When all of your assets are used efficiently for their lifecycle, you can significantly improve the total cost of ownership. Yet, for many organizations, a lack of data and asset strategy are hurdles. There is also often a silo mentality where data that could provide significant benefits is not shared throughout a company.
Optimizing your asset lifecycle management requires a holistic approach across every aspect of your organization, a focus on asset lifecycle planning, and the right asset management software to document, track, and manage your assets. In this post, we’ll focus on what is asset lifecycle management, how asset lifecycle management impacts the cost of ownership and financial viability, and best practices for making asset lifecycle management more efficient.
What Is Asset Lifecycle Management?
Asset lifecycle management (ALM) is a strategic approach to optimizing the operational efficiency and lifespan of assets. Extending the life of assets, optimizing maintenance, and sustaining life-term performance — especially for critical assets — can make a significant difference in productivity and profitability.
Asset management lifecycle phases include:
ALM includes physical assets and IT asset lifecycle management, such as hardware asset and software asset management lifecycles.
How To Make Asset Lifecycle Management More Efficient
Here are a few best practices and ways to make asset lifecycle management more efficient:
Have a Dedicated Asset Manager and Asset Team
Industry leaders typically have a dedicated asset manager or asset team that focuses on asset inventory and management. With someone in charge of ALM and establishing clear accountability, tracking mechanisms, and oversight for the asset management lifecycle, you can better meet asset requirements and lifespans.
This is especially important for IT asset lifecycle management to ensure remaining in compliance with software licenses.
Determine Asset Value and Repair and Maintenance Costs
Repair and maintenance costs of assets can add up quickly. So can asset depreciation. When you are tracking the lifespan of your assets carefully, you can take proactive measures to keep them in optimal condition. For example, preventive maintenance rather than reactive maintenance can reduce downtime and costly repairs. Planned maintenance before a problem arises is always preferable.
Today, companies can deploy predictive maintenance as part of their asset management services to better anticipate problems. For example, real-time data from sensors and IoT devices can help track usage and notify users when anomalies occur, defects are noticed, or maintenance is required. This allows organizations a more efficient way to monitor assets and prevent breakdowns.
Unplanned downtime is a profitability killer. Industrial manufacturers, for example, lose an estimated $50 billion yearly due to lost productivity.
Create Plans Based on the Causes of Asset Failure
Efficient asset planning requires an analysis at every stage of ALM. The planning stage should include a detailed understating of the causes of asset failure and how to avoid failure.
Companies should conduct a failure mode and effects analysis (FMEA) to identify causes of failure and the impact on asset performance. This is especially important for critical assets where failures have a significant impact on operations.
Plans should include:
- Analysis of historical data to identify recurring patterns
- Prioritization of critical assets
- Root cause analysis (RCA) in case of failure to determine contributing factors
- Documentation and knowledge sharing
- Training and skills development for employees
- Maintenance planning and forecasting
Planning helps mitigate risks from equipment failure and improve asset lifespan.
Invest in an Asset Management Software
Whether you are talking about the asset management of physical goods, such as raw materials, products, or containers, or IT asset management lifecycle planning, investing in asset management software is key.
Asset tracking systems help you understand where every item in your supply chain is at all times. Asset readings can identify problems and help you monitor asset health.
IT asset lifecycle management tools offer benefits, such as:
- Providing a single source of truth for managing all of your asset data
- Improving asset tracking and visibility into your supply chain and operations
- Streamlining maintenance to optimize resources
- Predicting end-of-life of assets for better procurement, replacement, and disposal
- Reducing administrative and manual tasks for better resource utilization
Some industries have specific compliance regulations for asset management. Asset management software maintains the documentation and traceability you need to demonstrate regulatory compliance or in case of audits.
By tracking the entire lifecycle of assets, you can more easily find and optimize operations. For example, by tracking procurement, vendors, licenses, warranties, and asset retirement dates, you can make more informed decisions about your assets. Monitoring and tracking assets can help reduce surprises that turn into unplanned expenses.
Track KPIs and Finances for All Asset Lifecycle Stages
Your asset management software can also help you track key performance indicators (KPIs) and financial metrics across all ALM stages. These KPIs and metrics help ensure you are meeting your lifecycle management goals.
Businesses need to define the KPIs associated with lifecycle management and create baselines for performance measurement. Sensors and automated systems can help gather data points to help track and evaluate asset lifecycle management efforts.
Tracking asset lifecycle stages should include a focus on the bottom line. For example, data should help inform practices concerning:
- Acquisition costs
- Operational costs
- Maintenance and repair costs
- Disposal costs
- Replacement costs
This data can help organizations make better decisions across every stage of lifecycle management, optimize expenses, improve cost structure, and create financial sustainability.
Comparing performance and financial outcomes against baselines (and targets) can help identify areas for improvement or where results do not meet objectives. This analysis can help identify areas where corrective actions or process improvements are needed for performance.
Use the Right Asset Management Tools for a Great Return on Investment
Surgere’s cloud-based asset management software, IoT devices, and tailored tags can track and deliver 99.9% data fidelity of all your tagged assets. You can instantly check asset status and location across your entire supply chain, eliminate manual and redundant processes, and comply with audits. Surgere’s solutions save you time and money by reducing lost assets and eliminating work that can be automated.
Learn more about asset lifecycle management and how Surgere can provide full visibility into your supply chain to improve operational efficiency and reduce costs. Contact the asset lifecycle management experts at Surgere today.