What is an Asset Lifecycle Analysis?

14. July 2020

Asset-Relationship-Management Service Knowledge

In order to discover the potential in the service, maintenance and repair of industrial machinery and equipment, more and more manufacturers, service partners and also operators are using the so-called Asset Lifecycle Analysis as a helpful tool. This blog article explains what the term Asset Lifecycle Analysis means, why it is needed and how it works.

What is an Asset?

In the industrial context, the term asset refers to “tangible assets”. This includes for example machines, equipment, vehicles or buildings. 

What is an Asset Lifecycle?

An Asset Lifecycle describes the sequence of phases in the lifecycle of a specific asset. The Asset Lifecycle usually starts with a planning phase, in which the demand for an asset is first determined, and continues over the entire useful life of the asset up to its disposal. Between planning and disposal, the asset usually goes through the phases of engineering, procurement, commissioning, operation, and replacement, sometimes also upgrade, retrofit, or overhaul. In the context of industrial, plant-related asset management, the Association of German Engineers (VDI), only considers the longest and most important part of the Asset Lifecycle in its definition: operation and maintenance. In this article we therefore also focus on the latter, i.e. operation and maintenance. 

What is an Asset Lifecycle Analysis?

An Asset Lifecycle Analysis describes an analysis conducted in the context of Asset-Relationship-Management, in which the complete lifecycle of an asset is mapped and then examined for optimization potential. In the following article, you will find out  what is important in this process and which factors apart from the individual lifecycle sections of industrial machinery and equipment need to be considered.

Why conduct an Asset Lifecycle Analysis?

The Asset Lifecycle Analysis intends to help actors of a company to discover the potential for improvement along the lifecycle of a machine or plant. These findings must be taken into account for example in the course of the digital transformation of the company. Here, it is essential for successful manufacturers to have knowledge about the availability, use and quality of their own assets and installed base.

Exemplary application of an Asset Lifecycle Analysis 

Bildschirmfoto 2020-07-14 um 09.55.12

Initially, the Asset Lifecycle is visualized as a linear progression. To do this, you imagine the entire lifecycle of an asset as a pathway and then graphically depict it in two dimensions in a a so-called Asset Lifecycle Matrix.

The horizontal Axis 

Here, all phases that an asset passes throughout its lifecycle are shown from left to right. This cycle begins even before the actual commissioning, includes for example planned and unplanned events, as well as spare and wear parts and usually ends with the disposal or replacement of the asset. For each step, keep the following in mind: The more precise the description and differentiation from the previous step, the more detailed and meaningful the subsequent analysis will be.

The vertical Axis

The vertical axis represents the levels of analysis. First of all, it is important to precisely describe the tasks that arise for each step. This gives an overview of the people and tools that are involved in each step. In addition, the effort as well as the success are considered and contrasted.

Every Asset Lifecycle is unique

Each Asset Lifecycle Analysis is tailored to a specific asset or asset type. Here, it is important to understand the functionality and needs of an Asset Lifecycle and to perform the analysis for a specific asset type. For example, the steps of the Lifecycle Analysis of one asset may not be useful for another asset.

This therefore means that a company with several machine types or plants cannot necessarily operate with one universal Asset Lifecycle Analysis, but might need to create it individually for every asset (type). In return, you benefit from a 360-degree overview of your installed base, which then subsequently forms the basis for deriving the digitization potential. Nevertheless, in our experience, in most cases it is sufficient to create one well-founded Asset Lifecycle Analysis which then serves as a basis to record the differences within the Asset Lifecycle Matrix for the different asset types. In the end, similar IT-Systems and people are often involved when it comes to service, maintenance and repair of different assets.

How is an Asset Lifecycle Analysis created?

Before you start to analyse your Asset Lifecycle, it is important to answer a few questions:

  • Who is the analysis being created for? In the field of industrial machines and equipment, for example, this persona would be the service or maintenance manager.
  • What type of asset is displayed? There is a wide range and variety of different assets in the industry. It is therefore important to classify the asset precisely in order to be able to analyse it efficiently later. Naturally, the lifecycle of a certain machine looks different from that of a building.
  • What findings should be derived from this? Which goals should be achieved?

This question, like the asset itself, is also very individual and varies from company to company. In general, the goal of an Asset Lifecycle Analysis is to gain a precise understanding of the processes today and the potential of tomorrow. For service managers in the machine manufacturing industry, in addition to increasing efficiency or sales, classic goals include strengthening customer loyalty along the lifecycle in after-sales. Maintenance managers on the other hand, in addition to increasing efficiency, often strive for extending the lifetime of the equipment or minimizing downtimes.

Once you have an answer to these questions, you can start working on the Asset Lifecycle Analysis.

Step 1 – Put the Asset Lifecycle Analysis Team together

Even if not every employee has a direct point of contact with the asset, different departments should be represented in the analysis team.

  • For manufacturers and service partners: e.g. internal service, field service, management, IT, etc.
  • For operators: e.g. maintenance teams, maintenance agents, machine operators, etc.

Even employees without direct machine contact can provide valuable insights and new perspectives. They are also getting sensitized to keep the asset in mind at every step of the process. These parties should definitely be involved:

  • Service managers: Can provide an asset-centric assessment and have in-depth knowledge of the installed base
  • Service technicians: can make concrete and practical statements about the needs and requirements of the asset by working directly with the asset
  • IT: can provide additional input on possibilities and limitations of data availability and analysis
  • External consultants/coaches: In some cases, they help to bring in an external perspective that resolves the so-called operational blindness and thus contributes new insights

Step 2: Draft – Create the first draft of the Asset Lifecycle

The analysis team should then meet in e.g. a workshop to develop a first draft towards the Asset Lifecycle. We recommend appointing a mediator to ask the questions and note down the team’s answers. What steps does the asset go through along its lifecycle from before it is put into operation until the end of its lifecycle? Which parties, organizations, people, IT systems and processes are involved? 

This step is about the first, rough draft. Not too much time and resources should be invested here; a 2-3 hour kick-off workshop with the analysis team should be sufficient. The focus should rather be on the development of a common roadmap. This can also be reflected in the form of presentation, the use of flipcharts and post-its is recommended here. 

Step 3: Collect Data – Back up assumptions with facts

After the brainstorming, the analysis continues with the “Hard Facts”. Here the aim is to back up the previously discussed sub-steps and processes with data, facts and figures. Be as precise as possible. How often does the service technician fill out the service report each year, how long does it take every time and who processes it? Are the reports still paper-based, or do they have to be printed out from Excel or Word on-site, then signed, scanned in again and transferred manually from the back office to the ERP system? Measure the time end-to-end for a representative service case. This work may seem to be time-consuming and demanding at first, but it also enables you to pinpoint in detail where the service can be optimised with the help of digitisation. 

Data sources can be internal or external, experience reports from service partners can be just as helpful as data from your own colleagues in the service field or from the maintenance team.

Step 4: Pareto Principle – identify and prioritize the most important potential

The Pareto principle states that in many cases an 80 percent result can be achieved with only 20 percent of effort. This principle is also applied to the digitization and optimization potential in industrial service. Here, it is helpful to enter the potential in order of importance as columns in a two-dimensional coordinate system (Pareto diagram). This serves as a basis for decision-making, enabling you to differentiate between important and unimportant potential. Having done this, you will be able to prioritize the order in which you approach the potential with a clear course of action. The more profoundly the Asset Lifecycle has been filled out and structured in the previous steps, the easier it is in this step to identify sticking points and derive the corresponding actions. The aim here is to analyze the Asset Lifecycle Matrix and examine it for anomalies or repetitive, low-value tasks. For which of the activities that occur along an Asset Lifecycle can you relieve your employees or offer additional services to your customers? Which processes, that today still mean manual effort for your employees, can you optimize and what can a solution look like? 

In our experience, companies that are not yet as advanced in terms of digitization and servitization (for more information, click here) in particular have a lot of potential for increasing efficiency. It is precisely this potential that is made visible and tangible with the Asset Lifecycle Analysis.

Step 5: Roadmap to realize the potential in service 

We suggest to prepare a clear roadmap for the implementation based on the potential and to assign responsibilities both internally and externally to the respective parties.

Here we recommend to put together a “speedboat” within the organization, similar to the analysis team. This means that it is useful to assign a project manager, in the best case scenario with a background in the service or maintenance department. Our experience showed that only in a few cases is it actually successful to realize the potential in the service department, if the responsibility lies in the IT or the digitization department, because the right incentive from the daily business is often missing. You should check whether the resources required for implementation are already available internally or whether you want or need to work with external providers. In both cases, you should make sure that the necessary know-how in the field of industrial assets or service or maintenance is available on the IT side. It is also important that your top management provides the necessary support for the implementation process.

All in all, we are convinced that the Asset Lifecycle Analysis is a helpful tool for you to approach and discover the potential that lies in the service, maintenance and repair of your industrial machinery and equipment. 

You want to get started with an Asset Lifecycle Analysis? We are looking forward to show you how we are already helping other companies in the machine manufacturing industry. Reach out to us.

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