenance based on data collection, and remote monitoring systems, make it possible to obtain real-time information on the operation and performance of assets. With this they identify potential problems, perform proactive maintenance and make informed decisions.
Specialized software , such as computer-aided maintenance management systems (CMMS) and enterprise asset management (EAM) software that is important because it helps companies monitor, evaluate, manage, and optimize the quality and reliability of the assets. The objective of these software is to optimize the quality and use of assets during their life cycle, increase productivity and reduce operating costs.
On the other hand, the training, development and culture of the personnel are fundamental for a positive management. Providing employees with the knowledge and skills necessary to understand and use the tools and practices is essential. Training can range from understanding the principles of asset management to handling specialized software and data interpretation. A competent and motivated staff is a valuable asset for an organization, as it contributes to sound decision making and successful strategy implementation.
How to manage an asset properly?
Some recommendations are mentioned that companies should take into account to efficiently control assets.
- Correctly classify all assets.
- Implement a robust enterprise asset management program to centralize information in one place and have better control.
- Select performance indicators to measure asset performance.
- Perform predictive and preventive maintenance of fixed assets to protect and extend their useful life.
- Plan activities, automate tasks and optimize resources.
- Run periodic comparisons of historical asset records.
Conclusions
The price of ignoring asset management in the industrial sector is undoubtedly high, the economic consequences will always be present. Recognizing and addressing the costs associated with asset management is critical to ensuring the long-term success of a business.
It is important to invest in asset management that is efficient and sustainable over time, this depends largely on the way it is implemented, the tools used, such as the use of methodologies, technologies and software, and an adequate training to the personnel involved.
By taking proactive steps to manage assets effectively, companies experience a positive impact on profitability and growth. Reducing maintenance and repair costs, minimizing downtime, meeting safety standards, and seizing market opportunities all translate into greater operational efficiencies, higher customer satisfaction, and a strong competitive advantage.
References
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