Asset Management Software

The term “Asset Management Software” paints with a wide brush.  Two primary interests are served by a wide variety of asset management software “packages” – 1. Asset Accounting and 2. Asset Stewardship.

Asset Management Software – for Asset Accounting

Accounting requirements for assets are significant and potentially complex.  Organizations are required to report assets on their balance sheets, at their current value, in accordance with generally accepted accounting principles.

Asset Management Software – for Asset Accounting

From the date an asset is purchased until the date the asset is disposed, its value can be changing.  Its value gets eroded over time through depreciation.  Its value may spike due to a field upgrade or through costly preventive maintenance.  Systems that support asset accounting must stay continually aware of the events that change an asset’s ‘book’ value.

In general, systems that support asset accounting, though essential, do not make organizations any money or create asset-related value.  They exist to support accurate asset value reporting and comply with accounting-related regulatory requirements.

The user communities for these systems might never see or touch the assets for which they account.

Asset Management Software – for Asset Stewardship

Asset management software, for asset stewardship, answers to a mandate to extract greatest value from asset investments.  Software is but a small part of the “solution”.  The packages ought to spawn lively discussions from asset stakeholders.

Asset Management Software – for Asset Stewardship

Asset life cycles are examined and improved.  Acquisition, placement into and out of service, maintenance, and disposal are ripe for discussion; particularly when cross-functional teams are involved.

Asset failure modes are identified and monitored.  In more sophisticated settings, Failure Mode Effects Analysis (FMEA) is brought to bear on observed failures to set priorities for preventive and corrective action.

The results generated by Asset management software, for asset stewardship, ought to include…

  • extended asset service life
  • increased asset availability
  • reduced asset failure risk.

The user communities for these systems are in constant contact with the assets with which they serve as stewards.

Asset Management Software – Implementation Guidance

Software for accounting may have step-by-step instructions or online help or chat to assist with setup and operation.

Software for stewardship ought to be bundled with guidance on process.  In the course of implementing stewardship software, a team should be formed.  The team ought to convene regularly, particularly at the start, to address specific topics.  Team get-togethers will spawn actionable discussion.  And that’s when value starts to get created.  Software guidance should propose meeting agendas, prescribe team actions, and show teams ways to assess their impact on asset value extraction.  So, while businesses may seek software to help manage their assets, it’s the team processes, conversations, and actions that actually help the business – with mere support from the software to keep track, reveal opportunities for corrective and preventive action, and objectively depict progress.

Asset Management Software – Shopping for Asset Management Software?

You’ll likely find asset accounting support in most ERP packages and in general accounting packages as Fixed Asset Accounting modules.  The package you select will be based more on buy-in for the overall package rather than its specific features for asset accounting.

asset accounting packages

Support for asset stewardship is more purposefully delivered in standalone packages.  The package you select can be based specifically on ways it can help your business extract greatest value from its tangible assets.  These packages target teams that acquire, manage, and dispose of tangible assets. 

asset stewardship solution

It’s not redundant to have assets represented in an accounting package and also represented in a stewardship solution.  The user communities have substantially different requirements and are even likely to describe assets differently to suit the distinctive contexts.

The different user communities speak different languages, have different motivations, and have very different requirements.  Get a handle on your asset management requirements, and your anticipated user community, when you shop for asset management software.

Asset Depreciation – Should Asset Management Software Calculate It?

Asset Depreciation – Asset management solutions are about. . .

  • Spawning actionable team discussion about ways assets are managed.
  • Supporting team efforts with asset data repositories.
  • Delivering insightful asset metrics to assess asset performance.

Asset Depreciation – The accounting function. . .

  • Needs automated asset services that differ from needs of the asset management team.
  • Determines when assets are expensed or capitalized.

Asset Depreciation

Capitalized assets are eroded off the books by scheduled depreciation – “straight line”, “sum of years digits”, “double-declining balance” and other methods determined by business convention and perhaps applicable law.

Learn more about depreciation and depreciation methods.

An organization’s accounting, or sometimes ERP, application software supports accounting’s specific, narrower, requirements – including calculating depreciation.

When an asset management solution has depreciation calculation capabilities, using them might result in the asset management team duplicating efforts already performed by the accounting function.

You certainly don’t want two separate functions, accounting and the asset management team, using separate tools to calculate depreciation. This would represent duplicated effort and could lead to dueling numbers; where the separate calculations do not agree and people spend time picking through minutia to account for the differences.

When the asset management team wants to know the book value of the assets it’s watching, it should rely on the accounting function for this information.

The asset management team is likely to have little need for asset depreciation capabilities. The team ought to be looking at life cycle events and studying asset failure modes. The goal is to enhance asset utilization, extend asset service life, and increase asset availability.

Significantly extending asset service life could trigger a chat with Accounting – to base depreciation on longer asset service lives.

People are Your Greatest Asset

The Most Important Investment You Make

People are Your Greatest Asset. This often stated mantra was affirmed by Boeing CEO Dennis Muilenburg when he was recently interviewed by J.P. Donlon (about forward looking plans for Boeing.) On the subject of the “talent gap”, Mr. Muilenburg said “I’m a firm believer that the most important investment we make is in our people.”

“Muilenburg’s Moonshot”

People are Your Greatest Asset – Extract Greatest Value

Like other tangible assets, the human kind have diverse attributes of interest to the business, pass through predictable life cycle stages, and can be subject to both anticipated and unanticipated failures.

People are Your Greatest Asset - Personal Progress

Extracting greatest value begins with acquisition practices. Where the process ends is more open to interpretation. Retention is a challenge unique to people. While machines won’t walk out on a moment’s notice, people can; taking much of the investment in their success with them and leaving a vacancy to re-fill.

While a machine will have performance bounds established by design specifications, people performance is wide open – influenced by culture, education, and professional development initiatives.

People are Your Greatest Asset – Pursue Human Resource Development.

Business knowledge developed in the course of an employee’s tenure is arguably both the property of the person and the intellectual property of the organization whose programs inculcated the related know-how and experience.

Human resource failure modes should be enumerated and tracked. Teams can take corrective and preventive actions to reduce failure frequency. Failure frequencies can be monitored to assess the impact of these actions.

On one hand, people cannot be kept running indefinitely through part replacement and preventive maintenance. On the other, people can be continuously retrofitted, through personnel development programs, to mitigate obsolescence and continually enhance goodness of fit to the organization.

Tangible asset management paradigms and thinking processes fit human resources nicely – though initial reaction to the concept might make this perspective seem crass. Asset management for people must extend into the realm of human resource development with additional steps to achieve value adding transformation and to assess impact.

A timeless and powerful framework for assessing human development program effectiveness is Don Kirkpatrick’s four-level framework for evaluating training impact. It’s scope spans program participant reaction through assessment of business impact.

Learn more about the “Kirkpatrick Model”.

The cross-functional team overseeing asset management will surely want human resources to have a seat the team table. Team collaboration with human resources will produce synergism that exploits the collective perspectives of the extended team.

Here are links to sample Human Resource Development (HRD) plans. They can provide inspiration for a team that aspires to implement a comprehensive and formalized approach to HRD.

Developing the HRM Plan

JORDAN HUMAN RESOURCES DEVELOPMENT PROJECT

In conclusion, placing people under the asset management umbrella spawns rich conversations about vital human resource characteristics, life cycles, and human failure modes. Extending the conversations to include conventional human resource development practices creates an immensely comprehensive view of people and ways to both boost and extract their value to the organization.

Asset Failure Analysis

Asset Failure Analysis – Assets break. Assets wear out.

Asset failure analysis challenges your team to investigate ways tangible assets fail at your organization and take steps to reduce asset failure risk. This five-step approach to asset failure analysis draws upon the contributions of all team members and puts you on track to get asset failure under control.

Asset Failure Analysis – Step One – Record Asset Failures

Record failures as they occur. Create Word docs, Excel worksheets, Notepad files – whatever works best for you. Keep it simple to start.

Record the date with each failure occurrence. When failures occur often, build occurrence tallies by day, or week, or month. Equip your team with data to report failure incidents by date (and time when time-of-day is relevant to the failure occurrence).

Asset Failure Analysis - asset failure log

Make a visual representation of your failure data with a bar chart. Show failures in order of decreasing frequency.

asset failure bar chart
learn about bar charts

Asset Failure Analysis – Step Two – Determine Failure Investigation Priorities

When your bar chart paints a vivid asset failure history picture, convene the team for a chat.

First Impressions – Bar charts direct your team’s attention to failures that occur most frequently.

It’s a common practice to use failure frequency to prioritize investigation efforts. This suggests you should work on what’s happening most frequently first.

You can do better.

Gain insight with Failure Mode Effects Analysis (FMEA). Assess failure likelihood and the impact of various failures you’ve observed. This will help you to be even smarter about choosing the failures that should get your attention.

To apply FMEA to failure data you’ve recorded, three factors are utilized.

  • Severity
  • Probability of Occurrence
  • Risk of Non-detection

These factors draw heavily on team judgement to determine. They are used to calculate a ‘risk priority number’ (RPN) for each failure you observe. Failures can then be prioritized for investigation on the basis of their RPNs.

Severity relates to failure impact on the organization. A disabled vital asset can shut down a factory or cause deliveries to come to a halt. Some kinds of failure may have the asset disabled for an extended time. Other failures might entail a quick fix. The weight assigned to severity could also reflect cost of preventive maintenance; the idea being that you might purposefully forego maintenance when a failure is regarded as inconsequential when compared to the cost of maintenance.

Using a scale of 1 – 10, a failure with an easy fix, a low downtime duration, and small consequential cost could be assigned a 1. A failure with a complicated fix, a long downtime duration, and high consequential cost, could be assigned 7 or 8.

Probability of Occurrence, for this example, is the relative failure frequency among all the recorded failures. Other probabilities may be explored. Your team might use an absolute frequency, say, number of expected failures per 100 uses, rather than a relative frequency. The purpose is to apply a factor that more heavily weighs failures that occur more frequently.

Risk of Non-Detection can be given a scale of 1 – 10. Failures that are likely to detected can have a low factor, say 1. Failures that may go undetected (until they have significantly impacted the organization) can have a high factor, like 7 or 8.

Reserve factor weights of 9 or 10 for failures that relate to catastrophe like loss of life, injury, or severe damage to the business.

RPN calculation can be Severity x Probability of Occurrence x Risk of Non-Detection.

RPN Calculation Worksheet

As a result, when the failures are sorted by RPN, you can see that the failure sequence differs from when they are sorted by frequency alone. This sorted list establishes the team’s failure investigation priorities. Failures with the highest RPNs get the most attention.

Determining factor values to use will challenge the team. As a cross-functional group, varying business perspectives will impact opinions about factor magnitude.

Furthermore, factor scale can be a point of contention. If the “Probability” factors were all divided by 10, they would still reflect relative probability of occurrence among the different failures. Their overall impact on RPN values would be much less substantial. Team wisdom is required to assign reasonable factors, and factor scaling, to arrive at RPNs the team can rely on to influence the investigation priority assigned to each failure.

Asset Failure Analysis – Step Three – Determine Failure Root Causes

Problems get solved when their root causes are identified and treated. The web is replete with articles about ways to get to the root cause of any problem. This post introduces two widely used techniques that work well with problem solving teams.

  1. Cause and Effect Diagrams
    With a whiteboard and a marker you can start a lively discussion to uncover failure root causes.Start the conversation with a statement of the “effect” – the asset failure you wish to avoid. Then, you propose cause categories like “Materials”, “People”, “Equipment”, and “Process”. For each of these cause categories, your team develops a list of potential causes for the undesired effect. Finally, each of the potential causes is investigated to assess its probable contribution to the effect.cause and effect diagramlearn about cause and effect diagramsHere’s a link to a PowerPoint template for cause and effect diagrams.
    cause and effect diagram template
  2. 5 Whys
    Asking “Why?” can help you and your team drill down to uncover problem root causes.Why did the truck get the flat tire?
    Because it drove over a nail in our vehicle service shop.

    Why was there a nail on the floor in the vehicle service shop?
    Because a box of loose nails was spilled from a work table.

    Why was a box of loose nails sitting on a work table where it could be spilled?
    Because a workshop table repair required nails. A box of nails was brought in from the wood shop to support the repair.

    Your team will typically get to the root cause of most problems by asking “Why?” approximately five times.

    In this example, the team implemented a “corrective” action. (Procedures were updated to require thorough sweeping of the work area after repairs are performed. This picks up stray tools and hardware, like nails, that are brought to the vehicle service shop to support repairs.)

    learn about the 5 whys technique

Asset Failure Analysis – Step Four – Take “Corrective” and “Preventive” Action

Action must be taken to remedy the failure root cause(s) found by the team. The desired outcome is to eliminate, or at least reduce the frequency of, observed or anticipated failures.

What’s the difference between a “corrective” and a “preventive” action?

A corrective action is taken as a response to an event that has already occurred. The goal is to reduce or eliminate the likelihood that the event will recur.

A preventive action is taken in anticipation of an event that might occur. The goal is the reduce or eliminate the likelihood that the event will ever occur.

Most team actions will be corrective because they will be in response to observed occurrences. Discussion may occasionally reveal an opportunity to make a change to prevent a failure that has not yet occurred. Such actions would be regarded as preventive.

What kinds of action might your team pursue?

When an asset failure is connected to human error, enhancements can be made to training to reduce the occurrence of the error.

When a fault is found with the tangible asset, the issue may be traced to missed or improperly performed preventive maintenance. The team might also discover quality differences among asset suppliers. These findings could influence purchasing decisions to favor suppliers whose assets fail less often.

Asset Failure Analysis – Step Five – Chart Your Progress

Line charts provide objective evidence to show the impact of your team’s efforts on reducing failure rates over time.

line chart example

learn about line charts

Asset Failure Analysis – It’s An Ongoing Process

Build failure recording into daily work practices. Develop and streamline your day-to-day recording techniques. Periodically create bar charts and meet with the team to calculate RPNs, identify root causes, take corrective and preventive actions, and chart your progress.

Finally, you should see the benefits of having a cross-functional team in your failure analysis process. Identification of root causes and formulating corrective actions can draw upon all disciplines within your organization – purchasing, human resources, quality assurance, operations, etc.

Asset Failure Analysis – Take a Deeper Dive if You Wish

Your team can further refine factors used to calculate RPN by tweaking the factors to reflect asset age, supplier history, and seasonality.

We found good treatment of FMEA in a dissertation from University of Groningen (The Netherlands) FMEA for Asset Maintenance

Organic Asset Management – Asset Stewardship’s Purest Form

Organic asset management grants you a clean slate. It leverages your business culture and business know-how as a foundation for excellence in asset stewardship.
organic asset management
Keep your unique traits untainted. Choose an organic approach to asset management.

Organic Asset Management Defined
  • A fresh start, regardless of where you have been before.
  • A greenfield approach that ensures that your work is not following a template based on prior work.
  • Only the most basic assumptions about your business are embodied.
  • Free of biased views of effectiveness, social responsibility, or environmental friendliness that can poison your culture and beliefs.
What You Can Do to Go Organic

Stay clear of pre-canned asset management approaches that shoehorn your business into their model.

Avoid regimens that can smother your business with standards, audits, and 3rd-party views of what’s considered good practice.

Leverage your in-house know-how and culture to brainstorm asset management conventions and methods.

Adopt practices that enhance asset availability, service life, and value realization while staying true to your business values and culture.

Go Organic – Benefits to Your Business

You’ll define asset stewardship for your organization.

You’ll breath  life into the way your assets are described, viewed, and managed.

Your approach to asset management will reflect your business, its character, and its values.

You’ll retain your distinctive culture, your vernacular, and your beliefs in your practices and your processes.

Go Organic – Benefits to Your Customers

Your customers choose you for a reason.  You are uniquely capable of satisfying their requirements.

Your customers depend on you to retain, and magnify, the special properties that inspired them to choose you.

Organic Asset Management – An Anology

When you perform a web search, some of the displayed search results are “paid” and some are “organic”. This link discusses the difference between “paid” and “organic” search results.

paid vs organic search

You can see that organic is genuine, untainted, and real. Paid is coerced, unnatural, and synthetic.

Paid search results go away as soon as someone stops paying. Organic search results persist because of their merit.

Make your asset management efforts a reflection of your beliefs, your culture, and your values. Stay clear of anyone else’s template for how you serve as asset stewards. Asset life cycle events are best defined by your organization’s mission and goals.

Keep outsiders, with standards, audits, and agendas at bay. Pursue your own, organic, persistent, approaches to asset stewardship.

Go Organic – Benefits to The Community

Nurture and sustain diversity and freedom of choice.

Mitigate conformance to restrictive standards and practices.

Maintain a climate that enables organizations to flourish.

Choose Organic Asset Management

Cultivate a healthy business life style. Harvest the fruits of your labor. Only you can envision, pursue, and sustain a holistic view of your business.
organic asset management
Be natural and true to your uniqueness. Adopt organic approaches to asset management.  Preserve your business as a place where fresh ideas can germinate and bloom.

Asset Life Cycles and Asset Stewardship

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.

business people discussing asset stewardship

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.

Acquisition

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.

Deployment

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.

business colleagues celebrating asset stewardship success

 

 

Asset Management Cloud Support

When your asset stewardship gains traction, you’ll need asset management cloud support to keep track and serve up information to spawn team discussion.

Support from the cloud ensures spontaneous access from anywhere on a variety of devices.

See Why Cloud Support Makes Sense for Your Business…

Use this link to gain perspectives on the many ways cloud solutions can empower your business.

ways cloud solutions can empower your business

A foray into asset management cloud support may be a powerful first step to harnessing cloud solution power, flexibility, and versatility.

Asset Management Cloud Support Delivers…
  • Visual renderings provide insight into asset performance.
  • Data-rich reports provide useful, actionable, information.
  • An engaging platform launches priceless, groundbreaking, discussion among users and asset management teammates.
Asset Management Cloud Support Empowers…
  • Achieve pinnacle asset performance.
  • Extend asset service life.
  • Enhance asset availability.
Asset Management Cloud Support is Uniquely Remarkable…
  • Leverage what your organization already knows about its assets.
  • Spawn conversations that boost communication, clarify diverse needs, and create workplace bonds among mixed disciplines.

asset management cloud support meetings spawn essential conversations

  • Engage in collaborative failure mode analysis.
  • Harness deep dive technology to gain enhanced asset views.
  • It’s at its best when you are at your best.  Inquisitive.  Social.  Transparent.  Time-efficient.
Make the next step yours…
  • Adopt a sustainable solution to a timeless challenge.
  • See what others do not see.
  • Embrace a solution that’s simple but not simplistic.
    “As simple as it can be. But no simpler.” – (Einstein)

Contact us for an eye-opening discussion. Take a tour of our cloud solution capabilities.

Offload record keeping and reporting to us. Focus on being remarkable.

Do You Need ISO 55000? Manage Your Assets to Best Advantage

Do You Need ISO 55000?

ISO 55000, 55001, and 55002 are sometimes referred to as a family or suite of asset management standards. Collectively, these standards can help establish a framework to facilitate effective asset management.

ISO 55000 – Does your organization need this guidance?

Is a foray into a standards-inspired management system an efficient way to spend your organization’s time and money?

You may have other management systems in place (e.g. ISO 9001 QMS). Drivers and motivations for ISO 9001 can be very different from those for ISO 55000.

We propose, if you’ve been in business for some time, you already have the requisite in-house know-how to utilize your assets to best advantage. Benefit from tips you find on our blog w/o having outsiders encumber your organization with standards, procedures, certifications, and audits.

Develop a custom-fitted management system for your tangible business assets by leveraging your company’s unique asset experience.

Watch our animated video (run time approx. 7 min). See how these good-natured characters resonate with you.

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.