A Sure Path to a Higher Level of Asset Stewardship
Asset stewardship is nurtured through lively conversations among teammates about best ways to extract the most value from tangible asset investments. Evaluating asset life cycles is a natural setting to spawn such conversations.
Idea exchange among team members, who practice diverse disciplines, is essential to value creation. Teammates can stir the pot with varied perspectives on what’s important to the organization and the larger world in which it exists.
If you’ve been in business for some time, you already know something about managing assets. What’s likely to be new, going forward, is that you will convene in-house cross-functional teams to analyze your practices through each phase in an asset’s life cycle. Team idea exchange can unlock latent knowledge and reveal ways to better exploit asset investments.
You may decide to have a single team oversee practices affecting the management of all business-critical assets. Alternatively, you may convene teams dedicated to each major asset class. (You’ll likely agree that the life cycle phases for cattle differ from life cycle phases for machinery.)
Asset life cycles typically include acquisition, deployment, maintenance and repair, and retirement and disposal. Use these thought starters to inspire discussion.
How does your company acquire new assets?
Does it buy, rent, lease? What factors are considered for this decision?
What criteria are used to evaluate suppliers?
Are suppliers favored on price alone?
Must assets demonstrate conformance to specifications?
You might be surprised to learn that industrial, farming, and office equipment can be found, competitively priced, at the ‘Business and Industrial’ section on eBay.
Are you willing to pay a premium for better conformance to requirements?
Are there ways better suppliers, with better products, can give you an operational advantage?
Purchasing will have one opinion about supplier selection. The shop floor will have another. Operations will likely have another. Factor lead-time, quality and goodness-of-fit, and anticipated service life into your collective thinking.
Consider the downsides to buying on price alone …
The most capable suppliers may walk away when they learn there is no money to be made doing business with you. They will likely move on to customers who team with them to achieve joint success. You could be left with the most desperate, potentially least capable, suppliers.
Consider the example of a steel fabricator who buys steel from a higher-priced supplier because the steel is more easily machined, causes fewer problems as it’s used, and imparts characteristics favored by end customers. The steel fabricator can successfully pass the higher steel cost on to its customers. The steel gives the fabricator an operational advantage that’s worth its higher price while positioning the fabricator to sell at a favorable margin.
When your company receives an asset, is it subjected to inspection, testing, or preparation for use like painting, lubrication, or cleanup? Of these steps, what steps could your supplier perform for you to save you the steps, time, and money? Would you be willing to pay the supplier to perform these steps for you?
Is training or orientation required as each asset is placed into service? Could your supplier bundle this into the deal for the asset?
Maintenance and Repair
Is the asset supplier’s recommended maintenance plan considered sufficient to mitigate asset failure risk? Are there enhanced practices, beyond those recommended by the supplier, that can further reduce asset failure risk?
Are the assets mission critical; would asset failure impair the business’ ability to operate?
Is your team tracking assets that are nearing the end of their service lives or are soon to be unavailable due to planned maintenance.
Are agreements and practices in place to ensure timely asset repair as necessary?
Retirement, and Disposal
Depleted assets might not have to disappear. Some may be refurbished for re-use or re-purposed.
Assets may be sold for scrap. Be cognizant of assets that contain gold, brass, copper, steel, aluminum, or plastic.
Thorough asset destruction can eliminate exposure and environmental risk – when done properly.
Assets like computers, answering machines, and digital recorders may contain sensitive information that may be accessed either accidentally or illegally. Secure disposal processes are essential.
Assets containing batteries, hazardous materials, or bio hazards present unique and important challenges.
Recycling can make the depleted asset go away while minimizing environmental impact. Look for materials recovery and recycling technologies that reduce surplus assets entering waste streams or landfills.
Assets requiring secure disposal can have their destruction witnessed or documented through an auditable destruction channel.
Teaming with a disposal partner ensures that disposal is performed in conformance with ever-changing environmental laws and regulations. Proven and trusted methods are utilized.
Asset Stewardship – Improving Your Organization’s Top Line
So, you’ve gained a greater grasp on asset life cycle management and have moved up more than a step on the asset stewardship ladder.
It’s time to place your discussions about asset acquisition in a new context. Recap the attributes you ascribed to your favored suppliers – delivery, quality, pre-delivery prep for your use, etc. Now ask yourselves how you can apply the attributes of your favored suppliers to ways you can serve your customers as their favored supplier.
You will discover new ways to compete on factors more valuable than price. You will identify ways to give your customers operational advantages when they choose to buy from you. This will equip you to formulate and deliver the most compelling propositions to your customers and prospects. You will create unrefusable offers (UROs).
You will become a more favored supplier in ways that delight your customers while maintaining or boosting margin. Imagine being members of the team, charged with strengthening asset stewardship, who ultimately boosts your organizations top line and margins.