Organize for Asset Management: Build a Unique Asset Perspective

Organize for Asset Management – Introduction

So, you’re tasked with championing an asset management initiative.  Your company believes that a formal management system for assets will help with asset utilization.  No worries.  This Organize for Asset Management post equips you to get your asset management initiative underway; providing direction and protecting you from missteps.

With our approach, you’ll not go it alone.  You’ll assemble a team to endow and enrich your efforts with your organization’s perspective at each step along the way.  When you’re finished, you and your team will have formulated your organization’s unique perspective on how your assets are described and understood.

Three steps are explained in this ‘Organize for Asset Management’ post.

1.  Decide, from among the many types of assets you plan to manage, the type of asset you wish to manage first.

2.  Form a team to work with you and serve as stewards for this type of asset.

3.   Develop the terminology, and define the characteristics, that your organization will use to describe this type of asset.

These important steps position your organization to adopt practices, described in future posts, to extract greater value from your assets.

Use our companion Asset Definition Note Booklet to record your progress along the way.  At first blush, you may cast this exercise as one where your teaming with your people to simply fill in a workbook.  As the work gets underway, however, you’ll spawn conversations from teammates with diverse perspectives.  There will be a litany of questions asked, and issues raised, about the many choices to be made.  You’ll know the process is working as ideas are floated and the team arrives at consensus on myriad issues.

1.  Organize for Asset Management – Select an Asset Type

Our approach encourages you to organize around specific asset types.  The body of terminology and characteristics you will create is invariably distinct to each type of asset you will manage.  Lumping all types of assets into a single management framework would compromise your initiative from the start.

If you are like most organizations, yours depends on a variety of tangible assets to get its work done.  These could include trucks or service vehicles, office equipment, machinery, custom tooling, and perhaps test equipment.  Though you plan to get all these assets under better control, you ought to select one asset type and give it your initial attention.

Consider prioritizing asset selection based on greatest capital investment.  This provides high potential to extract value through extended asset service life and optimization of asset inventories.  You could alternatively prioritize asset selection based on greatest business impact in the event of failure or shortage.  This approach delivers high potential to extract value through mitigating asset failure risk and steps taken to ensure asset availability.

Whichever priority scheme you choose to pursue, aim to set up support for asset types in descending order of this criteria.  Add asset types to your portfolio of managed assets until you decide there are diminishing returns to selecting additional asset types to manage.  When you get to this point, you and your team(s) will maintain the new status quo while moving on to other initiatives

2. Organize for Asset Management – Form a Team

When your organization is large, you may decide to create teams around different types of assets.  Smaller organizations may create a single team to serve asset management for the long haul.

Who belongs on this team?  Look for people who (1) know your business and (2) touch your assets in varied ways.  Include teammates who…

  • Buy your assets. (Purchasing, Sr. Buyer, Stakeholder, Finance)
  • Manage your assets. (Inventory, Operations, Commodities Manager)
  • Use your assets. (Shop Floor, Operations, Office)
  • Service your assets. (Maintenance, MRO – Maintenance, Repair, and Overhaul)
  • Dispose of your assets. (MRO, Stakeholder, Finance)

Use the term “cross-functional team” to inspire the variety of representation you want among team members.

3.  Organize for Asset Management – Develop Terminology and Define Asset Characteristics

Plan to host a series of meetings with your team to think through how you will define the important characteristics of your assets and describe your assets.  While the topics for discussion are provided in this post, a timeframe is not estimated.  Factors that impact this effort’s duration include asset complexity and your team’s ability to find common ground when conflict arises and decisions must be made.

When conflict arises?  How could that happen with a like-minded group engaged in thoughtful discussion?

Your team is a purposefully diverse group.  Team members might not routinely see each other while doing their jobs.  The conversations you’ll initiate may cause team members, for the first time, to think about how other people’s work with the assets affects them.  Daily practices will be revealed.  Idea exchange will be affirmed with comments like “That’s interesting.  I never knew how you evaluated these assets before placing them into production use.”  Some remarks, may be laced with barbs.  “If I had known how you evaluated these assets before placing them into production, I wouldn’t have spent so much time with my evaluation.  So much time I’ve wasted.  You should have told me!  That’s not in any of our procedures!”  Your discussions will touch on numerous topics and issues related to semantics and longstanding practices that some hold dear.  Issues that arise might require breaks for research or for team members to cool off.

Start your team’s foray into asset management with a kickoff meeting.  The purpose of this meeting is to exercise thinking about how assets are defined and to set the stage for the work ahead.

Descriptive Elements

Opening icebreaker exercise – have attendees jot down eight descriptive characteristics they would choose to describe a school bus to someone who has never seen one.

Have participants read their list to the rest of the team.  There will likely be a lot of variety among the lists.  We’ve all seen a school bus.  Most of us have ridden in a school bus.  Why didn’t everyone produce a similar list of characteristics to describe the school bus?

A school bus has an almost unlimited potential list of characteristics.  People who rode in them for years might emphasize interior characteristics or features of the way the vehicles ride.  People who have driven school buses might think about the power, or controls, or maintenance.  The rest of us might picture them from the outside and think about their size, color, and markings.  If you recently had your foot run over by one, your first thought might be about their weight.

Using a whiteboard, with the help of an appointed scribe, solicit responses from meeting attendees, for a lively discussion to create a master list of important characteristics of a school bus.  You could give this list to someone who had never seen a school bus.  (S)he would have your team’s perspective on the important characteristics of this asset.

Explain that similar exercises will be used to start discussion about each distinct type of asset the organization wants to manage.  The output establishes a common way to describe and discuss assets for the work going forward.

Now do the same exercise with the type of asset you chose to work with initially.  Spike this conversation by suggesting the list include all the characteristics one must specify when placing an order for an asset of this type.

One item on the list ought to indicate a way to uniquely identity each asset of this type.  This could be a serial number, vehicle identification number, or in-house asset ID.

Your new feature and characteristics list reflects team consensus.  This exercise done by different teams would produce different results.  That’s ok.  What matters is your team’s list because that’s what the team will use going forward.

At this point you and your team have gotten your arms around a specific type of business-critical asset.  You have adopted a set of terms that your team believes reasonably describe assets of the selected type.  That’s a major accomplishment because you now have a common vernacular to support discussions about managing the selected asset type.  Showcase this accomplishment to meeting attendees.

This is a good time to either take a meeting break or schedule the next meeting.

Asset Statuses

When everyone’s refreshed, start a new discussion – Asset Statuses.

Using a whiteboard, with the help of an appointed scribe, solicit responses from meeting attendees…

“Let’s continue developing our view of [selected asset type].  Give me your ideas about the statuses, or conditions, we can assign to this [selected asset type].  Examples could be “Broken” or “Ready for Use”.

If you need to spike the conversation to get it going, offer some of the following.  “On Order”, “Out of Service”, “Awaiting Repair”, or “Irreparably Damaged”.

As long as the team is offering suggestions, keep them coming and note them all.

Conclude this topic with “this is our master list of the statuses we will use to describe the condition of all our [selected asset type].  Any more for the list before we move on?

This is a good time to either take a meeting break or schedule the next meeting.

Asset Locations

When everyone’s refreshed, start a new discussion – Asset Locations.

Using a whiteboard, with the help of an appointed scribe, solicit responses from meeting attendees…

“Let’s continue developing our view of [selected asset type].  Give me your ideas about the locations where our [selected asset type] might be stored or located.  Examples could be “Main Warehouse” or “At the Service Station”.

If you need to spike the conversation to get it going, offer some of the following.  “In a Specific Cabinet”, “On a Shelf”, “In a Bin”, or “Out on The Shop Floor”.

As long as the team is offering suggestions, keep them coming and note them all.

This conversation can get complicated.  An asset might be located at the Toledo Warehouse, Zone A, Cabinet 21, on the left side of the 2nd Shelf.

Address the complexity.  Set out to identify every location where the [selected asset type] might be found.  The team may decide to keep locations generic “At supplier”. Or they may favor greater detail “At suppler A’s Detroit service center”.

You and your team must decide how finely detailed this list will get.  Assets will be assigned to locations on this list.  You need sufficient detail to help anyone locate the asset but you don’t want to parse an enormous list to look up team-approved locations.

Conclude this topic with “this is our master list of the locations where our [selected asset type] can be found.  Any more for the list before we move on?

This is a good time to either take a meeting break or schedule the next meeting.

Asset Life Cycle Events

When everyone’s refreshed, start a new discussion – Asset Life Cycle Events.

Using a whiteboard, with the help of an appointed scribe, solicit responses from meeting attendees…

“Let’s continue developing our view of [selected asset type].  Give me your ideas about the events that can occur over the course of [selected asset type] service life.  Examples could be “Asset Ordered from Supplier” or “Asset Placed into Service”.

If you need to spike the conversation to get it going, offer some of the following.  “Asset Was Damaged During Use”, “Asset Was Inspected”, or “Asset Was Retired from Service”.

As long as the team is offering suggestions, keep them coming and note them all.

This conversation can get complicated.  Provided events may blur with statuses (e.g. Out for Repair).  Take care to describe events that occur in a way that keep events distinct from statuses.

You and your team must decide how finely detailed this list may get.  Your organization will keep history of the events that occur over the life of monitored assets.  You need sufficient specificity to describe any asset event but you don’t want to have to parse an enormous list to find a good fit, team-approved, asset event.

Conclude this topic with “this is our master list of the events that can occur over the life of our [selected asset type].  Any more for the list before we move on?

This is a good time to either take a meeting break or schedule the next meeting.

Asset Failure Types

When everyone’s refreshed, start a new discussion – Asset Failure Types.

Our research and experience indicates that there are two primary ways an asset can fail.  An asset can fail because of a defect or inherent weakness in the asset that renders it incapable of functioning properly.  Alternatively, an asset can fail, through no inherent fault of the asset, when the asset is misused, abused, or damaged by its users.  Going forward your organization should track asset failures.  Failures caused by inherent shortcomings with the assets will spawn investigation into design, supplier, etc.  Failures caused by abuse, misuse, or damage may be cause for enhanced procedures and upgrades to employee training.

Using a whiteboard, with the help of an appointed scribe, solicit responses from meeting attendees…

“Let’s continue developing our view of [selected asset type].  Give me your ideas about the ways [selected asset type] may fail over the course of its service life.  Examples could be “Worn Out” or “Damaged by a User”.

If you need to spike the conversation to get it going, offer some of the following.  “Failure to Perform Routine Maintenance” or “Mis Applying the Asset to its Intended Task”.

As long as the team is offering suggestions, keep them coming and note them all.

You and your team must decide how finely detailed this list may get.  Your organization will keep history of the asset failures that occur over the life of monitored assets.  You need sufficient specificity to describe any asset failure but you don’t want to have to parse an enormous list to find a good fit, team-approved, asset failure type.

Conclude this topic with “this is our master list of the ways [selected asset type] can fail.  Any more for the list before we move on?

This is a good time to either take a meeting break or schedule the next meeting.

Asset Sources (Suppliers)

When everyone’s refreshed, start a new discussion – Asset Type Sources (Suppliers).

Several benefits are realized when suppliers for each type of asset are known.  In the wake of asset failure, traceability to the supplier can aid forensics.  When assets are performing well, knowledge of their supplier can elevate the supplier to favored status.

Using a whiteboard, with the help of an appointed scribe, solicit responses from meeting attendees…

“Let’s continue developing our view of [selected asset type].  Give me your ideas about who supplies us, or can supply us, with [selected asset type].  In other words, where can we go to get this [selected asset type]?”  Examples could be “We make them in-house.” or “ABC Asset Manufacturing Company”.

Conclude this topic with “this is our master list of the sources for [selected asset type].  Any more for the list before we move on?

This is a good time to either take a meeting break or schedule the next meeting.

Asset Service Channels

When everyone’s refreshed, start a new discussion – Asset Type Service Channels.

Using a whiteboard, with the help of an appointed scribe, solicit responses from meeting attendees…

“Let’s continue developing our view of [selected asset type].  Give me your ideas about who stands ready to service our [selected asset type] when they need service or repair.  In other words, where do we go to get this [selected asset type] fixed when it breaks?”  Examples could be “We fix them in-house.” or “ABC Asset Repair Company”.

Conclude this topic with “this is our master list of the resources that stand ready to service our [selected asset type].  Any more for the list before we move on?

This is a good time to either take a meeting break or schedule the next meeting.

Asset Disposal Channels

When everyone’s refreshed, start a new discussion – Asset Type Disposal Channels.

Using a whiteboard, with the help of an appointed scribe, solicit responses from meeting attendees…

“Let’s continue developing our view of [selected asset type].  Give me your ideas about who stands ready to help us dispose of our [selected asset type] when they reach the end of their service lives.  In other words, who can take these [selected asset type] away when we’re finished with them?”  Examples could be “We place them in the trash.” or “A recycler picks them up when we call.” or “We sell them to another business that repurposes them.”

Conclude this topic with “this is our master list of the resources that stand ready to take our [selected asset type] away when we’re finished with them.  Any more for the list before we move on?

Conclusions and Next Steps

The team has reached consensus about ways you’ll describe your assets.  You’ve committed, to formal form, asset descriptive features and characteristics.  Your team has a firm sense of how assets are obtained, where they might be located, the statuses that can be assigned, their means of service, maintenance, and repair, and likely methods and channels for disposal at the end of their service lives.

Follow our future blog posts.  Our posts nurture team discussion.  They focuses on ways to extract more value at each stage in an asset’s life. Equip your team to seize greatest opportunity with asset events as they occur.

Asset Management Parable – Two Companies Compared

This asset management parable is based on a true-to-life situation. See a stark contrast in outcomes influenced by the approach to asset management.

asset management parable

Asset Management Parable – Part One

One company saddled a single person to spearhead the asset management program.  Despite a consultant’s up-front admonishment – “Organize a Team” – the project was to be this person’s baby.

The False Start

Up-front setup followed this person’s view of how the business operated.  There were many options to be considered.  With a single decision maker at the helm, choices and decisions could be made quickly.  There was no conflict.

No issues surfaced until this person took the first big picture view of the new setup.  It seemed clumsy and clunky.  Even though a lot of work had been done, and much time had passed, it was scrapped for an alternative approach.

The revised approach addressed shortcomings of the initial approach.  The new arrangement was tidier and better suited to this person’s requirements.

The Poor Fit

Fast forward six weeks.  A larger group met to talk about the setup and how it was going with the new asset management program.  This was the first time some had seen the arrangement in place.  As questions were raised and new, novel, scenarios were floated, a strong undercurrent developed among meeting attendees – “Why did you set it up this way?” and “It won’t work for me because of how you set this up.”.

The setup had now been in use for some time.  Reversing some of the choices would entail starting over.  The arrangement, with all its shortcomings, would stand for the foreseeable future.

Asset Management Parable – Part Two

Another company appointed a project champion to lead their asset management program – an individual who saw the merits of formalized asset management. S(he) knew this would affect, and ought to engage, numerous people in the organization.

A kickoff meeting had an open invitation to all.  Specific invitations were sent to associates in different functional areas of the business.

The Good Start

The meeting began with opening remarks about potential gains from asset management.  Then there was discussion of a specific type of asset about which all had keen interest.  The initial work would focus on better managing this specific asset type.  Attendees from all business disciplines looked forward to the next meeting with anxious anticipation.  Everyone was given an assignment to prepare for the next meeting – “Make a list of specific characteristics and features you would use to describe this type of asset to someone who is not familiar with the asset.”

Everyone came well-prepared for the next meeting.  Attendees had been with the company for some time and were well familiar with the type of asset being discussed.  Surprisingly, there was a lot of variation in each person’s view of how the asset ought to be described and what characteristics were considered important.

This vital up-front exercise mimicked the parable of blind men and an elephant.  This is a story of blind people who learned about an elephant by touching it.  Each man felt a different part of the elephant – say an ear, the side, or a tusk.  Conclusions were drawn based on each person’s sense of their contact with the elephant.  Their descriptions of what an elephant is varied widely.

People involved in asset procurement described the asset in terms of lead time, supplier, and cost.  Those who routinely used the asset described the asset in terms of its weight, size, and appearance.  Others who had experienced the disposal of the asset, at the end of its service life, focused on its scrap value and environmental considerations.

The lively, sometimes impassioned, discussion drew upon diverse perspectives.  The team created a comprehensive list of descriptive, point-by-point, vernacular agreed by all to completely describe the asset.

Subsequent get-togethers created a feature-rich framework for tracking and evaluating the assets.  This established the way assets would be described and managed by a simple, manual, asset tracking system.

The Good Fit

The original team spawned other teams that were interested in other types of assets.  Adopting the recently-developed framework and discussion agendas, new teams quickly seized stewardship of other asset types.

A manual approach to tracking assets was later upgraded to a simple, standalone, cloud based, system.  The system was configured to accommodate the unique frameworks developed by the teams.  This arrangement has been in place, with only minor touch ups along the way, for several years.  Participants beam with delight and can spontaneously enumerate the many ways they are extracting more value from their business-critical assets.