Did you know that 80% of employees waste half-an-hour per day tracking down information on assets? And weeks, months and years, this figure adds up! That’s where understanding the asset management life cycle can be of help.
Managing assets might not be the most glamorous or exciting part of running a business — but it’s essential for achieving efficiency and generating profit. Understanding the asset management life cycle and using it to optimize your processes could stop you from losing track of your equipment and even reduce the amount you spend on maintenance.
Best of all, you can harness many of these benefits by using a free asset management software like BlueTally, which offers a secure dashboard to track your assets across their lifecycle. But first, let’s cover exactly what an asset’s life cycle looks like, why it matters, and how you can adapt your processes to that.
What is the life cycle of an asset?
The life cycle of an asset (also known as a fixed asset life cycle because it focuses on assets used over the long term) is the stages a company goes through when managing its assets.
This involves five stages:
- Planning: Company evaluates its assets and decides what to procure.
- Procuring: Based on analysis from the planning phase, assets are acquired.
- Using: The asset is at peak performance and the company uses it.
- Maintaining: After some wear and tear, the asset requires maintenance.
- Disposing: Eventually, the asset is no longer worth maintaining and is disposed of.
This same life cycle applies to all kinds of assets from all kinds of industries — whether we’re talking about physical assets and equipment, or software. However, the exact processes an organization carries out may well differ.
For instance, a factory testing its machines may perform tests and dispose of the equipment when it stops working, while IT asset management may only decide to “dispose” of a program because a better alternative has appeared. We’ll give some more detailed examples shortly — but first, let’s take a look at why life cycle management is so important in the first place.
What is asset life cycle management?
Assets can’t manage themselves throughout their life cycle — businesses need a team to carry out the role.
Asset life cycle management is all about managing the threats, costs, and opportunities that relate to assets throughout their life cycle. This should be a data-driven process that involves monitoring assets and studying their performance. What kinds of problems is your equipment encountering that's holding it back, and what could you do to get the most out of it?
You’ll also need to track what assets you have, where they are, and how they are configured.
Doing all of this might sound complex and time-consuming, but in the twenty-first century, it doesn’t have to be — technology can handle a large chunk of the work for you. For example, BlueTally gives you an overview of how many assets you have at a given location, which employees have an asset, and how many are in use.
To give you a clearer understanding of exactly what’s involved in asset management life cycle, let’s look at what each of the phases involves.
Planning may tend to be the phase people overlook, but don’t underestimate it. The better you are at creating a strategy and plan early on, the more successful you’ll be in the later stages.
This is all about evaluating potential assets and whether they can meet your needs by analyzing costs and requirements. What’s your budget? What are your must-haves?
You may also want to consider the assets you have right now and carry out an audit. Is there anything that’s under-performing or unnecessary? Maybe you’ve given everyone in your team a tablet, but nobody uses them as they’re unreliable and have too many bugs.
Finally, plan out the maintenance that the assets are likely to require. This could include regular asset testing, to determine when an asset needs to be repaired.
Once you’ve decided which assets you want to procure, you need to look for suppliers and negotiate a deal.
Remember to consider:
- Upfront costs
- Total cost of ownership of an asset (i.e., maintenance along the way)
- How long you’re keeping the asset for
- Cashflow when buying
Using an asset is the part of the life cycle that lasts the longest — but it’s also the simplest to explain.
However, even using an asset involves some extra management tasks. As mentioned already, it’s important to keep track where your assets are and how many you have.
Although we’ve listed use and maintenance as two separate phases, the reality is that they exist hand-in-hand. Since all assets need to be continually maintained, most organizations switch between using and maintaining their assets.
However, the exact maintenance you need to carry out will depend on the types of assets you have. In the case of software, maintenance could just mean scanning for viruses. In terms of equipment, you may need to carry out physical repairs.
Another aspect of maintenance is improving your assets and looking for ways to boost efficiency.
No asset lasts forever. The question is: How do you know when the time has come? Ultimately, this comes down to a cost-benefit analysis. How much would it cost to restore the asset back to peak performance — and is this cost greater than the benefits you’re obtaining from using it?
In some cases, even if an asset still works, you may not want to use it anymore if it’s too inefficient and there’s a better alternative.
But don’t forget to account for potential costs involved with disposing of something. For instance, in the case of software, you may need to pay somebody to uninstall a program across all your team’s devices.
Also, note that disposing of an asset doesn’t always have to mean chucking it in the trash. In some cases, assets can be recycled or even resold.
Why asset management life cycle matters
Managing your assets throughout their life cycle isn’t strictly necessary, but it brings so many benefits that it’s difficult to see why a company wouldn’t want to take advantage of it.
First of all, it can extend the lifespan of an asset. When you keep track of the assets you have, how long you’ve had them, and have processes in place to maintain them, they’re less likely to experience a sudden failure.
For similar reasons, it often becomes less expensive to maintain an asset. Prevention is better than cure — and preventative maintenance is to equipment what dental check-ups are to humans. This reduces overall lifetime costs, which can even boost profits for the business.
Since assets become more reliable and have less downtime, your team is likely to see an increase in efficiency. Plus, by monitoring the data, you can guide your business to make smarter asset decisions and keep costs low.
Asset management life cycle best practices
Asset life cycle management itself isn’t a brand-new concept — businesses have wanted to understand what their assets are doing and how to get the most out of them for a long time. Previously, there was no option but to handle everything manually.
It doesn’t have to be that way anymore. By following these best practices for your asset management life cycle, you can be sure you’re taking the most efficient approach possible.
- Track everything to have accurate data. Ideally, you should have a register with all your assets and crucial information about them (such as the number of each asset).
- Ditch the spreadsheets to track your inventory. They’re time-consuming to fill out and prone to errors — there are much better alternatives.
- Take advantage of cloud technology. This ensures that everyone on your team can access the same data in real time, reducing confusion.
- Seek out automation. Various manual tasks can now be carried out by AI or technology (e.g., data entry or sensors that track inventory in a warehouse). This frees up your team’s time for more important things.
- Use relevant KPIs to analyze your data. Metrics such as the Mean Time Between Failures (MTBF), Mean Time to Repair (MTTR), or Cost of Asset Maintenance help you understand how your assets are performing so you can tweak your processes.
- Use asset management software. Software like BlueTally ensures you have all the information you need about your assets in one place, which combines many of the benefits outlined above
Get your life cycle under control
The concept of asset management life cycle is simple enough, but getting it right is far from easy. However, making sure you understand it is crucial to scale your business efficiently and make sure you’re not paying too much in terms of your assets.
To maximize your chances of meeting your goals and gaining control of your assets, adopting a program like BlueTally can make all the difference. Still need some convincing? Try out our live demo to find out for yourself.