Asset optimization results in better efficiency for any type of organization. Other benefits include improved oversight and increased ROI.
If you are eager to exert better control over your assets and inventory, consider asset optimization.
This post explains what asset optimization is, as well as how it differs from asset management.
It clarifies misconceptions about asset optimization and lists some of its benefits.
Finally, helpful guidelines for beginning asset optimization are introduced, as well as some tips on what to look for in the software you use for asset optimization.
In this article...
What Is Asset Optimization?
Asset optimization involves overseeing the life cycle of an item in a way that best manages its service span.
It asks managers and decision makers to carefully monitor every stage, from procurement or creation to disposal. Employees participate in this process by aiding with asset tracking.
Fields benefitting from asset optimization include:
- Construction
- Rental companies
- Manufacturing
- Hospitals and health care
- Educational facilities
When assets are fully optimized, overall ownership costs go down, so stakeholders are more involved with — and in control of — the items serving the company.
The items are more easily located and distributed, while mobile technology is quickly deployed to provide instant communication and data points.
Here’s an example of how GoCodes tracks and locates any company-owned assets.
After surveying all of its assets, a company gains a precise overview of how efficiently its assets are managed, as well as where they stand in their respective life cycles.
This information is then processed, deployed, and applied to make decisions about the ways to use the assets.
Then, maintenance schedules and systems are adjusted according to this information. These modifications typically result in reduced downtime.
Asset Optimization vs. Asset Management: What Is the Difference?
Asset optimization is not in opposition to asset management; in fact, these two important aspects of administration relate to and complement one another.
Asset management focuses on a holistic approach to the items a company owns and uses to reach its goals. It involves strategy, planning, and data analysis.
The company’s goals, including its potential expansion or contraction, are taken into consideration, as well as the impact of all management decisions.
The following are all part of the adjusting to an asset optimization perspective:
- data input
- management processes
- risk management
- collaboration and objectives of stakeholders
- financial flexibility
The aim of asset optimization is to focus on the qualities the business is seeking.
In asset management, however, a company focuses on delivering its product to clients and consumers in an efficient and cost-effective manner.
The organization’s concentration is on the process.
This can include a tally of energy consumption as well as the output of waste.
Asset management usually involves small-picture data discovery, as well as explorations of how well assets are utilized. Monitoring is a significant and ongoing aspect of this process.
Methodologies may come under question and discussion, and the ways in which assets are maintained could undergo review.
Misconceptions About Asset Optimization
Since not everyone fully understands asset optimization, and because it is so close to asset management and other popular management processes, sometimes the term is misused or even misconstrued.
It’s important to identify these misconceptions and separate them from the truth, in order to raise awareness of the vital importance of asset optimization. Here are just a few.
It’s Just a Marketing Term Invented by Consultants
One of the main misconceptions about asset optimization is that it’s just a marketing buzzword.
Some who are not familiar with asset optimization believe there is no actual financial reward to the process.
However, the truth is that the time, and workforce power invested in asset optimization results in healthy and sustainable growth, increased profits, and lower maintenance costs.
It Produces an Overwhelming Amount of Data
The process of transferring from no asset optimization to studying the data it produces indeed seems overwhelming at first.
Those unfamiliar with interpreting this information or those who have not considered ways to use it might feel lost.
Nevertheless, establishing clear goals and means of gathering data, as well as implementing thorough and useful employee training, ensures that the data captured through asset optimization is valuable and thoroughly understood.
Asset Optimization Is Just Good Maintenance Procedures
There is a great deal more to asset optimization than simply repairing items when necessary.
It is an approach that involves:
- preventive maintenance
- gathering information about repairs and contractors
- wholesale purchase of spare parts
- better inventory control of all items relating to the asset
The best way to approach asset optimization, then, is to view it as a help to the entire organization, rather than a patched approach to a few items.
The Benefits of Asset Optimization
Now that you understand more about how asset optimization can help a company from top to bottom, consider these specific ways it can increase profitability while decreasing downtime and miscommunication.
Asset Availability
Asset optimization improves asset availability, as well as overall management of these items.
Since asset availability is measured as a percentage of time an asset is usable, it can predict when and how often an item is available.
This is invaluable in project planning and the provision of timelines to clients. It can also help decision makers to manage production delays and overruns.
Calculating asset availability requires an understanding of an item’s downtime, as well as its total operating time.
This is impossible without some form of asset tracking, an integral aspect of optimization.
When an organization properly communicates scheduled downtime for maintenance and directs its workflow around these interruptions, technicians avoid overwork, and runtime estimates are more reliable.
Improve ROI
Return on Investment (ROI) measures the profitability of an investment, typically expressed as a percentage, and in some cases a ratio. Maximizing ROI on assets is a major aspect of managing these items, as well as the processes and operations they perform.
Possessing a detailed picture of the organization’s goals for this asset is crucial.
Once the procurement or creation process begins, having data from the item it is replacing aids in finding the best solution.
Improving ROI begins with an honest assessment of the weaknesses and strengths of the asset, as well as its depreciation rate.
Decision makers might ask themselves the following:
- How often did the old item break down, and how is this avoided in the replacement?
- Can we obtain replacements quickly?
- Is it more profitable to have dedicated technicians on hand in the event of a breakdown, or should we contract a third party?
- How can we best manage and interpret the data this item will generate as it works?
It is impossible to foresee the entire life cycle and ROI of a new or replacement asset. However, asset optimization can help stakeholders make informed decisions.
More Effective Maintenance and Reduced Downtime
Good asset optimization results in less costly operation, as well as more effective maintenance and reduced downtime.
Any kind of work stoppage, either on a single worksite or throughout an entire facility, can be costly. When downtime is unscheduled or unplanned, expenses tend to mount quickly and dramatically.
Unplanned downtime can result in the following:
- Expensive and ill-informed panic buying to replace assets beyond repair
- Hiring specialized contractors to make immediate adjustments
- Environmental incidents
- Lost production
- Worker injuries
- Project timeline slippage
- Delayed delivery to customers and clients
All of these effects result in heavy financial losses and irreparable damage to a company’s reputation.
However, equipment emergencies and unscheduled downtime can be avoided by scheduling part replacements ahead of time, such as during a typically slow period, and perhaps including several repairs or preventative maintenance actions at the same time.
The ability to do this results from good asset optimization.
Improved Productivity and Oversight
Asset optimization enhances employee accountability and improves productivity in a number of ways.
When employees feel appreciated, and motivated, they are more productive.
Knowing that they are part of a larger picture and that their contributions to asset tracking are valued fosters a good sense of teamwork in the employees.
In addition, when assets are tracked, they are better protected against theft.
Since asset optimization and tracking can include GPS tracing, as well as check in/check out information, a trail of custodianship is quickly established and preserved for as long as necessary.
This information is highly useful in forensic investigations, productivity studies, and warranty or insurance claims.
With the automated system that comes with asset optimization, employees are encouraged to focus on the task at hand instead of wasting time with endless paperwork.
They are also freed from attempting to track down missing items.
The information they need to perform their work is readily available, and authorization can be defined as the company deems necessary.
The How-to of Asset Optimization
Once the decision to undertake asset optimization is made, it is important to understand best practices for integrating it within a company.
A flexible approach to finding the way it fits various operations is usually the most effective way of taking on this task.
Part 1: Auditing Existing Assets
Effective asset optimization begins with a thorough and honest assessment of assets.
This usually includes a full inventory of each item, as well as making decisions about which items are actually useful to the company.
Here’s an example of how an inventory list looks like in Gocodes mobile app.
In some cases, this involves eliminating ghost assets.
Ghost assets are items that are no longer in service or have been stolen or mislaid.
They can prove costly for a company, as they provide an inaccurate count of inventory and assets, send employees on time-wasting missions to find an asset that no longer exists, and act as a drag on tax reports.
Eliminating them is key to good asset optimization.
Other aspects of an asset audit include:
- Re-evaluating or initially calculating item depreciation
- Tagging
- Description of item
- Uploading maintenance information
- Setting up movement patterns
Once the initial asset audit is complete, yearly audits to update the database are quick and automated.
It is a natural effect of scanning items as they move throughout a facility, back and forth to worksites, or through a supply chain.
Part 2: Optimizing
Best practices for optimizing assets can vary depending on the industry the asset is serving.
However, these techniques are generally effective:
- Investing in effective employee training
- Deciding which assets to track and optimize, as well as how
- Clarifying the goal of each asset, and how this fits with the company’s mission
- Establishing an efficient procedure for applying the insights from the audit
- Constructing a foundation for optimization success
- Building a framework for realistic and sustainable improvement
- Introducing optimization procedures
- Encouraging employee and decision-maker deployment of the system
- Regularly reviewing best practices
- Maintaining asset optimization
When strong underpinnings and sound philosophies for optimization are in place, they are easily sustainable.
Programs that are flexible enough to meet new challenges, yet are designed based on accurate interpretation of data, have the best chance for long-term success.
Asset Optimization and Software
Choosing the best software for asset optimization is critical. A suite such as GoCodes is ideal for several reasons:
- Scalable for several different departments and industries
- Usable in smartphones and other popular mobile devices, such as tablets
- Cloud storage for efficient retrieval
- Secure and stable data control
- Simple automation
- Patented QR tags, backed with globally unique ID codes
- Easy optimization and report generation
GoCodes not only provides current information, but it also helps to plan for the future.
When a company invests in a new asset, it is important to have key information about how it will perform, as well as what its life cycle will involve.
Conclusion
Asset optimization helps predict downtime, schedule maintenance, and identify common issues.
With asset optimization it is possible to detect trends, and create a workforce focused on reliability, as well as devise a consistent strategy focused on reducing downtime.
In short, it helps a company make the most of a major investment.
As a result, the company will also benefit from a streamlined workflow, increased efficiency, a sharper overview of the company’s parameters, and better purchasing decisions.
