What is an asset life cycle?
A company or business’s assets can be some of the most valuable things that they will ever own. Millions of dollars are common in some Industries and even if a thousand dollars asset for a small company can impact employees, tasks, jobs, and the business as a whole if it goes out of commission at an unexpected time.
That’s why asset life cycles, the entire journey of an asset from brand-spanking-new to scrap, are so valuable for businesses to observe, track, maintain, and manage.
Let’s start with the definition.
A complete definition of an asset life cycle
An asset lifecycle is the series of stages involved in the management of an asset. It starts with the planning stages when the need for an asset is identified and continues all the way through its useful life and eventual disposal.
The asset lifecycle can be tracked in different ways and is generally monitored in some way at every company, even if it’s not a formalized process. The importance of any given asset lifecycle is determined by a number of factors, including how costly is the asset to replace, how crucial it is to the business or company, and the overall reliability of the asset in question.
When maintenance is neglected, companies have to struggle with the resulting unexpected breakdowns, long delays, and emergency maintenance. When properly maintained, asset lifecycles can make the process of maintaining and managing your valuable assets much easier for everybody concerned.
Finally, each cycle is going to vary, depending on the asset in question. For example, a comprehensive wrench set will have a very different asset lifecycle than a large piece of machinery that has a comparatively shorter lifespan. However, the stages of the lifecycle stay the same, no matter what it’s being applied to and the same principles can be applied to most assets.
The different asset life cycle stages
Every asset has four different stages in its lifecycle:
- Creating and/or acquiring
- And renewing/disposing of the asset.
While these lifecycle stages seem very simple on the surface, in practice it can be significantly harder to maintain all your assets according to and throughout these stages. Let’s take a look at each one and its purpose.
The very first stage is the creation or the acquisition of the asset in question. Depending on the company, these may be blended, in order to create a hybrid asset that is perfectly suited for the needs of the company. It is also the stage where a lot of mistakes can occur.
If something is set up wrong, or something is miscalculated at this stage, it can affect all the other stages, until the asset is renewed or disposed of. Oftentimes, this can be years later.
Many companies will group the utilization and maintenance phases together in their asset lifecycle. However, in practice, they are two separate stages. This is particularly true when an emergency or other maintenance needs to be done that would take the asset out of production for any length of time.
If all goes well, utilization will be the phase that your assets stay in the longest. If the reverse is true, the utilization of assets can be the biggest nightmare that your shop floor workers or employees will face.
In this context, maintenance covers all the work that will be done on the asset from the beginning all the way until the end of its useful life. This can include, but is not limited to, preventative, proactive, emergency, time-based, and other forms of maintenance. It’s good to remember that maintenance in utilization must work hand-in-hand for optimal success.
When managed properly, maintenance can almost always be planned. We’ll cover that in a future section.
Finally, the last stage in an asset’s lifecycle is its renewal or disposal. All assets will provide enough data over their lifecycles to inform companies of the best ways of moving forward. However, this data is not generally collected in a way that would best assist the executives or managers making these decisions. The company should be aware of this long before the renewal or disposal phases, so that they can leverage that data accordingly.
While this may seem straightforward, it’s rare that companies follow all of these stages logically. The favorite ones to neglect include proactive maintenance and initial setup. This may be because of outdated policies, insufficient data, lack of care towards the asset in question, and simple forgetfulness. How can companies avoid this?
The short answer is by investing in asset lifecycle management. These stages, and indeed the entire process becomes considerably easier when companies take this seriously. Due to the costly nature of most assets, this process can pay high dividends, both in the short and the long run.
Asset lifecycle management
The basic premise of asset lifecycle management is to extend your assets’ usability as far as you can, without losing any functionality. Proper planning and management are essential to this process.
Great asset lifecycle management rests on four stepping stones. These include initial and ongoing assessments of the situations, data collection from assets, proposed plan creation, and integration across all assets.
It’s not a four-step process because all of the stepping stones may be accomplished in a different order. Proposed plans and testing may be necessary before you can assess the situation. You may start with data collection, in order to prove that you need to assess your methods now. Unlike a four-step plan, stepping stones can be taken in any order. Additionally, so can these four points.
Assessment of the situation
During the different assessments that you may do of the situation before, during, and after, it’s important to focus primarily on the assets in question. This is the time to consult the people that know the asset the best, to check the paperwork or the digital files that have been tracking this asset, and other primary sources that may offer you data and information about the machine in question.
This is not the time to focus on your workers, your management, your production, or any other factors unless they directly impact your asset lifecycle in question. It’s especially not the time to focus on other issues that may crop up around ethics, such as poor training, insufficient or overextended workforce, and other people-oriented problems.
Some different areas to focus on include:
- Past records
- Current operation
- Worker experience and knowledge
- Competitors’ assets (if this information is available)
- Current and predicted market value
- And other such metrics and numbers.
Data collection to validate or disprove the hypothesis
Big data is having its moment in many different fields – and for good reason. It can prove or disprove with fairly clear certainty your ideas about what is going on and how to solve it. So, why aren’t more companies using data to connect their assets to other assets, infrastructure, and overall strategy?
In many cases, assets are separated by siloing. Very rarely do they all work together, and when they do, it’s generally the more up-to-date or technological assets that speak to similar ones. Large pieces of machinery, toolsets, assembly-line machines, and other similar assets are almost never interconnected. The short answer is because it’s extremely difficult in some cases and generally difficult in most cases to collect, store, and analyze the data that these assets offer.
It’s difficult sometimes to get quality data, but it’s well worth the struggle. While many companies decide not to make this investment, data collection is the only sure way to validate or disprove hypotheses about your assets. Other methods are good at pointing the way or at discovering different problems, but data has the answers.
Because of this, data is an integral part of asset lifecycle management.
Propose and implement plans and testing
If a company does not already have a plan to manage the lifecycle of their assets, they might face considerable amounts of trouble. This is particularly true if the plans and testing are not at all planned and simply organically occur.
Remember: there is always a plan in place. You just may not know it.
In these situations, it’s a good idea to start with your company’s existing policies and practices. What’s already in place? What could be better? Do your policies need an update and do certain investments need to be made to bring your company into the future?
Sometimes, during this process, companies discover that their policies need to be updated or re-written in order to implement a plan or process. While this might take extra time that you had not planned for, it is a worthwhile investment to answer the above questions.
These are the questions that start the journey of proposing new plans and testing to optimize your asset life cycle management.
Integration across all assets
Now it’s time to implement your plan across all your assets in an interconnected, organized way. If that sounds complicated, it’s because it is. This is where a computerized maintenance management system or an enterprise management system can give back all that you put into it and more!
The stepping stone is probably the best one to leave until last. The success of an integrated plan across all assets is highly dependent upon the work that has been done before implementing the plan.
With that said, integration is going to depend heavily on your existing systems and how interconnected they are with one another.
Why should companies care?
With all that being said, why should you care? Why do companies implement management specifically for assets and their life cycles? What kind of returns on investment happen? And why is it a good idea to upend years of the practices that, while not perfect, still work fairly well and require no updating?
These are all perfectly reasonable questions that companies must face when looking at or considering any significant infrastructure changes. In this case, the reasons can be summed up in the three Fs: freeing up resources, focusing on reliability, and failing on your own terms.
Freeing up resources
Large assets, in particular, can eat up a lot of company resources. Money, employee time, contractor time, and more may be gobbled up by needy assets that keep breaking down or otherwise malfunctioning.
The less time employees spend working on your largest and most valuable assets, the more time they have for getting the job done. In the cases where employees would not be able to do the work, contractors do not have to be hired to work on the machines as much as they otherwise would have been working.
Focusing on reliability
There are a lot of different types of maintenance and they all play a part in a successful business, according to the business’s needs. However, all businesses can benefit from greater reliability, which leads to improved functioning and health of your assets.
When you focus on your asset life cycles, you are automatically shifting the focus abatements to a reliability-centered platform. In general, reliability-centered maintenance focuses are concerned with the sum total output of the asset and its effects on the business. While that may seem to be the purpose of all maintenance, and it is, reliability centered maintenance provides the quickest way to total reliability.
Failing on their own terms
Failure is inevitable. However, unexpected failures can be minimized. You can also plan to fail on your own terms. There are two types of maintenance that are centered around failure: reactive maintenance and proactive maintenance, respectively. Which one will your assets face?
Asset life cycle management focuses on total productivity from your assets. By its very nature, it reduces unplanned, unexpected failures far more than most strategies. When you utilize your asset life cycles, you put the priority on preventing failure before it starts.
A planned failure is almost always better than an unexpected failure.
Asset lifecycle best practices
In order to boost your asset lifecycle, it’s important to know some of the best practices that companies have honed over the years. The three that we’ve chosen to focus on here are:
- Auditing your existing practices
- Exploring ways to improve
- And checking your policies
Audit your existing practices
It all starts with an honest audit of your existing practices and how you can do better. Where are the common pitfalls? What do your workers have to say about your assets in about the practices surrounding them right here, right now? Where are the biggest failings? Where are the biggest gains? Do you have the infrastructure you need or is your overall system out of date and clunky?
Exploring room for improvement
After your audit, you are equipped to see where there is room for improvement. You also will have the data to back up the necessary changes and to provide documentation for why they are being proposed and implemented.
Check your policies
Finally, check your policies and see if they’re limiting your growth. Are they outdated? Are they holding you back from making the improvements you need? Why do they exist in the first place and do they need an update? Many companies do not move forward because their policies do not allow it.
Remember that the policies are put in place to help the company. The company is not bound to most internal policies. Don’t let your policies rule you, especially ones that the company has put in place.
From the arrival of a replacement or new asset, asset lifecycles affect every part of the business. When properly maintained throughout their lives, assets can bring an even greater return on investment than they do otherwise. When poorly maintained, they can negatively impact company resources and employees.
In addition, if companies are truly interested in implementing an overarching maintenance solution, such as a CMMS or an EAM, an understanding of asset lifecycles is going to be an integral part of a preventive maintenance strategy.
Finally, asset lifecycles, when properly managed, can be a wonderful tool to increase return on investment, total productivity, worker satisfaction, and more.