First of all, we need to clarify what is an asset. Technically, anything that brings a benefit to the company is an asset. So, there are tangible assets (like buildings or equipment) and intangible assets (like copyrights or brand awareness). So, when we talk about asset management, we may also be referring to financial asset management, for example.
Either way, the aim of asset management is to extract the highest possible return from each investment and thus make the company more competitive.
Naturally, we are focused on the management of tangible assets. In this context, physical asset management encompasses all phases of the assets’ life cycle. Planning what can be useful for the company’s objectives, acquiring new assets, monitoring their performance over time, and deciding when to replace them. The international standard governing asset management is ISO 55000:2014.
Asset management coordinates the life cycle of assets. This involves assessing opportunities and risks at every point in time to achieve the desired performance.
Difference between asset management and asset maintenance management
Although maintenance management is essential for good asset management, we should not confuse the two. While asset management is concerned with managing the entire life cycle of each piece of equipment, costs, and depreciation, etc., maintenance management is a continuous process to improve the availability, reliability, safety, and condition of physical assets during their useful life.
In asset-intensive industries, ensuring the availability, reliability, and profitability of assets is a huge competitive advantage.
In other words, maintenance management is about planning maintenance tasks, scheduling them, and managing resources (including parts, labour, and budget). It is one of the main parts of asset management, but not the only one. We further explore the differences between maintenance management, facility management, and asset management here.
But what is the life cycle of assets?
As we mentioned above, asset management looks at the asset not only “now”, but in its entire life cycle. It is understood that the life cycle of assets has four phases:
- Planning. The manager becomes aware of an obstacle in one of the company’s processes and looks for the best equipment to solve the problem.
- Acquisition. The potential ROI of the asset is calculated, the available capital is assessed, and a final decision is reached.
- Operation & Maintenance. The asset begins to bring benefits to the company. As time goes by, it requires more and more maintenance. This stage is often represented by the bathtub curve.
- Disposal. The asset has reached the end of its life and has to be dismantled, recycled, or sent to a landfill.
Many companies tend to focus on the third stage, where the asset influences the company’s performance. However, neither phase should be overlooked. Take the aviation industry, for example, where airlines have to order aircraft years in advance for each route, ensure they are kept safe, and provide passenger comfort.
But just as important, if not more important, than knowing the life cycle of assets is having an estimate of their useful life. Only then can you know if the asset “still has a lot to give” or if it is in its decline phase. This type of data is essential to decide whether to repair or replace an asset that begins to show signs of failure.
How to choose an asset maintenance management strategy?
Over the asset’s useful life, it is important to choose the right maintenance strategy for each asset. But again, you need to take a holistic view and consider the entire asset portfolio – not just each asset in isolation. Therefore, the first step in choosing a maintenance strategy is to identify, locate, and assess the condition of each asset.
This first assessment is essential to first understand what the appropriate conditions to operate each piece of equipment are (for example, how many cycles it can perform without interruptions). Next, it allows you to classify them according to their criticality, which is essential to define priorities.
Next, you need to analyse the potential causes of failure. Conducting a root cause analysis is extremely valuable in this part of the process. Each predictive or preventive work order should correspond to a specific cause of breakdown to ensure no work is done in vain.
💡 Here’s how to choose an asset maintenance strategy.
Finally, don’t forget to define the main performance indicators (such as MTBF, MTTR, OEE, among others). Thanks to these indicators, you will understand whether your strategy is being effective and make more informed decisions. After all, “information is power”!
Technology is a great ally in this whole process. An intelligent maintenance management platform, a CMMS, or an Enterprise Asset Management (EAM) software is useful to manage the entire portfolio, monitor the status of assets in real-time, plan maintenance, calculate KPIs, and generate automatic reports.
What are the benefits of asset management?
✔️ Improving financial planning
As you analyse the entire asset life cycle, you can better predict what the useful life of each piece of equipment is and when is the right time to replace it. This means you can plan much better the purchase of equipment and the cost of maintenance at each stage of the asset’s life.
✔️ Decreasing the cost of your operation
Choosing the right maintenance strategy for each stage of the asset’s life allows you to find the most cost-effective option to maintain service levels and reduce risk as much as possible.
✔️ Increasing productivity and availability
It increases the availability of the equipment and, consequently, its productivity. In addition, as availability and performance are two variables in the OEE calculation, it also increases its effectiveness.
✔️ Increasing the reliability of each asset.
The goal of asset management is to ensure the best possible performance over time. To put it another way, it is to increase the reliability of assets and ensure that they are functional when they are needed.
✔️ Making decisions based on facts
As we’ve already mentioned, another benefit of asset management is making fact-based decisions. If you centralise all the data about assets, you can understand what the best strategy is for each case and whether it’s worth continuing to repair rather than replace.
✔️ Assuring compliance with processes and standards
By monitoring all your assets and ensuring they remain reliable, you can meet all your industry standards and ensure compliance with quality and safety rules.
✔️ Improving risk management and security
As we saw above, creating an asset management strategy involves knowing the status of each asset. Thereby, you control the criticality of each asset and prevent them from becoming a security risk.