What are the Stages of Asset Lifecycle Management?

From the moment you identify an asset need to its eventual disposal, here’s how you can optimise the use of your organisation’s assets at every lifecycle stage

Asset lifecycle management allows you to get optimal performance from all the assets your organisation uses, no matter whether you’re a small business with a few pieces of equipment or a major enterprise with tens of thousands of assets across multiple locations. To boost efficiency across your asset management strategy, here’s everything you need to know about the five stages of asset lifecycle management.

What is an asset?

An asset is an item that is owned by an organisation or individual that has value. Assets are split into tangible assets (physical assets such as land and machinery) and intangible assets (copyrights, trademarks, and IT assets such as computer software).

Within tangible assets, there are two sub-categories: current assets (cash, inventory) and fixed assets (equipment, buildings, machinery, and other physical resources which are used in a business’ operations and are unlikely to be sold). When we talk about asset lifecycle management, we’re talking about managing the lifecycles of fixed assets.

What is the asset lifecycle?

The asset lifecycle refers to each stage of an asset’s life within an organisation. Beginning with planning and procurement, the asset lifecycle covers operation, maintenance, and the eventual disposal of an asset. This process will differ between different assets, with various asset types having different useful lives. There may be a difference between the useful life of an asset from an accounting perspective and an operational perspective. From an accounting perspective, the useful life will be the period over which the asset is depreciated, but operationally, this may be until the cost of maintenance and repair eventually outweigh the cost of replacement.

What is asset lifecycle management?

Asset lifecycle management is a strategy used to optimise the efficiency and operational life of an asset during its lifecycle. This includes providing preventative maintenance and tracking assets. Without this strategy, assets may be poorly maintained or operated inefficiently, shortening their lifespan and leading to more frequent and often costly replacements.

Lifecycle management also allows organisations to plan ahead, forecasting when assets will reach their peak performance and how long they will last after that. This allows for more accurate planning that will maximise the useful life and uptime of assets.

Stages of asset lifecycle management

At each stage of the cycle, asset management allows you to get the most from the asset. Here’s how organisations can manage each phase of the process.

Planning

Although some people consider procurement to be the first part of the asset lifecycle, in most cases, planning is the real first step. This is where you identify a requirement, determine the asset specification and secure the necessary budget. This might mean considering a range of different assets to do the job, taking into account factors like price, maintenance costs, and expected operational life, and doing a cost-benefit analysis. Because organisations are reliant on their assets to function effectively, planning ahead is an essential part of asset management. Stakeholders such as operations teams and finance specialists will weigh in at this stage.

Procurement

This phase covers the purchasing, transportation, and installation of the asset in the facility. Depending on the scale and type of asset, this may be an expensive or lengthy process; vehicles or infrastructure assets may be cost-intensive in this phase, while smaller assets such as a hand-held tool or small piece of furniture are easier and cheaper. Safety checks and other preliminary checks may be conducted at this stage. An integrated purchasing solution will allow organisations to track assets seamlessly from planning to use through goods receipt.

Use

Use or utilisation should be an asset’s longest lifecycle stage. In this phase, the organisation should optimise the use of the asset to maximise uptime and effectiveness. Management of assets in this stage includes tracking, auditing, reporting, and maintaining the assets. As time goes on, the asset might need upgrades and patch fixes to stay up to date.

Maintenance

Managing the maintenance of the asset requires deciding which type of maintenance to use: preventative, predictive, routine, or another strategy. Planning maintenance also means understanding the asset’s maintenance requirements and how frequently it will need to be maintained. Because maintenance can be expensive and time-consuming, it’s important to plan maintenance to occur at optimal times in the lifecycle of the asset to maximise efficiency.

Disposal

Once the maintenance costs of the asset outweigh the total cost of a replacement, or the asset becomes obsolete, it’s time for disposal. This includes assessing the cost and manner of disposal. At this stage, an organisation will need to decide how best to dispose of the asset. This may involve selling, repurposing, recycling, or throwing away the asset, depending on its type. With certain assets, the disposal process may include dismantling the asset so it can be recycled in an environmentally friendly manner, or in the case of IT asset management, removing or transferring all data before disposal.

Then, the asset management lifecycle begins again with planning for a new asset.

Benefits of asset lifecycle management

Strategic management is important at every stage of the asset lifecycle. Full lifecycle management has many benefits:

Reduce equipment downtime

With asset lifecycle management, organisations can reduce downtime by scheduling maintenance activities and planning ahead for new acquisitions. This allows them to get the maximum amount of use out of assets while minimising disruption to operations.

Optimise maintenance to extend asset lifespan

Maintenance management allows organisations to extend an asset’s period of peak performance, sometimes even allowing the asset to perform better than it originally did. Managing maintenance at the most effective times for the asset allows it to be kept operational for longer while minimising maintenance costs.

A more cost-effective approach to asset management

Increasing the efficiency and lifespan of assets results in a more cost-effective approach to asset management, as longer asset lifespans and fewer replacements mean spending less money. Proactive maintenance can be cheaper than reactive maintenance, allowing organisations to save costs on maintaining their assets.

A data-driven approach

Careful management of the asset lifecycle allows for a more data-driven decision-making process, with increased knowledge about the lifecycle and maintenance needs of assets. Asset information collected over the lifetime of an asset can be used to reduce asset costs and improve utilisation for example a high number of maintenance requests over a given period may indicate a wider issue and lead to early disposal or replacement.

Asset management software

Software can automate and streamline the process of asset management in many ways. A good asset management solution brings together data about the entire asset register, including information about asset status, history, location, condition, depreciation, and information about maintenance needs. Not only that, but it can automatically create work orders to carry out this maintenance. Moreover, the software can store asset information such as warranty documents, photos, and purchase history, which is useful for planning and maintenance.

Looking for new software to enhance your asset management capabilities? You may be interested in FMIS asset management and tracking software. Comprised of a range of integrated modules for fixed asset management, asset tracking, stock and inventory, equipment maintenance, and more, our solution can help you optimise your assets across the entire lifecycle. It is available as a cloud-based or on-premises solution, allowing you to choose the option that best suits your organisation, and even offers mobile asset management capabilities.

To learn more about the benefits of FMIS asset management solution, request a demo or get in touch today.

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What are the Stages of Asset Lifecycle Management?

What is an asset?

What is the asset lifecycle?

What is asset lifecycle management?