Proper asset lifecycle management makes it possible for your organization to operate at peak efficiency. Asset lifecycle management (also known as lifecycle asset management) is typically broken down into four stages: planning, acquisition, utilization and maintenance, and disposal.
This article covers the basics of asset life cycle management (ALM), including the stages, benefits, and best practices to follow when managing your assets. We’ll also explain how asset lifecycle management software can streamline the ALM process.
What Is Asset Lifecycle Management?
Asset life cycle management is a data-driven process designed to optimize your equipment’s performance and efficiency. By carefully monitoring the cost, labor, and time invested in your assets, an asset life cycle manager can effectively track the total cost of ownership.
Asset lifecycle management refers to a broad range of approaches designed to extend asset lifespan, boost efficiency, and reduce downtime. ALM is an ongoing process, which begins even before your organization acquires a new piece of equipment. By carefully tracking and managing an asset throughout every stage of its lifecycle, teams can see significant cost reductions and an overall increase in productivity.
What Is an Asset Lifecycle?
An asset refers to any piece of equipment, spare part, tool, vehicle, or building that your company relies on to achieve its goals. Every tangible item your company owns is an asset and therefore has an asset lifecycle. The asset lifecycle spans from before you purchase an asset to the time of its disposal.
Tracking the health and performance of your critical assets over time can help extend asset lifespan and increase uptime. That’s the purpose of asset lifecycle planning and management.
Benefits of Asset Lifecycle Management
Effective asset lifecycle planning can transform your whole operation. The benefits of a good asset life cycle management program include:
- Developing a data-driven maintenance strategy that includes preventive maintenance and predictive maintenance
- Improved decision-making processes with more data-driven insights
- Increased productivity
- Reduced downtime
- Improved compliance with safety and quality regulations
- Minimizing the total cost of ownership
- Greater operational efficiency
Benefits of Using Asset Lifecycle Management Software
Digital tools like CMMS and EAM software make implementing the asset lifecycle management process much easier, increasing the benefits of ALM. Asset lifecycle management software is much more efficient than paper-based maintenance systems; it also enables data-driven insights at every stage of the asset lifecycle.
CMMS/EAM solutions act as a central repository for all your asset data, from acquisition costs to work order histories. Integrations with other digital platforms, like SCADA and BI, create a contextualized picture of asset health, maintenance expenses, and overall cost of ownership.
Robust reporting functions let you drill down and view maintenance metrics, cost of ownership, repair history, and much more, all in just minutes. This drives smart decisions about maintenance and asset lifecycle planning, including decisions about when to repair or replace equipment.
A CMMS/EAM also monitors asset health data and auto-generates work orders as needed. Analytics enable a predictive maintenance approach, which reduces maintenance costs and extends assets’ useful life. And a CMMS/EAM automates many aspects of inventory management, increasing efficiency during the asset’s utilization stage.
Some benefits of using a CMMS/EAM include:
- Reduced maintenance costs
- Data-driven insights and decision-making tools
- Extended asset lifespans
- Greater efficiency throughout the organization
Below, we’ll explore what that looks like in specific use cases.
Asset Lifecycle Management Use Cases
Asset lifecycle management is fundamental to virtually every industry. Here are a few examples of use cases across different sectors.
Facility and Building Management
Asset lifecycle management allows teams to track the performance of critical assets like HVACs, electrical systems, and plumbing. Planning and performing preventive maintenance tasks can keep those systems operational for much longer; likewise, monitoring asset health data allows managers to plan interventions at exactly the right time.
Healthcare and Life Sciences
Healthcare facilities rely on asset lifecycle management to maintain life-saving equipment, like ventilators and defibrillators, as well as diagnostic tools like MRI machines. Effective asset lifecycle planning also ensures that equipment like HVACs and electrical systems stay up and running.
In biosciences, the asset lifecycle management process helps organizations maintain compliance with regulations and external auditors.
Fleet management
Fleet management is a key element in sectors like logistics, agriculture, and transportation. Asset lifecycle management practices and tools also apply to fleet management. ALM strategies help drive decision making related to vehicle acquisition, repairs, and replacement.
Over time, effective ALM reduces the cost of maintenance and improves reliability, which leads to greater productivity for the organization.
Why Is the Asset Lifecycle Management Process Important?
Asset lifecycle planning delivers major benefits that ripple throughout the organization. However, sometimes the transition to ALM can feel overwhelming. That’s why you need to consider its importance; why is it worth your while in the long run?
Most manufacturers today have more complex assets than ever before. With the advent of IoT and lean manufacturing, equipment needs to be precisely calibrated and tuned. At the same time, organizations are facing intense labor shortages and expertise gaps. All this adds up to significant challenges for modern organizations.
Asset lifecycle management can help. ALM helps overstretched, under-resourced organizations achieve greater productivity at a lower cost. The approach is ideal for lean teams or for organizations that rely on remote workers.
Asset lifecycle planning cuts costs and extends assets’ operational life. By reducing unexpected breakdowns, ALM also reduces the demand placed on maintenance teams. Additionally, the asset lifecycle management process increases asset reliability, meaning teams aren’t constantly taken by surprise and can carefully plan how they use resources.
Fewer emergency repairs mean that MRO teams can stop putting out fires and focus on preventive and predictive maintenance projects. This also eases processes like inventory and spare parts management while improving long-term budgeting and forecasting. Increased efficiency throughout the organization means teams really can get more done with fewer resources.
What Are the 4 Key Stages of Asset Life Cycle Management?
It is useful to think of the asset management life cycle in four different stages. At each stage, assets have different maintenance and care needs. Likewise, asset lifecycle managers have different decisions to make at each step of the process.
Stage One: Planning
Before purchasing a new asset, research possible solutions to make sure that it is compatible with your existing facility and production needs.
Decision makers will need to determine the asset’s overall value to the business. The potential value needs to be carefully weighed against the cost of ownership. This goes far beyond the asset’s sticker price: consider costs like maintenance fees, replacement parts, likelihood of machine failure, and projected degradation over time.
Asset lifecycle managers should also assess the chances that the asset will become obsolete before it reaches the end of its useful life. The more critical the asset, the more important it is to carry out thorough research and planning before acquisition.
Stage Two: Asset Acquisition
After determining which asset best suits your facility’s needs, consider your company’s budget and the total cost of the asset. Include the costs of delivery, installation, maintenance, and disposal in your total budget before making a purchase.
During the acquisition stage, teams will need to install the new asset and check for correct alignment. Asset lifecycle managers will also need to make decisions about the new asset’s maintenance needs, inventory and spare parts, and integration with the rest of the production line.
Some key considerations during the acquisition stage include:
- Creating a preventive maintenance plan for the new asset
- Entering the new asset’s information into a maintenance management system
- Setting up asset tracking
- Determining how to collect and monitor asset health data
Stage Three: Asset Utilization and Maintenance
This is the main stage in the asset lifecycle. Throughout the utilization or operation stage, managers should focus on extending the asset’s useful life and maximizing productivity while keeping costs low.
There are a number of different proactive maintenance strategies that can help with these goals. Over the course of the asset’s life, you should generally focus on preventive maintenance and predictive maintenance rather than corrective or emergency maintenance. It’s easier, less expensive, and less time-consuming to diagnose and address potential issues before they lead to breakdowns or other unplanned downtime.
Preventive Maintenance
Preventive maintenance reduces unplanned downtime by performing maintenance tasks on a regular basis, before an asset develops a serious fault.
Preventive maintenance is usually calendar-based. Teams carry out regular inspections, cleaning, and lubrication on a set schedule. They also change components like belts and valves on a regular basis. A computerized maintenance management system (CMMS) can help plan preventive maintenance schedules and track work order completion.
Preventive maintenance is an effective strategy for preventing emergency breakdowns, but it can be labor-intensive and costly. Sometimes it can lead to over-maintenance and excessive planned downtime.
Predictive Maintenance
Predictive maintenance uses a network of wireless sensors to spot potential equipment problems so that your maintenance team can nip those problems in the bud before they cascade into larger issues. Sensors monitor an asset’s performance and health on a continuous basis, even while it’s operating. Tracking data like vibration levels, temperature, and oil quality helps teams stay ahead of new machine faults.
A CMMS can analyze asset health data and issue notifications when equipment shows signs of a new defect. CMMS software can even generate work orders so that maintenance teams know when to address issues. What’s more, a good CMMS also manages inventory, digitally organizes spare parts, and stores and analyzes work order history so that managers can plan maintenance tasks ahead of time.
Stage Four: Asset Disposal
The final stage of an asset’s life cycle is disposal. This happens when your organization determines that the long-term value of the asset no longer justifies the cost of maintaining it. You can use a CMMS to manage obsolescence and supply the data-driven records you need to determine exactly when it makes financial sense to dispose of an asset.
Repair or Replace?
It can be a challenge deciding whether to repair or replace your assets, especially when they’re critical to your organization. A good rule of thumb is to calculate your asset’s current value, taking into account its depreciation, and then compare that to the cost of new equipment.
A CMMS can also help you take a more granular look at your asset’s value by tracking metrics like mean time between failures (MTBF) and mean time to repair (MTTR). Beyond that, CMMS software can track safety issues, inventory, spare parts availability, and a range of other considerations that can help decision makers determine when to dispose of an asset.
Optimizing the Disposal Process
Once you’ve determined that disposal makes sense, there are a few more decisions your team will need to make. Managers will need to consider:
- Can the asset be resold?This will depend on factors like obsolescence, utilization, and asset health. It’s a good practice to keep records of maintenance activities throughout the asset’s lifecycle in order to increase its resale value. If the asset can’t be resold, it may be possible to sell its components or some of its materials.
- What is the proper way to dispose of the asset?If the asset or its components cannot be resold, then the next step is to determine how to discard what’s left. Depending on the materials and components, some assets are subject to strict regulations when it comes to disposal. Consider costs associated with disposal as well, since removing certain materials can require specialized services.
- How will uninstalling the asset impact the rest of the worksite?Managers will need to plan for the labor and time needed to successfully dispose of the asset before installing the replacement.
What Are the KPIs for Asset Lifecycle Management?
When implementing asset lifecycle management, measuring certain key performance indicators (KPIs) can help you improve workflows and asset performance over time. You’ll want to measure these metrics:
- Asset utilization rate
- Mean time between failures (MTBF)
- Mean time to repair (MTTR)
- Mean time to failure (MTTF)
- Planned maintenance percentage (PMP)
- Return on assets (ROA)
- Uptime vs. downtime
- Rate of compliance
- Customer satisfaction
- Asset lifecycle cost
Energy efficiency may also be a good metric to track, especially if environmental, social, and governance (ESG) benchmarks are high priority for your operation. A recent study acknowledges a strong positive correlation between environmental ratings and ROA.
Consistently tracking KPIs will help you understand the benefits (and any potential downsides) of changes to your asset lifecycle management systems.
Strategies and Software for Your Asset Lifecycle Manager
When looking to centralize and manage your asset lifecycle data, asset lifecycle management software streamlines the process from start to finish. These are the tools you’ll find most helpful.
Enterprise Asset Management (EAM)
Enterprise Asset Management (EAM) is the broad concept of managing your assets across your entire enterprise. It may include processes, software, and services to help your asset lifecycle managers stay organized. When EAM is successful, you can review past and present activities, enabling key insights and informed decision-making.
Computerized Maintenance Management System (CMMS)
A CMMS, like eMaint, is a key component of any EAM strategy. With real-time data and automated alerts and recommendations, you’ll approach asset lifecycle management more proactively. That’s how you can protect and extend the lifespan of your assets. Explore the EAM capabilities you can unlock with eMaint CMMS.
Harnessing AI Tools
Today, more organizations are adopting artificial intelligence (AI) tools to deliver insights into asset health. Tools like Azima can diagnose hundreds of machine and component faults and create a detailed set of recommendations for maintenance teams to follow. All these AI programs need is a set of condition monitoring data to analyze.
AI is a time-saving solution for many teams that want to implement a predictive maintenance approach. It’s not a replacement for human technicians, but it’s a great way to support a team by enabling faster and more frequent data analysis that can inform maintenance decisions.
The bottom line: preventive and predictive maintenance helps teams achieve their goals during the utilization stage. Having the right tools, like a good CMMS and an AI-powered diagnostic engine, makes maintenance planning a breeze.
Best Practices and Strategies for the Asset Management Life Cycle
Asset lifecycle management is an increasingly complex process. It’s also full of potential risks: the more you invest in your assets, the more important it is to manage them correctly throughout the lifecycle. There are a few key steps that can help any team face this challenge and reduce risks.
Monitor, Organize, and Store Asset Health Data in a Central Location
Industrial Internet of Things (IIoT) tools make it easy to track key indicators of asset health, like vibration levels or temperature. A network of wireless sensors can capture that data and stream it to the cloud in real-time.
CMMS software, like eMaint, stores and organizes that data for easy analysis. When vibration levels cross a certain threshold (or when other asset data exceeds limits), eMaint automatically starts a maintenance workflow so that your teams know exactly what they need to do to correct the problem.
Get Alerts When Critical Assets Show Signs of a New Fault
CMMS software can issue automatic notifications whenever vibration data crosses a pre-set threshold. eMaint generates work orders and organizes all the information teams need to plan and execute maintenance tasks. That means schedules, inventory, maintenance checklists, safety considerations, and more are all collected in one central location.
Build a Strong Preventive Maintenance Program
Preventive maintenance helps you stay ahead of machine failure by keeping your assets in optimal running condition at all times. A CMMS helps you plan preventive maintenance tasks and track PM completion rates.
Planning a preventive maintenance strategy is an important element in asset lifecycle management from the beginning. During the acquisition stage, it’s a good practice to enter the new asset’s details into your CMMS and determine what, if any, preventive maintenance tasks to assign to it.
Track Your Asset Maintenance KPIs
Staying on top of important key performance indicators (KPIs), such as mean time between failures and mean time to repair, will help you see where your maintenance strategy needs to improve.
A CMMS tracks and stores asset health data, work order data, and KPIs in one central location. Managers can access that data remotely, making it possible to oversee multiple worksites. The software also generates in-depth reports to help make decisions about asset procurement, maintenance, and disposal.
The resulting data can be used to allocate resources, make inventory decisions, and create more efficient schedules — all effective ways to improve operational efficiency and asset lifecycle management.
See how Inframark successfully manages and tracks KPIs for 30,000+ assets with eMaint.
Standardize Asset Management Lifecycle Workflows
A high-quality CMMS can automate work order creation and ensure that your work orders contain all of the steps and instructions teams need to carry them out successfully. Building checklists, safety measures, and even photographs into your work orders is a great way to standardize workflows so that tasks are done the right way, every time.
Once the maintenance task is complete, the resulting data can be used for root cause analysis. This helps managers fine-tune their preventive maintenance plans and improve future performance.
It’s a best practice to assess these metrics yourself instead of just using manufacturer guidelines. Tracking data with a CMMS can help determine these metrics and build benchmarks to measure your progress. Over time, reporting pinpoints areas where your maintenance approach is weakest so that you and your team can work toward continuous improvement.
Remember that asset lifecycle strategy is an ongoing process. With the right tools and the right methods, your asset lifecycle strategy can yield a wide range of benefits.
Leverage Data to Improve the Asset Lifecycle Management Process
Asset lifecycle management is most effective when you start with plentiful, high-quality data from every stage of the asset lifecycle.
Data collection begins with the acquisition data, including the exact cost, purchase date, and vendor. MRO teams will also require data from the asset utilization stage, like asset condition monitoring data, maintenance history and work orders, and cost of repairs and replacement parts.
Collecting and analyzing this data helps you plan preventive maintenance schedules and manage spare parts inventory, all of which increases maintenance efficiency and extends the asset’s operational life. Beyond that, utilization data lets you easily calculate the total cost of ownership for the asset, making repair vs replace decisions much easier.
You should also be measuring and tracking asset KPIs, like Mean Time to Repair, Mean Time Between Repairs, and Mean Time Between Failures. Tracking KPIs helps you assess your maintenance strategy and make informed decisions about your next asset acquisition.
Finally, it’s important to collect and analyze data related to the asset’s end-of-life. Track and plan the cost of disposal and any relevant compliance issues that impact those costs. This will factor into the total cost of asset ownership, helping drive smart purchasing decisions in the future.
Get Lifecycle Asset Management Solutions
Effective asset life cycle management starts with the right tools. That means using sensors and other IIoT tools to monitor the health of your critical assets. It also means choosing a quality CMMS to track asset performance throughout the lifecycle.
A CMMS like eMaint gives you a wealth of insights into every stage of the asset life cycle. eMaint lets you monitor all the time and money invested into each asset so that you can weigh the total cost of ownership against productivity and output.
Increasingly, effective life cycle management includes adopting Industry 4.0 and artificial intelligence tools as well as CMMS/EAM. AI tools are already helping expertise-constrained teams implement predictive maintenance strategies so that they can stay ahead of machine failure and keep their costs low.
The result? Data-driven decision making that helps asset lifecycle managers make smart choices, improve ROI, and achieve far greater operational efficiency into the future.
Try a free demo of eMaint today to start improving your asset lifecycle management strategy.