To improve the use of capital assets and extend their life cycle, it's never too early to put together an equipment management program. Traditionally, the equipment management function is divided into the following phases: Specification, Procurement, Startup, Operation and Disposal.
Specification is the process for identifying the functions and requirements of proposed equipment. Although only a small percentage of the life cycle cost is expended during this phase (typically 5%), poor specification and design has a major impact on total life costs of the equipment. Often, too much effort is spent on controlling the purchase cost and not enough on controlling the operational cost. Operating efficiencies, future maintenance requirements and utility usage are largely determined by the equipment specification.
Procurement matches the company's needs as defined by the specifications, with the product of an internal or external supplier. Costs can appear to be high, but are typically only a small percentage of the operating cost. Procurement includes bid solicitation, bid analysis, vendor negotiation and contract for purchase. Most effort is spent on contract terms and vendor prices, with little effort given to ensuring continuing vendor support and/or incentive-based performance guarantees.
Startup or commissioning is the initial phase of equipment operation and lasts until equipment reaches stable operation. A launch team, consisting of representatives from engineering, production and maintenance, helps to bridge the gap between initial equipment installation and normal operation. Costs can be relatively high, though start-up delays are typically the biggest contributor.
Operation is the activity associated with stable, long-term supervision of the equipment including production, maintenance and rebuild. Though this phase typically consists of 80% of costs, it's also where value is generated by the machine to the organization.
Disposal is the scrapping of out-of-date, deteriorated or unneeded equipment. The elimination of equipment is handled in an environmentally sound manner. However, costs of lingering liabilities can be enormous unless sufficient engineering is performed.
Maximizing a company's total investment in equipment is accomplished by ensuring individuals and groups understand their role in equipment management, so that they know how their activities impact the total life cycle of the equipment.