What Are Physical Assets? Definition, Types, & How to Manage

In the business world, assets are essential components that a company uses to function and achieve its goals. From office equipment to specialized tools, an organization relies on tangible resources that need diligent oversight to ensure they perform optimally and provide the best returns on investment.

This blog will delve into the essentials of physical asset management, offering insights into the types and benefits of physical assets and practical tips for managing them. 

We will also spotlight how advanced tracking solutions like RedBeam's scalable software can streamline asset management processes, helping organizations maintain order and efficiency.

Main Takeaways From This Article:

• Physical assets are tangible items like technology, office equipment, tools, and furniture essential for business operations.
• Tracking and managing physical assets ensures proper utilization and maintenance and helps make informed decisions.
• Establishing clear policies and scheduling regular maintenance is crucial for effective physical asset management.
• Documenting and reviewing asset lifecycles helps maintain accurate records and improves overall asset efficiency.
• Utilizing asset management software like RedBeam can enhance tracking processes and optimize asset performance.

What Are Physical Assets?

Physical assets are tangible items of value owned by an organization. Unlike intangible assets such as patents or trademarks, physical assets can be physically touched and used, including items like machinery, buildings, and furniture. Proactive asset management is crucial for optimizing their use and ensuring they contribute to the organization's operational efficiency and financial health.

Physical vs. Intangible Assets

When distinguishing between physical and intangible assets, it’s essential to understand how each type contributes uniquely to an organization’s value. Physical assets, aka fixed assets, are basically tangible assets that can be seen and touched. In contrast, intangible assets are non-physical and include things like patents, trademarks, and goodwill. 

Both types are vital to a company’s operations but require different management approaches due to their distinct characteristics: 

• Physical Assets: These include all tangible items that a business uses, such as machinery, buildings, vehicles, and inventory. They are often substantial investments and require regular maintenance.
• Intangible Assets: These are non-tangible items such as intellectual property, patents, copyrights, trademarks, and goodwill. They often contribute significantly to a company’s competitive advantage and brand value.
• Depreciation: Physical assets typically depreciate over time due to wear and tear, while intangible assets can amortize, reflecting the diminishing asset value over its useful life.
• Management: Physical assets require physical tracking and maintenance schedules, while intangible assets need legal protection and regular valuation to ensure they are recorded accurately on the balance sheet.

Most Common Physical Assets: Types and Examples

Physical assets are tangible items; hence, they come in various forms, each serving a specific function within the business. Below, we take you through common physical asset examples.

Technology Assets

Technology assets include hardware like computers, servers, and networking equipment, as well as software licenses and digital data. These assets are crucial to modern organizations' day-to-day operations, ensuring connectivity, data processing, and information security. 

Proper management involves not only tracking these items but also maintaining and updating them to prevent obsolescence and ensure peak performance. Utilizing asset management software for technology assets can help automate inventory control, streamline updates, and enhance security measures. This ensures that your IT infrastructure remains reliable and efficient, ultimately supporting your business's overall productivity and success.

Office Equipment

Office equipment encompasses various items essential for day-to-day operations, including computers, printers, copiers, and telecommunication devices. Proper management of these assets ensures efficiency, minimizes downtime, and extends the lifespan of the equipment. Tracking software like RedBeam can be crucial in maintaining accurate records of each item by creating logs for manual recordkeeping. 

By implementing effective office equipment management practices, businesses can reduce costs, prevent loss or theft, and ensure that employees always have access to the tools they need to perform their tasks efficiently.

Tools and Instruments

These assets are critical for businesses that require precision and specialized functions. They can range from simple hand tools like wrenches and screwdrivers to more sophisticated instruments such as diagnostic machines or laboratory equipment. Proper management of these assets ensures they are stored safely, maintained regularly, and readily available when needed. 

Efficient asset management prevents tool loss, reduces downtime due to equipment failure, and ensures compliance with safety standards. By keeping an accurate inventory and maintenance log, organizations can optimize the lifespan and performance of their tools and instruments, ultimately leading to cost savings and enhanced operational efficiency.

Furniture and Fixtures

These assets are essential elements in any workplace, providing comfort and functionality. Common examples include desks, chairs, filing cabinets, and lighting installations. These assets not only contribute to the aesthetic appeal of your space but also support daily operations by creating an efficient work environment. 

Effective management of furniture and fixtures involves regular inspections, maintenance, and adjustments to meet evolving needs. By keeping accurate records and ensuring timely replacements or repairs, you can enhance employee productivity and extend the life of these investments, thereby optimizing your organization's resources and maintaining an orderly workspace.

Importance of Physical Asset Management

An effective physical asset management system is crucial for organizations to maximize the value derived from their assets. Here are key reasons why focusing on physical asset management is essential: 

• Cost Savings: Efficient management helps reduce maintenance costs, optimize resource allocation, and avoid the expenses associated with lost or misused assets.
• Enhanced Productivity: Well-maintained assets operate more efficiently, minimizing downtime and ensuring consistent productivity across the organization.
• Regulatory Compliance: Proper documentation and tracking of assets ensure compliance with industry regulations and standards, reducing the risk of legal and financial penalties.
• Improved Decision Making: Accurate data on asset performance and utilization supports better asset acquisition, allocation, and disposal decisions, ultimately enhancing the strategic planning process.
• Asset Lifespan Extension: Regular maintenance and timely upgrades extend the usable life of assets, maximizing their return on investment by ensuring increased asset availability.
• Risk Management: Effective tracking and management help identify and mitigate risks associated with asset theft, damage, or unexpected downtime.
• Operational Efficiency: Streamlined asset management processes lead to more efficient operations, ensuring that assets are available when needed and optimally used.
• Sustainability: Proper asset management includes environmentally responsible disposal practices, supporting the organization’s sustainability goals and reducing its environmental footprint.

Best Practices for Managing Physical Assets

As you can see, effectively managing physical assets is crucial to ensuring their optimal performance and longevity. Here are some best practices to help you maximize your physical assets.

Utilize Physical Asset Management Software

The right software can automate and streamline various asset management tasks, ensuring that you maintain accurate records and optimize the use of each asset. 

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

• Automated Tracking: With automated tracking, you can easily monitor where each asset is located and when it is being used. This helps in reducing instances of lost or misplaced items.
• Maintenance Scheduling: Proper maintenance is crucial for the longevity and performance of your assets. Asset management software can schedule regular maintenance activities and send notifications and reminders to ensure they are completed on time.
• Enhanced Reporting: The best software solutions offer robust reporting capabilities, allowing you to generate detailed reports on asset utilization, lifecycle, and costs. This assists in making well-informed decisions related to asset acquisitions and disposals.
• User Permissions and Controls: Establishing user permissions helps maintain security and accountability. You can control who has access to specific assets and who can update asset information, thereby minimizing errors and unauthorized usage.
• Integration Capabilities: To maximize efficiency, asset management software should easily integrate with other systems you are using, like ERP, finance, and HR systems. This ensures consolidated data management and better resource planning.
• Customized Alerts: Customized alerts keep you informed about important events related to your assets, such as maintenance due dates, asset movements, and contract expirations. This proactive approach helps avoid unexpected downtime and financial losses.

Establish Clear Policies

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 clear policies can make a significant impact: 

• 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.
• 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.
• Training Programs: Create training programs to ensure that all employees are aware of the policies and know how to follow them. This standardizes practices and reduces errors.

Schedule Regular Maintenance

Proactive maintenance not only helps avoid unexpected breakdowns but also minimizes downtime and extends the lifespan of your equipment. Implementing a routine maintenance schedule can result in significant cost savings and improved operational efficiency. 

Here are some key strategies to consider: 

• Maintenance Management Features: Look for asset management solutions that offer comprehensive maintenance management capabilities. This should include scheduling, tracking, and recording all maintenance activities.
• Checklists and Procedures: Develop detailed checklists and standard operating procedures for regular asset maintenance. This will help maintain consistency and thoroughness in every maintenance task performed.
• Professional Inspections: Engage qualified professionals to inspect critical assets periodically. Professional assessments can identify potential issues that are not visible during routine checks.
• Historical Maintenance Records: Keep a detailed log of all maintenance activities. Historical data helps in identifying recurring issues and making informed decisions about repair or replacement.
• Training and Compliance: Ensure your team is adequately trained in the maintenance procedures and understands compliance requirements. Well-trained staff are crucial to the successful implementation of a maintenance schedule.

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. This information helps in budget planning and warranty claims.
• Deployment: Track which department or individual the asset has been assigned to. 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. Ensure that disposal methods meet legal and environmental guidelines. You can use this information to develop better asset management strategies and make informed decisions.

Improve Asset Performance With RedBeam

By now, you should have a solid understanding of physical assets, their various types, and the essential practices for managing them effectively. 

RedBeam offers a comprehensive suite of features, including accurate asset monitoring with barcode tracking and RFID tracking, user permissions and controls, and robust analytics and reporting capabilities. Our platform also facilitates asset lifecycle documentation, ensuring that all assets are properly maintained and utilized to their full potential. 

By adopting RedBeam, your organization can make better-informed asset acquisition decisions and reduce unnecessary costs. 

So, are you ready to optimize your asset performance with RedBeam? 

Schedule a demo today or try the RedBeam 30-day free trial to see for yourself how the platform can benefit your business with its advanced solutions.