Assets – both current and fixed – are the most valuable investments for any organization. Keeping these assets well-maintained not only enables organizations to conduct quality operations, but achieve optimal performance.
Assets pass through various stages in their lifecycle, and the need for maintenance varies depending on their usage, capacity and performance. By recognizing the lifecycle stage of an asset, asset managers can better devise a suitable asset management plan to ensure their upkeep. That’s where effective lifecycle management comes in! It helps organizations reduce the risk of downtime and guarantee consistent operations.
This article takes you through the concept of asset lifecycle management, its importance, key stages and what you can do to wisely implement it in your organization.
What is asset lifecycle management (ALM)?
Asset lifecycle management (ALM) is a strategic approach to managing an asset throughout its life to prolong its life. The aim of this approach is to reduce inefficiencies in the performance of an asset, and ensure it is used in the most efficient manner. Devising a plan for asset lifecycle helps managers allocate the assets well, and achieve a higher asset control.
Asset lifecycle tracking is a significant development in the realm of asset management. Over the years, it has gained considerable traction due to its ability to optimize asset allocation in the most cost-effective manner. This optimization has been made simpler with the help of cloud-based asset management systems. Organizations, regardless of their size, are moving toward using asset management systems to optimize their asset lifecycle planning.
As per a report, the ALM market is expected to reach USD 7,597.35 billion by 2032, growing at a CAGR of 35.2% from 2022 to 2032. This way organizations can maximize their return on assets while adapting well to the asset management ecosystem.
5 phases or types of asset lifecycle managementÂ
The table below highlights the primary stages an asset passes through. Taking these stages into consideration is highly critical to make decisions regarding asset upkeep.
| Stage | Function |
| Planning and acquisition | Identifying the need for an asset, assessing the budget and purchasing the asset as per departmental requirement. |
| Deployment | Installing the asset for use, assigning custodians, and giving training to the concerned personnel to use it. |
| Monitoring | Checking the asset for quality performance, identifying any gaps in functions, and seeing if the asset is fulfilling the desired need. |
| Maintenance | Scheduling regular inspections and servicing for any visible signs of wear and tear to prevent breakdowns. |
| Disposal | Finalizing the decision to dispose of an asset based on its depreciation and end of useful life to avoid excessive holding costs. |
Stage 1: Planning and acquisition
It is advisable for asset managers to recognize the need for an asset before purchasing it. This involves cross-checking the request for certain assets from employees, reviewing the asset landscape of all departments, and assessing if the current assets are fulfilling the said need or not.
Once the assessment has been done, asset managers can make a detailed plan and proposal for equipment procurement. This includes covering the following questions, amongst others:
- Where is the asset needed the most?
- Why is the asset required?
- How does the asset fulfill the organizational objectives?
- Does the asset meet the regulatory requirements?
- Does the organization have the budget to procure the asset?
After the managers have reached a conclusion, they can go ahead with the purchase for effective operations.
Stage 2: Deployment
Deployment is crucial as it involves ensuring the asset is tested and fully ready to be used. To make the deployment stage as smooth as possible, it is vital to involve the relevant stakeholders. For instance, a construction technician would be an apt choice for checking if a forklift is ready to be used or not, and conducting test-checks on a construction site.
Managers overseeing asset deployment must coordinate the asset’s delivery with the administration to ensure its timely installation. Relevant staff can be engaged if the asset needs to be assembled. It can then be tested for precision and accuracy in terms of functionality.
Stage 3: Monitoring
The asset procured and installed must be checked for performance on a regular basis. This can be done by defining and checking KPIs that reflect an asset’s performance, including uptime and asset utilization. Tracking these KPIs helps organizations stay on track with the broader organizational goals and strategically manage assets.
Safety monitoring is another aspect asset managers must assess to stay compliant with the regulatory requirements. Organizations need to ensure that they are following industry-specific standards to maximize employees’ safety at work. Checking the asset regularly helps achieve just that!
Stage 4: Maintenance
Keeping the asset well-maintained is the most important part of asset lifecycle management. It involves following some maintenance best practices, including inspections, assessment, and repair sessions. It also includes scheduling frequent inspections to identity faults and errors in the asset. Once the inspection has been completed, maintenance managers can decide how extensive the repairs need to be, then arrange for the related inventory and forecast the costs.
Timely maintenance helps prolong the life of an asset, and reduce the chances of emergency repairs. Detailed maintenance logs can be created to keep track of an asset’s maintenance history and refer to it if any repair is needed in the future. maintenance improves an asset’s efficiency considerably, no matter what the asset type is.
Stage 5: Disposal
Disposal is the last stage in managing the lifecycle of an asset. It involves calculating asset depreciation and assessing if it’s worth maintaining and keeping the asset for use or not. Automatically calculating the depreciation saves organizations time and makes it easier to decide whether the asset is capable of performing. If the cost is more than the return, then it’s wise to dispose of the asset.
Benefits of smooth asset lifecycle management
No matter the industry or size of an organization, it depends on well-maintained assets for increased ROI. ALM helps achieve this strategically by ensuring that your asset management principles stay aligned with your overall organizational goals and the upkeep of your assets. It involves keeping a close eye on the performance of your assets which eventually helps improve the overall organizational efficiency.Â
Here are the potential benefits you, as an asset manager/custodian, can help achieve with smooth ALM:
1. Cost optimization
ALM helps optimize costs right from the first stage of an asset’s lifecycle i.e., planning and acquisition. Asset managers can assess the available budget to procure certain assets, and ensure the purchases within the allocated budget or funds. ALM helps analyze the Total Cost of Ownership (TOC) so managers make wiser decisions for cost minimization.
Additionally, managers can avoid overstocking by simply assessing what asset is needed the most to avoid costs associated with acquiring additional assets.
Once an asset has been procured, ALM helps prolong its life, minimizing procurement costs. Regular maintenance helps reduce the risk of breakdowns, saving organizations from on-the-spot expensive repairs.
Similarly, once an asset has fulfilled its purpose and tracked for performance, ALM provides enough data to managers to decide if an asset must be disposed of. This helps avoid unnecessary holding costs and the risk of lost productivity in case of unexpected asset breakdowns.
2. Improved compliance
ALM enables organizations to stay compliant by helping keep assets up-to-date and integrating regulatory policies within the asset management framework. When an asset is procured all the regulatory policies with regards to its use are identified in line with ALM. Timely identification of these policies enables organizations to follow these policies throughout the asset’s life.
Frequent inspections and maintenance help ensure that the asset is safe to use, which, in turn, keeps it compliant with Occupational Safety and Health Administration (OSHA) regulations. Organizations can conduct regular audits to comply with Occupational Safety and Health Administration (OSHA) regulations, and maintain audit trail for transparency in the way assets are handled.
3. Risk management
Organizations can systematically reduce risk by identifying potential risks at each stage of the asset lifecycle. You can assess if it’s viable to procure a new asset or improve the usability of the existing ones – including assessing vendor reliability and asset need.
Additionally, with real-time monitoring, you can avoid extensive wear and tear by identifying potential risks before they turn into critical issues. Premature asset disposal can also be avoided if you know exactly when an asset is no longer useful. For instance, a five-year-old machine might still be functioning well due to low usage than a two-year-old machine that was used heavily for multiple projects.
Overall, ALM helps prevent operational, financial, compliance and cost-related risks by simply keeping asset utilization in check.
4. Optimal asset utilization
ALM helps increase asset utilization through in-depth data analysis. To optimize asset use, you can generate various reports, including asset utilization, asset depreciation, asset availability, and total asset value reports. Such reports provide a detailed analysis of your asset landscape and help allocate assets better.
For instance, by tracking depreciation, you can decide if the current asset needs replacement or repair. Likewise, obsolete assets can be easily identified and replaced with well-functioning assets. This way, no project is halted, and high productivity can be achieved.
5. Enhanced employee experience
Dealing with outdated assets or handling frequent asset breakdowns can be troubling for employees! With efficient ALM, you can provide your employees with a seamless asset management experience by enabling them to perform their tasks without any operational hindrances.
Employees will have the most recent technology to execute tasks. With optimized workflows and accurate asset allocation, organizations can prevent bottlenecks, allowing employees to work efficiently without waiting for the needed resources.
Best practices to prolong asset life
Here are some asset management strategies to maximize the value of your assets:
1. Devise an asset management strategy
A clearly defined asset management strategy serves as a guideline for how assets are acquired, deployed, maintained, enhanced, and disposed of across their life cycles. Set a strategy based on your organizational goals to set the direction for your ALM activities.
The ultimate goal is to maximize asset utilization, reduce downtime, and enhance overall productivity for operational efficiency.
2. Conduct audits
One of the best ways to ensure that your organization is meeting industry standards, and staying compliant is to perform regular audits. The aim is to identify gaps in the way assets are being handled, cross-check physical counts against the digital records, and take corrective action if needed.
Audits also give visibility into utilization rates and maintenance backlogs so you can adjust your asset management strategy accordingly.
3. Perform preventative maintenance
Schedule regular maintenance sessions to ensure your equipment is performing upto the mark. Extend the lifespan of your assets to optimize their performance.
You can attach checklists while sending your asset for maintenance to provide detailed guidelines to the technicians regarding what repairs need to be performed. By implementing maintenance best practices, you can easily schedule maintenance sessions; simply check your availability calendar, reserve the asset, and send the asset for servicing.
4. Use asset management system
Automate asset management to eliminate manual data entry and reduce the risk of errors. Enter asset details into the system along with their identification numbers to uniquely identify assets and track them. Store essential documents related to assets, for instance, user manuals, for easy accessibility and use.
A well-functioning asset management system enables real-time monitoring through barcode tagging and GPS tracking. Get an accurate count of your assets, where they are located and in what condition to stay updated with essential asset data.
5. Standardize processes
To maintain efficiency and quality operations, it is vital to take data-driven decisions. You can improve your organization’s processes by standardizing and defining them. This includes defining transparent protocols for handling assets right after they are procured.
Some ways to standardize processes include defining procedures, automating workflows, benchmarking standards, monitoring and reporting numbers, and training the staff to use the system for asset lifecycle management.
6. Analyze Total Cost of Ownership (TOC)
It is important to conduct a rigorous TOC analysis to evaluate all direct and indirect costs across an asset’s full lifecycle.
This data will enable you to make informed procurement decisions and optimize the value of assets by matching the procurement cost with the ownership expenditures.
8. Ensure continuous improvement
Operational teams need to proactively identify opportunities to enhance asset management processes on an ongoing basis. Conduct a thorough data analysis to assess the performance of assets over time and try revising strategies to streamline the existing workflows.
Tools for asset lifecycle management
There are different ways to manage the lifecycle of your assets. Following are some examples:
1. Enterprise Asset Management System (EAM)
Systems that are particularly designed for enterprise asset management are useful for asset lifecycle planning. You can create a centralized asset register to store the asset information that serves as the foundation for asset tracking and monitoring.
EAM systems also integrate with systems like Zendesk and Jira to allow service management, so users can check out assets or send them for maintenance without logging into their EAM system directly. This enables cross-platform collaboration and simplifies workflow management.
2. Computerized Maintenance Management System (CMMS)
You can use a CMMS platform solely for advanced maintenance management. Managers can create purchase orders for new inventory orders, create maintenance calendars particularly for assets, generate work orders to track different service types and reserve or send an asset for maintenance.
Such a system helps track asset maintenance faster and better with capabilities for enhanced service management.
3. Advanced Analytics Software
You can use a system equipped with data analysis tools to measure and track your performance overtime. Create reports as per your organizational needs to get a comprehensive view of your assets and their usage over time.
ALM for increased efficiency
Asset lifecycle management is not just a technical box to tick, but a holistic approach to unlocking the full potential of your organization. From cost savings and enhanced performance to improved security and a happier workforce, the benefits ripple throughout your organization. By embracing best practices like strategic planning, timely deployment and proactive maintenance through the use of technology, you can leverage your assets for fast growth. These aims can be best achieved with the help of an asset lifecycle management system that simplifies workflows and transforms monotonous data entry and tracking into easy tasks!
