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If your business or organisation is to manage its assets as effectively as possible, it is crucial that it understands the lifecycle of those assets.
Asset lifecycle management is far from being a one-time process. Instead, it’s an ongoing process that allows your organisation to make better use of its assets while optimising how it uses its time, energy and resources.
What is an asset?
In short, an asset is a thing, item or entity of potential value to a business or organisation. So asset management is essentially about an organisation maximising the value it gains from its assets.
Why is asset management necessary?
The management of your organisation’s fixed assets is necessary in order to make the decisions required to realise the maximum possible value from those assets.
Asset management is chiefly concerned with minimising the overall ‘life cost’ of particular assets, as can be impacted by such factors as everyday risk and business continuity.
Having a well-managed asset management strategy will help your organisation to make the most of the opportunities that those assets represent, while also guarding against threats to the assets and allowing you to achieve the best possible return on investment (ROI) from them.
What is the asset management lifecycle, and why is it necessary?
A given organisation’s fixed assets will always play an integral role in its success – but like everything else, each and every asset within an organisation has a lifecycle.
That lifecycle includes its period of useful life when it delivers its peak performance. However, it will also include times of maintenance and repair – aimed towards extending the asset’s operational life amid inevitable wear and tear – as well as the final disposal of the asset.
Having an effective asset lifecycle management strategy will enable your organisation to gauge the period of time for which each of its assets will produce optimal performance.
This will allow you to determine how much useful life a given asset is likely to have remaining – which in turn, will enable you to better plan for any necessary operation and maintenance work as well as the asset’s eventual replacement.
The 5 stages of asset lifecycle management
Planning
The first stage of the asset life cycle typically begins before it has even been acquired. This is the stage at which the organisation carefully assesses and evaluates its current and future requirements, including what it requires from an asset that it is considering acquiring, as well as for how long.
Careful thought needs to be given when planning to such factors as the specific environment in which the asset will be needed, how the new asset could help improve inefficient aspects of the organisation’s existing systems, and what funding is likely to be required in order to acquire the asset.
This assessment process also needs to be with a view to the other four key asset life cycle stages. So, the organisation must also consider the likely costs involved in maintaining the asset throughout its lifecycle, as well as options for its recycling or disposal.
Procurement/acquisition
One reason why the planning stage is so crucial is because it will enable your organisation to gather the relevant information that will guide its decision-making at the subsequent procurement and acquisition stage.
This stage will present your organisation with the classic challenge of identifying the supplier that can provide the highest-quality possible asset at a feasible cost.
A key risk during this phase is simply settling for the lowest-priced solution available. After all, this may result in your organisation receiving a lower quality product that frequently breaks, requires constant maintenance, and doesn’t deliver to the same extent as a higher-quality alternative.
But on the other hand, nor can your organisation always expect the best outcomes from a ‘premium’ product from a well-known and respected manufacturer.
Deployment
While deployment tends to be the shortest phase of the asset life cycle, it is also a critical one, given that this is when all of the action occurs immediately before the asset begins to be used.
Important elements of the deployment stage, then, are likely to include the asset being assembled, followed by any preliminary checks that might be needed to ensure the asset can be safely used.
It is at this point that any defects or problems with the asset will need to be resolved, and the asset introduced to the employees and operators who will actually be using it. That might make the creation and delivery of training sessions and employee manuals crucial at this stage, too.
Another key part of the deployment stage is the tagging of assets so that they can be logged and tracked. Asset tagging – as can be done with the help of Assets & Compliance Managed Services UK’s own cloud-based risk and compliance management software – is especially important for larger organisations’ efforts to track the location, value, depreciation of their assets over their lifecycle.
Operation and maintenance
In theory at least, this is the phase that lasts longest, given that it is the one in which the acquired asset is now being used within the organisation, for the purposes for which it was acquired.
If all of the right decisions have been made up to this point, operators should be becoming accustomed to using the asset, which should now be delivering real value for the organisation.
However, the asset’s performance will still need to be routinely monitored over time, and a scheduled maintenance programme put in place to help maximise its lifespan.
Speaking of maintenance, it’s almost inevitable that for at least some of your organisation’s assets, emergency reactive maintenance will be needed from time to time as a result of unexpected downtime.
Finally, it’s also a good idea as part of this stage to carry out an annual audit that would provide the opportunity to report various assets’ financial depreciation costs. This will help give an indication of the total cost of ownership of your assets.
Disposal
An asset can be considered to have reached the end of its lifecycle when the costs of ongoing maintenance and repair begin to exceed the expense of having it replaced.
A serviceable asset should not be disposed of simply because a new model of the same product has become available. However, nor does it make sense to leave an asset in operation long after it could have been more cost effective to replace it with a much more efficient alternative.
So, the eventual decision to dispose of a particular asset will need to be made carefully. The disposal process itself must also be responsible, including the dismantling and the wiping of any sensitive data from the asset. Furthermore, no aspect of the disposal should be allowed to pose an undue risk of harm to the environment, in line with environmental protection laws.
The benefits of using asset life cycle management in your business
The above outline of the five key phases of asset life cycle management will have given you a sense of just how much value this process can bring to your organisation.
Far from being a superficial burden, asset life cycle management – once it becomes integrated into your organisation’s operations – can bring many benefits. These range from improved decision-making and control over budgetary projections, to better-optimised maintenance and replacement schedules, and the minimisation of disastrous unexpected downtime.
Continually managing this process, particularly in bigger organisations, can be difficult unless you have a robust system in place. For this reason, many businesses chose to invest in asset management software to help them with this process.
Not only will asset management software such as ACMS’s Vision Software enable you to document the assets you have. It also ties in closely to other areas of responsibility such as audit management and compliance. Having a record of key information and being sent alerts on key dates will ensure you and your business can adhere to any compliance and legislation requirements you may have.
Would you like to learn more?
Would you like to learn more about the value that the most suitable asset life cycle management process could bring to your business? If so, then click through to discover more about the Asset management module of our vision software system here at Assets & Compliance Managed Services UK.
The Asset Management Module of our Vision platform could be invaluable for your organisation as it seeks to better record, track, trace and monitor its physical assets, especially if there are multiple locations involved; the result could be considerable time and money savings.
Don’t hesitate to call Assets & Compliance Managed Services UK today to learn more about how our complete software solution could greatly help streamline your organisation’s property compliance and auditing processes.