The Importance of Asset Lifecycle Management

Your company relies heavily on its assets to generate income. But what, exactly, are assets?

Assets may be defined as anything of value that a company either owns or leases. These typically include properties and equipment. However, the definition may extend to things that create value for a company like intellectual property and customer relations.

Capital assets can be classified either as tangible or intangible assets.

Apart from generating income for your company, your assets are also your most significant expenditure, often accounting for as much as 75 percent of your total cost of ownership. 

In order to get the most out of your investment, it is critical to operate, maintain, and manage your assets effectively. However, how do you accomplish that?

In order to better answer this question, it is imperative to have a basic understanding of the asset management lifecycle and its five stages.

Asset management lifecycle

The asset management lifecycle refers to the process of managing assets, from their acquisition to their retirement, with the end goal of maximizing the ownership and use of these. Furthermore, lifecycle management can help plant managers identify inefficiencies which undermine the lifespan of assets as well as cause bottlenecks in production.

The asset management lifecycle has six stages, namely recording, using, maintaining, auditing, reporting, and disposing. 

1. Recording

This is the stage where your company receives the asset and lists it as part of the inventory.

2. Using

This is the stage where assets spend the longest time in the lifecycle, providing the most value for your business. It is worthwhile to mention that assets that are in this stage still need to be reported in order to maintain accurate record-keeping.

This is also the stage where assets are assigned to operators and different departments within your company.

3. Maintaining

An asset enters the maintaining stage in the lifecycle once it is repaired or undergoes preventive maintenance.

4. Auditing

Audits may be conducted either voluntarily or in order to meet industry or government regulations. Auditing may also be undertaken to complement your company’s reporting. During this stage, your asset manager will need to confirm both the location and the total number of units in each asset class.

5. Reporting

After conducting an audit, the next stage of lifecycle management that follows is reporting. This stage provides decision-makers in your business with historical and current data about your assets that enable them to make informed choices, especially in terms of acquiring new assets and identifying inefficiencies.

6. Disposing

An asset enters the disposing stage when it is past its state of usefulness. Here, the asset may be donated, recycled, or sold. Before an asset enters this stage, it is critical for a company to make the necessary preparations in order to ensure that there is no disruption in operations before fully retiring a piece of equipment.

Overcoming the challenges of asset lifecycle management

Managing each asset lifecycle poses a few critical problems. For starters, without the proper tools at their disposal, your employees may find themselves overwhelmed with the tasks usually associated with lifecycle management.

Second, asset failure has far-ranging effects that extend beyond downtimes. These include the potential loss of earnings and negative company reputation.

In order to effectively overcome these challenges, it is critical to invest in the right tools such as a facilities maintenance software. This type of software will enable your company to stay on top of all the tasks related to lifecycle management.

However, investing in this software will not necessarily end your woes. It is essential to supplement this software with the right practices.

Invest in the right tools.

For asset lifecycle management, that tool would be facility maintenance software. This versatile software can be used for practically all the stages in asset lifecycle management, from recording to disposal.

Employees tasked with entering data on the software should make sure that the information entered is accurate and complete. Otherwise, this defeats the purpose of using the software. Plus, this can create additional problems later on.

Consider switching to a preventive maintenance program from reactive maintenance. A computerized maintenance management system or CMMS software can make the transition seamless by enabling automated scheduling based on the conditions set. This transition will help you get more out of your assets, extend their lifespan, and minimize downtime.

The effective management of assets is vital to getting the most out of your investment. By using the right tools and implementing best practices, you are assured of reaching this goal.

AUTHOR BIO

Mohammad Daudi is the Chief Revenue Officer at SGE Group International, a multidisciplinary group of companies with core business interests in Asset Lifecycle Management, Land Development and Software. Aladdin is SGE’s proprietary Asset Lifecycle Management software, designed to empower FM, Maintenance and Asset teams across multiple industry sectors.

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