| Tackling Revenue Straight From The Assets |
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| In: Asian Channels September 2005 | |
| Written by Clement Goh, Senior Director of Sales and Marketing, Asia Pacific, Datastream Systems Pte Ltd | |
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Top performers optimise their assets. It’s true in any field — sports, the arts, and business. Yet in business, optimising performance of capital assets often plays distant runner-up to the more glamorous pursuit of top-line growth. That’s not surprising, given the importance of increasing sales revenue and growing a customer base. But it can be costly. Under-performing capital assets can leave tremendous profit potential on the table. It is time now for CXOs to examine what we termed “Asset Performance Management” (APM), as it is the secret to making significant reductions in operating expenses and improvements to the bottom line. APM combines best-of-breed enterprise asset management (EAM) software with the power of cross-functional data analysis and advanced analytics, which enables organisations to make decisions that optimise not just their assets, but also their operational and financial results. Top performers optimise their assets. It’s true in any field — sports, the arts, and business. Yet in business, optimising performance of capital assets often plays distant runner-up to the more glamorous pursuit of top-line growth. That’s not surprising, given the importance of increasing sales revenue and growing a customer base. But it can be costly. Under-performing capital assets can leave tremendous profit potential on the table. It is time now for CXOs to examine what we termed “Asset Performance Management” (APM), as it is the secret to making significant reductions in operating expenses and improvements to the bottom line. APM combines best-of-breed enterprise asset management (EAM) software with the power of cross-functional data analysis and advanced analytics, which enables organisations to make decisions that optimise not just their assets, but also their operational and financial results. ARC Advisory Group may have said it best. “Investments in capital assets are staggering billions of dollars invested in hundreds of plants worldwide. While the nature of the assets may differ acquiring, maintaining, and disposing of these assets is a very serious business. A one percent improvement in performance can be worth millions annually.” Asset management has traditionally been marketed to and run by an organisation’s maintenance personnel. Unfairly, maintenance does not receive the attention it deserves, even though it is a critical business lever – accounting for as much as 50% of some organisations’ operational expenses. But it is also unglamorous and has resulted in asset solutions being hidden from executive level attention. The benefits of asset solutions are no secret to maintenance managers worldwide, but those benefits have yet to percolate to the top of the executive suite.THE EVOLUTION OF APM APM has the power to overcome the maintenance stigma because it has the power to change operational performance. It completes the evolution from maintaining assets to optimising assets for higher profits and better overall performance on the bottom line.First-generation solutions, known as Computerised Maintenance Management System (CMMS), are essentially a way to automate a maintenance to-do list — when to turn the wrench on a certain piece of equipment, when to order replacement parts, and so on. The next generation, Enterprise Asset Management (EAM), focused on how to track and manage an asset’s performance — how to extend the asset’s life and reduce its downtime. For example, if an organisation has 200 forklifts across 10 sites, and 150 are productive and 50 are not, the company can analyze maintenance transactions associated with the better-performing lifts — which manufacturer made them, when and how often they are maintained, what comprises preventive maintenance, and so on – and then use those findings to improve performance. APM builds upon and extends EAM by combining asset management, maintenance and tracking with the ability to use this data to improve operational decision-making. EAM answers the question, “How do we get the most out of an asset?” Asset Performance Management answers the question, “How does the asset affect operational performance? APM supplements enterprise-wide maintenance transaction data with data from other silos in the organisation — such as finance, human resources, inventory, and production — and provides the advanced analytics necessary to identify correlations and trends, thereby improving operational decisions and results. Consider a chief operations officer with the goal of increasing production output enterprise-wide by 10 percent through a more efficient production process. Using APM, the COO might look across the organisation and notice that where production lags, a high number of reactive work orders are being issued, and that where this is true, there is also a spike in the use of contracted labour. This leads to the conclusion that increased use of contract labour directly decreases both equipment (asset) efficiency and production output. Information drawn from HR, production and maintenance data enables the COO to isolate a problem, predict the impact, and decide what steps to take for improvement.APM INFLUENCES ENTERPRISE PROFITS The relationship between assets and bottom-line profits typically receives scant attention from upper management. This is another reason why the profit potential of APM remains something of a secret from the broader organisation. The good news is that because this potential is overlooked, executives and organisations seeking top performance have new profit opportunities. |
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