The supply chain industry is very complex. More importantly, there are lots of several other industries that need assistance from the supply chain industry! Supply chain management plays a crucial role in the flow of goods and services. It involves the movement & storage of raw material, finished goods, or MRO (maintenance repair operation).
According to Statista, “In 2019, the global supply chain management market was valued at 15.85 billion U.S. dollars and is expected to reach 37.4 billion U.S. dollars by 2027. In 2019, Germany's SAP was the leading supply chain management software supplier with revenue of around four billion U.S. dollars.”
Also Read: Need for Planning Life Cycle Management for Business Assets
What Is the Asset Life Cycle? What Are the Phases of the Asset Lifecycle?
Assets are very important and precious for an organization, especially in the supply chain industry. As assets are not only valuable but they help create wealth for the company. Assets are the source of earning.
For supply chain equipment are very important they are the pillars of the core business. Thus, organizations must keep their assets in good condition. To keep assets in good condition, understanding asset life is important.
An asset life cycle is a series of events that occur and are divided into various stages. An asset life cycle begins with planning and acquirement and the last stage is the disposal stage.
For keeping track of the asset stage, you need asset tracking software. It monitors assets and you can easily know what is the stage of the asset! There are various factors through which the importance of an asset is calculated such as cost of the asset, dependency on the asset, etc.
The stages of asset lifecycle are as follow:
1. Planning & Acquisition
First of all asset requirement is identified. For an accurate understanding of assets, requirement planning is done. When you want to complete the work order quickly then how many assets are required! These types of questions are identified in the planning stage.
Then asset acquisition is done, it is the initial stage of the asset lifecycle. In this stage asset is tried to purchase at the most effective price, the procurement department does the negotiations.
In this stage, asset utilization is done to its full potential. Production activities are done & as time goes assets need maintenance and starts losing their value and depreciation is used for tax benefits.
3. Operation and Maintenance
In this stage, the asset works regularly then it requires maintenance, the issues are rectified. Maintenance activities are done to improve performance. Moreover, the operation is performed to enhance asset performance.
If maintenance is not done on time and asset performance can be decreased and maintenance expenses will be increased. Maintenance is done at regular intervals until its useful life is over.
Also Read: Leading Attributes of Asset Management Software
4. Disposal or Renewal
When an assets life is over an asset is disposed of. It is done when the expected life of an asset is finished. This is the end stage of the asset life cycle. In this stage, assets cannot be repaired and asset failure occurs continuously but productivity suffers.
However, if the machine works effectively after its expected life is over you can use this asset until it is working efficiently.
The scale of the supply chain industry is huge and, in this business, one small error or mistake can turn into a big financial loss. Therefore, asset lifecycle should be taken care of attentively! It can impact productivity and business bottom line as well.
What Is Asset Lifecycle Management?
Asset lifecycle management helps in increasing the lifecycle of assets and equipment. When asset life is increased then productivity increases. When productivity increases profit margins also increased.
For effective asset lifecycle management assets are tracked continuously and when this work is done with software. It provides real-time data for each asset. Tags adhered to each asset.
These tags or labels provide data and information of each such as where it is located. These tags or label comes with asset tracking technology such as barcode, QR Code, RFID. Some of the tags are more advanced such as NFC, IoT, etc.
An effective asset life cycle management identifies which asset needs maintenance by keeping track of performance & key performance indicators. It can create a long-term vision for organizations.
When you implement an effective asset life cycle management you will find lots of room for improvement but managers need to in a way that business activities & operations do not suffer.
The data reveals how you can increase the potential of assets and equipment. It also shows the opportunity for improvement.
We know assets are the backbone of the organization. When you want to increase return on investment one should have a holistic view of the asset including the asset life cycle.
If you want to achieve this objective then asset management software can help you. With this software, you can do effective asset lifecycle management. It allows you to maximize asset life and full utilization of assets resulting in increased efficiency.
Each asset has lots of papers and documents and if there are lots of assets then lots of paperwork and managing them becomes hectic. In the long run, the software comes handy as you can manage and find any document quickly.
This software strengthens the asset lifecycle, minimizes risk, eliminates errors, and provides data that helps make decisions and set future goals.
Also Read: What Is the Importance of Effective Hardware Asset Management?
Frequently Asked Questions (FAQs)
1. What is Supply Chain Management?
It includes planning and control of flow goods. It has several activities included from sourcing to procurement and collaborating with partners. These partners can be suppliers, customers, third-party service providers, etc. Furthermore, the movement of products, inventory from one place to another as per the requirement is also part of supply chain management.
2. What are the benefits of asset lifecycle management?
There are several benefits of asset lifecycle management such as managers can make informed decisions. Prolong asset life by providing maintenance proactively. It helps increase the return on investment (ROI). Eliminating errors and increasing productivity!
3. How does data help in improving asset performance?
Asset performance is really important for an organization if the asset is not productive then the organization will change it. Data provides detail about asset performance when you have several assets belonging to the same category then you can analyze data of each asset and find an average performance. Furthermore, if the organization has historical data, they have leverage. They can predict asset failure, minimize downtime, and increase productivity.