How to Create an Agile Asset Management Strategy


Finance Insights for ProfessionalsThe latest thought leadership for Finance pros

Thursday, November 19, 2020

If more effective asset management is a priority for your business right now, you could have a lot to gain from a strategy that emphasizes agility.

Article 4 Minutes
How to Create an Agile Asset Management Strategy

The drive to be more agile has become a significant theme in recent years. Agility enables businesses to respond more quickly to fast-moving trends in their industry and changes in customer expectations.

According to McKinsey, agile organizations are more akin to living organisms than machines. The company identified five trademarks of truly agile businesses:

  • A 'north star' purpose that is embodied throughout the company
  • A network of empowered teams
  • Rapid decision and learning cycles
  • A dynamic people model that ignites passion
  • Next-generation enabling technology

There are many aspects of business that can benefit from greater agility, including your approach to identifying, procuring and managing the assets you need to succeed. Here are some of the steps you can take to develop a more agile asset management strategy.

Cultivate specialist expertise

To raise your asset management to the highest levels of agility, efficiency and effectiveness, you need at least one person (or possibly a whole team, depending on the size of your organization) who is an expert in this area and can concentrate on achieving the best results. You might want to invest in developing relevant skills and knowledge from within your existing workforce, or otherwise recruit people with experience who can provide an instant boost in performance.

An appointed asset management leader or team can take on full responsibility for planning your strategy and placing agility at the heart of it. They can also dedicate themselves to tracking the latest trends and developments in this space, which will help you stay relevant and in touch with new opportunities for efficiency.

Incorporate demand forecasting

Demand is a critical factor in some of the most important elements of business, including your capital expenditure, cash flow, revenue and profit margins. If you're able to accurately predict demand and manage your operations accordingly, you're better placed to meet customer needs.

As far as asset management is concerned, reliable demand forecasting puts you in a much stronger position to make the right decisions at the right time. For example, if you're confident of an impending spike in demand for a particular product, you can make sure the assets required to deliver are in place and functioning properly at exactly the right time.

This can prove particularly important for the finance department, who will want to be aware in advance of any acquisitions or procurement activity needed to support your efforts to keep customers happy.

Understand your asset lifecycles

A solid grasp of the lifecycles of your assets - and the steps you can take to manage these cycles - could be one of the most valuable tools at your disposal when you're working to achieve greater agility.

If you've put in the work and studied the typical lifecycles of your key assets, all the way from acquisition to disposal, you'll have a clearer idea of how long they’re likely to be operational and financially viable for the business.

Understanding lifecycles will also give you a better idea of the best times to perform asset maintenance. This is particularly important if you want to keep your assets in the best possible condition, to maximize their lifespan and ensure that you can rely on them at times when demand is highest. Insufficient understanding of lifecycles raises the risk of assets becoming ineffectual at the worst possible time.

Furthermore, it's advisable to conduct routine tracking of your assets and to monitor their depreciation, so you're fully prepared for when they need to be offloaded and replaced.

Leverage technology

There is excellent potential for asset management - like most areas of business in the 21st century - to become more modern, efficient and agile through technology.

It's an activity that can eat up a lot of time, energy and resources if some of the routine processes involved have to be done manually. If tasks like monitoring uptime and downtime, measuring the productivity of certain assets and scheduling maintenance can be automated, the human asset management experts in your workforce can concentrate on jobs that make better use of their skills and generate value for the business.

Dedicated software and process automation can also make your asset management more effective by reducing the risk of human error and using predictive analytics to anticipate when you'll need to take action.

You can realize these advantages in relation to all sorts of assets, from the physical machinery and equipment you might need to manufacture products, to intangible resources like software. As a result, modern technology and automation can help you achieve wholesale growth and improvement in asset management.

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