Strategic management: Key for corporate goals

Organisations control the development and implementation of change and influence relationships, communications and the overall effectiveness of people.

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By  Oliver Schulz Published  May 29, 2005

CIOs and CEOs of enterprises in the Middle East are facing increasing pressure due to greater maintenance costs and lower operational margins. In order to cope with the growing business demands, they are looking for better management methodologies. In recent years, asset management has evolved from paper-based systems through computerised maintenance management systems (CMMS) and enterprise asset management (EAM) to strategic asset management (SAM). Although enterprises have worked diligently to keep up with new technologies and trends, the maintenance practices and approaches to managing maintenance have often failed. Strategic management of an enterprise’s assets maximises the performance of fixed, physical or capital assets that have a direct impact on achieving corporate objectives. Companies and organisations depend on assets to drive their business. However, they often see them as individual, stand-alone objects operating in the background. SAM enables enterprises to maximise how assets that are critical to business and financial performance are purchased, maintained, managed and optimised throughout their life cycle. This provides enterprises with an important source of cost savings, regulatory compliance, productivity enhancements and competitive advantage. SAM is highly relevant for all asset dependent organisations irrespective of their industry and size. Strategic asset management is intended to cover all asset classes, including production, facility, fleet and IT (hardware and software) asset infrastructures. The typical asset life cycle is defined in distinct stages including design and planning, procurement, deployment, tracking, maintenance and retirement. A complete SAM solution addresses all asset management challenges an organisation may face. The essence of SAM is the integration, synchronisation and optimisation of asset management practices across multiple types of assets of an enterprise at a strategic and tactical level. This management process affects everyone “from the backroom to the boardroom,” because the metrics associated with an asset have an impact on maintenance workers by measuring equipment uptime/downtime, operators by measuring quality and first time throughput, sales management by on-time delivery accuracy, management by measuring return on assets and fixed asset turnover and investors by measuring the current perceived value of the operation. Strategic asset management methodology (SAMM) is the delivery framework associated with managing assets strategically. SAMM brings together strategy, practice, project management and benefit realisation to support the customer’s business objectives. SAMM is a modular and scalable approach that can be adapted to meet the needs of different customers. The methodology does this by providing a holistic approach to managing assets through a framework of delivering value, return-on-investment (ROI), performance management, best practice, business change management and project management. There are four inherent characteristics of SAMM: Strategy, practice, project management and benefit realisation. The absolute advantage in economics is a concept of trade in which an entity produces products and services more efficiently, using fewer resources of labor, and/or capital, while maintaining market agility superior to its competition. Strategy is identified through the development of an impact assessment that is delivered following a short, intense on-site engagement that uses a series of targeted analyses, which last from several days to several weeks depending on the scope, complexity and depth of analysis. Impact assessment focuses on analysing the asset portfolio strategies, asset criticality to throughput, revenue, regulatory compliance, health safety and environment (HSE), risk mitigation, maintenance process practices, spares and services supply, expenditure controls and system and data quality. During the impact assessment, the team develops a realisation plan in the form of a business release schedule aimed at resolving the organisation’s most critical issues— known as “practical path forward.” The plan details specific business benefits that are derived by each implementation phase. It also provides the guidance to develop and implement the improvement strategies outlined in the impact assessment. The realisation plan is a logical, phased approach that is structured in such a way that the customer begins to see immediate results. It also gives the customer the ability to identify expected change that is required to move away from any previous experience into a more dynamic environment. Once you are moving forward in a dynamic business, you will want to measure and report on the dynamics to ensure the movement is in the desired direction. The improvement strategies may identify existing waste and how to eliminate it, making your organisation more “lean.” In many cases, the jointly developed realisation plan has benefited all the parties involved in the implementation process. The level of involvement and qualifications differ according to the plan and the complexity of the practical path forward. People are the prime movers in any enterprise and the strength of the organisation is only as strong as its weakest link. When modifying, redesigning or instituting change within an organisation, it is important to remember that the end result must be that the organisation, as a whole, is greater than the sum of its individual parts. That means companies determine the nature and purpose of the business, while the system of people is dependent on their own culture, education, training and experience. Organisations control the development and implementation of change and influence relationships, communications and the overall effectiveness of people.

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