Asset Lifecycle Management: Stages & Practices

Your assets won’t live forever. They’ll serve their purpose, but they’ll eventually need to be replaced.

The question is, how long have your assets been living?

Effective asset life cycle management is crucial to ensuring your business is performing at its best. By carefully considering the different stages of an asset life cycle, you can begin optimizing your asset management to extend lifespans, save on asset expenses, and improve your bottom line.

In this article, you’ll learn what an asset life cycle is, the stages involved, and how to keep track of which assets are in different stages with asset tracking. Plus, you’ll learn a few best practices to better manage your assets so you can optimize your profit margins.

Main Takeaways:

• Asset Lifecycle Management (ALM) is a strategic approach that guides assets from acquisition to disposal, aiming to extend lifespans, save costs, and improve profitability.
• An asset's lifecycle includes planning, acquiring, deploying, operating, maintaining, and disposing or renewing, each stage critical for optimizing asset performance and efficiency.
• ALM boosts asset performance, optimizes resource allocation, and increases return on investment by ensuring assets are used effectively and maintained properly.
• ALM encompasses five key stages: Planning, Acquisition and Deployment, Operation, Maintenance, and Disposal or Renewal. Each is critical for maximizing asset efficiency and company profit margins.
• ALM enhances business operations by enabling informed decision-making, reducing operational costs, maximizing asset value, and ensuring regulatory compliance through systematic asset tracking, preventative maintenance, and data-driven management strategies.
• ALM's best practices include regular asset audits, establishing clear management policies, leveraging an asset management system like RedBeam for real-time monitoring, and optimizing processes through strategic planning and technology to enhance productivity, reduce costs, and improve overall asset value.

What Is an Asset Life Cycle?

An asset's lifecycle refers to the stages it goes through, from acquisition to disposal. This cycle covers planning, acquiring, deploying, operating, maintaining, and finally, disposing or renewing each individual asset.

What Is Asset Lifecycle Management (ALM)?

Asset lifecycle management (ALM) is a strategic approach that enables organizations to get the most out of their assets throughout their lifecycle. From planning to disposal, ALM oversees all stages, ensuring an optimized and efficient operation. 

Importance of Asset Lifecycle Management

If you're in a business where managing physical assets is a considerable part of your operations, understanding the importance of asset lifecycle management is non-negotiable. 

So, let's drill down into why it is so important:

Enhanced Asset Performance

Asset lifecycle management effectively boosts asset performance. It provides a structured plan for managing an asset from start to finish, ensuring optimal use and longevity while reducing downtime. This organized approach greatly improves overall efficiency and productivity, which ultimately enhances the performance of assets.

Improved Resource Allocation

ALM helps optimize resource allocation as it provides a clear overview of each asset's usage, performance, and cost efficiency. Having a detailed understanding of these factors empowers companies to allocate resources more effectively, avoiding overutilization or underutilization of assets and ultimately driving operational efficiency.

Increased Return on Investment

Prioritizing asset lifecycle management can help optimize return on investment and minimize expenses. With a forward-thinking approach to managing assets, companies are able to boost the efficiency of their assets, reduce costs, and make smarter business decisions.

Stages of Asset Lifecycle Management

Delving deeper into asset lifecycle management, we will now explore its five fundamental stages. Understanding these stages will allow you to unlock the optimal value of your company's assets and enhance their operation.

1. Planning

The planning stage, the first phase of asset lifecycle management, involves mapping out your asset roadmap. This is crucial for both new business owners acquiring their first assets and seasoned executives updating their asset inventory. 

In this stage, collaboration across departments is key to assessing the business's needs and deciding on the type and quantity of assets to acquire while balancing current and future demands within budgetary constraints. 

Before acquiring new assets, teams should focus on asset planning to establish the requirements of different assets by auditing current assets and various data points. In this stage, decision-makers should explore the following questions:

• What assets do we have?
• What condition are they in?
• What assets are needed now?
• How will the new assets improve operations?
• How will the new assets reduce expenses in the long term?
• What assets are needed in the future?
• How much of the budget do we have available for new assets?
• What is the estimated depreciation of each asset?

This first stage is the most important, as it'll set you on the course to either improve your performance and your books or set you back. You should spend plenty of time at this stage to help make the right decisions to improve operations and improve profit margins.

2. Acquisition and Deployment

After you’ve made an asset plan, it’s time to acquire the new assets you’ve decided on. 

After identifying your assets, research potential suppliers to ensure you acquire the best quality assets at the lowest prices. The process doesn’t end with purchase; assemble, test for flaws, and then work proactively with your maintenance team to identify any future replacement needs, ensuring a smooth operation and longevity of your assets.

With RedBeam asset tracking software, you can see exactly when each asset was acquired to help design a maintenance and replacement plan.

3. Operation

Now that you’ve got your assets fully set up and ready for use, it’s time to begin operating them. While the acquisition stage involves initial testing, continue testing your equipment regularly to ensure optimal performance without issues.

Keep in mind that even after your initial planning stage, you should always be in a state of planning, continuously adjusting and optimizing your asset life cycle management. Asset lifespans vary, and while you'll have initial estimates on maintenance needs, these can change due to various factors, such as:

• Asset type
• Frequency of use
• Facility conditions
• Complexity 
• Regular upkeep by asset users

4. Maintenance

Once you’ve begun using your assets, it’s time to shift your focus to the maintenance stage. This is the second most important part of asset lifecycle management, next to the planning stage. While your planning stage sets the trajectory for your overall asset health, your maintenance is what determines how long each asset will actually live. 

There are two main asset maintenance types you need to consider: preventative maintenance and reactive maintenance. The key with maintenance is to spend enough time and resources on preventative maintenance so you don’t have to spend unnecessary amounts of time and money on reactive maintenance.

While the type of preventative maintenance you do depends entirely on the asset type, some examples include:

• Changing the oil in a service vehicle
• Lubricating machinery
• Cleaning equipment
• Replacing furnace filters
• Painting a wall
• Updating software and hardware

Investing adequately in preventative maintenance, such as oil changes, equipment lubrication, and software updates, can significantly reduce the need and costs associated with reactive maintenance. 

However, staying ready for emergency interventions, with a 24/7 available team for critical or safety-threatening situations, remains essential. Leveraging tools like the RedBeam asset tracking platform provides visibility into the maintenance history and investments of assets, facilitating informed decisions on future maintenance scheduling through RedBeam’s maintenance logs and ensuring a strategic approach to asset management.

5. Disposal or Renewal

The final stage of the asset life cycle is the asset disposal stage, where all assets eventually end up, influenced by the optimization of the preceding stages. At this point, assets that are no longer useful or safe are removed, possibly through recycling, selling, or landfill disposal, depending on their composition. 

This stage doesn't only occur when an asset is beyond repair but can also be strategically planned based on performance efficiency. For instance, replacing an old fleet of cars with new ones to avoid high repair costs highlights the importance of integrating disposal planning early on.

Renewal, seen as an alternative to disposal, is a strategic decision taken when an asset still has potential value. It involves extending an asset's lifespan by refurbishing or upgrading it, ultimately delaying the need for replacement. 

Such action is usually driven by factors like performance needs, technological advancements, or budget constraints. By renewing assets, businesses can improve their operational efficiency, reduce waste, and optimize their asset-related costs.

Benefits of Asset Lifecycle Management

If we think critically about it, ALM serves as the lifeblood of your business operations – a robust ALM approach means effectively managing your critical assets from the moment they're acquired to when they're retired. 

But what do you truly stand to gain by embracing ALM? These benefits: 

• Informed Decision-Making: By systematically tracking and reporting on assets throughout their lifecycle, you gain a wealth of data for informed decision-making. With accurate data at your fingertips, you can make better decisions regarding asset procurement, maintenance schedules, performance upgrades, and more. 
• Reduced Operational Costs: Efficient ALM practices can save you a lot of money in the long run. By keeping a finger on the pulse of your assets, you're better equipped to prevent breakdowns and avoid costly repairs. Moreover, preventative maintenance can extend asset lifespans and reduce new asset purchases. 
• Maximized Asset Value: Maximizing the value of each asset is central to ALM. Things like optimizing asset usage, reducing downtime, and improving performance all contribute to extracting maximum value from each asset. 
• Regulatory Compliance: Another win with ALM is effortlessly meeting compliance requirements. Automatic tracking, regular maintenance, and thorough documentation all help ensure legal and industry compliance. 

Types of Asset Lifecycles to Consider

Understanding the types of asset lifecycles is pivotal for insightful decision-making and effective asset lifecycle management in any business. Below, we list some common types of assets and consider the nuances of their respective lifecycles within enterprise asset management.

• Machinery and Equipment: Machinery and equipment represent substantial investments in any business, particularly in manufacturing or industrial sectors. Their lifecycle includes acquisition, installation, operation, maintenance, and eventual disposal or replacement. Efficient management entails regular maintenance logs, understanding operational lifespan, and planning for future upgrades to maintain productivity and safety standards.

• Furniture and Fixtures: Though often considered less critical, furniture and fixtures play a vital role in workplace aesthetics, functionality, and employee satisfaction. Their lifecycle involves procurement, usage, wear and tear, and replacement or refurbishment. Asset managers need to balance cost with ergonomics and the potential impact on employee productivity and well-being.
• Vehicles: Vehicles, including company cars, delivery trucks, and heavy machinery, have lifecycles characterized by acquisition, maintenance, depreciation, and resale or scrap. Managing this lifecycle effectively requires understanding the total cost of ownership, including fuel, maintenance, insurance, and depreciation, to optimize the timing of replacement.
• Office Equipment: This category includes computers, printers, and other tech tools essential for daily operations. The rapid pace of technological advancements significantly impacts the lifecycle of these assets, necessitating frequent updates or replacements to ensure efficiency and security. Asset managers must balance the benefits of the latest technology with the costs of upgrades and training.
• Art and Collectibles: Unique among assets, art and collectibles can appreciate in value. Their lifecycle management focuses on preservation, security, and, potentially, sale or donation. Insurance, proper storage, and maintenance are crucial, alongside considerations for displaying and leveraging these assets for branding or cultural enrichment.
• Library Collections: Library collections, whether digital or physical, require ongoing curation, preservation, and access management. Their lifecycle includes acquisition, cataloging, maintenance, and deaccessioning. Challenges include balancing the relevance and physical condition of materials with space constraints and digital accessibility.
• Medical Equipment: Medical equipment must adhere to stringent regulatory standards in healthcare. Its lifecycles encompass procurement, certification, use, regular calibration, maintenance, and eventual replacement. The management of these assets is critical to patient care quality, requiring investments in technology updates and staff training.

Asset Lifecycle Management Best Practices

Here are some of the best practices you can follow to get the most out of your assets, optimize productivity, and optimize your bottom line:

1. Audit Your Assets 

You should focus on your physical and digital assets like you would your business finances. Everything should be accounted for. This means conducting regular internal audits of your hardware, software, and fixed assets. 

By keeping an eye on your assets through consistent audits, you can help identify errors in asset records, accurately track your assets, and forecast maintenance and replacement costs.

2. Set Up Clear Policies

Without a road map, you won’t be able to reach your asset management goals. You should establish a comprehensive set of policies and operational procedures that outline your asset life cycle processes. This means documenting every step of your asset life cycle strategy, from planning to disposal.

By setting up policies and procedures, you can maintain consistency throughout your organization, which will improve your asset management.

3. Leverage Asset Management Software

Your ability to optimize asset life cycles in your business isn’t just dependent on your ability to plan and strategize. You also need to rely on the right life cycle asset management technology to keep productivity high and errors low. Asset tracking software like RedBeam can help you monitor all of your assets in real-time throughout their entire lifecycle.

The power of RedBeam's asset lifecycle management software lies in its ability to provide critical information at your fingertips, enabling managers to make data-driven decisions at each stage of an asset's lifecycle. 

From asset acquisition to disposal, these computerized maintenance management systems provide all the necessary tools for effective asset management, providing a centralized system for tracking, auditing, and optimizing your assets. 

This results in reduced operation costs, maximized asset value, and much-improved overall operational efficiency.

4. Optimize Your Process

One of the most important practices you should follow if you want to improve your asset life cycle management is optimization.

You should have a plan in place to focus on improving your asset management processes. This means working on different asset life cycle management areas like:

• License management
• Asset prioritization
• Asset tags
• Automating and outsourcing asset management
• Tracking asset metrics (i.e., the average cost of maintenance, asset depreciation value, compliance failures)

5. Ensure Regular Maintenance and Upgrades

Implement a preventive maintenance schedule to make sure all assets are kept in optimal condition, thereby extending their life and usefulness. This can significantly reduce the likelihood of costly emergency repairs and also help you plan for timely upgrades to keep all assets, especially technology assets, up-to-date and efficient.

6. Implement Performance Monitoring

You must continuously monitor the performance and utilization of each of your assets. Make sure to use key performance indicators (KPIs) to track and identify underperforming assets or those assets that are not delivering expected returns.

With this real-time data at your fingertips, you can make well-informed decisions about asset reallocation so that every asset is utilized. This data can also help you allocate additional training and plan the potential disposal well in advance.

7. Continuous Improvement

Asset Lifecycle Management should be a dynamic process. It is important to regularly assess and improve ALM processes using information about how well they are working, new technology developments, and any changes in business requirements. Foster a culture of continuous improvement to adapt to new challenges and opportunities.

8. Training and Awareness

Effective asset management requires all stakeholders, including employees and management, to understand their roles clearly. This ensures alignment with asset management goals and streamlines processes while clear guidelines reduce risks and boost operational integrity.

Regular training and communication are key to building a culture of ownership and accountability within the organization. This engagement enhances commitment to the organization's success and emphasizes the importance of everyone's role in asset protection, thereby improving performance and security.

Leveraging RedBeam for Effective Asset Lifecycle Management

Asset lifecycle affects every part of your business, whether you know it or not. If properly maintained throughout their time in your business, assets can be a great source of profitability. But, when poorly managed, assets can be a hindrance to productivity, squeezing the life out of company resources and employee time.

If you’re serious about improving the life cycles of your assets and optimizing your asset management, then you need to get started on the right foot with asset tracking software.

With RedBeam, your asset management can be fully transparent. The leading asset tracking software can show you which asset is in which stage of its life cycle.

Schedule a free demo with RedBeam today to take your asset management to the next level. Our leading asset tracking software can help you automate and simplify your asset management process so you can improve asset life cycles, optimize productivity, and increase your profit margins. Get started today!