Asset life cycle management is key to maximizing your ROI

Complex equipment can cost hundreds of thousands of dollars. For example, in the construction industry, a full-size excavator may cost around $600,000. When investing in assets for your business, carefully managing their life cycle will help you maximize your return on investment (ROI). Additionally, properly maintained equipment will experience less downtime and be less likely to cause logistics headaches for those who need to service the equipment.

Asset life cycle management (ALM) is the process businesses use to manage assets throughout every stage of their life. ALM is important when you consider the cost of assets individually and collectively. Additionally, business leaders expect management to act quickly on opportunities that can optimize asset usage. This requires management to have an awareness of asset performance and to be familiar with important key performance indicators (KPIs), like energy usage, safety incident frequency, operating costs, revenue generation, and more.

Traditional ALM has five stages, each of which contributes to the total cost of ownership of a business’s assets in some way. Let’s take a look at them.

5 stages of traditional asset life cycle management

Each stage of the asset life cycle presents a different opportunity for optimization. By understanding the stages and their purpose, managers can develop strategies for each stage that help raise profitability and lower total cost of ownership. 

1. Procurement is when an organization sources and purchases an asset. The goal is to stick to the budget while meeting or exceeding the organization’s requirements. Managers need historical data to understand how similar assets have performed in the past, how maintenance has affected asset lifespan, and how usage will impact equipment needs.
   
2. Deployment is part delivery and part preparation. Assembling equipment and inspecting it to ensure it’s free of defects are aspects of deployment. Also, assets are not always physical, so teams may need a strategy for delivering virtual goods securely.
   
3. Utilization is the stage in which companies get most of their ROI. This is why monitoring performance at this stage is very important. It’s also essential for developing reports like a cost-benefit analysis. Monitoring will allow managers to ensure assets are performing as expected and make needed optimizations, fueling continuous improvement initiatives.
   
4. Maintenance could be considered the most important stage in life cycle management, as it extends the life of your investments. Every asset will experience wear and tear, so taking a proactive approach to maintenance will minimize the consequences of malfunctions. Additionally, system upgrades keep assets relevant and facilitate interconnectivity with new devices.
   
5. Disposal requires organizations to think carefully about logistics and environmental questions. Your disposal policy could come into effect because your asset is reaching its end of life or because it was damaged, stolen, or lost. For every scenario, businesses must have policies that help dispose of assets ethically, according to law, and in a way that protects company data. 

These five stages are the foundation of a strong asset life cycle management process. However, physical assets are changing, and so is the need for better collaboration between departments and systems. 

Asset life cycle management for continuous process improvement

Traditional asset life cycle management was linear and didn’t have integrated feedback loops that shared data between different systems and departments. This limited the improvement capabilities of businesses that didn’t open the barriers of communication between departments. Industries like process manufacturing have to be especially conscious about making continuous improvements since assets represent the majority, if not all, of their revenue potential. 

However, without a holistic view, it’s possible to cut costs in one stage and make other parts of the process more expensive. For example, imagine that you’re able to cut costs on a certain product, but by doing that, you end up lowering its quality. While this could result in lower up-front costs, the equipment will likely need more maintenance or more frequent replacement. 

Organizations should strive to create transparency at every stage of the ALM process. When procurement teams can see how products are performing during utilization and maintenance, it allows managers to make purchasing decisions that lower overall costs. This is especially true when looking at assets on a global scale. Transparency helps leaders manage all of the assets at their organization. Let’s look at some of the key performance indicators that signify an asset is successful.

5 key performance indicators for ALM 

Metrics are essential in helping your team analyze the productivity of your assets. However, depending on the sector you work in, some metrics may be more valuable than others. For example, for manufacturing line equipment, measuring how long it takes to fix an asset and how often it fails would be crucial since any downtime would halt production. In this section, we’ll review five of the most common KPIs: 

1. Mean time to failure (MTTF): This is the average time it takes an asset to fail without the possibility of repair. Measurement of this metric begins when an asset goes into operation and stops at its end of life.
   
2. Mean time to repair (MTTR): This is the average time it takes to make a repair. In other words, you’re measuring the length of time an asset is unusable while it’s under repair. 

3. Mean time to failure (MTTF): This is the average time an asset is functional before it needs to be repaired again. This metric is closely related to failure frequency, which is how many times an asset fails during its useful life. 

4. Overall equipment effectiveness (OEE): This measures the productivity of an asset over a specified period of time. This metric requires you to first calculate the asset’s availability, performance, and quality metrics. OEE will give managers an overview of process efficiency. For example, poor performance could be the result of an unstable maintenance program since machines would not be operating as expected. You can calculate these metrics as listed below: 

• OEE = Availability x Performance x Quality
• Availability = Total run time ÷ Planned production time
• Performance = (Ideal cycle time x Total count of productivity) ÷ Run time
• Quality = Total number of good units ÷ Total number of units produced

5. Incident resolution: This metric measures how quickly a team resolves breakdowns and malfunctions. This metric is crucial for understanding the impact breakdowns have on the production of your assets as well as tracking your maintenance team’s efficiency. 

These five metrics apply to ALM in general, but you’ll want to tweak your most valuable KPIs based on your industry. If you’re working with digital assets, you’ll want to use software-specific metrics like cycle time and open requests. 

Essential ALM tools to simplify data management

Analyzing important KPIs in asset life cycle management highlights an important truth: ALM is a data-dependent tool. Without data, it’s impossible to make optimizations and share findings with other departments. Without data, all conclusions are hypothetical. Analyzing vast amounts of data is not feasible without the right tools to gather, process, and distribute your data and reports, so let’s look at three ALM software tools that can help. 

IFS Cloud

IFS Cloud offers asset life cycle management as part of their enterprise solution. It helps clients deliver assets, provide maintenance, and monitor and optimize performance. Here’s where it can make an impact:

• Asset planning and realization: IFS Cloud helps clients develop strategic plans for their assets, simplifies data entry during the asset realization process, and maintains all aspects of the design in a single repository. 
• Asset operations and maintenance: IFS Cloud helps users standardize their maintenance practices, increase visibility to improve employee safety, manage and optimize the workloads of maintenance departments, and adapt user interfaces based on individual use cases. 
• Asset performance management: IFS Cloud enables users to create digital twins of their assets so that they can visualize performance, scheduling, and environmental conditions. Additionally, it helps clients examine interrelations between maintenance data and operational data. 

InvGate Assets

Today, more and more businesses are dealing with digital assets instead of physical assets. InvGate Assets helps businesses manage their IT assets by helping users collect data automatically, monitor changes in IT assets, and manage and update assets remotely. InvGate also offers a 30-day free trial for those wanting to test-drive the software. Here are some of the benefits a business can gain from the solution:

• Improved governance and compliance: InvGate provides users with relevant compliance information to help them meet government regulations that affect their assets. 
• Better IT support and operations capabilities: InvGate helps teams implement best practices while managing workload limits, incidents, changes, and customer demands. It does this by providing the asset data needed to improve issue resolution. 
• Better cost management and decision-making: InvGate helps its clients use assets to their full potential. For example, instead of a business procuring new assets, the software can help teams find areas where equipment is underutilized and redeploy it for cost savings. 

Asset Panda

Managing assets in a growing organization can be challenging. Asset Panda is designed to help clients keep track of assets of every type, from digital to physical goods. They promise up to 800 percent ROI, and they don’t limit the number of users you can add to the platform. Here are a few of the solution’s helpful features: 

• Extensive configuration options: Asset Panda is designed to track anything, and you can modify it to fit your current way of managing assets. 
• Simplified dashboard: Instead of your team having to sift through multiple asset management spreadsheets, Asset Panda presents full action histories, warranty information, user manuals, and photos in a single pane. 
• Unlimited sharing: Asset Panda allows teams to give access to unlimited users, improving collaboration. This simplifies sharing reports with executives and gives managers and front-line workers the access they need to make changes from anywhere. 

Jotform

Jotform is a digital form builder that can make collecting asset information easier. Accessible on any device by simply using your browser, Jotform allows you to create forms that help you collect information regarding incidents and warranties or create new asset entries in your system. Jotform is free to try and has many great features: 

• Large library of apps and integrations: With more than 400 apps and integrations, you’re sure to fit Jotform in your workflow with ease. And, if you need something more, you can build your own unique workflow with our custom application programming interface.
• Advanced user management: Jotform supports SAML user authentication and integrates with popular products like Active Directory, Okta, Google, and OneLogin. 
• Enhanced security and compliance: Data security is a top priority at Jotform.
• Superior customer support: Our enterprise products come with a dedicated support team that can answer questions during standard business hours. 
• Easy migration of current forms: Our migration tool can import your current forms to ensure a smooth transition and help you avoid rebuilding forms from scratch. 

Asset life cycle management tools will make managing your data easier and facilitate collaboration with other departments. But you may wonder whether ALM is really worth the effort or if you can get by without it. 

Asset life cycle management: The final analysis

Asset life cycle management is key to using your digital and physical assets to their full potential. By analyzing key performance indicators, managers can make informed purchasing decisions and plan out maintenance in a way that improves the total cost of ownership. ALM also helps minimize interruptions, reduce business risk, and improve the security of your organization. 

Are you trying to optimize your asset management systems? Digital forms can help with your new asset intake process. Create workflows with Jotform’s forms that simplify adding new assets, keeping track of inventory, and tracking changes across your organization. Try Jotform today.

Photo by Matthew Henry from Burst