Anyone who’s ever driven a used car knows that the better you take care of it, the longer it lasts. The same goes for your organization’s assets.
Understanding asset life cycle is the number one way to ensure the highest return on capital. This means tracking things like depreciation, repairs and upgrades performed on the asset. By doing so, you can maximize the asset’s useful life, thereby optimizing the profit generated from that asset.
Here are the five stages of asset life cycle management you should follow to optimize the profit generated from your assets.
1. Procurement (purchasing the asset)
The first step is to purchase an asset that meets business requirements and falls within budget constraints. This involves creating a purchase order, obtaining management’s approval for the purchase and adding the purchase to inventory. The asset must be properly accounted for by recording and reporting the receipt of the asset via data import or manual add in your CMMS or EAM software.
Using asset management software allows you to easily create inventory reports and keep your asset management information in one place even if you have multiple locations or distributed data centers. Remember that insurers and auditors may require this information for compliance purposes, so always have it handy.
2. Deployment (preparing to use the asset in production)
Before the asset can be used in production, it must be assembled and installed correctly. Preliminary checks are done to check for physical defects or design/engineering problems so you don’t wind up with an emergency work order shortly after deploying the asset.
During the asset’s useful life, it’s vital to schedule and keep track of regular upgrades, patch fixes, new licenses, scheduled scans and compliance audits. Continually check asset performance to prevent unscheduled downtime and get the most output from it.
If the asset is expensive to replace and could cause significant production delays in the event of a breakdown, put it on a preventive maintenance plan (regular, scheduled maintenance regardless of asset performance).
Extra tip: Maintaining accurate asset records is not only important for maintenance management but also financial accounting purposes. Calculating asset depreciation may be required for long-term, high-cost equipment.
4. Maintenance (repairs, calibration and preventive maintenance)
Proper maintenance is crucial to keep the asset running smoothly. Corrective maintenance may be needed if unexpected breakdowns occur. With Micromain’s CMMS, you can generate a unique QR code for each asset. When you need to create a work order, simply scan the QR code on your mobile app and fill in the details. You can even attach images or documents if needed.
5. Disposal (getting rid of an asset at the end of its useful life)
When an asset is no longer usable, it must be disposed of properly — and accounted for in financial records. The data must be wiped and the asset dismantled piece by piece. Store reusable parts and send parts to scrap. If certain parts can cause an environmental hazard, make sure you dispose of them as dictated by local environmental law.