Physical Asset Management is defined by The UK insitute of Asset Management, as follow:
"The optimum way of managing asset to achieve a desired and sustainable outcome."
Phycical Asset Management is a process to optimize and manage phycical assets through whole life cycle of the asset. That includes design phase, installation, maintenance, inspection and disposal of the asset.
The key objectives for the process are minimizing the life cost of assets (life cycle cost) and reduce and manage risk.
Production companies to day need to focus on cost reduction to be able to survive and grow in competitive environment. The maintenance cost is one of the factors that company can control and reduce, expenditures and efficiency of the production assets is another factor that can deliver value to companies. Raw material, labour and energy costs are factors that all have tendency to increase in the future and the companies have not full control on the unit price.
Both maintenance and equipment efficiency can be affected by increased reliability of production equipments. By increasing the reliability of equipment the maintenance cost will be reduced because of less breakdowns, there fore less use of labour and material and it will increase the availability of the equipment because of fewer interruption therefore lower downtime. It will lead to higher efficiency of the production equipment.