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You’ve worked hard to instill asset management best practices into your business. But what happens when you’re not around or someone else needs to dispose of an asset?
If you don’t know, then you have a problem.
You can have the best asset management software on the market, regularly audit your assets, and comply with your industry’s regulatory requirements. Still, it’s all for naught if you don’t write your practices and policies down somewhere.
That’s why you need an asset management policy.
An asset management policy defines your principles and best practices, ensuring everyone in the organization can follow them to the letter. It helps your business get ISO certified, too.
In this article, we’ll explain what an asset management policy is, why it’s so important, and how you can start creating one today.
What is an asset management policy?
An asset management policy is a set of guiding principles and goals related to your practices. As we outlined in the introduction to this article, implementing asset management best practices only works if other employees know what they are and why they’re important.
That’s the job of your asset management policy.
An asset management policy can be applied to any type of asset — whether physical, technological, finance, or human resource — and should define how employees treat an asset throughout its entire lifecycle, from purchase to maintenance to disposal.
It highlights which assets are covered (usually all) and guides decision-making. In other words, after reading your policy, employees should know exactly what to do regarding each asset.
An asset management policy isn’t just a nice-to-have document, however. It’s a core requirement of ISO 55001:2014.
What is ISO 55001:2014?
ISO 55001:2014 is a global asset management standard developed and governed by the International Organization for Standardization (ISO). The standard applies to all types of assets and aims to help companies better manage asset life cycles.
ISO 55001 is particularly relevant in capital-intensive industries like construction and manufacturing, which have a lot of expensive physical assets and high fixed costs.
Why do you need an asset management policy?
An asset management policy is one of the core requirements of ISO 55001:2014 certification — you can’t get certified without it.
But that doesn’t mean you have to be in the process of getting ISO-certified to create one. There are several benefits to creating an asset management policy beyond ISO certification. These include:
- Boosting efficiency
- Setting an executive mandate
- Defining the roles and responsibilities of employees
It boosts efficiency
Creating an asset management policy will go a long way to ensuring everyone in your company follows best practices. That alone should help your company to use assets more efficiently and reduce costs associated with asset repair and replacement.
But the document itself will also help employees work more effectively. Rather than waste time asking department heads where to find assets, how to use them, or submit maintenance requests, they can use your concise and accessible asset management policy to learn what they need to know.
It sets an executive mandate
Why should regular employees care about asset management? That’s one of the most important questions your asset management policy should answer.
Physical assets are usually some of your company’s most important and high-value equipment. They tend to be fundamental to an organization’s success and need to be cared for appropriately. Despite this and the best efforts of maintenance teams, regular employees don’t always take asset management seriously or hold it in the highest regard.
An asset management policy helps stakeholders and executives to lead from the front in this regard, setting a tone the entire organization will follow. As such, your policy should contain a concise statement of stakeholders and other executive leaders outlining why asset management is so important and how it helps the company achieve its goals.
It defines employee roles and responsibilities
One of the major objectives of an asset management policy is to define each employee's roles and responsibilities clearly. Everyone in the company can impact asset utilization and lifespan, so it’s in your best interest to ensure they have the resources to make the correct decision.
That means identifying things like:
- Who is responsible for assets at every stage of the life cycle
- How employees should request asset maintenance
- How employees dispose of assets
- What procedures they need to follow
A good asset management policy will leave no room for interpretation and make it easy for employees to take immediate action.
How to write asset management policy
If you create an asset management policy to become ISO 55001:2014-certified, the standard will guide you. It outlines which sections are mandatory and which are optional.
The standard is still a good guide if you aren't getting certified. Alternatively, you can follow our step-by-step guide below:
Start with a summary
The summary should be a short section (no more than a few paragraphs) that sets out the overarching goals of the document.
However, explaining the critical nature of asset management isn’t enough. To help people understand its importance, you must tie asset management to your company’s mission and goals. Show how excellent asset management can help your company succeed and grow in the future — and how everyone has a role to play.
Determine the scope
Next, highlight all of the company assets the policy applies to, the company’s products and services to which they apply, and the employees, too.
You may need to conduct an asset inventory at this stage to list your company’s assets accurately. It’s probably a good idea to do so even if you think you have excellent visibility into your company’s assets. After all, you can’t protect assets you don’t know about.
It’s important to take your time at this stage. It’s arguably the most important part of the document, and any ambiguity here could mean that your asset management practices won’t be carried out.
Use your asset inventory as a chance to document as much information as possible about each asset and store it in your asset management software. This could include each asset’s:
- Name and location
- Value
- Date of purchase
- Expected life cycle
- Last update or repair
Describe your principles of asset management
Now, we are getting into the meat of the document and your first chance to outline your general rules and best practices regarding asset management.
This will probably be the first page employees will read in detail, using it as a blueprint for how to apply best practices in their everyday lives. Make sure you provide relevant examples as a result.
For example, if one of your principles is integrating asset management with strategic planning, provide an example of how an employee might use this principle when submitting a purchase request for a new asset.
You should also use this section to explain the intended outcomes of asset management in your company. This should add some color to the points above and make employees understand why they follow your outlined principles. If you show that good asset management will make their lives easier through improved reliability, employees will likely follow your guidance.
Define asset maintenance procedures
Regular and proactive maintenance procedures are essential to keep your assets operating at peak performance and increase asset lifespan. As such, part of your policy should describe a maintenance schedule for each asset.
Because maintenance includes regular inspections and servicing, it is important to outline who is responsible for maintenance and how often they need to carry out these procedures. If this includes regular employees and your maintenance team, then adding step-by-step instructions is sensible.
This policy section should also touch on when to repair vs. replace assets. A time in an asset’s life cycle will inevitably come when maintenance no longer makes sense. Outline your company’s process for making this decision — whether it’s based on the repair cost or other, more complex calculations — and who should be involved when making the decision.
Provide an asset disposal procedure
Dictate what happens when assets need to be disposed of. This is usually the most resource-intensive part of the asset lifecycle (forms need to be filled, procedures need to be followed, etc.); therefore, it’s usually one of the longest parts of the asset management policy.
This section should also include your company’s asset write-off procedures. If forms or checklists are involved, include them if it makes sense — otherwise, direct readers to where those forms can be found.
Lay out responsibilities
This is another important part of your policy for readers unfamiliar with the company’s asset management practices. This section should highlight who in the company is responsible for which assets at every stage of their lifecycle.
For example, which decision-makers should be involved when purchasing assets? Which employees or departments are responsible for maintaining assets?
The more detail you can add here, the better. Obviously, you don’t want to make individual employees responsible for each asset, but it’s a good idea to make certain departments responsible for certain assets.
Finalize and review the document
Once you’ve written a first draft, circulate it amongst department heads and other stakeholders for feedback. You can also seek expert advice from outside the company, especially if you plan to become ISO-certified.
Implement their feedback and then give the document one final review. Make sure to spend time trimming the fat. The best asset management policies are concise, actionable, and easy to understand. The goal is employees know what they need to do, regardless of who is reading your policy — so clarity is key.
Achieve this by using headings, subheadings, short sentences, and bullet points that break the copy up. Your final document should get to the point and be a sensible length. Ask employees to read a copy and quiz them on its contents if in doubt. The document is probably too dense if they can’t answer simple questions.
Don’t forget to review and revise your asset management policy regularly. This living document will need updating whenever new assets are acquired or the underlying policies and best practices change.
Improve asset visibility with RedBeam
An asset management policy should be considered necessary, even if you aren’t becoming ISO-certified.
It gives clarity and purpose to your employees, improves efficiency, and helps to ensure the best practices you implement are actually followed by everyone from stakeholders down.
Make sure your policy is as accurate and detailed as possible by using an asset tracking solution like RedBeam to inventory your audits and store data in a secure and accessible environment. Our user-friendly platform makes it easy for anyone in your organization to see what assets are available, where they are, and learn anything else they need to know about them.
Improve your asset management practices with market-leading software today. Try RedBeam free for 30 days.
