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Repair vs. Replace: How to Assess the True Lifecycle Cost of Your Assets (Part 1)

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Repair vs. Replace: How to Assess the True Lifecycle Cost of Your Assets (Part 1)

Of course, a huge benefit of connecting your hardware is the data you can use for decision making. Do you repair a part? Or is it time to replace it?

· IoT Zone
Free Resource

One of the biggest challenges that business decision-makers are faced with is having the right information, at the right time, upon which to base their decisions. As much as we’d like to turn to a crystal ball for answers to tough questions, having access to the right data is the next best thing. In this two-part series, I'll address the importance of available data to help make better decisions, allowing asset-intensive organizations to meet business objectives in a competitive market.

Beyond the availability of quality data, decision-makers face other challenges in determining the most cost effective way drive business outcomes. These challenges include:

  • Budget restrictions
  • Increased cost effectiveness among competitors
  • High asset investment costs
  • Increasing maintenance costs

To determine the best long-term strategies for asset ownership and management, organizations need to understand the whole life cost implications of owning its assets.

Management of Complex Assets

Assets are rarely just a single item. More commonly, assets are a group of items or elements that have been configured into a system with a specific purpose. The inter-dependency of these assets, which comprise the system, is often referred to as a hierarchy. This hierarchical aspect is needed to visualize or conceptualize the dependency of one asset on another asset. So, when you’re trying to determine whether to repair or replace a single asset, other assets will also likely be impacted.

Management of Asset Fleets 

Fleets of assets consist of multiple assets that are of a common model or type, and share a common duty cycle and revenue model. Conceptually, the lifecycle costs of these assets differ from the single asset model. Lifecycle Cost Analysis in a fleet application is enabled by multiplying the number of assets as well as the costs associated with operating and maintaining those assets. 

Obsolescence can present itself in two ways:

  • The asset in question is no longer suitable for current demands
  • The asset in question is no longer being produced, and therefore is not available for use

A lack of understanding around the importance of being proactive toward obsolescence can have a major impact on your company. It’s something all industries are challenged with, including the military. In my opinion, one of the best and most complete lifecycle costing documents was written by the U.S. government with the purpose of planning for obsolescence of weapons systems in military applications.

For critical assets that are at high-risk of going obsolete, proactive management must be implemented. By being proactive, your organization can benefit from:

  • Maximum time to react, avoiding costly, temporary resolutions
  • Corrective actions at the asset level that can be taken while low-cost opportunities still exist
  • Time to evaluate asset end-of-life notifications

Now that we’ve covered the whole life cost implications of managing assets, it’s time to understand when it becomes more cost effective to replace an asset rather than maintain it. Stay tuned for part 2 to learn more on how you can assess the lifecycle of your assets.

Topics:
iot data ,industrial internet ,iot ,manufacturing

Published at DZone with permission of Don Rozette, DZone MVB. See the original article here.

Opinions expressed by DZone contributors are their own.

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