Asset Hierarchy

Table of Contents

Asset hierarchy is a structured, streamlined way of organizing asset data. Your asset hierarchy lists, categorizes, and organizes information for assets, equipment, machinery, and components at one or all locations. The hierarchy is built based on how your assets work together. There are typically some natural asset categories where their connection is clear through a larger system or function. However, building your asset hierarchy will be unique to your business.

How to Create Your Asset Hierarchy

First, it helps to have some kind of asset management system that tracks your asset inventory. Then, you can decide how to group your assets. It is essential to have a structure relevant to your use and needs, along with a consistent naming system. Developing nomenclature consistency also benefits your inspection, maintenance, and work order processes. For example, if you have multiple technicians using different asset and component names, the tech that performs a work order must decipher what the work order means if the names are not consistent.

An asset hierarchy does not have to include every single asset in your business. It is far better to only include critical assets that are crucial to your daily operations. While you may inventory fewer assets, you can go into greater detail. Having this depth of detail for mission-critical assets will only benefit your business by reducing downtime and increasing production. Equipment that you rarely use will have fewer issues and not carry as much of the benefit of diving into its details.

Asset Hierarchy Example

A typical asset hierarchy is a parent-child or a parent-child-grandchild structure. The asset at the top is the parent, then the child is next, followed by the grandchild, and so on. If you have multiple locations, you may want the location to be the parent and categorize from there. Alternatively, you may want to use an asset’s function as the parent category. Starting at the bottom and working your way up enables you to move to higher categories until the final one covers all assets in that system.

Benefits of Charting Your Asset Hierarchy

Charting your asset hierarchy makes it easier to analyze asset data, perform root cause analysis, avoid unplanned breakdowns, and improve the efficiency of work order processing. Grouping assets can also assist when making maintenance or replacement decisions.

If you’re charting your asset hierarchy, then you likely have Computerized Maintenance Management System (CMMS) or Enterprise Asset Management (EAM) software. This works well with an asset hierarchy to forecast preventive maintenance and optimize the scheduling of work orders. Many companies underestimate how much understanding your asset relationships can reduce equipment downtime. Scheduling inspections, repairs, or other maintenance based on asset groupings can minimize the disruption to the system and your overall business.

Finally, the best way to get to know your assets is to do an inventory and build your asset hierarchy. A detailed inventory means you know everything about your systems, individual assets, and even individual components. In this process, you can track what components are replaceable, what should be run to failure, as well as the ideal maintenance and inspection plan for each part. This helps you optimize your maintenance budget, cost of repairs, and improve your spare parts inventory management.

You can make better decisions because you have access to the data you need.

While there are many up-front benefits to an asset hierarchy, it does require long-term maintenance. It is best to assign maintenance supervisors to regularly audit and maintain the asset hierarchy. This ensures it is kept up to date with new assets, removal of old assets, or even adjusting the structure if your business or maintenance plan changes.

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