A cursory glance at the company books can show responsible use of revenue, but a closer look can show you that a substantial amount is falling through the cracks. To highlight the costs of operating a business without asset management software, let’s take stock of the real cost of keeping track of assets using outdated manual methods.
Trying to manage the physical tools that help a business make money is never an easy task, but for an enterprise-sized company, it’s no longer a job for a couple of clipboards or Excel sheets. Despite this, business leaders often feel they have no choice and operate with limited intel on their assets.
In many cases, not having data on assets and inventory is a problem in itself. It means not knowing how many assets you have, what their status is, and where they are. This sort of “flying blind” can negatively impact your financial and operational efficiency, due to decision-makers not having maintenance, quantity, and other valuable data at their disposal.
In other cases, non-comprehensive methods will give an incomplete or inaccurate picture of assets and inventory. This situation can be worse than no data at all since it can lead to poor decision-making. (stat from infographic) Bad data makes for bad data analysis. But on a customer-facing end, incorrect data on inventory can mean product information (such as out-of-stock statuses) can be incorrect. Out-of-stock inventory can lead to a 12% loss of revenue or more. This leads to dissatisfied customers and damaged PR.
Companies operating without asset management will sometimes err on the side of caution with regard to maintenance scheduling. Without regular status updates or a comprehensive database showing maintenance records, equipment and tools can be overly serviced. This wastes technicians’ time, as well as causing unnecessary equipment downtime, and needlessly raises maintenance bills.
It’s common knowledge that a poorly maintained piece of equipment is bound to have a shorter lifespan than is ideal. But the effects are more costly than you might have realized. Poorly maintained assets mean unexpected breakdowns, and often untimely replacements. This is not a cheap mistake to make: For instance, one LP forklift can cost $6,000 a year to maintain, but a replacement can cost anywhere between $15,000-$30,000. Not only is value lost from unplanned downtime, but personnel who rely on the equipment are also often rendered idle during this downtime.
An issue plaguing corporations with manual asset tracking is ghost assets – assets that appear on the books, but don’t exist or work in real life. The company still pays taxes on ghost assets but doesn’t get value from them. And this loss isn’t a marginal one. According to Research Gate, “70% of organizations have a 30% discrepancy between planned inventory and actual inventory. Up to 30% of an IT budget could be saved by effective asset management.”
On an enterprise level, it’s impossible to keep tabs on the moving pieces of a business without a larger system in place. By implementing a comprehensive, integrated enterprise asset management system (EAM), businesses can save hundreds of thousands of dollars and optimize employee work hours.