Business Drivers

Managing Asset Information to Make Better Decisions

Focusing on Financial Issues Related to Your Operating Assets

Managing Your Assets to Manage Your Risk

Managing Your Assets to Support Your Business Strategy

Driving Behaviour Through Performance Measures

Is reducing operating and maintenance cost the only way to improve profitability? 

What is the impact to reducing asset management budgets?

Increased profitability can be achieved through reducing the per-unit costs of the output.  This can indeed be achieved through reducing operating costs, including asset management and maintenance budgets.  The difficulty is that typically the impact is negative to the individuals who need to make the changes.  Increased profitability can usually be more easily be accomplished by increasing output within the existing infrastructure, if all the output can be sold.  To help drive this behaviour, one common performance measure used for production is OEE (Overall Equipment Effectiveness).  OEE is the product of Availability, Production Rate, and Quality Rate; or simply: how long you can run it, how fast you can run it, and how much of the output is good.

If focusing only on costs and not results, it is possible to reduce the asset management budget to the point where the physical assets are not able to perform at the desired level, resulting in loss revenue and reduced profitability.  Taken to the extreme, is the situation where the organization is not replenishing or refurbishing the infrastructure, but instead is “consuming the assets” required to produce the product or deliver the service.  This may be required in a crisis situation, where the long-term is sacrificed as the future beyond the short-term remains in question.  If the situation of consuming the assets is left to continue, the expectation is the organization is not looking to remain a “going concern” in that business.

Are you focusing on the right financial drivers? 

Do you fully understand the implication of the financial decisions made?