What is asset management?
Asset Management is a strategic and systematic process of planning, operating, maintaining, upgrading and replacing physical assets in a cost-effective manner with minimal risk.
To understand the organizational significance of having a well thought out asset management strategy and deployment system, it is important to be clear about the purpose of an asset. An asset’s purpose is to provide the highest level of value to the customer at minimum cost during its whole planned life cycle, generating the optimum flow of net revenues and best return on investment to stakeholders.
To achieve this objective:
- All activities related to the asset must be aligned to the customer value proposition defined in the company’s business model.
- Engineering solutions should optimize customer value and insure equipment capability, flexibility and maintainability.
- Product allocation to assets throughout the whole asset life cycle should optimize asset revenues and costs streams.
- Cost effective maintenance strategies should be identified and implemented.
- Effective and appropriate equipment operation standards should be in place.
Ensure that your asset management system aligns with top management policies.
It almost goes without saying that a well-structured and executed asset management system must align with top management policies and will require the involvement of all major functions – from policy making to field execution.
Yet this is not always the case as asset management is often treated as an operational, rather than a strategic, effort.
But when you consider that the life cycles of physical assets vary greatly (from 5 to 40 years), optimization of asset value to customers, and hence to the organization’s stakeholders, will depend upon the ability of the organization to manage revenue and cost risks and to foresee and seize potential opportunities both short-term and well into the future.
This can only be accomplished when asset management is a priority at the executive level.
Do you have a well thought out asset management strategy and deployment system?
Productivity Innovation offers a range of consultative and coaching offerings to assist you and your leadership team in positioning an asset management strategy. Contact us; we’d welcome the opportunity to talk ‘asset planning’ and share perspectives on how we can partner for success.
