Asset management

What is Asset management?

Tangible assets require well thought-out management, due to their value and long-term utilisation. This must cover three components of Asset management (further AM):

- Purchase, renovation, reconstruction and disposal of assets;
- Asset operation and maintenance;
- Material and resource management.

In some industry sectors, such as chemicals, energy, mining and transportation, asset maintenance is of vital importance, and therefore its performance conforms to a specific category of Asset management.

Why is Asset management important?

Tangible assets are in most industrial and service companies important in terms of their value and long-term lifetime. Their optimal utilisation is thus a key assumption for the competitiveness of the company. Effective use of assets and related costs begin with the selection of their supplier. A lower purchase price may result in higher operation costs and finally in overall higher costs of the asset. It is therefore very important to evaluate the cost of the asset during the course of its lifetime.
In companies with highly valued tangible assets, a significant amount of resources are blocked for asset maintenance. A higher level of efficiency of the maintenance of management therefore represents an opportunity for cost optimisation in relation to risks connected with asset failure.

What is the subject of improvements in Asset management (AM)?

The most important objective in AM is the proper design of processes, and of the internal communication links that can secure consistency of decisions in all phases of an asset’s lifetime. Such links are critical between asset operating and asset maintenance departments, purchasing of assets and maintenance materials, and financial department. Among typical projects belongs:

- Implementation of process management in AM;
- Evaluation and implementation of AM outsourcing (facility management);
- Methodology for evaluation of new asset purchase;
- Implementation of an integrated AM information system;
- Maintenance management as an important part of the AM offers several opportunities for improvement:
- Maintenance strategy and performance measurement;
- Process re-design in maintenance;
- Maintenance cost optimisation in balance with risk of failure (Reliability Centred Maintenance);
- Evaluation and implementation of maintenance outsourcing;
- Implementation of information systems for maintenance management.

What is the result of improvements in asset management?

Results of improvements tend to be changes in processes and in working procedures, changes of organisation structures, and the implementation of integrated information systems for decision-making support.

What benefits can you expect?

The greatest potential benefit from AM improvements, is a new approach to costs related to asset purchase, operation and disposal. This means, that instead of looking on cost items separately, a comprehensive view is applied at cost during the course of the asset’s lifetime. Similarly, the most desirable modification is a new approach to the maintenance strategy, spelled out jointly by the operating and maintenance departments. Further benefits can be expected from optimisation of maintenance methods, based on assessment risks and loses related to asset failure. All these changes are a basis for cost reductions and a higher asset utilisation.

Why engage an external consultant?

Maintenance managers are sometimes personally related to existing processes and methods, and do not always see opportunities for improvements. Hence they are pushed by their bosses to reduce costs, so they do it by overall reduction of maintenance services. This may lead to a lower availability of assets, and to loses in production. An experienced consultant can guide these managers in the re-thinking of the maintenance function and implementation of an appropriate strategy.

My own experience

- Maintenance process improvement in maintenance division of a large transportation company;
- Design of maintenance information system in a large chemicals company;
- Workshop on maintenance outsourcing for the Chemical Industry Association.