The asset of an enterprise generally can be categorized into physical asset and digital asset. A physical asset is an item with assigned economic or commercial value and has material existence. It is also known as tangible asset. Physical assets are generally been utilised directly or indirectly to generate revenue for a business. Let us have some better understanding of the new asset classification co-existed with the physical asset since the beginning of the millennium, known as digital asset. Digital media such as photos, audio files, videos, movies, animated clips, internet games and digital marketing materials has gained significance importance ever since the rise of internet boom. Both physical and digital asset needs to be managed with equal importance by a company to ensure the growth and sustainability of their business. Hence the asset management is important for a company; to ensure it manages and monitors their assets systematically. A proper managed and executed asset management system enables the business to generate higher return of investment for their investors and other stakeholders of the business.
Let us explore the importance of asset management system:
- Asset management system allows a company to keep track of all assets right from the stage of asset acquisition to usage and disposal. It enables the company to identify the actual location of their assets, the utilisation of the assets and how the assets have gone through any changes throughout the life cycle of the assets. By having such a tracking of the assets systematically, the company is able to operate efficiently and increase the productivity of the business. For example, a company is able to allocate the assets in accurate and fast manner with an asset management system instead of searching for the assets manually. It leads to less wastage of time and resources to track and allocate the assets especially for a business with multiple offices and warehouses.
- By having asset management system allows the company to understand the usage of the assets in the operation of the business effectively. A company is able to understand the usage of the assets precisely and been accurately recorded. Therefore it leads to better return of investment for each asset acquired by the company. Data from the asset management system allows for effective and efficient recovery of the company assets. Hence the company is able to minimise the losses from lost or theft of the assets.
- Most of the physical assets need maintenance during their life cycle of usage. A company generally allocates a substantial amount of resources for the maintenance of their assets. Therefore a company needs to be well updated in timely manner for the maintenance of the assets in order to prevent situation such as over-maintenance or under-maintenance of the assets which will lead to lower return of investment of their assets and affect the profitability of the business. For example, over-maintenance will lead to increase of cost of operating significantly and under-maintenance will cause the business to suffer from drop in productivity.
- Asset management system removes the possibility of “ghost assets” in the inventory of a business. “Ghost assets” refer to the condition of an item loss or stolen while the record of the item remains in the inventory. This situation of inaccurate recording of assets will create negative impact to their operational cost and eventually leads to drop in profitability of the business. It is extremely critical for business which has huge storage of inventory and the situation of “ghost assets” could impact the profitability significantly and also its sustainability, especially during the current challenging business environment in the Covid-19.
- A company with asset management system is able to manage and monitor their assets at each stage of the asset life cycle from acquisition to usage and disposal of the asset. Therefore a business is able to understand well and precisely the value of their assets at each stage of the asset life cycle. By having such a system to manage and monitor their assets, regardless it is physical or digital asset, a company will be able to generate the highest return of investment to their stakeholders and to ensure the sustainability of their business.
It is crucial for a company to consider investing in a good asset management system even during this challenging business environment.