What Is Asset Lifecycle Management? Best Practices & Stages

Are you getting the most out of your assets throughout their lifespan? Applying asset lifecycle management (ALM) strategies can increase your assets' productivity and lifespan while cutting costs such as maintenance and replacement.

In this guide, we'll walk you through everything you need to know about what asset lifecycle management is, how it benefits your business, the stages in the ALM cycle, and how they apply to different types of assets. Then we'll share some best practices for optimizing your asset lifecycle management strategy and selecting the right ALM software for your needs.

Main takeaways from this article:

• Asset Lifecycle Management (ALM) strategically guides assets from acquisition to disposal to extend lifespans, cut costs, and improve profitability.
• ALM improves asset performance, resource allocation, and return on investment by optimizing utilization and maintenance.
• Asset lifecycle management encompasses five stages: planning, acquisition and deployment, operation, maintenance, and disposal or renewal.
• ALM enhances business operations by enabling informed decision-making, reducing operational costs, maximizing asset value, and ensuring regulatory compliance.
• ALM's best practices include scheduling audits, documenting policies, automating asset tracking, planning maintenance and upgrades, and monitoring key performance indicators (KPIs).

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) applies a structured process to managing assets from acquisition to disposal. It maximizes asset value by improving performance, increasing utilization, extending lifespan, cutting costs, and reducing compliance risks. ALM optimizes asset life cycle stages by leveraging best practices and technology such as asset management system software. 

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 maps out your asset roadmap. Informed by inter-departmental input and auditing requirements, decision-makers explore questions such as:

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

Planning forms the foundation for subsequent stages by providing parameters for asset management decisions.

2. Acquisition and Deployment

After you’ve made an asset management plan to guide your lifecycle, it’s time to acquire the new assets you’ve decided upon. Research potential suppliers to ensure you acquire the best quality at the lowest prices. After the purchase, assemble, test for flaws, and work proactively with your maintenance team to identify future replacement needs. Use asset tracking software to record when each asset was acquired to design a maintenance and replacement plan.

3. Operation

As you begin putting your new acquisitions into operation, monitor key performance indicators to track utilization. Continue testing your equipment regularly to ensure optimal performance. Adjust your initial asset lifespan estimates based on factors such as:

• Asset type
• Frequency of use
• Facility conditions
• Complexity
• Regular upkeep

4. Maintenance

Once you’ve begun using your assets, maintenance becomes a critical focus of the asset lifecycle management, determining how long each asset will actually live. Maintenance planning includes both preventive maintenance and reactive maintenance. Asset lifecycle management emphasizes preventive maintenance to minimize time and money spent on reactive maintenance. Automate your maintenance scheduling by using an asset tracking platform that supports digital maintenance logs and reminders.

5. Disposal or Renewal

An asset's life cycle ends with either disposal or renewal. In disposal, assets that are no longer efficient, useful, or safe are removed through means such as recycling, selling, or donations. For example, IT equipment that has become technologically obsolete may be recycled to make way for newer acquisitions.

Alternatively, renewal extends an asset's lifespan by refurbishing or upgrading it, delaying the need for replacement. Both disposal and renewal strategies aim to improve operational efficiency and avoid excessive maintenance costs for assets that have outlived their useful life.

Benefits of a Successful 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. The machinery and equipment 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. Utilize Technology for Asset Tracking

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. Track Asset Maintenance KPIs

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.

How to Choose the Right Asset Lifecycle Management Software

Selecting the right software supports asset lifecycle management by automating routine tasks, increasing efficiency, cutting costs, and providing business intelligence to guide asset planning decisions. Here's how to go about choosing the right asset lifecycle management software:

• Identify Business Needs: Consider what business functions you need your software to perform, such as inventory tracking, maintenance scheduling, or compliance reporting.
• Ensure Scalability and Integration: Verify that your software supports the number of assets and locations you need to track and integrates with other apps sharing your asset data, such as accounting software.
• Leverage Automation and AI: Look for solutions that use automation and AI to simplify routine asset management tasks, such as capturing asset data for digital tracking.
• Strengthen Security and Compliance: Check that your solution provides strong cybersecurity and supports any compliance frameworks you need to follow.
• Optimize Ease of Use and Support: Evaluate your prospective provider's digital interface for user-friendliness, and research their support resources, such as knowledge databases, tutorials, and live chat.
• Compare Costs and ROI: Weigh the cost of your solution against potential gains from increased efficiency, reduced maintenance costs, lower compliance penalties, and other benefits.

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!