18 Jan


In the simplest terms, Physical Asset Management refers to the process of tracking, identifying, and organizing assets that are used throughout the organization. A physical asset is any material, equipment or real property that is not in the control of an individual or organization. This includes inventories, plant and equipment, furniture, machineries, vehicles, and more. The physical assets of a company include its capital assets, such as fixed assets and accounts-receivable records, as well as its non-capital assets, such as goodwill and trade names. The physical assets of a company, therefore, represent the totality of its assets and liabilities and their relationship to other assets, liabilities, operations, equity and ownership structure. See more here details on this topic. 


The basic principles of physical asset management system are discussed in a simplified way that makes them easily accessible to a broad spectrum of audience and thus covers all major stages of the asset management system, ranging from the initial identification of physical assets to their disposition. As already mentioned, physical asset management system starts with the identification of physical assets or parts. These parts can be anything from plant and equipment to inventory, furniture and machineries, vehicles to financial instruments. After the identification of assets, the next step of physical asset management system is to categorize them into different categories like asset classifications according to their position in the hierarchy of importance, asset classifications according to their performance, and finally asset classifications according to their proximity to events or sources of risk (e.g., safety, inventory, or control).


A very important aspect of physical asset management is its life cycle. The life cycle of a physical asset management system starts with acquisition or production, whereby suppliers of physical assets are acquired to meet organizational requirements. Next, the physical assets are modified or remodeled to fit the requirements of the organization. During this phase, care should be taken to customize the physical asset management system to suit the requirements of a particular organization so as to minimize costs and maximize productivity. Once the modifications are complete, they are released for use by the organizations. Click here for more for info on this topic. 


The next stage of physical asset management is the creation or construction, wherein fixed assets are created or constructed to meet organizational needs. Next, the assets are used to satisfy operational and budget requirements. Once production is completed, the resources are released for utilization by the organizations. This is the final stage in the life cycle of a physical asset management system, wherein fixed assets are still used to satisfy future operational and budget requirements of the organization.


This life cycle of a physical asset management system gives rise to two important concepts, namely, systematic approach and flexible or elastic approach. Schemes based on a systematic approach are more flexible and allow for minor changes to be implemented if required, whereas schemes based on the elastic approach assume no flexibility at all and only require the timely removal of existing assets when required. Both the asset managers and the users of these systems assume that, with the help of these asset managers, their systems will be successful and remain functional for a very long period of time.


This is where the value of a physical asset management system lies, which cannot be underestimated. It helps in the smooth functioning of an organization in terms of the reduction of fixed assets and the provision of essential resources. This also facilitates planning, implementing and monitoring the processes associated with its use. A well-organized and functional physical asset management system increases the overall productivity of a company, allowing it to grow even when the market is in a slump or recession. Therefore, the value of this system cannot be ignored by any organization, irrespective of its size. Check out this post for more details related to this article: https://en.wikipedia.org/wiki/Digital_asset_management.

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