5 Critical Asset Management KPIs (Plus Examples)
Have you ever worked with someone who doesn’t give feedback?
You work hard, submit your project, and don’t hear back until a new project needs to be done.
It can make you unsure, maybe even self-conscious. Am I doing well? Do I need to improve anything? Without specific feedback, you can’t know the answer to either of these questions.
When you don’t have a measurement of your performance, it makes it hard to improve. That’s why using Key Performance Indicators is important, especially in asset management.
In this article, we’ll discuss why you should be tracking Key Performance Indicators, and what Key Performance Indicators are important in asset management.
Asset Management KPIs
- Number of assets needing audit
- Number of assets without life-cycle status
- Number of assets with bad serial numbers
- Inventory accuracy
- Equipment reliability
Keep reading to see examples of how to apply these to your organization!
Why track KPIs?
If you’re not already aware, Key Performance Indicators (KPIs) are statistics that serve as standards for your organization to measure its success.
In the book Operations Management for Competitive Advantage, KPIs are defined as “a set of measures that help managers evaluate a company’s…performance and help spot the need for change…”
Put another way, tracking Key Performance Indicators enables you to track the performance of your department and to further improve your asset management process.
Performance tracking is a key part of the ISO 55000 framework that in 2014 was introduced as the international standard for asset management.
However, it’s important to choose the correct KPIs to track. Tracking the wrong KPIs can make you lose focus on tasks and processes that can actually improve your business.
So what Key Performance Indicators positively impact asset management? Let’s take some examples of the top asset management KPIs.
Asset Management KPI Examples
Number of assets needing an audit
This is a simple count of the number of assets that your organization still needs to audit by a certain date.
Knowing the number of assets that need to be audited gives you a quick idea of your progress in the audit process. As the date approaches, you should see this number decreasing as you audit more and more assets.
You can track this number over the course of days or weeks in order to calculate the rate at which your team is auditing assets. This can help you not only understand your current audit process but predict the likelihood of meeting your goal by the date.
Number of assets without life-cycle status
This is a count of all assets in your system that do not have a life-cycle status.
Every asset should have a life-cycle status, which states where the asset is in its life-cycle, such as whether it is being acquired, needs maintenance, or is being disposed.
The number of assets without life-cycle status is less about your business performance and more about the correct utilization of your asset management system. This count measures your organization’s efficiency in tracking assets through the life-cycle and identifies key gaps. The lower the number, the more accurate and helpful your system will be in tracking these assets through their life-cycle.
If you find a high number of assets without a life-cycle status in your asset management system, you may want to take a look at your processes and staff to understand why. The problem may be as simple as staff not knowing how to use the asset management system to input life-cycle status, or a hectic purchasing process.
Number of assets with bad serial numbers
This is a simple count of how many assets in your system have invalid (or bad) serial numbers. This is normally determined automatically by an asset management system.
It’s important you know any errors in your system, especially when the errors occur in asset labeling or tracking. Without proper tracking, your asset management system will not be able to manage all assets effectively and you will likely lose track of these assets.
If you do not use serial numbers frequently, you may want to instead monitor invalid barcode tags or RFID tags instead.
Inventory accuracy is the measure of difference between asset records and actual assets. This metric can be calculated by determining the variance in inventory (how much of an asset type you actually found) and dividing by the expected number for that asset type.
Inventory accuracy is vital for many businesses. A high inventory accuracy allows businesses to accurately plan operations and remain highly productive; low inventory accuracy leads to uninformed management decisions, as well as possible disruptions in operations from missing assets.
Using inventory methods such as cycle counting and inventory by exception can help assess inventory accuracy more quickly and efficiently.
Equipment reliability is a measure of the likelihood an asset will remain in-service for its lifetime. Equipment reliability is measured by comparing how long equipment is meant to operate with its down time. The longer and more frequent the equipment fails, the less reliable it is.
This KPI is integral not only to asset and property management but to maintenance performance as well. The more reliable your business’ equipment is, the less downtime you experience and the more efficient your operations become.
Keep an eye on this metric long-term. Finding low equipment reliability may indicate the need to source equipment from a different vendor, or to change some aspect of equipment maintenance.
Ultimately, your business will need to decide which KPIs are most important for you to track. Although we have provided several ideas, choose what makes sense based on your business.
You may decide to create more KPIs based on your unique business goals. The NPMA has a short section in their dashboard guide that explains how to create your own metrics and KPIs that may be helpful.
Deciding on the Key Performance Indicators to track can present a challenge for asset managers. But it’s vital to choose KPIs wisely in order to avoid wasted time and effort.
It can be especially difficult to define your KPIs when you are implementing a new asset management system. To learn more about other common challenges when implementing an asset management system, download our white paper here.