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Young businessman shows the word on the virtual display of the future Asset management
The 5 Stage Life Cycle Of An Asset Explained

Assets are an important part of any organization, whether physical assets like equipment or digital assets like software. But like any other property, assets have a life cycle that begins with planning and concludes with its disposal. Understanding an asset’s life cycle is critical to maximizing its value and ensuring that it contributes to an organization’s success. In today’s growing business world, assets are the backbone of any successful organization, and its 5 stage life cycle is the roadmap that outlines the various stages of its existence. Looking to own an asset? Here’s all you need to know about an asset’s life cycle. What is an Asset? An asset is a resource that an individual or organization owns, controls, or has the right to use and that has value, and the potential to provide economic benefits in the future. Assets can be tangible or intangible, and they can be used to generate revenue, increase the value of the organization, or support business operations. Types of Assets Although assets are primarily classified as tangible or intangible, they can also be classified in various ways, depending on the organization or individual in charge. Some examples of common asset types include: Fixed Assets: These are long-term assets that are unlikely to be converted. Land, buildings, equipment, and vehicles are some examples.   Current Assets: Current assets will be converted to cash within a year or business cycle. Cash accounts receivable, and inventory are all examples.   Tangible Assets: Physical assets that can be touched, seen, and quantified are referred to as tangible assets. Buildings, vehicles, and equipment are all examples.   Intangible Assets: Non-physical assets with value, such as intellectual property, patents, trademarks, and copyrights, are examples of intangible assets.   Operating Assets: These are assets that generate revenue in the normal course of business operations. Inventory, machinery, and equipment are some examples.   Non-operating Assets: Non-operating assets are not directly used in business operations but may generate income, such as investments in other companies or real estate holdings.   Financial Assets: They are income-generating assets such as bonds, stocks, and cash equivalents. What Is An Asset Life Cycle? Each stage of an asset’s useful life within a company is referred to as its lifetime. The asset life cycle begins with planning and purchase and includes asset utilization, upkeep/maintenance, and final disposal. Because different asset types have different usable lifetimes, this method will vary depending on the item.  The useful life of an asset may differ from different perspectives. Operationally, the useful life may extend until the cost of maintenance and repair eventually exceed the cost of replacement, even though from an accounting perspective, the useful life will be the period over which depreciation occurred. Asset Life Cycle Management  Asset management manages an organization’s assets to maximize value, reduce costs, and improve profitability. It entails a systematic approach to asset acquisition, use, maintenance, and disposal throughout their life cycle, from planning and procurement to decommissioning and disposal. Asset management is critical for businesses of all sizes and types because it allows them to make informed decisions about their assets and align them with their strategic goals. Identifying and asset tracking, assessing their value and performance, identifying opportunities for improvement, and making informed decisions about asset acquisition, use, and disposal are all part of effective asset management. Physical assets, such as real estate, equipment, and vehicles, and financial assets, such as stocks, bonds, and other investments, are some of the most common types of assets managed. Furthermore, intellectual property, human capital, and intangible assets such as IT software are assets that are frequently managed as part of an organization’s asset management strategy. Overall, effective asset management can assist organizations in improving their financial performance, reducing risk, and maintaining a competitive edge in a rapidly changing business environment.  The 5 Key Stages In Asset Life Cycle Management  An asset management team manages a company’s assets. Their goal is to assist the company in tracking changes to their assets, how they are configured, and where they are located. An asset, no matter how large or small, cheap or valuable, goes through five key stages and the asset life cycle. 1. Planning Stage The asset life cycle begins with the planning stage. It is the first stage, and it occurs when the current asset is not meeting the organization’s needs. The asset is identified, and its requirements are defined at this stage.  Following that, a plan is developed outlining how the asset will be acquired and used to meet the current and future needs of the organization using data from an asset management system and input from key stakeholders. This stage entails determining the asset’s purpose as well as its expected life span. The asset’s purpose is determined by the needs of the business, which may include increasing productivity, lowering costs, or improving the quality of a product or service. Factors such as technological advancements, changing regulations, or environmental factors can all impact the asset’s expected life cycle. However, it is critical to consider the total cost of ownership during the planning stage, including the purchase, installation, training, and maintenance costs, to ensure that the asset is cost-effective and can be integrated into the organization’s operations. It is also critical to consider the asset’s potential impact on the environment, health, and safety and to plan for any necessary risk-mitigation measures. 2. Procurement Stage The second stage of the asset life cycle is asset acquisition. This is the stage at which the asset is obtained, whether by purchase, lease, or construction. Negotiating the purchase or lease agreement, supervising the construction process, and ensuring that the asset is delivered on time and within budget are all part of the acquisition stage. It is important to ensure that the asset is purchased from a reputable and reliable supplier and that the supplier provides adequate warranties and support. Additionally, the asset should be tested to ensure that it meets the required specifications, is identical to the gathered asset data, and is

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Hand touching Maintenance and repair about assistance and servicing of equipments
Predictive vs. Preventive Maintenance What’s The Difference

Predictive and preventive maintenance both focus on improving asset efficiency and increasing its reliability. However, they both adopt various approaches to achieve these. Knowing the difference between both asset maintenance practices is a great starting point to know which of the two is best for your business. Below, you will find everything you need to know about the similarities, differences, pros, and cons of preventive and predictive maintenance. Predictive And Preventive Maintenance: The Overview Predictive maintenance and preventive maintenance are maintenance strategies implemented as part of an asset management plan. Although both maintenance strategies feature different modes of operation, they are both designed to increase the reliability of assets within a business. Every business is aware of the importance of asset maintenance. Without proper maintenance, assets will experience downtime, have frequent breakdowns, and become inefficient. For businesses that depend on physical assets such as machines and equipment to carry out every operational task, the breakdown of a machine is detrimental to production. This explains why the world’s largest manufacturers lose almost $1 trillion annually due to machine failures. Machine and equipment failures are usually due to improper asset maintenance. Without servicing, cleaning, and inspection, machines will deteriorate. This will affect their performance and, essentially, the business organization’s performance. However, as businesses try to provide assets with the necessary maintenance services they need, they are quickly faced with the complexities of the whole process. The process of overseeing the maintenance of several assets in an organization is usually fraught with the problems of clashing maintenance schedules, knowing the best period to provide maintenance services, and trying to minimize maintenance costs. To avoid unexpected breakdowns, unplanned downtime, and costly repairs but still give their assets the maintenance services it needs, businesses adopt a maintenance strategy. This helps them find a routine for fixing an asset, thereby preventing over-maintenance. Predictive and preventive maintenance are two types of maintenance strategies usually adopted in organizations. What Is Predictive Maintenance? Predictive maintenance (PdM) is a proactive maintenance strategy that uses data analysis tools and techniques to detect faults and defects in a piece of equipment. It uses technological devices and processes to monitor the performance of an asset during its normal operation to note when the asset experiences a fault. By monitoring an asset during its normal optimal performance, predictive maintenance makes it easier to spot anomalies and defects in operations. This reduces the likelihood of downtime as no fault goes undetected for a long time. PdM was created by C.H. Waddington and was implemented in industries in the 1990s. At first, it was adopted with an offline approach and was restricted to certain fields that use heavy machinery, such as aeronautical engineering. However, as technology advanced, so did preventative maintenance processes. Soon, this maintenance strategy was embraced in various business sectors. Predictive maintenance is often described as a condition-based machine maintenance program. This is mostly because it cannot exist without continuous condition monitoring of machines during normal operation. By continuously monitoring, assessing, and measuring the optimal functional range of an asset, predictive maintenance reduces maintenance frequency while keeping equipment failure at bay.  How Does Predictive Maintenance Work? Predictive maintenance combines the power of artificial intelligence (AI), machine learning (ML), and the Internet of Things (IoT). It uses these and many other technological tools to get insight into how a machine performs. The process involves modern condition-monitoring devices- such as IoT sensors- connected to a single AI-powered system. These sensors collect performance data, such as temperature and conductivity, from and store the data received in asset management software. Condition-monitoring sensors can quickly sight a deviation or anomaly from the data they collect. These anomalies are warning signs that something might be wrong with the operated machine. When technicians discover a change in machine parameters, they can quickly assemble a predictive maintenance protocol and schedule a maintenance service.  Essentially, PdM is a great way to predict unplanned downtime, making it easier to provide the necessary maintenance services before total machine failure. Types of Predictive Maintenance Different types of predictive maintenance procedures can be applied to various assets. These types include: 1. Vibration Analysis Vibration analysis monitors the changes in a machine’s vibrations. The sensors monitor the asset’s vibrational level and trigger an alert when a change occurs. Vibration Analysis is typically used for high-rotary machines. It detects machine imbalance, looseness, misalignment, and bearing wear. This type of predictive maintenance has been around for a while and is easily one of the most cost-effective processes in this strategy. 2. Acoustic Analysis The acoustic analysis uses sound to detect faults in machines. It is popularly used for low- and high-rotating machines that require lubrication. Acoustic analysis listens to the inner works of a machine. It is easy to implement and makes a cost-effective maintenance strategy. Acoustic analysis can be sonic or ultrasonic. While the sonic approach uses a strictly proactive strategy, the ultrasonic approach quickly detects subtle sound and is used mainly for predictive purposes. 3. Oil Analysis Mostly used in the transportation industry, oil analysis involves extracting and testing the oil from a machine. This process tests for wear particles, the presence of water, and viscosity, using the data to determine the discrepancies in the machine’s performance over time. 4. Infrared Technology  Infrared Analysis is the most subtle yet efficient type of predictive maintenance technology. It relies not on sound or vibration but on the machine’s temperature. This makes it perfect for a wide range of equipment. Infrared technology recognizes and measures hot spots on a machine. It makes it easy to identify problems due to cooling, airflow, and even engine stress.  5. Motor Circuit Analysis Motor Circuit Analysis monitors a motor’s stator and rotor. It then uses the data collected to determine and detect faults. Motor circuit analysis as a predictive maintenance strategy is used in many industries, including the automotive industry. What Is Preventive Maintenance? Preventive maintenance is a maintenance plan that involves performing regular maintenance on assets. This form of maintenance strategy emphasizes the need

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Blue chip services manager is plugging a wrench icon into a virtual Preventive Maintenance control matrix
The Basics Of Preventative Maintenance Explained

Preventative maintenance, also called preventive maintenance, is a widely used form of asset maintenance in a business. As part of an asset management system, or preventative maintenance offers the promise of less asset down-time and more efficiently performing assets. When implemented correctly, preventative plays a significant role in protecting and optimizing assets. To implement preventative maintenance in business, it is essential to first understand its basics. Below, we have provided all you need to know about the methods, features, advantages, and disadvantages of preventative maintenance. What Is Preventative Maintenance? Preventative maintenance (PM) is a process that involves taking actions to maintain equipment regularly. It involves performing consistent and regular business and equipment inspections, cleaning, lubricating, and part replacement on physical assets such as machines. PM is generally used to prevent the breakdown of assets. It is used as prevention against costly equipment failures by consistently offering asset maintenance services whether an asset needs to be maintained or not. Essentially, preventative maintenance is defined as a maintenance program that involves scheduling maintenance tasks such to detect, avert, or mitigate the degradation of an asset. It does this with the aim of extending the asset’s lifespan by controlling degradation to an acceptable level. Some examples of preventive maintenance tasks include: cleaning equipment, replacing worn-out components, and lubricating rotating parts. Types of Preventative Maintenance Preventative maintenance is systematic, routine, and performed to prevent the sudden breakdown of crucial assets in a business. While this is straightforward, preventative maintenance is split into different types with different approaches and features. Every type of preventative maintenance shares the same goal of preventing sudden equipment failure. However, every type also adopts different methods of anticipating and preventing these breakdowns. Although the types of preventative maintenance vary widely, they share three things in common: A goal A pattern A concept There are majorly four different types of preventative maintenance. These are: 1. Periodic Maintenance Also known as time-based maintenance, periodic maintenance focuses on finding a regular maintenance schedule and routine. It involves maintenance services performed at scheduled intervals. In this type of preventative maintenance, the business chooses consistent intervals throughout the calendar year when an asset will be assessed, cleaned, and lubricated whether it has faults or not. Periodic maintenance can be monthly, weekly, quarterly, or even annually. It focuses on how often an asset should be maintained to increase its reliability and useful lifespan while keeping unplanned downtime minimal. Although a business’s maintenance operators are sometimes charged with determining how often assets should be maintained, the easiest way to determine how often an asset should be maintained is by checking the manufacturer recommendations or guide.  Manufacturer’s guides are based on Mean Time Between Failure (MTBF). MTBF is the average time a machine operates between stops or equipment downtime. Because the gaps between each stop are calculated to an accurate degree, they can help businesses determine the perfect time in the period gap to schedule maintenance procedures. Periodic maintenance may also include Failure-Finding Maintenance (FFM) and Risk-Based Maintenance (RBM) sub-categories. FFM focuses on regularly servicing hidden parts of an asset while RBM involves prioritizing high-risk prevention maintenance tasks over low-risk tasks when armed with limited resources. Examples of periodic maintenance tasks include: Assessing bearing grease Gauging machine temperature Cleaning oil filters Changing lubricating oils. Cleaning HVAC or air conditioning filters Periodic maintenance processes keep repair costs minimal, reduce an asset’s likelihood of failure, are easy to implement, and require no added equipment to begin. However, they puts the asset at risk of over-maintenance, which might be time-consuming. 2. Meter-Based Maintenance Meter-based maintenance is also known as performance-based maintenance. It is the type of routine maintenance that focuses on using the extent of performance of a critical equipment to gauge when it needs maintenance services. Also sometimes called usage-based maintenance, this type of asset maintenance is triggered by the utilization of an asset. In meter-based performance, variables such as hours used, miles driven, and pressure generated is commonly used to indicate when an asset should be serviced. This means these variables should be consistently monitored to know the optimal maintenance period. While some assets have in-built meters, others may require separately installed components to measure these variables. An example of a meter-based preventative maintenance schedule is scheduling the maintenance of a conveyor belt according to its maximum run time. If the conveyor belt runs 500 times before it breaks down, maintenance can be provided immediately after the 450-round mark 3. Predictive Maintenance Although predictive maintenance (Pdm)  is usually classified as a type of maintenance management strategy on its own, it is also a type of preventative maintenance. A common problem in preventing maintenance is the fear of over-maintaining an asset. However, in a bid to prevent this problem, some businesses find themselves not providing enough maintenance services. Pdm offers just the amount of maintenance services an asset needs. It uses condition monitoring to schedule these maintenance services. However, pdm  is more advanced than time and meter-based types of preventative maintenance and is usually more expensive to implement. Predictive maintenance uses internet of things (IoT) sensors to continuously assess an asset’s performance. These sensors continuously monitor metrics such as vibration and temperature and detect a change in these metrics. This change or abnormality usually means there’s a fault, causing a work order to be automatically generated within a computerized maintenance management system or CMMS and assigned to a technician. The CMMS in this use case is a preventive maintenance software that centralizes data relating to maintenance activities and facilitates the processes of maintenance operations when necessary. By doing this, businesses can provide assets with maintenance services only when necessary. This reactive mode of maintenance saves time and resources in the business. An example of predictive maintenance in a preventative maintenance strategy will be installing a thermal sensor on a machine. This sensor continuously measures the temperature of the asset and enables an alert when it notices a change in normal temperature. 4. Prescriptive Maintenance Prescriptive maintenance is the most advanced type

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Industrial technology maintenance management concept
The Basics Of Maintenance Management Explained

Maintenance management is a process designed to ensure assets get the regular maintenance they need. This is important for ensuring all company assets and resources continue functioning efficiently. Maintenance management is usually structured to maximize and optimize asset maintenance services. Are you considering adopting a detailed maintenance management process in your business? Here is everything you need to know about the basics of maintenance management. What Is Maintenance Management? Maintenance management is defined as the process of maintaining an organization’s assets and resources efficiently. However, instead of focusing on intangible assets like computer software, it focuses on physical assets like machines. After a company acquires physical assets, it is important to ensure these assets continue to perform as effectively and efficiently as they can. To achieve this, the company needs to provide consistent asset maintenance. Assets are essential to the running of any business. Whether the assets are real estate, furniture, equipment, or machinery, they are important in any business’s revenue-making strategy. The ability of a business to operate efficiently often depends on the state of these assets. To ensure assets are always in shape tip-top, businesses often employ asset maintenance services. However, because companies often have a lot of assets, keeping track of what asset gets what maintenance service and when this service is scheduled can become tricky. To solve this problem, companies are adopting efficient maintenance management services. Maintenance management is one of the most important aspects of business that is usually underrated. Like any other business process, it has undergone several evolutions, from archaic and arduous to being streamlined using various automation software.  How CMMS Helps Maintenance Management Maintenance management today is performed using a computerized maintenance management system software or CMMS software. CMMS eliminates the need for manual recordkeeping to manage maintenance tasks in a business lifecycle. Instead, its centralized nature ensures that the entire process is automated. CMMS handles several maintenance tasks such as scheduling, record keeping, data collection, and management. It facilitates maintenance planning while making workflow more seamless and improving asset performance. Essentially, CMMS software offers businesses organizations, tracking, and managing your maintenance operations. This makes it easier to track maintenance processes, get real-time updates, and get notifications about changes in an asset. Why Is Maintenance Management Important? Maintenance activities play vital roles in determining the life length of an asset. This directly affects the success of an establishment. Essentially, maintenance is important for the success of any establishment. Why? This is because assets that lack proper maintenance experience downtime, need frequent repairs, or are lost due to extensive damage. To ensure this does not happen, it is essential to employ maintenance management. Maintenance management is essential because it ensures the timely and orderly maintenance of assets. It controls maintenance resources and activities necessary to preserve and prolong the life of a company’s assets. This offers a solution to keeping assets in efficient working order for a longer time, thereby keeping risks to production due to the dysfunction of assets at bay. Maintenance management is important to keep assets in maximum and optimum condition. This will, in turn, encourage efficient production and business operation, increased production quality, improved productivity, and lower operational costs. Types of Maintenance Management Strategies Maintenance management comes in different types. The mode of operation of each type varies and often yields various results. Some maintenance strategies are highly effective, and some are less effective than others. Regardless, there are maintenance management strategies for every type of asset, depending on the business’s resources. Some maintenance management strategies include: 1. Reactive Maintenance Management Reactive maintenance management is also known as run-to-failure, corrective, or breakdown maintenance. It is usually adopted when an asset breaks down from overuse without adequate maintenance. An instance is when a truck is used continuously without any upkeep to ensure all its parts are functioning adequately. Soon, it will reach a breaking point where it will not work anymore. When this happens, the maintenance management that is adopted is reactive. Reactive management is typically used for assets that do not impact a business’s production. These assets are known as low-priority assets as their breakdown does not necessarily cause a change in the quality or rate of business operation. Reactive maintenance is a go-to optimization option for saving time and resources that would otherwise have been spent on these low-priority assets. By waiting for the asset to break down, the business spends more on repairs than it would have spent on precious collective repairs.  Reactive maintenance requires careful analysis of what assets are low-priority. Pros: Saves maintenance costs, time, and resources on maintenance Helps businesses divert maintenance fees to more important assets Cons:  Asset breakdown might take the asset out of remission for a while If serious damages caused the breakdown, repairs might be extremely expensive 2. Preventive Maintenance Management  Preventive or proactive maintenance is a more courteous form of maintenance management. It involves the scheduling of routine and constant maintenance services to prevent the breakdown of support physical assets. A preventive maintenance task is typically employed for the prevention of asset damage and downtime. It targets high-priority business assets that are essential to business operations. Essentially, these assets are vital to the success of the business. Therefore keeping them at optimal condition is important at all times. A business’s maintenance department also uses preventive maintenance operations for assets that may be too costly to repair. They use the “prevention is better than cure” approach and choose to avoid these costly repairs with cheaper maintenance alternatives. An example of a preventive maintenance approach is scheduling a truck for frequent oil changes, tire pressure checks, and other maintenance services.  Pros: Less equipment downtime  Assets remain efficient for a longer period Longer asset life Fewer interruptions during crucial operations due to asset breakdown Increased workplace safety as assets are now less prone to/less likely to cause accidents Maintenance checks are consistent and considered in advance to form a routine Major signs of asset damage will be caught extra early Cons: More labor-intensive Waste

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Total productive maintenance TPM on the blue memo
What Is Total Productive Maintenance

Every business has a unique maintenance plan for its fixed assets. While some businesses dedicate certain resources and employees to asset maintenance activities, others adopt a more holistic design. This holistic design is called total productive maintenance. Total productive maintenance is a maintenance strategy where all employees take part in maintaining assets within the organization. This method offers different benefits that make it one of the best business strategies. But, how exactly does it work? Below is everything you need to know about total productive maintenance. What Is Total Productive Maintenance? The idea behind total productive maintenance is to have an “all hands on deck” approach. This maintenance strategy blurs the lines between employees’ roles in administration, production, and maintenance, ensuring they work together to maintain a company’s assets. Total productive maintenance, or TPM, is the process of involving all employees within an organization in the maintenance of the organization’s assets. Other than employees, total production maintenance involves using machines and equipment to make production a bit more efficient. In other words, total productive maintenance aims to achieve better production by involving all employees in maintaining assets. Total productive maintenance emphasizes proactive and preventative maintenance strategies. It does this to attain perfect production with fully-maintained assets. Put simply, total productive maintenance aims for: Zero asset breakdown No interruptions of production No slow-moving assets No defects No safety. With total productive maintenance, businesses aim to reduce downtime while simultaneously increasing productivity. Total productive maintenance channels the strengths of proactive and preventive maintenance strategies to achieve its goals. Understanding Total Productive Maintenance To understand TPM, it is first important to understand the intricacies of the process. Why is it done? How is it done? Total productive maintenance works based on the five “S”. Without the five S being in order, a productive maintenance plan can’t be successful. The 5S foundation includes: Sort or organize:  Sort through all assets to determine which is used frequently and which is not. The one’s used frequently undoubtedly play a huge role in business operations and should be kept closer to facilitate easy use. Conversely, the assets not used as often should be stored further away than the rest. During this process, assets should be sorted based on their importance.   Systemize or orderliness: It is essential to keep similar assets together. However, it is also necessary to ensure every asset has a unique location. In other words, assets should have one place to store, and none should be out of order.   Shine or cleanliness: Cleanliness is an essential part of any business. However, it is also an important part of total productive maintenance. Maintenance is more difficult to perform in a dirty environment and on dirty assets. Without cleanliness, it becomes difficult to assess assets for maintenance and identity the underlying repair needs.   Standardize: ensuring every process is up to standard is the next step in creating a flawless total productive maintenance process. The workplace should be brought to standard by labeling assets and creating processes where there are none.   Sustain: The first four steps must be continuously reapplied to ensure the sustenance of the processes. By continuously performing all these steps, a business can easily sustain total productive maintenance. Pillars of Total Productive Maintenance There are eight pillars of total productive maintenance. These pillars are the basis of the maintenance strategy and focus on using proactive and preventive techniques to make equipment more reliable. The eight pillars of TPMinclude:  1. Autonomous Maintenance Autonomous maintenance puts the responsibility of routine asset maintenance in the hands of the operators. It ensures that operators are trained to attend to routine maintenance services such as cleaning, lubricating, and inspecting. Autonomous maintenance is great because it gives operators a sense of responsibility and ownership of the equipment. This sense of responsibility helps operators learn more about the machine, thereby increasing their knowledge about the handling and sustenance of that machine. Implementing autonomous maintenance also ensures the machine is always clean, lubricated, and in excellent condition. This makes it easier to identify faults faster while keeping the risk of damage minimal. Because autonomous maintenance focuses on teaching operators to maintain the machines, it reduces the need for maintenance personnel. This ensures maintenance personnel can take on higher-level tasks. 2. Planned Maintenance Planned maintenance involves scheduling maintenance services according to the machine’s failure rates. This maintenance strategy involves studying asset metrics such as historical breakdown and failure rates and then scheduling maintenance according to this data. In other words, the frequency of maintenance is based on the machine’s performance and inefficiencies. Planned maintenance lets businesses create a routine. This way, they can schedule a maintenance service when the equipment is idle without interrupting operations. By implementing this approach, planned maintenance reduces asset downtime. This maintenance process also reduces inventory by better controlling failure-prone equipment parts. It also mitigates constant breakdowns, ensuring better asset uptime as the asset reaches and sustains maximum potential. 3. Focused Improvement Focused Improvement is established on the Japanese word ‘Kaizen’, which means improvement. It involves the continual effort to improve operation and production efforts, functions, and processes. The focused improvement includes the efforts that go into studying operation processes and brainstorming ways to improve them. It mobilizes small teams within the establishment to be proactive and work together to improve equipment operation by implementing regular equipment improvement solutions. Essentially, focused improvement involves a cross-functional approach to problem-solving. This combines the collective talents of all employees in achieving incremental improvements in equipment operation. In focused improvement, teams identify and resolve recurring operational and production problems together. It combines inputs across the organizations so the teams can see how these inputs and processes affect the departments. 4. Quality Maintenance It is one thing to offer maintenance solutions, and it is another to ensure these solutions are of high quality. Without quality maintenance, the entire maintenance management will fail. The quality maintenance pillar is dedicated to improving overall manufacturing quality. By using timely detection of equipment failures, a business

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Main engineer doing machine maintenance
The Basics Of Machine Maintenance Explained

As an organization that uses machines to perform operational and functional processes, having a machine fail while being operated is detrimental to the business. This can severely affect production, and, essentially, the delivery of services necessary to generate revenue. Machine maintenance limits the occurrence of downtimes due to machine damage. Essentially, machine maintenance keeps all machinery within an organization running efficiently. But how exactly does this work? Below is everything you need to know about the basics of machine maintenance. What Is Machine Maintenance? Unplanned machine downtime in a business is one of the leading factors that lead to the loss of business revenue. It costs many industrial manufacturers a substantial loss of about $50 billion annually. This is precisely why machine maintenance is an integral aspect of any organization. Machine maintenance is any work or practice dedicated to keeping machines functioning efficiently. It is the operation put in place to keep a business’s machine assets in peak or optimal condition, thereby reducing the risks of downtime. Machine maintenance usually includes regular services that examine all parts or the crucial parts of a machine. These services are usually performed to ensure all parts are working in perfect order, catch early signs of faults or damages, or replace worn parts of a machine to avoid a snowball of small faults. A business’s machinery are fixed assets are a critical investment to its organization. A problem with a business’s machine will ultimately result in business production problems. Machine maintenance is put in place to prevent the degeneration or damage of machines, thereby resulting in more efficient production. Machine maintenance includes oil checks, part replacement, or any other service carried out on machines. It is typically scheduled before or after machine failure. Which Businesses Need Machine Maintenance? Any business that relies heavily on machines for production and operation requires machine maintenance. Without functioning machines, these businesses will undoubtedly suffer a loss. Some examples of businesses that require machine maintenance include: Any plastic-producing business: Plastic-producing businesses use machines for all production. Examples of these machines include molding machines, plastic granulators, and trim presses.   Commercial food manufacturing cti businesses: Companies that manufacture and package food and drinks on a large scale require machines for all daily processes. These machines include filtration equipment, sterilization equipment, bottling/canning machines, ovens, and pumps.   Automotive Businesses: Automotive businesses use machines to manufacture and assemble automobiles. Some examples of machines used are robotic welders, conveyor systems, and pneumatic grippers.   Apparel production: From sewing machines to pressing machines, cloth-making businesses depend on machines to a significant extent. Types of Machine Maintenance  There are different types of machine maintenance. Each type has its advantages and disadvantages and is used depending on the business’s objectives. Businesses can use each machine maintenance strategy independently or paired to suit their objectives. These different types of machine maintenance were also created to match the needs of different machines. Because not all machines are the same, these types of machine maintenance are tailored to meet the unique needs of every machine. The eight different types of machine or equipment maintenance include: 1. Reactive Maintenance Reactive maintenance is the type of maintenance program that is carried out in response to machine failure. This maintenance type implies that businesses wait for damage to the machinery before they react and offer the necessary solutions. In a way, reactive maintenance is a form of repair. It waits until there is an unforeseen and unplanned breakdown before the machine can receive the necessary tune-up or part replacement service. 2. Run-to-failure Maintenance Many people choose to classify reactive and run-to-failure maintenance as one type of maintenance. This is not entirely incorrect, as they both use the same method of waiting for a machine to break down before giving it the attention it needs. However, unlike reactive maintenance, run-to-failure is a conscious and deliberate choice by the business to ignore the machine’s maintenance needs.  Run-to-failure always involves a plan and readily available spare parts to ensure the maintenance has all it needs to be repaired when it fails. Other than that, the business implements no effort to make sure the asset does not fail. In fact, the asset’s failure in itself is the maintenance plan. 3. Corrective Maintenance Corrective maintenance is the type of maintenance to correct a problem in an asset and return it to working order. It can either be planned or unplanned. Planned corrective maintenance usually involves implementing a run-to-fail strategy that waits for the sign of a fault or a condition-based strategy that aims to prevent the fault. When it is unplanned, there is either no maintenance scheduled when the asset breaks down, or the asset breaks down right before its scheduled maintenance. Essentially, corrective maintenance activities are performed anytime a machine fault is noticed. While in some cases, the business might have to wait for a fault, this is not always the case. Sometimes, corrective maintenance may take place after a problem has been noted in the machinery without asset failure. 4. Preventative Maintenance Preventative maintenance is a maintenance strategy used to prevent the risk of asset failure, damage, or downtime. It involves regularly scheduled maintenance services provided to quickly spot signs of faults before these faults desperate into a bigger problem. Preventative maintenance may be thought of as the opposite of a run-to-failure strategy. Whereas the latter adopts a deliberate “don’t-touch-if-not-broken” approach, preventative maintenance doesn’t wait for machine failure. This strategy is split into time-based and usage-based preventive maintenance. Time-based preventive maintenance includes the services scheduled as a part of the routine within a certain time interval. This interval is usually uniform. Usage-based preventive maintenance, on the other hand, is scheduled depending on the asset’s usage. This can be after certain cycles or mileage is established. 5. Condition-Based Maintenance Condition-based maintenance is carried out depending on the condition of the asset. It involves monitoring the machine’s performance to spot a decrease in its output. When this decrease is spotted, the business carries out a maintenance service

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The Basics Of Asset Labeling Explained

As a business, it can become difficult to keep up to date with and identify all the assets an organization owns. This can make effectively managing all the assets a company owns a problem that affects running business operations efficiently. To solve this problem, many companies make asset labeling to keep track of their assets. Asset labeling is widely practiced in many businesses and is used as a means to quickly identify a company’s assets. But what is it and how exactly does it work? Here is your definitive guide to asset labeling. What Is Asset Labeling? Businesses today have a wide range of assets that facilitate their operations. These assets are frequently managed and accounted for to keep the business running efficiently. One of such asset management techniques is asset labeling. When an organization owns lots of assets and equipment, it is essential to keep track of these assets. Without keeping track of these assets, businesses risk asset losses that severely affect the organization. As a result, many people use asset labeling to keep track of their business assets to ensure these assets are accounted for. But what exactly is asset labeling? Asset labeling is the simple process of labeling or tagging an asset. It is usually done to assign fixed assets with unique identities that make them easy to identify during asset management procedures. Fixed assets are those tangible assets a company purchases for long-term use. These assets are usually used to generate income in a business by facilitating operations, and, as a result, are considered extremely important to business operations. Fixed assets include equipment, vehicles, furniture, and real estate. Essentially, asset labeling is the process of attaching labels or tags on company assets such as equipment, tools, and machines. This makes it easy to track data and real-time information concerning these assets, thereby offering businesses a holistic view of all company assets. What Is An Asset Tag? Asset tags, also called asset labels, are those identification tags attached to assets. They come in different forms and are usually attached to fixed and moveable assets within a company. Asset tags are an integral component of effective tracking systems essential to a successful asset management system. These tags are usually printed on durable vinyl or polyester stock, making them long-lasting solutions to tracking assets within an establishment. Asset tags are attached to assets to improve how they are tracked and managed. They usually carry a means of identification such as ID numbers and barcodes so that every asset is assigned a unique identity that is different from the rest of the assets. Together with asset management software and barcode scanners, asset labels or tags make it easier to gather, organize, and maintain information concerning the assets of a business. This information offers insight into how assets are used, maintained, and even disposed of. Which Assets Should Be Labelled Or Tagged? In business, there are different types of assets. However, not all of these assets should be tagged. When choosing assets to tag, it is essential to pay attention to those assets that are crucial to the operation and success of a business. Assets that need to be assigned asset tags should be critical to business production such that if they are misused, damaged, lost, or stolen, the business operation suffers. Some examples of assets that can be tagged include: 1. Computers And Attachments IT equipment are important business assets as they increase employee output, reduce human error, and are the platforms that run many business software. As a result, damage or loss of any IT equipment is dangerous to any business operation. IT equipment such as Laptops, monitors, and external hard drives are IT assets that should be labeled. Labeling these assets makes it easier to keep track of them and get an easy overview on how they are purchased, used, and maintained. Assets like computer software are intangible and so cannot be tagged.  2. Equipment Phones, printers, fax machines, and other office equipment need to be managed. Because these assets facilitate daily business operations, it is essential to tag them for easy assessment. 3. Appliances Appliances like water heaters, dishwashers, and air conditioners have specific maintenance needs that can be difficult to keep track of. Attaching asset tags to these appliances helps companies to regularly manage them to reduce depreciation and ensure they are still functioning at optimal performance and getting the timely management that they need. 4. Machines And Tools Businesses rely heavily on machines and tools for business operations and to make revenue. As a result, machines and tools are integral assets that need to be labeled, tracked, and managed. Examples of these are medical devices, power tools,turbines, generators, turbines, and jacks. 5. Furniture Most businesses undermine the importance of tracking business equipment. Furniture is a high-value investment in business. Tracking them enables organizations to prevent furniture shortages, excesses, reduce waste, and prevent mismanagent. 6. Vehicles  Many companies use vehicles as a part of their daily operations. Because vehicles are mobile, they are at risk of being lost, stolen, or damaged. Additionally,  vehicles need frequent management to function properly and reduce the risk of depreciation. Without a proper tracking system to offer vehicle management information, it can be extremely difficult to know if a vehicle is properly managed. Using asset labels help businesses keep track of these and more. With labels attached to vehicles, companies can track and understand vehicle maintenance costs, plans, and location. Some vehicles that can be tracked are vans, trucks, and cranes. Different Types of Asset Tags And Labels Asset tags come in different forms with unique features that determine the success of a business’s asset management system. While every asset tag is effective in keeping track of business assets, every tag has its own drawbacks and limitations. 1. Polyester Asset Tags If you’re looking for a simple, cheap, and easily replaceable asset label, polyester tags are the best option for your business. Polyester asset tags or labels are one of

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asset control tracking buisness concept
What Is Asset Control AKA Asset Tracking

Businesses, especially those that are just starting, sometimes only focus on procuring as many assets as they can. More often than not, these businesses pay little to no mind to the most important aspect of managing these assets, which is asset control or tracking. Asset control is a great way to ensure you are always on top of any information about your assets. Are you considering adopting an asset control strategy in your business? Here is all you need to know about this key business operation. What Is Asset Control? As businesses worldwide evolved and adopted newer technology processes in their operations, so did their need for more effective business solutions to improve their operations. Although the business world has recently enjoyed a growing surge in modern technological solutions, one aspect particularly enjoyed attention is business asset control, also known as asset tracking. The growing popularity of asset control solutions is no surprise, as the global asset tracking market size reached $16.9 billion in 2021. In its simplest form, asset control or asset tracking is the process by which businesses or organizations keep track of their assets. Asset tracking offers companies real-time and accurate data on the assets they own, even sometimes offering as much information as how the asset is used. To truly appreciate the benefits of asset control, it is important first to understand what a company’s asset is and what it includes. Business asset refers to items of value owned by a company. They are those assets available to solve debts or meet other commitments within the company. In business, the two major types of assets are tangible and intangible assets. Intangible assets are valuable assets that cannot be seen or touched. Tangible assets, on the other hand, are those physical assets that cannot only be seen or touched but also bought and sold. Although intangible business assets are valuable, they cannot be valued or carry a price tag. As a result, only tangible business assets can be controlled or tracked. Tangible business assets have physical substance and include inventory, rolling stock, equipment, machinery, and furniture. These assets are usually split into two categories, which are inventory and assets. While assets and inventory matter in business, asset control usually focuses on assets. Asset Control vs. Inventory Tracking In business, inventory is sometimes confused with assets. This is unsurprising, especially because inventory can usually be sold to generate revenue for the business. Although this might classify inventory as an asset, this is not always the case, as inventory not sold in 12 months becomes a liability. The major difference between assets and inventory is that inventories offer a more temporary value than assets. While assets offer businesses a value that helps the organization continue managing inventory, inventories offer the business a more ephemeral financial solution when sold. Regardless, both assets and inventory are tracked in a business. Like asset tracking, inventory tracking is an inventory management process a business uses to monitor the inventory in its possession continuously. However, inventory tracking and asset tracking involve two different processes. How Does Asset Control Work? Asset control or tracking usually involves tracking fixed or non-current assets such as real estate and equipment. It is usually done with the ultimate goal of protecting assets while saving time and money.  Years ago, the ideal way a business would have managed or tracked its assets was by recording information about these assets on paper or in asset management software such as spreadsheets. While this was an effective way to account for all the changes on those assets within a business lifecycle, it did not provide the in-depth insight that modern asset control methods offer businesses. Now, asset control has evolved over the years from the old-fashioned spreadsheet systems companies usually use to track assets remotely. Asset control no longer means a process where employees fill important company asset information in spreadsheet files. Today, asset tracking involves a streamlined, automated, and usually cloud-based asset management system that does not require hours of manual work. This upgrade of record-keeping in asset management processes has severely reduced the loss, mismanagement, and continuous repair of assets in an organization. But how exactly does asset control work? Businesses use asset management solutions as an easy and efficient way to track essential information about all their fixed assets, regardless of their locations. With asset tracking software solutions, companies have easily accessible real-time information about the status of assets, including their real-time location, ownership, and up-to-date maintenance schedules or records. Essentially, with asset control, businesses can keep track of the following: Where an asset is How that asset is at a particular period How much that asset is worth at the time. Asset tracking is usually executed by equipping the necessary assets with asset tracking systems such as a GPs tracking system or other options like a barcode scanner and a radio-frequency identification (RFID) tag. Benefits of Asset Control Assets add value to an organization and play significant roles in keeping the business in operation. As such, it is essential to protect these assets to ensure maximal asset utility and efficiency of business operations. Keeping accurate records of assets within the organization offers lots of benefits. Some of these include: 1. Improves Accuracy Asset control ensures that a business knows what assets it has and where these assets are at all times. Assets are vital to the growth of a company, and accurately keeping track of these assets ensures a business knows where it stands at any given point in time. By knowing what assets it possesses, a business eliminates the need for guesses when putting together its operational strategy. 2. Efficiency Asset control using asset tracking software gives a company insight into its assets. With the ability to receive in-depth asset performance, asset downtime, and associated asset maintenance cost and obtain necessary asset-based information, businesses can make data-driven company decisions on their assets. This enables businesses to run their operations more efficiently and be more productive. 3. Reduce Asset

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Is Computer Software an Intangible Asset?

More and more companies are relying on computer software in their day-to-day operations. These assets must be valued and included in financial statements. To do so, you will need to know if the software is considered a tangible or intangible asset. So, is software an intangible asset? In this article, we will discuss the answer in more detail. What are Tangible and Intangible Assets? In previous articles, we’ve talked about both tangible and intangible assets. However, in this article, we must parse the specific similarities and differences between them.  Tangible assets: Tangible assets are typically those business items that can be physically touched. They are used to produce measurable profit within the company operations, usually long-term. Property, plant, and equipment (PP&E) are classified as tangible assets.    Intangible assets: The simple definition of an intangible asset is an asset that cannot be physically touched. Like tangible assets, they are also meant to be used long-term by the business. Oftentimes, intangibles are intellectual assets, which makes it hard to determine their precise valuation and future economic benefits. If you don’t know how much benefit they carry, the value remains unclear. Examples of intangible assets include software licenses, trademarks, patents, films, intellectual property, customer lists, and copyrights. There are different accounting procedures for different types of assets, and all assets must be classified in the right category. For instance, cloud computing, developmental software, multi-use software, and shared software will all have different accounting treatments associated with them.  That being said, is computer software an intangible asset? Most people will consider it to be intangible since it cannot be touched. Generally, it is considered an intangible non-current asset and is classified alongside other fixed assets aka capital assets. This is because computer software is made for long-term use, typically over 12 months time. An intangible asset like this will be a high expense for the company. However, there are some exemptions in which software can be considered tangible, and therefore will have another set of beneficial accounting rules applied. Accounting rules allow some exceptions for computer software to be classified as PP&E and capitalized upon. If the asset is not capitalized on the balance sheet, it will instead be expensed on the Income Statement. The balance sheet is a company’s financial statement that reports assets, liabilities, and shareholder equity at a specific point in time. Capitalizing on an asset refers to the cash expenditures recognized as an asset on the balance sheet instead of expenses listed on the income statement. The cost of the asset is reconciled over its useful life instead of solely expensed in the reporting period of time it was purchased.  When software is capitalized, your business can delay the full expense of the asset on the balance sheet. As it turns out, some accounting rules allow businesses to capitalize on software, as they would any tangible asset. Specifically, IAS 38 made it possible for companies to capitalize software costs on the balance sheet as non-current assets.  It is important that not all software can be capitalized, however. The software must first be properly classified and treated as PP&E, as stated:    “Some intangible assets may be contained in or on a physical substance such as a compact disc (in the case of computer software), legal documentation (in the case of a licence or patent) or film. In determining whether an asset that incorporates both intangible and tangible elements should be treated under IAS 16 Property, Plant, and Equipment or as an intangible asset under this Standard, an entity uses judgment to assess which element is more significant. For example, computer software for a computer-controlled machine tool that cannot operate without that specific software is an integral part of the related hardware and it is treated as property, plant, and equipment. The same applies to the operating system of a computer. When the software is not an integral part of the related hardware, computer software is treated as an intangible asset.” Therefore if an asset is used to deliver goods and services, it can be classified as a tangible asset. For example, software used by a graphic design company could be considered tangible since it helps deliver the graphic design service to customers. On the other hand, software used to count asset inventory at a warehouse is not considered tangible since there is no direct relation with the customer. Therefore the software asset would be considered intangible. To explore tangible assets further, let’s take a closer look at PP&E. How to Determine if Software is PP&E Property, plant, and equipment or PP&E is another term for the tangible physical assets of a business that are meant for long-term use within the operations. Examples include things like office equipment, buildings, machinery, land, furniture, and vehicles.  The software must meet certain criteria to be considered PP&E by accounting standards. Here are those standards for reference: “The Federal Accounting Standards Advisory Board (FASAB) Statement of Federal Financial Accounting Standards (SFFAS) No. 10, Accounting for Internal Use Software introduces a set of rules about the cost of internal software and transforming it into value as an asset on the balance sheet. It states that: “Entities should capitalize the cost of software when such software meets the criteria for general property, plant, and equipment (PP&E). General PP&E is any property, plant, and equipment used in providing goods and services.” To be classified as PP&E, SFFAS No. 6 states that the assets must meet the following recognition criteria: They (the assets) have estimated useful lives of 2 years or more. They are not intended for sale in the ordinary course of operations. They have been acquired or constructed to be used or are available for use by the entity. You may notice that there are no dollar amount thresholds stated in these accounting standards. This means that your management teams have some discretion in choosing to capitalize on the software or not. The decision-makers are then able to establish their capitalization thresholds.  These thresholds cannot include any expenses of the

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Fixed Asset Audit Procedures & Processes Explained

Organizations with quality asset management systems perform fixed asset audits. In this article, we will explain what an audit of fixed assets is, and the common procedures and processes involved.  What is a Fixed Asset Audit? A fixed asset audit is the process of cross-checking items to make sure they are still within the business’s possession. It also evaluates all of the items’ monetary value. Fixed assets typically make up the largest number on the balance sheet, making them your most important investments. For this reason, we recommend doing such an audit of these items at least once a year to keep your asset register up-to-date and accurate. Audits should be done on these noncurrent assets that are expected to be used by the business for a year or longer. Noncurrent items cannot easily be turned into cash. This includes fixed assets like equipment, furniture, buildings, land, vehicles, and machinery.  BENEFITS OF COMPLETING A FIXED ASSET AUDIT Although it may seem like a lot of work, audits can be extremely beneficial. Here are a few reasons why:  Identify and reduce risk: Drawing more attention to an item will naturally help you find more areas in which the item is vulnerable to risk. As a result, you are more likely to work to mitigate that risk. Risks can include things like asset fraud, which involves the theft or misuse of company items.    Discover essential details: While doing an audit, you will be jotting down information that can help you maintain the item in the long run. For instance, knowing the date of purchase will give you a better idea of how long the item will last and how soon preventative maintenance is needed.    Make better decisions: Knowing what items you have and what they are valued at allows you to make more informed business decisions. You can decide whether to prioritize replacing an item or continuing to maintain it. When your company decision-makers know what to prioritize, this provides a clearer agenda to work from.    Organize your assets: Keeping track of these important resources allows you to develop a more organized system. Storing your findings and reports in an asset management system will keep the data safely secure and accessible for all employees, rather than that one “kitchen sink” desk drawer with papers spilling out.    Internal control: Audits are part of the company’s policies and procedures that ensure that the financial statements are reliable. This internal control allows the organization to depend on the financial information they receive from an internal audit.    Save money: When you track and record your items, you will avoid displacement, loss, and undocumented assets.    Improve compliance: Audits entail verification that your business is meeting the requirements of the laws and regulations governing your assets and business procedures. Ideally, your business procedures should align with the standards of the Institute of Internal Auditors (IIA).  Procedures and Processes of a Fixed Asset Audit Before you embark on the asset audit process, you will need to choose an auditor. The auditor can be hired in-house or can be hired from an outside firm. The auditor’s main duties in a fixed asset audit are to make sure all items previously listed are accounted for, add any new records or updates, and that all financial statements are following generally accepted accounting principles (GAAP).  If you own a public company, the Securities and Exchange Commission (SEC) requires that the process is done by an external auditor. Once you’ve found your auditor, you are ready to begin fixed asset processes and procedures.  CREATE AND/OR VERIFY ASSET RECORDS First things first. We start with the asset register. The fixed asset register is a list of the fixed assets that belong to your organization. In the past, this list used to be maintained in a book that the bookkeeper kept track of. This method was inefficient due to its failure to address risks like avoidable maintenance costs, quality assurance issues, and issues with compliance, health, and safety regulations. However, now companies typically use an electronic accounting system for these purposes. The asset management solution you choose should allow you to export checklists from your fixed asset register. You can then fill them out as you proceed through the audit process. With asset management software, you can also capture all the item information electronically to keep track of them. This can be done through barcode technology, making item verification quick, simple, and efficient. This asset database must be accurate and comprehensive. Therefore, you must create any new records of items that have been missed, which are called zombie assets. For the fixed assets already in the register, you’ll want to verify the information that has been previously reported. Errors happen, whether through mistyping or other human mistakes. That is why it is important to verify every previous detail reported. The audit should focus on creating, verifying, and updating the following item record details, if applicable: Asset location Type of item Description of the asset That the item is/isn’t accounted for Purchase date Original purchase price Acquisition costs Current value The vendor you purchased it from Estimated useful life Receipt number Its assigned barcode, serial number, or ID number Warranty expiration date The state of the item’s condition Quantity of the item Any blocks to access authorization Asset user history Protocol for the sale or disposal of the item IDENTIFY GHOST ASSETS Approximately 10 to 30% of a business’s fixed assets are estimated to become ghost assets. If you are unable to physically verify all your listed items, some may be unaccounted for. Ghost assets are those items that are listed in the register but are unable to be found.  Typically it is because they’ve gone missing (lost or stolen), or were found to be unusable but were not reported. Once you’ve identified which items are ghost assets, you’ll want to remove them from the register. You don’t want to keep paying taxes on those items, nor pay inflated insurance premiums.  UPDATE ASSET

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