16 August 2021

Tackle These 5 Biggest Risks To Ensure Effective Asset Management

The performance of an organization's physical assets has a significant impact on its day-to-day operations. As a result, these companies are always striving to improve the performance of their assets by an asset tracking software

What is Asset Management?

Asset management is defined as "systematic and coordinated activities and practices through which an organization efficiently and sustainably manages its assets and asset systems, their associated performance, risks, and expenses over their life cycles for the goal of accomplishing its organizational strategy," according to the British Standards Institute's PAS-551 standard on asset management.

Different forms of assets management tools that contribute to the corporate strategic plan include physical, financial, human, information, and intangible assets. There are five such hazards that largely contribute to an organization's inability to manage its assets optimally:

⦁ Inadequate operation

⦁ Over or under maintenance

⦁ Not understanding what they have

⦁ Asset management systems that are not optimized

⦁ Impoverished risk management

Let us discuss the 5 biggest risks for effective management:

1. Inadequate operation

Due to the lack of awareness of their assets' intrinsic design capabilities, as well as how to effectively operate within their ranges to maximise the asset life cycle many companies suffer. The life of some assets will have a negative impact if the functioning of the design ranges below or beyond the design.

The best recommendation in such circumstances is:

⦁ Determine how your assets should be managed

⦁ Comprehend the consequences of operating outside of design ranges

⦁ If you are unable to operate within the ranges, comprehend the hazards, or reduce the risks

2. Over or under maintenance

There might be an issue with both over and under maintenance throughout the operating phase of the asset life cycle.

The problem of under-maintenance and how much it hinders effective asset management has gained prominence. Maintenance is usually seen as a business expense that, like any other, might be minimized in order to enhance profits. With these demands, maintenance teams are always attempting to strike a balance between cost and asset performance objectives like dependability and uptime. Cost reduction, on the other hand, frequently wins out in the shape of postponed preventative maintenance and maintenance workers that lack the required expertise and instruments to do an accurate job.

The following measures should be taken to address both over-and under-maintenance issues:

⦁ Begin with the most valuable assets.

⦁ Determine the assets' optimal maintenance requirements using a more rigorous methodology like Reliability-Centered Maintenance (RCM).

⦁ Both economic and human resources should be levelled and should carry out the maintenance plan.

⦁ Finally, make certain that a training strategy is in place to narrow the skills gap among the people who will be doing the duties.

3. Not understanding what they have

In the industrial business, this is referred to as the FDH (Fat, Dumb, and Happy) approach to asset management. While it may appear intuitively clear, many companies either do not recognise the need to identify, with certainty, the assets that they have or choose not to take the effort to do so. This is the most important step in ensuring the effectiveness of one's asset management program. It's like playing Russian roulette if you don't know what you've got. If a company is serious about its program, it must take the following measures to lay the groundwork for future growth:

⦁ Make a physical asset hierarchy and customise it. In this regard, the International Organization for Standardization (ISO) 142242 shall be applied.

⦁ Create and apply business-criticality evaluation criteria to the verified asset base. This is the area where specific assets are related to how they influence the overall strategic strategy of the organisation.

⦁ Create and execute a change management or configuration management procedure to ensure that any major asset modifications are appropriately reviewed and recorded

4. Asset management systems that are not optimized

Enterprise Asset Management (EAM) software have grown more popular in recent years for asset management inside businesses. Most systems have flaws that prohibit them from managing all of the plan's requirements holistically. As a result, additional secondary systems are usually needed. Having said that, many businesses are guilty of not fully utilising the capabilities offered by most EAMs. Typically, this is the result of shortcuts used during the EAM installation. To tackle this problem properly, either do it correctly the first time or spend more money doing it afterwards. This needs planning, resources, and viewing the deployment as a major transformation programme rather than a project.

5. Improvise risk management

The fundamental premise of best practices asset management requires the implementation of a strategy that not only controls the operation and maintenance of an organization's assets but also manages the risks connected with their ownership and usage. The risk, in its most primitive sense, is a function of the consequences and the likelihood of such an event occurring. Risk management takes place on two main fronts:

⦁ evaluation or identification

⦁ Controls and management

ISO's four-step approach should be used.

⦁ Create a context

⦁ Risk assessment includes the following steps: risk identification, risk analysis, and risk evaluation.

⦁ Risk management

⦁ Keep an eye on and review

Asset management is a comprehensive strategy to maximising the life cycle of your assets, by recognizing and paying attention to these major risks to efficient asset management, you may put measures in place to reduce the impact these risks may have on their program.