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For 21st-century organizations with extensive physical inventories, the playing field is evolving, with new challenges around every corner. Along with increasing legislative requirements, asset managers face increasing pressure to ensure reliability and security.
Asset optimization is one of the key trends emerging in the asset management landscape. This process of maximizing the value of assets while minimizing costs and inherent risks pivots on a primary goal: amplifying the Return On Investment (ROI) from your physical infrastructure.
Historically, asset management and infrastructure asset management were often static and linear, relying heavily on past data and pre-set patterns. But the narrative is rapidly shifting.
Asset tracking software is critical to elevated productivity, reduced downtime, and elevated asset utilization and efficiency.
In this article, we'll examine the role of asset optimization and how harnessing the power of new technologies can lead to radical improvements in critical operations, enabling real-time monitoring and optimized assets across the asset lifecycle.
What's asset optimization?
Asset optimization is used to enhance the value of an organization's assets while at the same time reducing related costs and risks. Asset optimization primarily aims to elevate a company's return on investment (ROI). Asset optimization is multi-phase and generally involves the following: Teams need to take inventory of their existing assets. This includes tangible, physical assets such as machinery, computers, laptops, etc. After these assets are collated, they're analyzed and evaluated based on their worth, functionality, and inherent risks. This is nearly impossible without using tracking software such as RedBeam. Data analytics should be leveraged throughout the process to inform decision-making. By examining various asset-related data, patterns emerge, enabling better choices around how to optimize assets.
Asset optimization vs. asset management: What is the difference?
While closely linked, asset management and optimization serve distinct business purposes. Asset management takes a comprehensive view of a company's assets, emphasizing the efficient delivery of products and services. This framework concentrates on the overall utilization of assets, monitoring energy usage, waste output, and maintenance requirements. Conversely, asset optimization is a holistic, iterative process that focuses on enhancing specific business processes. It incorporates elements like data input, management processes, risk management, stakeholder collaboration, and financial flexibility.
While asset management aligns with a company's larger strategy and goals, considering potential growth or decline, asset optimization focuses on refining actions for peak performance. While asset management oversees the big picture, asset optimization fine-tunes the details to maximize returns.
Asset optimization may include reviewing your team's asset management frameworks and fine-tuning them to streamline the workflow and maximize ROI.
Let's look at an example that highlights the difference.
An asset manager might track trends in how competitors use resources, compare this to the company's current practices, and adjust them accordingly.
On the other hand, an asset optimizer would go a step further by looking at restructuring certain aspects of the business and pricing potential investments that could be implemented to optimize asset management.
Who benefits from asset optimization?
Benefits by sector
Asset optimization is finding the best use of assets for a company. Asset optimization seeks to find the balance between efficiency and reliability. We suggest a holistic approach to asset optimization, creating a culture whereby all moving parts in the asset management framework are open to scrutiny and improvement.
According to Zion Research, the asset optimization market is expected to more than double in the next decade to $10.9 billion. While all companies will benefit from implementing an asset optimization framework, organizations with a large physical inventory across multiple locations will likely see the biggest benefits.
At RedBeam, we work primarily with partners in the following sectors: - Construction - Manufacturing - Hospitals and healthcare - Educational facilities
Benefits by role:
Internally, certain roles will be influenced by and see the most return from asset optimization. Senior management - Gain and ensure that yearly infrastructure investments are adequate for sustainability- Pinpoint necessary investments to sustain or reach desired service benchmarks- Provide evidence to regulators regarding needed investment amounts- Build a repository of expert knowledge from key personnelAsset managers and project engineers- Evaluate the effects of current yearly investments on service standards- Highlight the most pertinent projects for immediate execution- Aid in formulating a coherent justification for funds related to the network to uphold anticipated service standards- Streamline decision-making and foster clear communication among stakeholdersCFOs and finance department- Outline the essential annual investments for asset longevity- Facilitate improved financial borrowing approaches- Evaluate the implications on the utility's long-term financial obligations
Benefits of asset optimization
When implemented with careful planning, asset optimization will reduce risk, ensure maximum ROI on asset investments, and streamline processes for peak performance.The benefits include, but aren't limited to:- Financial analysis and integrated asset management planning for targeted service levels: A holistic asset optimization approach will ensure the desired level of service, regardless of budgetary restraints.Asset management software tip: For service-focused organizations managing compliance requirements on a lean foundation, such as not-for-profit teams, RedBeam offers a cost-effective asset management solution. It streamlines asset tracking, maintenance, and security, allowing you to serve your community efficiently and effectively while staying within budget and compliance regulations.Better risk management: Having complete real-time oversight of assets lowers the risk in decision-making by ensuring decision-makers have access to advanced data. Furthermore, they'll have better insight into the probability of meeting goals and be able to set realistic service-level targets. Asset management software tip: Dependence on outdated, manual asset tracking systems imposes constraints on the visibility, efficiency, scalability, and productivity of your daily operations. Asset management software simply and easily streamlines the process, providing a global real-time view of your inventory. Optimized decision-making processes: When teamed with advanced analytics, asset optimization allows managers to use probabilistic models to make decisions that aren't arbitrary or unrelated but instead based on combinatorial criteria. This means the decision-making process becomes transparent and auditable across departments. In a robust asset optimization framework, decision-making should be based on documented criteria applied via an auditable model. This reduces the risk of decisions being made on personal and subjective ideas or judgments. This process transforms decision-making from a reactive approach to a proactive one based on actionable data and insights.Asset management software tip: RedBeam's asset management software streamlines compliance by automatically generating precise records for every asset. This simplifies the monitoring and administration of retired, sold, stolen, or lost items. This guarantees regulatory compliance and enhances the ability to investigate potential fraud incidents.
Challenges in asset optimization
As asset optimization stretches across all operational functionalities, there are challenges. As of 2021, the top challenges identified were compliance, department alignment, and risk management.
Smart technologies for asset optimization
Organizations need to ensure their assets are constantly monitored, and asset-tracking software can enhance their ability to do this. This software can track different assets — from large machinery to small tools or equipment — in real-time, providing visibility into their location and condition.
At a glance, managers can identify underutilized assets or those that need immediate maintenance attention. Additionally, the software provides timely alerts if any tracked assets move outside of an established area or show signs of wear and tear, helping organizations avoid costly losses due to theft or breakages.
Asset tracking software helps organizations become more data-driven and efficient when managing their assets. The data provided can be used for analysis that reveals patterns related to usage and maintenance needs.
Asset management software such as RedBeam is increasingly zeroing in on asset optimization. RedBeam helps you facilitate optimization across the entire asset lifecycle by:- Providing an accurate record of your assets: You can't optimize what you don't understand. Asset optimization starts with having a clear, real-time account of your entire asset inventory. With RedBeam, users can easily track their assets' location, status, department, and purchasing information with the click of a button.- Giving access to advanced analytics: Advanced analytics capabilities of asset tracking are seeing some industries save 20 to 25 percent in operating expenses when leveraging data for asset optimization.
Conclusion
With its focus on maximizing asset value while minimizing costs and risks, asset optimization presents a pathway to amplify ROI from an organization's physical infrastructure.
By leveraging advanced technologies, including asset tracking software and IoT devices, real-time data streams become the linchpin of productivity, reduced downtime, and maximum ROI.
Ready to start optimizing your asset inventory? Contact RedBeam today to learn more.
