Value Based Asset Management Smart Asset Management.
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Value Based Asset ManagementSmart Asset Management
Business Statements Objective Basic Concept Document Comparative Benefits To Management Planning & Support Getting Started Develop A Plan Implementing Plan Document Results Communications
Discussion Items
Most Companies: Are Implementing ERP Systems
ERP Systems Do NOT Address Asset Accountability Or The Cost Of Ownership Of Assets Company Assets Government Assets Customer Property
ERP Systems Do NOT Address Property Management Regulatory Requirements
Are NOT Aware Of The Cost To Acquire, Manage And Dispose Of Assets
Business Statements
Managing Assets Costs 3 To 4 Times More Than The Management Perception
Most Costs Can Be Reduced Or Eliminated With A Total Asset Management System: Cataloged Assets Single Database Integrated Processes Accountability & Responsibility Must Be Well
Defined
Business Statements
Most Companies: Do Not Recognize The Significant Resource & Cost Now
Spent To Manage Assets Through The Life Cycle (Cost Of Ownership) Property Management Facilities Calibration Maintenance Retirement & Disposal Accounting
Depreciation Taxes Insurance
Physical Inventory Etc.
Business Statements
Implement A Single COTS Accountability System & Proactive Processes For The Management And Control Of ALL Assets.
Eliminate All Systems That Overlap, Duplicate Or Are Maintained To Satisfy Individual User Needs
Integrate All Systems Necessary To Provide Data Needed To Accomplish Accountability & Responsibility
Implement Tools That Drive Consistency Data Base Discipline Catalog Assets
Drive Effective Solutions That Streamline Processes, Improve Efficiency, Substantially Reduce Cost And Generate Revenue!
Objective
Implement A Single COTS Accountability System For The Management And Control Of All Assets. Most Corporations Are Directing Commercial Of The
Shelf Solutions. Corporations Are Slashing Software Development
Budgets Company Solutions Do NOT Stand The Test Of Time
Maintenance & Upgrade Funding Is NOT Supported Resource Support Is Erratic At Best System Documentation Is Poor Or Non-existent
Company Solutions Cost More To Develop, Upgrade And Maintain
Objective
Eliminate All Systems That Overlap, Duplicate Or Are Maintained To Satisfy Individual User Needs With No Benefit Eliminate All Sub Systems Required To Manage
Assets Maintenance Calibration Disposition Access Databases Excel Spreadsheets Subcontractor Control
Objective
Eliminate All Systems That Overlap, Duplicate Or Are Maintained To Satisfy Individual User Needs Chose A Solution That Can Be Integrated With The
Company’s ERP System For Key Interfaces Material Accounting Contracts EH&S Export Control
Objective
The Purchase Of Capital Assets Adds $$$$ To The Investment Portion Of The ROI Equation
The Same Capital Assets After Purchase Add Costs Annually (Cost Of Ownership) Which Are Part Of The General & Administrative Costs (G&A) Costs Of The Organization
Basic Concept
G & A=
A Dollar For DollarReduction In Operating Profit
=Return
Basic Concept
Cost Of Ownership
Basic Concept
Initial Evaluation Assets were costing the company Over $10M annually
$7M in equipment-related costso $3.5M in engineering productivity impacts
Equipment resources were not being effectively managed. Assets were held by departments as “Just in Case”
inventories and reactive processes fueled inefficiencies Implementing and institutionalizing a solution, due to
logistics, expertise and deep seated and habitual hoarding practices of the engineering products, would not be a trivial task
Document Comparative Benefits
Hi Tech Company
Results Utilization more than tripled, reducing the inventory
from 19,000 assets to just 11,600 Capital expenditures were reduced from $9.6M to
$1.7M Control of assets was dramatically improved:
o Write-offs were reduced from $800K to less than $8Ko Past due calibrations went from 10.5% to 1%
• Product delivery time was reduced by 20%
Document Comparative Benefits
Hi Tech Company
Significant improvement in efficiency was achieved:o Bench-to-Bench calibration time was reduced from 10 days
to 2 days
o Equipment lead-time from user request to arrival of equipment was reduced from 16 weeks to less than 1 day
o 20 man years of productivity were saved each year
Document Comparative Benefits
Hi Tech Company
Initial Evaluation24 separate databases/spreadsheets were being managed
in addition to the capital asset databaseOver 30 different labs were working on programsEquipment utilization was measured at 9%Nearly half the equipment was no longer supported by the
Calibration lab putting projects and schedule at riskTest equipment was not standardized across labs and
programs decreasing the likelihood of sharingEngineers were fearful that they would not be in control and
would not have equipment to do their jobs
Document Comparative Benefits
Defense Firm
ResultsUtilization nearly tripled going from 9% to 26% Total Inventory was reduced by35% Capital expenditures were reduced to 75% of historical normsThe inventory of obsolete unsupported equipment was reduced
by 50%Lab space was freed up allowing for growth needed by the
contractorThe capital approval process was streamlined; over 95% of all
requests are fulfilled through re-deployments from current inventory
ROI increased and cash flow savings exceeded the goalCapital is available to acquire state of the art equipment
required to meet increased demands
Document Comparative Benefits
Defense Firm
What We Found:
Document Comparative Benefits
Personal Experience
Majority Of Capital Assets: Were Outdated Or Obsolete Had Been Acquired For Only One Requirement Were NOT Shared Utilization Rates Were 20% At Best Lack Of Coordination Between Engineering &
Operations Multiple System Improvement Opportunities Multiple Record Systems In Use With No Integration Significant Cost Savings Opportunities
Document Comparative Benefits
Personal Experience
What We Did Implement 3 Phase Plan
Improve Processes Implement Integrated Data Base
New COTS Software (AssetSmart) Must Have Data Discipline Controls Must Have Standard Catalog Capability Including New Asset
Updates
Improve Asset Utilization Capital Expense
Document Comparative Benefits
Personal Experience
Phase I Implemented Over 50 Process Improvements Resulted In $21.3 Million In Cost Savings
Phase II Consolidated Over 35 Systems Into AssetSmart Resulted In $5.2 Million In Cost Savings
Phase III Improved Utilization From 20% to 42% Resulted In $11 Million Total Cost Savings = $37.5 In Cost Savings
Document Comparative Benefits
Personal Experience
Cost Savings By Phase
Document Comparative Benefits
Personal Experience
Total Cost Savings
Document Comparative Benefits
Personal Experience
Senior Management In All Departments Capital Budget
Resource Expense
Information Technology IT
Development Administration Software Support
Planning & Support
Key Functional Areas General Accounting Calibration & Maintenance Security Production/Operations Engineering Material Management Receiving/Shipping Depot/Spares Operations
Planning & Support
Obtain Management Support Ensure IT Priority For Resource And Administrative
Support Involve All Functional Departments In Design &
Implementation Plan Make Sure They Understand & Accept Responsibilities
Place Responsibility With Physical Custody Receipt/Disposition With Property Management User Responsible For Day To Day Accountability Assign Custodians Only When They Can Control & Be
Responsible!
Planning & Support
Develop A Total Property Management Plan Develop A Master Plan For All Areas Develop Software Requirements
Ensure Data Element Control Ensure Asset Catalog Capability Including Updates Ensure Catalog Includes Technical Specifications For
Assets Identify Areas For Automation
Electronic Movement Automated Forms Integration Of Responsibilities
Getting Started
Develop A GAP Analysis For All Software Capability Include All Functional Area Data Elements Are Included Include Data Element Control Capability Include Asset Description Control Include Asset Utilization Capability Include Regulatory Report Capability Include Ad Hoc Reporting Capability Include Automated Forms Capability
Sample GAP Analysis file://localhost/Users/robertmcfarland/Desktop/Smart
Asset Management/Sample GAP.xls
Getting Started
Conduct GAP Analysis Develop Scoring Plan Based On Priorities
Required For Compliance Required For Functionality Required For Control Required For Integration Required For Improvement Improves Efficiency Improves Accountability Improves Accuracy Nice To Have
Getting Started
Conduct GAP Analysis Chose At Least 3 Potential Suppliers And Score
Results Based Established Priorities Include All Supplier Input Not Included In GAP
Analysis Decide If New Input Is Relevant Add Requirements As Determined By Team
Request Input From All Suppliers For New GAP Analysis Requirements
Obtain Supplier References !!!
Getting Started
Make Sure To Ask For References And Make Sure They Are Checked Out In Detail
Conduct Final Analysis And Team Decision Make Final Software Decision Communicate Software Decision:
Team Users Management
Getting Started
Develop A Comprehensive Plan Start Plan As Soon As Management Approval Is
Secured Include ALL Required Actions
Be Specific Assign Individual Responsibility For Each Action Make Sure All Actions Are Broken Out
Independent Actions Dependent Actions
Assign Time Frames For Start & Completion Actions
Develop A Plan
Make Sure To Communicate With All Employees!! Formal Periodic Team Reports Formal Management Reviews
Include All Issues & Problems Test, Test & Test Notify All Users Of Key Events
Process Improvement Implementation Dates New System Testing Dates New System Go Live Dates
Develop A Plan
Keep Communication Lines Open: Team Management Custodians & Users
Be Open To Changes When Necessary Regulatory Changes Customer Input
Internal External
Implementing The Plan
Provide Periodic Management Briefing Of Results Process Improvements Integration Successes Utilization Improvements Performance To Schedule Performance To Budget Any Obstacles Or Changes
Make Sure There Are No Management Surprises
Document Results
Communicate With Team On All Issues Communicate With Users
E-mail Employee Bulletins Awareness Posters
Communicate Across Company Peers At Other Divisions Property Management Council
Document Results
Market Your Program & Results Create Standard Formats For Each Improvement Ensure Consistency Ensure Clarification Of Each Objective
Define The Objective Explain All calculations Automate Results Include Metrics
Sample Format & Tracking System file://localhost/Users/robertmcfarland/Desktop/Smart
Asset Management/AMC-Metric Template.xlsx
Document Results
Maintain Company Awareness Across The Company
Consider Corporate “Best Practice” Programs We Received A Best Practice For Our Program Provide Visibility Company Wide
Program Website Corporate Property Website
Maintain A Narrative Report To Be Used For Corporate And Professional Publication
Sample Narrative Report
Communicate Results
You MUST Demonstrate The Value You Add Property Management Can Provide And Endless
Stream Of Projects To: Improve Efficiency Eliminate Overlap & Duplication Reduce Cost
All Result IN Cost Savings or Cost Avoidance To Your Company
file://localhost/Users/robertmcfarland/Desktop/Smart Asset Management/SMART-VBAM-Narrative.docx
Summary
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