Asset lifecycle management refers to the strategies used to extend the time that an asset functions. A longer asset lifespan means a more efficient business, so lifecycle management ultimately boosts your bottom line while lowering asset tracking costs at the same time.
To increase your asset’s life cycle, you may need to implement numerous strategies, including comprehensive monitoring or regular check-ins with preventive maintenance. However, purchasing a higher quality asset is also a key element of lifecycle management, saving you money in the long run.
With this guide, you’ll learn the four stages of asset lifecycle management and tips to make the most of your assets.
In this guide:
What Is Asset Lifecycle Management?
Most businesses require assets, which are the owned property or equipment that the business uses to turn a profit. To get the most value out of these assets, a business needs a plan to manage them for increased longevity while maximizing their output. This process for increasing an asset’s lifespan is called asset lifecycle management.
Eventually, every asset must be retired and a new asset must be acquired. When this happens, the cycle restarts while the business remains profitable.
Whether it’s a lawn mowing company or a luxury yacht rental company, every operation with assets must invest in asset lifecycle management to ensure the best return on its investment.
Key Stages of Asset Lifecycle Management
Asset lifecycle management can be broken down into roughly four different stages: planning, acquiring, operating and maintaining, and disposing. Your operation should have a process in place for each stage.
Planning
When your business needs more assets, you’ll have to start planning to add them. You’ll likely need more assets for one of two reasons: Business growth or a previous asset failure that requires a replacement.
Tips to keep in mind while planning:
- Know your budget restrictions
- Check in with other departments to make sure you have all the data
- Estimate the asset’s lifetime value
Acquiring
The acquisition or procurement stage centers around buying the asset(s) you need. You’ll want to put together a shortlist of potential suppliers, and then negotiate costs and delivery to determine which supplier is best for your needs.
Once you’ve purchased the asset(s), you may need to assemble, install, and buy spare parts.
Operating/Maintaining
In this stage, you’ll be using the asset for as long as possible. This means creating a maintenance plan that uses both preventative and corrective approaches.
Preventative maintenance reduces the likelihood of an asset breaking down by improving conditions before they turn into problems, including oil changes or replacing a filter. However, you should also have a corrective maintenance plan to ensure you move quickly and efficiently in response to asset (or system) breakdowns. Since breakdowns can’t be prevented, you should have a response plan at the ready.
This stage is when asset monitoring is helpful because it this allows you to track the daily operation of each asset.
Disposing
Your asset will eventually stop meeting your minimum requirements for safety or efficiency. You’ll need to have these requirements established, so that your managers can easily determine when an asset must be retired.
Once you’ve recycled or trashed the nonfunctional asset, you’ll need a new one, and the asset lifecycle restarts with the planning stage. Over multiple cycles, you’ll learn more and more about what works best, and you can modify the asset lifecycle to maximize your efficiency.
Asset Lifecycle Best Practices
Knowing the four stages of an asset lifecycle is just the beginning. Once you have them all planned out, you’ll need to know how to improve on them.
These improvements will be specific to your industry and your company. However, we do have a few tips that can help you get started.
Get asset management software
Tracking your asset lifecycles with software can be as simple as relying on a single spreadsheet.
However, as your business grows, you’ll likely want to consider a dedicated program that can track and highlight all the stages of an asset lifecycle to help you or your managers stay on top of the entire process. Try exploring the best asset tracking systems, which can even send automated alerts to ensure you stay informed.
Track data to improve maintenance schedules
Improving maintenance schedules will ensure your asset lifecycle plans are in constant motion. It would be beneficial to invest in an asset tracking system – like RFID tags or barcodes – to gather data on asset location and usage. Checking this data through regular inventory audits will guide your updates to maintenance schedules.
For example, you may find that some laptops are used by the night shift as well as the day shift, so they need to be replaced twice as frequently as laptops that are only used by the day shift.
Establish asset role guidelines
Asset misuse can lead to faster breakdowns. To prevent this, figure out the exact parameters that your business will be using the assets within. This might include when, why, and who uses them, in addition to how they’re used.
Consider reducing downtime
Whenever your asset is not in use, you’re losing efficiency. Finding ways to reduce asset downtime will reduce relative maintenance costs and increase productivity. However, in some cases, you’ll want asset downtime, since redundancies will come in handy in the event of an emergency breakdown.
Benefits of Asset Lifecycle Management
A good asset lifecycle management plan will require constant tweaks and improvements. However, it’s definitely worth creating for any business that uses assets. Here are the biggest reasons why your operation needs one:
Cost-effectiveness
Asset lifecycle management exists to streamline the use of your assets, ensuring you get the most productive power at the lowest resource cost. The right plan is the most cost-effective one.
Asset performance
Assets will perform best when your lifecycle plan is in place to ensure that you buy the best asset for the job and you maintain its functionality for as long as possible. Without a plan to ensure strong performance, asset breakdowns will be common and you’ll lose valuable production time while spending more money on emergency repairs.
Scalability
An asset lifecycle plan will allow your business to grow in revenue without unexpected asset replacements or breakdowns growing at the same rate.
Resource allocation
An asset lifecycle management plan will ensure that all your resources (time, labor, budget, and equipment) are balanced. You’ll avoid giving workers or assets too much downtime, so the entire operation stays in production and remains ready for anything.
Security
Establishing a system deters the potential for theft, out-of-hours use, or misplacement of assets. Since your business is aware of how long assets are expected to last and when they’ll be in use, there’s no wiggle room for theft to pass unnoticed.
Asset Lifecycle Management Software
Asset lifecycle management is all about planning, acquiring, maintaining, and disposing. There’s no rush to figure out how all of these processes work, either. You can always change your approach as you gain more hands-on experience in your industry.
However, you do need to create an asset lifecycle plan. Once you have a plan, you have to actually use it. The right asset management software can help by keeping all your maintenance schedules on track and alerting you when an asset has reached the end of its estimated life span.
It may not have to cost you a cent, either: just visit our guide to the best free asset tracking software options on the market today.
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