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Asset lifecycle – what a business leader needs to know

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06.07.2021

Asset Lifecycle Management (ALM) or, in other words, asset lifecycle management are activities aimed at maximizing the value of an asset. They cover all stages – from assessing the need for an asset to its operation and subsequent replacement or disposal.

A competent ALM strategy combined with modern IT tools allows you to achieve four seemingly incompatible goals:

– maximize the life of the asset;

– to reduce the cost of its useful use;

– to reduce risks for business processes;

– to improve production efficiency.

Asset lifecycle management will provide economic value in the short and long term. Thus, the Gartner company, based on the results of a survey of its customers, determined that the implementation of the ALM strategy in the first year saved 30% of the funds, and another 5% in the next few years.

Why is it important to keep track of the asset lifecycle?

Asset Lifecycle Management enhances the ability to leverage assets. And also along the way, it opens up real information about the level of availability of production resources and the role of each unit in the implementation of business tasks.

Creating an effective lifecycle management strategy involves several stages:

– defining the value and role of the asset

– inclusion in the company’s budget

– purchase / production approval

– integration into the tracking system

– regular monitoring of the condition

– assessment of depreciation costs

– inclusion in the service plan

– ensuring regulatory compliance

The process may seem time consuming, but it is worth understanding – it is enough to integrate the asset into the business process management system once to immediately feel the positive effect.

Specialized software helps to analyze the life cycle of assets. For example, with the help of SmartEAM solutions, you can make better decisions, assess the reliability of an asset, the cost of its replacement and repair, business criticality and real operational efficiency. Even if Asset Lifecycle Management is not a formal process in your enterprise, such a tool can help reduce operating costs.

Life cycle timeline – from design to disposal

The life cycle of an asset can differ depending on its type, industry, way of organizing production and the size of the company. However, for ease of analysis, the timeline can be divided into four large stages. We will analyze each of them in order to understand how modern IT solutions ensure the optimization of Asset Lifecycle Management.

  • Planning / Design

The stage of making a decision to purchase or produce an asset. By using systems for analyzing production data and forecasting load, you can accurately determine the value of a new asset and the requirements for it.

  • Get / Deploy

Financial forecasting software solutions help you determine the optimal time to purchase. IIoT-based systems also simplify the hardware integration process. To track the life cycle of assets, tag-marking technologies (GPS, RFID, QR, NFC) are used.

  • Operation / Maintenance

Operation and maintenance is the longest and most expensive stage in an asset’s lifecycle. According to Keith Linard’s post, he accounts for up to 85% of the costs. For optimization, you can use a whole range of software solutions that will monitor performance indicators and the technical condition of equipment. Such monitoring will help improve the production planning process and extend the useful life of the asset. And most importantly, it will allow you to move from reactive methods of service to more cost-effective proactive ones.

  • Disposal / Replacement

Production automation programs will help you choose the optimal time for asset withdrawal. You can plan your replacement to get the most out of it even at this stage.

Looking for critical points

Asset Lifecycle Management helps you take a broader view of business processes to meet the individual challenges of the company.

With dynamic asset data, you can focus on solving key challenges:

– discover problem areas that consume resources and time;

– organize maintenance so that downtime and repairs are always planned;

– to fully realize the potential of legacy and obsolete assets;

– reduce life cycle costs, even if there is no data on the cost of individual units;

– increase the added value of the product by introducing new assets;

– start the process of introducing innovations in production;

– to popularize the optimization reward system and the culture of active improvement.

As you can see, asset lifecycle management provides information for making informed decisions at all levels. And as a bonus – it allows you to save money.

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