What is Asset Lifecycle Management (ALM)?
Everyday value creation depends on the assets and tools that businesses of all kinds own. This is why every company aims to optimize earnings and reduce expenses by implementing the most effective asset management system. An asset’s maintenance level primarily influences its life duration. Assets go through several phases in their lifetime, and depending on their use, capacity, and performance, upkeep is required. Understanding the lifetime stage of an asset helps asset managers create an appropriate asset management strategy to guarantee the maintenance of that asset. Effective lifecycle management then becomes quite important. It helps companies ensure constant operations and lower their risk of downtime.
Understand Asset Lifecycle Management
Strategic and analytical, asset lifecycle management (ALM) helps one to grasp and decide every step of an asset’s life.
Tracking the asset lifetime helps companies to maximize the operational efficiency of assets and increase return on investment. Operating aging equipment, paying excessive maintenance costs, and decreasing asset value all present difficulties for companies without a basic knowledge of the asset lifecycle.
Four Stages of Asset Lifecycle
Planning
One must have a thorough plan before asset purchase. Effective asset life management depends critically on good asset planning. Based on data including the assessment of current assets, present asset performance, and operational demand for an extra asset, it helps to determine the need for an asset.
An asset management software will help most of this data to be effectively examined.
From operators to financial teams, every stakeholder depends on this first step of asset lifetime management. The choice to buy an asset depends on it fitting the requirements of a company. In addition to helping with its running costs and finally producing income.
Purchasing or Acquiring
Purchasing an asset comes next once it has been located. This indicates that an item has been carefully examined and found to be a much-needed resource enhancing company operations. This step will also concentrate on the financial aspect of obtaining an asset within a given budget established at the planning level.
Since procurement is so important, one may break it down into a procurement lifecycle fit for companies buying goods and services. A good procurement management system can help with buying costs as well as speed of procurement.
Maintenance and Operations
Operation and maintenance are the longest phases of asset lifetime management. Once put to use, an asset is now enhancing operations and supporting income generation. Along with responding to licenses, audits, updates, and patch repairs.
An asset will be routinely checked for any performance problems that unearth themselves during operations. Here is where maintaining dependability and performance will depend mostly on an asset maintenance schedule.
Businesses without a maintenance schedule will most certainly experience unforeseen downtime and expensive repairs.
Also, read how real-time maintenance can help in increasing efficiency.
Replacement and Disposal
An asset ends its life cycle by being taken from use and either sold, reused, thrown away, recycled, or replaced.
Although usually asset lifetime management is budgeted for 15 years, this last stage can occur anywhere after purchase. Asset management might decide, for example, on a suitable disposal point depending on its present resale value or if there is a more sustainable replacement for an asset that would produce better long-term outcomes.
Should an operating demand for this kind of asset still exist, a replacement is scheduled and the asset life cycle starts once more. Considering inflation, the detailed planning for a replacement asset offers numerous choices that either provide a like-for-like replacement at the same purchase price or provide an alternative with higher up-front expenditures but a better return on investment.
Benefits of Asset Lifecycle Management
Cost Control
From the initial phase of an asset’s lifetime—that of planning and acquisition—ALM helps maximize costs. Asset managers can evaluate the available budget to acquire specific assets and guarantee the purchases inside the assigned money or funds. Through analysis of the total cost of ownership (TOC), ALM enables managers to make better decisions for cost control.
Moreover, managers can prevent overstocking by just determining which asset is most in demand, therefore saving expenses related to acquiring new assets.
Once acquired, ALM helps extend the life of an asset, thereby reducing procurement expenses. Regular maintenance helps lower the chance of breakdowns, therefore sparing companies from on-demand costly repairs.
Enhanced Observance
By allowing companies to maintain assets and combine regulatory policies inside the asset management system, ALM helps them to remain compliant. When an asset is acquired, all the legal rules pertaining to its usage are found in line with ALM. Early recognition of these rules helps companies to implement them all through the lifetime of an asset.
Management of Risk
By spotting possible risks at every phase of the asset life, companies may methodically lower risk. Including evaluation of vendor dependability and asset need, you may determine whether it is feasible to acquire a new asset or enhance the usability of the current one.
Real-time monitoring also helps you to avoid major wear and tear by spotting possible hazards before they become major problems. Knowing exactly when an item is no longer valuable will help you also avoid premature asset disposal. For example, a five-year-old machine might still be running well because of less utilization than a two-year-old machine utilized extensively for several tasks.
Optimal Use of Assets
By use of thorough data analysis, ALM facilitates asset usage. Create many reports—including asset use, asset depreciation, asset availability, and overall asset value reports—to maximize asset use. Such studies enable better allocation of your assets by offering a comprehensive study of your asset scene.
Improved Workforce Experience
Dealing with old assets or managing regular asset breakdowns can be problematic for staff members! Effective ALM can help you give your staff a flawless asset management experience by allowing them to complete their jobs free from any operational constraints.
Utilize Factech’s Asset Management Software for the best Asset Lifecycle Management
Stakeholders must have access to pertinent and accurate data if asset lifecycle management is to succeed. That covers buying, condition, location, value, and maintenance information. Manual asset management tools like Excel spreadsheets let one record and distribute this. When it comes to vast data sets, however, spreadsheets are well-known for mistakes.
Rather, by applying Factech’s asset management software, companies can reach higher accuracy and efficiency. With an asset management system, asset managers can enhance their activities related to lifecycle management through access to:
A searchable resource register
Ongoing real-time monitoring
Updated figures for asset value
Warranty, license, and lease details
Data on maintenance and repairs
The bottom line
From better security and a happier workforce to cost savings and increased performance, the advantages sweep across your company. You can employ your resources for quick expansion by adopting best practices including strategic planning, timely deployment, and proactive maintenance using technology. An asset management system that streamlines processes and converts boring data entering and tracking into simple chores would assist one to best fulfill these goals!
Contact us for a free demo of how our expertise can help you achieve your business goals to the best.
