Before diving into the asset life cycle, it’s important to first define the term asset. “Asset” is a broad term that refers to any piece of property owned by a person or firm. An asset can be anything from an entire office building to a pencil in someone’s desk drawer.
However, when talking about the asset life cycle and asset life cycle management, it’s generally referring to a physical asset, like a piece of equipment, that requires upkeep and financial investment to stay in excellent condition.
What is the asset life cycle?
An asset’s life cycle encompasses everything that occurs from first deciding there’s a need for the asset to eventually disposing of the asset after it is no longer useful. Asset life cycle management is a method for asset management in which facilities leaders can optimize their assets’ useful lives and get the most out of a limited lifespan.
Effective asset life cycle management can extend asset lifespans, reduce the cost to maintain the asset throughout its life, and make the asset more reliable/less likely to break down spontaneously.
Asset life cycle stages
Each asset goes through 5 main stages during its life: plan, acquire, use, maintain, and dispose. The majority of time is spent in the use and maintain phases, but each stage plays an equally important role in ensuring you get the most from your asset.
The planning lifecycle stage begins by realizing a need in your facility is not currently being met. Once you start to brainstorm and research assets that might solve your problem, you’re planning.
If the asset requires a significant financial investment, take your time in the planning phase—research multiple options to decide which asset will best fulfill your facility’s needs.
Once you’ve found the perfect asset to meet your facility needs, the next step is acquiring said asset. Acquiring not only means purchasing the asset, but it also means getting it to your facility.
If the asset requires installation, be sure to plan for additional costs when setting a budget.
Now that the new asset is in your facility, you can begin to use it! Once you’ve got it up and running, analyze the asset’s needs and assess how your team can best care for it. Determine if the asset would benefit most from preventive maintenance, predictive maintenance, routine maintenance, or some other maintenance strategy.
Check out the benefits and drawbacks of different maintenance management methods. Then create a maintenance plan to ensure you perform tasks at the most optimal time to extend the asset’s life and improve efficiency.
After you’ve developed a maintenance management plan for the asset, continue to use it as usual until maintenance is prompted. Whether it’s a time-based, meter-based, or condition-based cue, perform the necessary maintenance to get your asset up and running efficiently again.
Rely on maintenance checklists to ensure that maintenance tasks are being performed routinely and comprehensively by all technicians, every time. Once the asset is back in peak operating condition, continue to use it as normal until maintenance is once again prompted.
At a certain point, additional maintenance will no longer be a financially sound decision, and disposal will make the most sense. Every so often, perform a cost-benefit analysis to determine the costs associated with additional maintenance versus purchasing a new asset.
Eventually, when disposal and replacement make the most sense, look into different options for removing the asset:
- Can the asset be resold to another facility?
- Can the asset be sold to a refurbishing company for parts?
- Are there certain environmental restrictions that impact how the asset must be disposed of?
- Will there be an additional cost associated with uninstalling the asset?
All of these questions must be considered during disposal.
Once the asset has been disposed of, the cycle repeats itself. Return to stage one and begin to plan for the asset’s replacement.
Benefits of asset life cycle management
There are several benefits associated with tracking, managing, and optimizing your assets’ life cycles. Below, I’ve outlined just a few of these benefits:
Extend asset lifespan
Tracking an asset’s lifecycle offers you valuable information on how that asset operates and when maintenance is most optimal. Use this information to create an asset lifecycle plan highlighting the best maintenance intervals and procedures to keep the asset operating in peak condition.
By intervening with preventive maintenance at these critical points, you can extend the asset’s useful life. In fact, 78% of facilities that track maintenance history and optimize preventive maintenance report seeing an increase in equipment lifespan.
Following an asset life cycle management plan reduces the need for reactive maintenance, subsequently decreasing downtime. Planning preventive maintenance before the need for reactive maintenance arises puts you in control of the asset’s downtime.
Preventive maintenance also reduces the risk of unplanned, excess downtime due to emergency reactive maintenance. You can schedule maintenance outside of facility operating hours to ensure maintenance doesn’t interrupt productivity.
Improve facility efficiency
Another benefit that comes with asset life cycle management is improved equipment quality. Regular maintenance keeps assets in their best condition and prevents damage from improper care.
Well-kept equipment, longer asset lifespans, and less equipment downtime all boil down to one thing: improved facility efficiency.
Asset life cycle management helps your facility operate as efficiently as possible, taking stress off the shoulders of you and your team.
An efficient facility is an inexpensive facility. The benefits outlined above all bring along cost savings:
- Longer lifespans result in purchasing new equipment less often, saving money
- Decreased downtime ultimately means more uptime, which means making more money
- Reactive maintenance typically costs 3–9 times more than preventive maintenance
By planning maintenance ahead of time with asset life cycle management, you can save vast sums of money on maintenance costs.
Inform your decision-making processes
Asset lifecycle management offers insight into your facility you would otherwise miss. This knowledge can inform your decision-making process and help you make better plans for the future.
For example, when it comes to decisions like repair or replace, you’ll have the financial data to back up your thought process and help you come to the most cost-effective solution.
Getting a program in place
Now that we’ve covered what asset life cycle management is and what it can do for your organization, let’s talk about how to implement it in your own facility.
Whether you’re just getting started or ready to take your asset tracking to the next level with asset and equipment management software, we have the perfect resources for you.
Just starting out with asset life cycle management
If you’re just starting out with asset lifecycle management, congrats! This is a big leap, and your actions will have a positive impact on your facility. Here are a few helpful tips for getting started with asset lifecycle management:
Follow asset maintenance best practices: Effective asset maintenance prolongs the life of your assets and enhances their performance. For machinery, this means fewer breakdowns and subsequent repairs. For an office space, this means a clean and comfortable workplace where your team can be their most productive.
Performing asset maintenance means keeping your assets in great condition. And assets in great condition ensure your facility is functioning at its best (and its most cost-effective too)!
Follow these five asset maintenance best practices to ensure your facility stays in tip-top shape while keeping costs low.
Track each asset: When it comes to asset management, the more information, the better. Accurate and expansive information regarding asset performance allows you to make data-driven decisions.
Use maintenance KPIs to measure efficiency: As you begin to track your assets’ performances, be sure to use metrics like KPIs—key performance indicators—to get the most accurate and insightful data. Asset maintenance KPIs are a great tool for analyzing and quantifying what your facility is doing well and where it’s struggling.
Performance metrics give you the power to inspect asset maintenance through a diagnostic lens, enabling you to isolate and solve problems before they become major issues.
These 7 asset maintenance metrics were curated to give you a well-rounded snapshot of your facility’s performance, providing you with the knowledge needed to optimize your operations.
Further asset life cycle management development
If you and your facility are further in your asset lifecycle management journey and ready to take asset life cycle management to the next level, asset and equipment maintenance software is the right thing for you!
A digital asset management system will effortlessly track time and money spent on asset maintenance, manage the asset lifecycle, and alert technicians of opportunities for preventive maintenance. The system will even allow technicians to store important documents virtually and easily pull up equipment logs while on the job.
These additional insights that come with asset management software further develop the benefits seen from traditional asset life cycle management: even longer asset lifespans, fewer breakdowns, lower costs, and more data on your facility’s performance.
Using a digital system to manage your assets offers a level of insight and control that is unmatched with traditional paper systems.
Learn more about what maintenance management software can do to improve your facility’s operations.