Guide to the Asset Management Process

Optimizing asset reliability and performance is a critical factor for enabling organizations to generate revenue and achieve other business goals. Therefore, it is important for organizations to understand an asset’s life cycle and identify opportunities to maximize value. This article provides an overview of asset life cycle management.

An asset’s life cycle is the series of stages involved in managing an asset, from “life” to “death”. While there are many ways to segment it, fixed assets generally go through 5 main stages:

• Planning
• Acquisition
• Operation
• Maintenance
• Decommission / Disposal

The first stage, planning, represents identifying the need for an asset. The process then continues throughout an asset’s useful life before it is considered to be fully depreciated. Assets are disposed of, recycled, or replaced once they’ve reached the end of their useful life and the process begins again.

Asset Life Cycle Stages

Asset life cycle stages can be defined in multiple ways, but generally fall into the stages described below:

Planning

The planning stage occurs when current assets aren’t meeting the organization’s needs. Using data and input from key stakeholders, evaluate the need for the asset, the organization’s current and future needs, and begin researching assets that meet your requirements.

Acquisition

After planning comes the acquisition stage. Acquisition brings focus to your budget and financial situation, as this is when you already perform vendor research in the planning stage and ultimately purchase the asset. The information gathered during planning makes it easier to identify a supplier that meets your requirements at an affordable cost.

Also included in this stage is delivery of the asset and installation. Activities include assembly, setup, testing, inspecting, and tracking the asset.

Operation & Maintenance

The operation and maintenance stages represent a majority of the asset’s life cycle. They are grouped together because they happen simultaneously, instead of one after another like the previous stages.

During this period of time, the asset is put into operation and is maintained or repaired as needed. As time goes on, the maintenance team must be mindful of how maintenance needs will change over time.

For example, newer equipment requires fewer repairs, but the risk of unplanned downtime increases as assets age and require more frequent attention. Maintenance activities are also affected by factors such as operator competency, usage, product being handled, availability of maintenance resources, and environmental conditions, to name a few.

The organization will need to perform multiple types of asset maintenance over time. Maintenance strategies differ from one organization to the next – or from one asset to the next.

Organizations may use one or a combination of these strategies to keep assets in proper working order.

Decommission / Disposal

The last stage in an asset’s life cycle is decommissioning and disposal of the asset. This typically occurs when the asset no longer provides enough value to the organization to justify the costs to maintain it.

Depending on the type of asset and the material it’s made of, it may be recycled or thrown away. In some industries, assets are repurposed before they get disposed of completely. For example, a truck that travels to worksites becomes a plow truck that stays on the property. However, repurposing doesn’t happen often with production assets.

After an asset is disposed, the life cycle starts over again with a replacement asset. This is always a good time to determine if the organization can upgrade to a better product while minimizing costs. By analyzing asset data collected over its lifetime, the organization can reassess how to maximize the next asset’s value moving forward.

Resource: FasTrak Maintenance

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