Make asset management an executive priority

If men are from Mars and women are from Venus, it sometimes seems like plant floor folks are from Mercury while CEOs, CFOs, and COOs are from Pluto. The perceptions and attitudes between the plant floor and the executive floor often seem to be so radically different that they are out of this world.

By Martin Osborn, Vice president of product marketing, hosted solutions, Datastream December 1, 2001

If men are from Mars and women are from Venus, it sometimes seems like plant floor folks are from Mercury while CEOs, CFOs, and COOs are from Pluto. The perceptions and attitudes between the plant floor and the executive floor often seem to be so radically different that they are out of this world. In fact, it sometimes feels like the two floors are speaking in completely different languages.

This analogy, although far fetched, is not far from the truth. While the plant floor and the executive floor have the same ambitions for the company — to increase production and make more money — the two floors talk about how to accomplish the company’s goals using very different languages. The jargon used on the plant floor is not the same as the jargon used in the boardroom, despite the common goals.

When trying to get executive level buy-in for an asset management solution that will make your job easier, you need to be able to phrase it in a way that helps the executive understand that you are both trying to accomplish the same goals. By translating what you need into a language that executives will understand, you will have an easier time convincing the top brass to consider your ideas.

Asset lifecycle management

For years, plants have used computerized maintenance management systems (CMMS) to manage asset maintenance. More recently, the trend has been toward the use of enterprise asset management (EAM) programs. While asset maintenance and management are important, an executive’s view of assets is much broader, incorporating an asset’s entire lifecycle from the time it is acquired to the time it is retired, redeployed, or sold. By positioning maintenance programs as part of the larger asset lifecycle picture, you can help executives see the value of the project you would like approved. Executives need answers to questions like:

  • What assets do we own? Where are they now?

  • Should assets be redeployed? Where? How?

  • What are the right times and methods to maintain and repair assets?

  • Can assets easily be traded or sold?

    • Asset lifecycle management (ALM) addresses all of these areas, including preventive maintenance. In fact, the asset history that is established through use of preventive maintenance applications provides much of the information needed to answer the questions above.

      But why haven’t executives been paying attention? Until recently, they haven’t had access to these plant-centric data in a context that makes sense to them.

      Effectively managing assets is an important driver of a company’s success. It impacts profitability and productivity. In order to maximize the return on a company’s assets, a company must ensure it is managing assets throughout the entire lifecycle — from the time assets are bought to the time they are sold.

      Asset lifecycle management has four distinct phases — buy, track, manage, and sell. These phases involve every aspect of an asset including labor, equipment, and inventory. Each of these phases has opportunities for a company to improve the return on investment received from its assets.

      By tracking their existing assets through a CMMS or EAM network, plants are able to reduce up-front capital expenditures by ensuring they acquire only the assets they need. These programs help increase productivity of assets by ensuring proper maintenance and peak efficiency. They can also help users reduce spare parts and other MRO acquisition and inventory costs. And by properly tracking assets, the system can help companies quickly dispose of, and recognize maximum sale price for all used, surplus, or obsolete equipment and assets.

      The most recent advance in asset management is the introduction of application service providers (ASPs). The ASP model provides an asset data repository for the entire company, enabling executives to see the broad picture. This repository, along with reporting and analysis, leads to better decisions about how assets are deployed across the organization.

      By accessing asset data online through an ASP, executives and plant users alike can reap the benefits of knowing the complete history of assets. One of the primary benefits for executives is the ability to lower the total cost of ownership (TCO).

      Executives are receptive to project ideas that will have a positive impact on the bottom line, and speaking in terms like “total cost” will demonstrate how the company can save money. In the eyes of an executive this is the key phrase that turns a new purchase from an unneeded expense to a valuable cost-cutting tool. Using asset management via ASP reduces the need for backend database and application management — which can account for as much as 65% of the TCO. In addition, executives have access to information about plant performance that historically has been stored on local servers at individual plants.

      A plant user also gains by conducting asset management through an ASP. The user no longer has to be at a designated workstation to monitor operational metrics such as open work orders. Instead, he can access this information with a wireless device such as a personal digital assistant (PDA) or from a personal computer.

      In addition to the access that the ASP model provides, decision support tools provide reporting and analysis tailored for both the plant user and the executive. While a plant user may access everything from a work order task list to graphs representing labor hours available for scheduling, an executive is probably more interested in benchmarking plants and key capital assets against one another. Benchmarking performance metrics can help with many decisions, including how capital assets are financed, sold, disposed, and deployed.

      Typically, the plant’s job is to keep an asset in good condition during its active life. Because plant workers are in contact with the equipment they use on a regular basis, they are looking at a different set of performance metrics than executives.

      Executives’ jobs must incorporate management throughout the entire asset lifecycle. While they may not be involved in the day-to-day operations on the plant floor, they are involved in deciding how much money to allocate to specific projects.

      If you can effectively communicate how companies that choose to manage their assets can have a huge impact on the bottom line, you will be well on your way to getting an asset lifecycle management program approved by the right people.

      Author Information
      Martin Osborn is vice president of product marketing, hosted solutions, for Datastream. He has extensive experience with ASPs for both Datastream and Fluor Daniel. Earlier in his career, Osborn was a vice president and partner of BYTE Systems, Inc. Osborn holds a B.S. in financial management from Clemson University.