What is Physical Asset Management? Types & Key Strategies

Are you struggling with keeping track of your organization's physical assets? Do inefficiencies and maintenance issues frequently disrupt your operations? If so, you're not alone. Many organizations face significant challenges in managing their physical assets effectively.

That is why it is a seamless system that tracks your assets’ locations, conditions and more is an essential investment. Effective physical asset management helps reduce costs, improv productivity, and enhance asset longevity.

Main takeaways from this article:

• Physical assets are tangible items, including equipment, machinery, vehicles, and buildings, owned by an organization to generate value. They may change location and ownership over time.
• Effective physical asset management solutions minimize risks and costs, maximize asset value, and ensure reliability, safety, and compliance.
• Reactive asset management addresses issues after they occur, while proactive asset management anticipates and prevents problems.
• Creating a solid physical asset management system involves identifying critical assets, conducting regular audits with a secure asset management system, and tracking maintenance.

What Is a Physical Asset?

A physical asset is a tangible item that an organization owns to generate value for its customers. Physical can include a variety of items like:

• Equipment
• Machinery
• Technology
• Vehicles
• Infrastructure
• Buildings

On the other hand, intangible assets have value but do not have a physical presence. Examples include software, trademarks, licenses, films, patents, and copyrights. Intangible assets each require a separate management system. 

Examples of Physical Assets

Depending on the industry and the company's operations, a wide range of physical asset types can exist. Here are the most common physical assets used within an organization:

• Manufacturing: Tools, equipment, machinery
• Real Estate: Land and buildings
• Inventory: Raw materials, work-in-progress (WIP), finished goods
• Energy: Pipelines, power plants, transmission lines
• Utilities: Reservoirs, water treatment plants, distribution systems

These physical assets form the backbone of an organization's operational capabilities. Proper management and maintenance of these assets are crucial for sustaining business growth and achieving long-term success.

Physical Asset Management

Physical  asset management tools ultimately maximize the assets’ values and outputs while minimizing costs associated with owning and operating them. 

A successful physical asset management strategy aims to maintain an efficient upkeep through the entire asset lifecycle, ensuring that an organization's physical assets are:

• Reliable
• Well maintained
• Available when needed
• Cost-effective to operate
• Safe to use
• Sustainably managed
• Compliant with regulations
• Used for as long as possible (while maintaining quality)

By implementing these principles, organizations can enhance their operational efficiency and achieve long-term sustainability.

1. Reactive Asset Management

Reactive asset management requires little foresight and planning and only addresses problems and risks when they arise. Reactive asset management, sometimes called run-to-failure maintenance or breakdown maintenance, is not recommended as it can lead to hazards, unplanned downtime, lost revenue, and a lack of compliance. While only 3% of organizations hold reactive maintenance to be effective, an astonishing 60% of manufacturing companies still use it today because they lack an efficient proactive asset management system.

2. Proactive Asset Management

Proactive asset management leverages a range of strategies including monitoring and tracking assets, predicting potential failure of equipment, and allowing for preventative maintenance, reducing risks, increasing compliance, and decreasing the likelihood of asset loss and theft. As more business recognize these significant improvements and grow tired of the complications from their previous systems, the predictive asset management market is expected to reach $16,761 million by 2028.

Benefits of Physical Asset Management

Applying physical asset management strategies streamlines your inventory management by enabling you to automate tracking of your assets. Radio Frequency Identification (RFID) captures movement of physical assets without manual labor, reducing downtime and questions about where critical items are located. This improved organization offers new insights, allowing for better decision-making by eliminating guesswork.

Automation with RFID can also be tied with GPO. For instance, if an asset or person is in a restricted area, the system can be configured to sound an alarm or lock doors. This reduces asset loss and theft. In other helpful examples, RFID can smoothly work in process manufacturing sites by routing conveyers for assets registered by RFID fixed antennas.

Even barcodes which allow users to scan inventory can help streamline processes, evading manual entry errors. All data would then be hosted in cloud-based asset tracking software like RedBeam. This provides analytics insights for predictive supply chain and maintenance management and allows users to conveniently manage assets from anywhere. RedBeam even allows users to continue to scan barcodes in the field while disconnecting from Wi-Fi with store and forward.

With more eyes on critical assets during scan cycles and upkeeping current asset conditions, unexpected failures are prevented. RedBeam offers thorough documentation, allowing users to update custom fields including maintenance logs. 

Additionally, depending on the assets, delaying crucial maintenance could put employees at risk of potential injury or even death. Improving asset management will help mitigate the potential dangers of equipment malfunctions. Proactive management spots potential threats earlier and maintains the integrity of your equipment, also resulting in improved ROI and therefore increased profit margins.

By regularly maintaining and optimizing the use of assets, organizations can extend their lifespan, delaying the need for costly replacements, reducing capital expenditure and minimizing environmental impact by decreasing waste and resource consumption. 

Reduced Risk of Non-Compliance With Government/IRS Requirements

Proper physical asset management significantly reduces the risk of non-compliance with government and IRS requirements. By maintaining accurate records and ensuring timely updates, organizations can adhere to regulatory standards more effectively. This compliance avoids costly fines and penalties and builds trust with stakeholders and regulators. 

Asset management software's automated tracking and reporting features ensure that all assets are accounted for and meet legal requirements. Additionally, well-maintained assets are less likely to cause safety incidents, further reducing legal liabilities.

Creating a Physical Asset Management System: Steps & Best Practices

Leveraging the right physical asset management software ensures accurate records are maintained and the use of each asset is optimized.

Here are some key benefits of employing physical asset management software: 

• Automated Tracking increasing visibility without manual intervention
• 3^rd Party Integrations offer smooth communication between different sectors of an organization through ERP, finance, and HR systems.

• Enhanced Reporting to generate detailed analytics on asset utilization, lifecycle, and costs aid in well-informed decision-making related to asset acquisitions and disposals
• User Permissions and Controls to maintain security and accountability, minimizing errors and unauthorized usage
• Customized Email Notifications to track asset movements and updates helps avoid unexpected downtime and financial losses.

Document and Review Asset Lifecycle

Effectively managing physical assets means keeping a detailed record of their lifecycle from acquisition to disposal. This process empowers you to effectively track asset performance, monitor usage, and plan for future needs. 

Here's how you can go about documenting your assets through different phases:

• Acquisition: Record all details of asset purchases, including vendor information, cost, warranty terms, and expected life span in the asset management system. This information helps with budget planning and warranty claims. Assign each asset a unique ID tied to either a barcode or RFID tag.
• Deployment: Track which department or individual the asset has been assigned to via manual or automated scan. Knowing where your assets are deployed mitigates the risk of loss and helps reallocate resources efficiently.
• Maintenance: Log routine and emergency maintenance activities to ensure assets operate at peak efficiency. Regular maintenance prolongs asset life and can prevent costly breakdowns.
• Usage: Monitor how and how often assets are used. This data can inform decisions on future purchases and help identify underutilized or overworked assets.
• Retirement: Document the disposal or retirement of assets to maintain an up-to-date inventory. In RedBeam, assets can be marked as inactive to retain historical reporting while also informing the system of the assets’ current state. 

Conduct Regular Audits

Conduct monthly, quarterly, biannual or annual reviews to gain valuable insights into asset conditions. Regular audits reveal your status, enabling better asset management decisions. Organizations can quickly reveal if any resources are missing or need to be replaced.

By thoroughly examining your physical assets through scheduled audits, you can accurately track them, forecast maintenance and replacement costs, and identify errors in asset records. This proactive approach ensures optimal performance and cost-efficiency.

The goal is to at least answer these three questions:

• How many assets do you have?
• Where are they located?
• Who is using them?

Asset-tracking software like RedBeam can help you efficiently track this information, ensuring you get the best ROI on your physical assets.

Monitor Asset Performance and Condition

Monitoring your assets' condition and performance is essential for maintaining optimal efficiency and productivity. This empowers teams to take action when assets underperform by maintaining, repairing, or replacing them. This proactive approach to preventive maintenance maximizes value and output over the asset's lifespan.

Train Authorized Personnel on Maintenance and Safety Procedures

Implementing physical asset management in your organization is more effective when approached as a team effort. Training your team on usage, maintenance, and safe tracking to maximize asset value. RedBeam subscriptions include ongoing software support for dedicated training, and if using RedBeam RFID, the automated system practically works on behalf of employees, cutting down on training time.

Establish Clear Policies for Asset Tracking & Management

Well-defined policies provide guidelines that help your team handle assets consistently and efficiently. These protocols ensure that everyone understands their responsibilities, reducing the risk of loss or misuse of physical assets.

Here are some key areas where companies can utilize RedBeam to establish clear policies:

• Asset Acquisition: Define the criteria and procedures for purchasing new assets. This ensures that all new acquisitions meet the organization’s standards and are necessary for operations.
• Asset Usage: Set guidelines on how and when assets should be used. This minimizes wear and tear and ensures that assets are only used for their intended purposes.
• Asset Security: Develop procedures to protect assets from theft or damage. This could include measures like secure storage, restricted access, and using tracking devices.
• Asset Tracking: Implement methods for keeping records of where assets are and who is using them. This will facilitate quick retrieval and prevent loss.
• Check In and Check Out: to track short-term loans of physical assets like a library or tool crib.
• Disposal Policies: Establish guidelines for the disposal of assets that are no longer useful. This includes processes for recycling, selling, or discarding items in a way that complies with regulations.

Effectively Manage Your Company's Physical Assets with RedBeam

If you’re ready to take control of your physical asset management to get the most value out of your assets, consider using RedBeam today. With our easy-to-use platform, you'll always know when assets were purchased, where they’re located, and how much they cost. Our leading asset management software can help you automate your asset management process to improve physical asset life cycles. 

Try RedBeam for free!

FAQs

What Is an Example of a Physical Asset?

Physical assets include tools, equipment, machinery, raw materials, land buildings, vehicles, and inventory goods.

What Is Enterprise Asset Management?

Enterprise asset management (EAM) is a strategy for optimizing the value of your company's fixed and current assets throughout their lifecycle, from acquisition to disposal.

What Is the Goal of Physical Asset Management? 

Physical asset management strategies aim to maximize asset value, minimize costs and risks, and ensure reliability, safety, and compliance.