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Equipment Asset Management: Definition, Benefits & Software

Every tool, piece of equipment, or item your business purchases is an investment. You buy equipment because of the returns it provides. Equipment asset management is also an investment — one that helps you get more out of all your equipment. Proactively managing your equipment increases its value by improving your ability to track assets, stop shrinkage, plan maintenance, extend equipment lifespan, and cut replacement costs. In this blog, we'll cover what equipment asset management is, how it benefits your business, and how to do it efficiently by leveraging asset tracking software.

Main Takeaways from this Article:

  • Equipment asset management systematically tracks equipment and other fixed assets to optimize utilization, maintenance, lifespan, and costs.
  • Leading industries that benefit from equipment asset management include manufacturing, construction, healthcare, and nonprofits.
  • Strategically managing equipment reduces shrinkage, extends asset lifespan, increases asset value, and cuts replacement costs.
  • Equipment asset management software uses scannable asset tags and software to digitize asset records for streamlined tracking, maintenance planning, and multi-location management.

What is Equipment Asset Management?

Equipment asset management systematically tracks, organizes, and analyzes equipment and other fixed assets. Managing equipment assets optimizes utilization, improves maintenance, extends asset lifespan, and cuts replacement costs. Equipment management strategies deploy scannable tags and asset tracking software to monitor resources efficiently.

Industries That Benefit Most from Equipment Asset Management

Industries that rely heavily on physical machinery, tools, and assets benefit most from equipment asset management. While certain benefits cut across multiple industry sectors, some industries benefit in specialized ways:

  • Manufacturing: Industrial manufacturers use equipment asset management to guarantee material availability, coordinate logistics, plan maintenance schedules, ensure machine dependability, reduce downtime, extend assets' lifespans, cut replacement costs, and claim depreciation deductions.
  • Construction: Construction firms manage equipment assets to track equipment from multiple sites, optimize maintenance schedules, maintain efficiency, avoid delays, extend machine lifespan, reduce replacement expenses, and report assets and depreciation.
  • Healthcare: Hospitals and healthcare providers use equipment asset management to coordinate sharing of assets between departments, shorten search time, maintain supplies of essential medical equipment, replace aging assets, and meet compliance requirements for medical waste disposal.
  • Nonprofit Organizations: Nonprofit organizations need equipment asset management to stay on budget by extending equipment lifespan, cutting replacement costs, claiming depreciation deductions, and avoiding compliance penalties.

Top 9 Benefits of Equipment Asset Management 

These are the top nine benefits businesses can reap from implementing an effective equipment asset management system.

1. Reduce Loss and Theft/increase Accountability

The first, and perhaps most important, benefit of implementing an equipment asset management system is that it decreases misplaced, lost, and stolen work equipment. By creating records of when and where equipment is used (and even who has used it), you can identify who is responsible for the equipment at any time. This accountability encourages employees to take greater care not to lose or misuse equipment.

These records also make theft more difficult because you know who has used it and will often notice something is missing more quickly. With just a quick look at your records, you’ll be able to find out where the tool was last used or checked out. If it’s not there, you can take action instead of waiting for the item to “turn up.”

2. Understand Asset Lifecycle and Value

Each tool or piece of equipment is an investment, and understanding the use and value you get from it is an important factor in budgeting and other decisions. Your records should include asset details like when equipment is purchased and how it is used and when.

You can also use your asset management system to keep track of equipment use. This potentially allows you to track the revenue critical assets produce. If you need to convince leadership to invest in a new asset, this kind of concrete information can be very persuasive. 

Over time, you will be able to see how long different equipment lasts and notice if certain brands or models last longer. Then, when it’s time for replacement, you can choose the equipment that provides the most value. By reducing loss and theft, you can often increase the lifetime and lifetime value of your equipment. 

3. Maintain and Get More Value from Assets

Equipment asset management is also an extremely effective way to document and even promote preventive maintenance. From vehicles to industrial refrigerators, many fixed assets need periodic care to continue functioning. 

When you document repairs and maintenance history in your asset records, anyone with access to your system will be able to check when an asset was last serviced. In fact, you can even set up notifications to remind you when it’s time for maintenance. This can help prevent equipment failure and lost revenue.

4. Extend the Life of Assets

Taking better care of your equipment will help it last longer and can help avoid costly breakdowns and repairs. For example, company vehicles require regular oil changes, tire rotations, tune-ups, and more. 

Between taking better care of your equipment and reducing loss and theft, asset tracking and maintenance management can extend the life of your investments. When you don’t have to spend your budget on constantly replacing equipment, you can use that capital for other revenue-generating purposes.

5. Enable Location Lending and Multi-Site Work

Many businesses operate out of several locations or may work on different sites every day. Plumbers and electricians, for example, may travel to several places throughout the workday, bringing their tools with them. A tool tracking system helps make sure equipment doesn’t get lost along the way. 

When you track equipment, you also make it easier to share important resources without losing them. For example, let’s say you have three business locations. Because scissor lifts are only needed occasionally, you might only have one for all three locations to use. Equipment asset management makes it easy to lend or move the lift from one location to another. You’ll have a record of where the lift is at any time, preventing confusion, loss, and delays. 

6. Improve Budgeting and Resource Planning

As we mentioned above, equipment asset management helps you understand the life cycles of different equipment. When you know how long an asset will last, you’re better able to project and plan for replacement costs.

For example, when creating next year’s budget, you can review your equipment records to identify items that may need replacement. This is a much better option than having an unplanned major expense halfway through the year.

With metrics around how much each tool is used and how much revenue it generates, you can also make data-driven decisions about whether to invest in costly equipment. Equipment use and revenue records make it easier to judge whether a potential purpose will ultimately pay off.

7. Reduce Human Error

In the past, employees might have had a handwritten or digital log in which they would write down an asset’s serial number. While this is better than having no tracking system at all, misread numbers, illegible handwriting, and other issues would often arise. One of the benefits of a modern asset management system is that it prevents the inevitable errors that occur when you’re tracking assets by memory or spreadsheet.

Using asset tags and readers (be they barcodes, QR codes, or  RFID tags) means an employee can’t write down the wrong number. All they have to do is point their scanner at the asset label, and the technology does the rest.

Keep in mind that training your employees on how and when to use their asset management tools is essential for success. Your team should know when assets must be scanned and who is responsible. 

8. Save on Taxes

For many businesses, equipment and  fixed assets are an enormous investment. Along with helping you get more return from that investment, asset tracking can get you a tax break.

Physical assets and machinery often decrease in value over time, which is called depreciation. Vehicles are a great example. We all know that, generally, older cars are worth less than newer cars. The same principle applies to your company’s fixed assets. The Internal Revenue Service allows you to write off that loss of value — or depreciation — when your business files taxes.

It’s important to note, however, that you have to keep diligent asset records to take advantage of this tax break. Within your asset details, you should keep track of each piece of equipment’s value at purchase and its salvage value each year. The difference is how much that asset depreciated. When you track depreciation across all your high-value assets, the tax savings can add up.

9. Maintain Detailed Asset Histories

Modern asset management software allows you to keep a chronological history of your equipment. These records are at the core of so many other benefits, including the ability to track lifetime value and depreciation.

This can also be extremely important for compliance measures. For example, if you find that there was an issue with a job, you can find out what other jobs used the same equipment, potentially allowing you to make corrections before new problems arise.

These records can be helpful documentation for insurance claims. They can also serve as proof of work because they have records of when and where equipment was scanned. In case of a disaster, up-to-date asset records can help you collect your benefits faster.

Equipment Asset Management Software 

An equipment asset management solution usually has three main parts: the unique asset tags that are applied to each item, the scanners (or mobile devices) that allow you to read those tags, and the asset tracking software that stores, analyzes, and displays your asset records. Because it holds all your data and item histories, your asset management software is at the center of tracking and maintaining your equipment.

By providing a central digital interface for data, asset management software like RedBeam simplifies equipment management, making it easy to document, find, and learn from equipment data. This data-driven insight empowers you to optimize acquisitions planning, asset utilization, maintenance scheduling, and replacement budgeting. To achieve these goals, your asset management solution should include certain essential features.

Key Features to Look for in Equipment Management Software

Essential software features for effective equipment management include real-time tracking, preventive maintenance scheduling and alerts, customized reporting, and support for your software environment:

Real-Time Asset Tracking

Tracking assets in real time keeps your system up-to-date and lets you locate equipment instantly. RedBeam facilitates real-time tracking by using a cloud-based asset management solution that syncs data from scannable barcodes and mobile devices.

Preventive Maintenance Scheduling

Planning maintenance proactively pre-empts equipment breakdowns and unscheduled downtime. RedBeam supports preventive maintenance scheduling by letting you create maintenance logs for past, present, and future dates and times.

Automated Maintenance Alerts

Automating maintenance alerts ensures you don't miss critical repairs and replacements. RedBeam's mobile accessibility supports setting up maintenance notifications.

Custom Reporting & Analytics

Viewing customized reports lets you see the data and analytics insights you need to implement your equipment management goals. RedBeam's platform lets you create custom fields and filters for mining analytics insights.

Multi-Location Asset Management

Managing equipment across multiple departments, facilities, or sites can be tricky if you're trying to use different tracking systems at each location. RedBeam simplifies multi-location management by letting you set up custom fields for different companies, buildings, rooms, and departments.

Seamless System Integration

Sharing data between your equipment management software and other apps such as accounting software requires support for integration. RedBeam makes integration easy by supporting REST APIs and smart data importing.

Maximize Equipment Value with RedBeam’s Asset Management Solution

Equipment asset management helps you get more out of your assets by improving utilization, maintenance, longevity, and cost-efficiency. A good asset management software solution supports this by automating essential tasks and making it easy for you to view, manage, and apply your equipment data.

RedBeam streamlines equipment management by providing a cloud-based interface and mobile scanning technology to simplify asset tracking, manage assets from anywhere, and mine asset data for valuable insights into equipment. To learn how RedBeam can help your business maximize the value of your equipment investment, schedule a demo today.

Equipment Asset Management: Frequently Asked Questions

What is an equipment asset?

Equipment assets are non-current, tangible fixed assets distinct from real estate property and buildings, such as:

  • Machinery
  • Tools
  • Office equipment
  • IT equipment
  • Safety equipment
  • Medical equipment
  • Vehicles

How do you track equipment assets?

The most efficient way to track equipment assets is to use scannable tags to digitize asset data and enter it into asset management software.

What are the three types of equipment maintenance?

Equipment maintenance includes:

  • Preventive maintenance, which uses routine inspections to pre-empt problems;
  • Corrective maintenance, which fixes malfunctions;
  • Predictive maintenance, which applies analytics to anticipate maintenance needs. 

What is asset lifecycle management?

Asset lifecycle management optimizes assets' utilization and costs at all stages of their lifespan, from planning, acquisition, and maintenance to disposal or replacement.

How do you calculate depreciation on equipment?

You can calculate equipment depreciation using various methods, ranging from even distribution to percentage and sum-based calculations to actual output measurement:

  • Straight-line method calculations distribute asset costs evenly throughout their useful lifespan.
  • Declining balance method calculations accelerate depreciation in early stages of an asset's lifecycle using a percentage.
  • Double-declining balance method calculations multiply accelerated depreciation rates by 2.
  • Sum-of-the-years digits method calculations shift depreciation to the early stages of an asset's lifecycle by adding up the years of the asset's lifespan and dividing by 2.
  • Units of production method calculations base depreciation on actual output changes.