The Importance of Deploying Asset Management Tools in the Automotive Industry
To be competitive in a sector that generated over £78.9 billion in 2019, businesses in the automotive industry can maximise the efficiency of their productive output with the use of an effective asset management solution. Most notably, Asset Management Software.
By deploying digitised tools to help manage their various automotive assets, organisations can achieve significant improvements in operations. Not only can effective asset management ensure the reliability of equipment and machinery through preventive maintenance, but it also assists in significantly reducing costs by increasing asset visibility in manufacturing plants. As well as optimising the life cycle of mission-critical assets with asset life cycle management.
What Is Asset Management For the Automotive Industry?
From developing and manufacturing to marketing and selling, the automotive industry consists of various organisations responsible for producing vehicles and other automotive outputs. The overall size of this operation is huge and requires sufficient staff, plant machinery, spare parts, equipment, and facilities. All better know as assets.
As with any organisation that relies heavily on its use of tangible and intangible assets, the management of automotive assets is essential for helping to monitor and track a business’s most important assets.
Deploying an effective asset management solution allows businesses to govern processes such as acquisition, maintenance, operation, renewal, and disposal of assets in an efficient manner. Eventually, a detailed approach to the management of automotive assets will enable asset managers to make informed decisions based on accurate data and help to improve the financial and operational performance of assets.
Asset management protocols provide a range of benefits for companies in the automotive industry, one of which is reducing the expenditure of acquisitions. Through preventive maintenance schedules and asset life cycle management, it becomes less likely for businesses to replace and purchase new equipment. Something that UK motor vehicle manufacturers spent over 40% of capital expenditure on between 2014 and 2018.
The Importance of Managing Automotive Assets
No matter what industry a business operates in, the purpose of Asset Management Software is the same. It is used to:
- Increase asset visibility
- Optimise the useful life of assets
- Reduce costs associated with procurement and maintenance
- Improve workplace health and safety
- Ensure compliance
Without a form of automated asset management in place, businesses face multiple challenges that can have negative effects on both production and revenue. This is particularly true for the automotive industry, which faces numerous challenges when it comes to the management of assets. Including:
Unplanned Downtime of Automotive Machinery & Equipment
Either through machine failure or loss of equipment, the operational damage that unplanned downtime causes can be severe. Typically, the majority of downtime caused in businesses that rely heavily on the use of their assets is due to a reactive maintenance approach. As opposed to deploying preventive or predictive maintenance schedules with the help of an asset management tool.
Not only can disruption to production cause delays in output, but downtime can also put a huge strain on a company’s finances. In 2016, the average cost per hour that downtime incurred was $260,000 across all businesses. In the auto industry, in the same year, automotive businesses experienced a loss of $22,000 in unexpected stoppages caused by asset downtime every minute.
Replacing Lost, Misplaced, or Stolen Assets
One advantage of having an asset management system in place is the ability to track automotive assets in real-time. This is possible with the use of typical asset tracking tools such as asset tags in the form of barcodes and QR codes, GPS trackers, Bluetooth beacons, and RFID tags. The latter helping Canadian airline company, Air Canada, to save millions of dollars each year by using RFID asset tracking to track food carts used in airports around the world.
Without the use of real-time tracking and access to location data, companies are at risk of losing essential assets. Whether through theft or being misplaced across various facilities and manufacturing plants. This can include equipment such as hand tools, CNC machinery, spare parts, or even expensive materials in the automotive industry. Without clear asset visibility, businesses will need to replace them at a cost to their bottom line.
Lack of Asset Data
As with any asset management system, asset managers have the ability to monitor and track an asset’s life cycle. Better known as asset life cycle management. This is split into four stages; planning, acquisition, operations and maintenance, and disposal. With the correct data that fits into each stage of an asset’s life cycle, businesses can define:
- The average useful life of machinery and equipment
- Servicing and maintenance schedules
- If the correct spare parts and inventory are stocked
- When an asset needs to be replaced or disposed of
But, without the capabilities of asset life cycle management, companies take a more reactive approach to maintenance and have a significant lack of asset data at their disposal. Leading to uninformed decision making, unplanned downtime, and production delays.
Benefits of Asset Management Software for Vehicle Manufacturers
The objective of an asset management system is to build an extensive portfolio for each asset that is critical to a business’s production. In the case of an automotive operation, this could be anything from ensuring conveyors belts run without failure to reducing needless purchasing of material. With an extensive collection of asset data, businesses can ditch manual methods and look to build an automated asset register. As well as this, there are various other benefits of an asset management tool. Including:
Preventive Maintenance (PM), or Preventative Maintenance, is a proactive strategy that involves regular maintenance of equipment to reduce the likelihood of failure leading to downtime. Through scheduled cleaning, repairs, adjustments, and replacements, preventive maintenance increases the availability and operational output of equipment. As opposed to a reactive maintenance schedule, which leads businesses to run an asset to the point of failure. Something that can cost up to 10 times more in repairs and lost production.
The deployment of Asset Management Software brings with it the ability for automotive businesses and asset managers to track assets in real-time. Being able to track and monitor assets is possible with the use of IoT, tagging, and cloud-based tools. This helps businesses to create accurate asset registers, reduce costs associated with replacing assets, and improve inventory management. But, most importantly, the introduction of asset tracking tools allows businesses to swap out error-prone manual tracking methods such as spreadsheets and pen-and-paper.
Modern asset management systems pride themselves on being able to deliver essential asset data in real-time. This can be associated with factors such as location, maintenance, depreciation, and work orders. Real-time data is collected into one single-source dashboard that is accessible to managers, supervisors, and staff. From here, asset managers can understand when a CNC machine is due for a service and what inventory is available.
Having access to the right asset data also benefits a business’s accountancy teams, enabling them to understand an asset’s depreciation value and its overall return on investment (ROI). This helps businesses to understand when a particular automotive asset is needed and when it is time to be disposed of.
Automotive Asset Management vs. Fleet Management
When it comes to the management of vehicle assets, there are various types of tools that a business in the automotive industry can benefit from. One of those that can be mistaken for Asset Management Software is fleet management.
Whereas asset management is focused on improving the efficiency of machinery and equipment during the manufacturing process of vehicles, fleet management focuses on the upkeep and tracking of vehicles when in use.
What is Fleet Management?
Fleet management incorporates multiple processes that allow fleet managers to take control of a business’s entire fleet operations. Whether managing a fleet of commercial vehicles via spreadsheets or using an automated system, the objective of fleet management is to maximise productivity and efficiency while reducing costs.
Managing a fleet consists of various tasks that span from asset acquisition, vehicle maintenance, driver safety, and route optimisation. Whereas an asset manager is focused more on asset life cycle management, a fleet manager’s duties include:
- Vehicle dispatch and scheduling
- Reducing vehicle fuel consumption
- Ensuring driver safety
- Understanding transport regulations and compliance
- Ensuring vehicles are MOT’d and serviced
- Acquiring vehicles, drivers, and other assets