Trail - What is Equipment Management?

Equipment management is a continuous process to optimize the life cycle of an asset.

What is equipment management? 6 principles of life cycle management

Whitepaper by Trail Systems Ltd 2023

Introduction

Equipment management is a continuous process in optimising the life cycle of company’s fixed assets. This article will describe in more detail the core elements of equipment management and how to apply those in an organisation.

Equipment management is not a tool only for specific industries or company sizes. A ground rule can be set

so that if you struggle to list all fixed assets of your company, completed maintenances or the time of acquiring the equipment, it’s worth considering digital equipment management tool. As an outcome for the investment, you can expect cost savings and a more sustainable asset management culture.

When an efficient system and optimised processes are combined with smart and sustainable asset management culture, we can start talking about AssetOps. AssetOps is fast becoming a strategic tool for the frontrunners in creating competitive advantage.

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Why is it important to manage the life cycle of equipment?

Imagine the following situation: it’s spring and you have purchased a new bicycle. You enjoy riding the bike throughout the summer. You leave the bike outside for a Nordic winter and when it’s time to ride again, the condition of the bike is not the best anymore and maintaining it back to it’s prime comes with a price.

If on the other hand you had optimised the life cycle of the bike from the very beginning, you would have taken the bike indoors for winter and ensured that way the condition for the next summers to come. By prioritising equipment life cycle, you ensure that the productivity of the asset investment is optimised.

Same principle applies also to the equipment of any company or organisation.

On top of productivity improvement, the life cycle management of equipment also contains managing the equipment after its lifetime. When equipment is no longer needed in my organisation, could it be sold to aftermarket? How the equipment should be recycled? These topics are right in the core of sustainability and resource-wise operations and are key in improving the sustainability of any organisation.

Companies naturally carry also other equipment besides bikes. Therefore requirements for equipment management are also higher. The first step is to identify and list all owned equipment.

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Achievable benefits of life cycle management

The profitability (ROI) of equipment is maximised

There is fewer needs for renewals

Equipment waste is reduced

Operational lifetime of equipment is longer

Maintenance costs of equipment are in control

Equipment insurance values are managed better

Company operates in a sustainable manner in all equipment purchases

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What are the different ways to manage equipment?

Fixed asset management is important. It creates confidence in knowing what equipment is owned by an organisation, how the productivity can be optimised, and taking bigger responsibility for the asset operations.

Equipment management can be operated in several different ways with very different tools. And as in life in general, not all methods suit all.

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The most common ways to manage fixed assets

Memory of employees

The first two on the list are still the most common ones. And those are perfectly good options for a newly started company when there isn’t yet much to manage. The few laptops and the one van can be easily remembered.

In a growing company it’s noticeable that a system based on memory or pieces of paper is not reliable or secure. There is a risk of people leaving taking the knowledge of equipment with them.

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Did you know that systematic equipment management is an efficient way to reduce your company’s carbon footprint?

The most common ways to manage equipment

Spreadsheets are already a more advanced solution compared to pen and paper. The most skilled users can work with spreadsheets in managing maintenances and reservations. In small companies this can well be a reasonable solution.

The problem with spreadsheets is that they are fixed and there is a risk for conflicting duplicates. The user interface in spreadsheets is not the most intuitive and also due to that there is a risk of missing updates.

Maintenance systems are often used by companies where the usability and usage condition are of importance. Maintenance systems are built to manage maintenance requests and maintenance plans efficiently.

Maintenance systems however lack other core features of equipment management such as inventories, investment planning or equipment reservations.

Equipment management system is a digital tool for equipment life cycle management. On top of maintenance features, equipment management system includes all required functionalities to maximize the productivity of equipment. These features are asset register, asset labeling, management of asset reservations and asset loans, inventory management and asset investment planning.

A proper equipment management systems ensures that the asset information is transparent and available to all who need it. We’ll return to the subject of digital equipment management system later in this article.

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Enterprise resource planning system (ERP) is in use in many of the more mature companies. ERP many times includes some asset management features, such as asset maintenance, asset reservations,

One of the main goals of equipment management is to build a transparent and comprehensive view to all equipment.

What is the difference between equipment management and fixed asset accounting?

The finance department usually has the best view to the fixed assets of an organisation. And that’s because if other departments in the organisation can only guess, finance at least has fixed asset accounting and reports to turn to. Now however, fixed asset accounting is not enough for obvious reasons.

Why isn’t fixed asset accounting enough? The most important reason is that it’s not timely enough to give proper and reliable view of the status of fixed assets in an organisation. Another important reason is that the information is not transparent – it’s usually available only to the finance personnel.

Fixed asset accounting usually gives answer to the question of what has been purchased and which equipment still has value in the balance sheet. This has actually very little to do with the equipment that is being actively used in an organisation.

Fixed asset accounting doesn’t tell for example which equipment has been lost or broken. The information can be obtained only by completing an inventory which is normally rather time consuming unless smart asset tags are used. Traditional inventory reveals only what assets are found, not what is lost and why.

In addition, for many devices the technical lifetime is multiple compared to the depreciation period for accounting. By relying on only fixed asset accounting, this information is not recognised. And it would only be smart to plan future purchases based on the end of actual lifetime rather than the one in the books.

Fixed asset accounting is of course important. However alone it’s providing a narrow view of assets. Efficient equipment management processes help companies to maximise the lifetime and productivity of the equipment.

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List of differences between fixed asset accounting and equipment management

Fixed asset accounting lists the assets that have been purchased and what assets are still being depreciated. Equipment management gives a comprehensive view of all owned and operated equipment.

Fixed asset accounting information is available to only a limited number of people in the organisation. Equipment information is available to all who need it and operate with the assets.

Fixed asset accounting doesn’t help in managing maintenances, reservations, investments or transfers between physical locations.

Fixed asset accounting usually includes financial limits for the assets that are being tracked (for example €2 000 or €10 000) in which case the less expensive assets are not necessarily tracked at all. Equipment management reaches all equipment relevant for the company either via operations or via value.

Fixed assets accounting doesn’t include information about lost equipment, the reason or timing for getting lost. Equipment management system can log all this information.

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Steps for implementing equipment management system

Choosing equipment management system

Naming a responsible person and first key users

Choosing the labeling technology (RFID, NFC, QR-code or a combination)

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Naming responsible users for equipment management is one of the most important steps in implementing life cycle management as part of corporate culture.

Implementing and using equipment management system

First step of implementation is choosing the correct equipment management system. A good practice is to list all the challenges, needs, wishes to find just the right system.

The software should be tested before making decisions. With testing it’s good to evaluate the internal processes and culture around asset management.

Already when purchasing the system it’s good to name one or two superusers. Their responsibility is managing the equipment as well as acting as key users for the system.

When implementing the chosen system, it’s recommended to name a few key users on top of the superusers. The responsibility of key users is then to implement the processes in their departments.

The best labeling technology and material is chosen before implementing the software. The most common technologies are QRcode, barcode, RFID and NFC, or a combination of these. The practical difference between technologies is in the way they are scanned when using.

It’s always possible to expand the use of different labels later if and when the use of the system expands. In the first phase the fist labelling method is chosen carefully during implementation. We’ll go through the different labelling possibilities later.

The initial inventory is most time consuming but at the same time the most important step of implementing equipment management system. In practice the work is to list the equipment with all details to be imported into the digital system.

The data quality of the first initial inventory during the implementation cannot be stressed enough. This is something where it’s worth to ask from professionals and take the time to understand the importance of different data elements in the system. If the inventory of all assets seems too big of a hurdle, it’s good to start with on department, building or location to get going.

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Finalising implementation

When initial inventory of assets is completed, and asset data is in the equipment management system, it's time to label equipment with chosen tags. The more advanced equipment management systems offer possibility for own printing infrastructure to bring fluency into the printing process. Labeling is something that requires working hours to be completed.

When equipment management system is in place and assets are labeled, it’s time to move on to the normal continuous use of the system. Now the personnel can manage equipment life cycle efficiently, sustainably and easily. At the same time there is data gathered for decision makers about assets and required investments for planning all asset operations.

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Identifier tags bring intelligence to equipment which isn’t equipped with any internal intelligence.

Asset tracking and labeling

Tracking assets is a continuous process to keep up record about asset life cycle and location. Many of us have searched for a missing piece of equipment and gotten frustrated when not finding it. How fantastic would it be to get the information easily from one reliable source!

Equipment tracking can be broken down to two categories:

Passive tracking (RFID, NFC, QR-code and barcode)

Active tracking (GPS)

The passive tracking of equipment is a cost effective method to label and manage equipment. Passive identification labels (RFID, NFC, QR and barcode) link the physical asset with the digital counterpart in the asset management system.

The passive labels do not require a power source to work and therefore have a long life time and are a cost efficient solution in tracking.

Passive tracking doesn’t automatically update the location of the tracked asset. Equipment management system however contains information about the original location of a device which can be verified with inventory. In addition, the reservations feature helps to track the movements of any asset used in projects or given out to personnel (or students or similar groups) for use. With operating through reservations, there is constant knowledge of the location of the assets available.

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UHF (Ultra High Frequency) RFID labels require a separate reader device to operate. With a special reader, the UHF RFID labels can be identified from a distance up to 10 meters. That is the reason UHF RFID labels are excellent for inventories. It’s recommended however to ensure that the RFID labels contain also printed mobile readable QR- or barcode to ensure readability via mobile device as well.

NFC, barcode and QR code labels are readable with a mobile device without separate reader devices. These labels support the users to access the asset information and operate assets also on the field, when laptops are not close by.

Active GPS tracking is at the moment still a fairly expensive method for asset tracking. That’s why it’s recommended to leave that technology for tracking the more valuable assets, such as vehicles on the move.

The reason the technology is expensive to use is the price of the tracking devices (from tens to hundreds of euros) and data connection needed for each tracking device. The price of data is normally a few euros a month per each GPS tracking device.

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RFID-tags can improve the efficiency of fixed asset inventories significantly.

Inventory of fixed assets

Inventories are usually time consuming jobs but highly important from the financial and sustainable aspect of operations.

Inventories must be recorded for the annual reporting but the inventory of existing fixed assets (machinery, devices, vehicles etc) should not be overlooked. The up-to-date view on fixed assets help to plan investments better and avoid unnecessary purchases. In addition the timely data makes it possible to determine accurate insurance values for the assets.

Inventory of fixed assets is often neglected because it takes so much time. In addition a big portion of the fixed asset might be hanging in the ceiling of an auditorium which makes it very difficult to complete the inventory in practice.

What if we say that it is possible to speed up the inventories of fixed assets by 70%? We already touched the subject of UHF RFID labels. The labels are readable from a distance without the visual contact to the actual label. This enables scanning labels of several devices very fluently without the need to find the actual label from each device separately.

Distant readability enables inventories to be managed just by walking through a space with a reader device. Mobile device attached to the reader with equipment management system in it, make sure that the log is updated during the inventory.

RFID inventories are already here to stay and have opened the possibility for fluent, fast and reliable inventories.

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Customer Case: Senate Properties

Inventory efficiency through life cycle management of equipment

Senate Properties is the work environment partner of the Finnish government. Senate Properties is responsible for the maintenance and development of the premises of government organisations and creates work environments that support customers' operations.

Trail was introduced in Senate Properties in 2018 through a public tender. In connection with the implementation, a security and administrative audit of the system was carried out, in which the suitability of Trail for use by the state administration was ensured.

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“Inventories can be completed in a fraction of the time compared to before”

Efficiency in inventory

Trail is currently used to manage tens of thousands of Senate Properties' furniture and AV equipment throughout Finland. Physical RFID tags are attached to the equipment for individual tracking. The tags have basic item information and a QR code, enabling fast and effortless defect reporting through Trail mobile application.

Trail mobile application and RFID reader are used to identify remotely readable RFID tags. In practice, a mobile device is connected to the reader, where Trail application registers all RFID tags scanned by the reader, and then updates the system with up-to-date information.

A powerful RFID reader allows tags to be read from a distance up to 10 meters and as a result, inventory execution is very fast. As an example of efficiency, about 800 articles from the entire floor were inventoried in less than 10 minutes in one of Helsinki offices.

Gathering equipment information

The gathering of equipment information into Trail service works smoothly for Senate Properties as the suppliers of equipment provide the information already in a system readable format.

Management of user rights

All systems used by the Senate Properties must operate seamlessly and reliably in terms of user rights management. With Trail's comprehensive access control possibilities, information on equipment in different parts of Finland is only available to relevant persons.

Read more about the customer case

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In Trail, the user also sees operational needs such as reservations, defect reports, and future maintenance needs.

Whitepaper by Trail Systems Ltd 2023