Find Competitive Advantage With Asset Management
EP Editorial Staff | May 15, 2019
By Drew D. Troyer, CRE, CMRP, Contributing Editor
Most people think of reliable asset management as maintenance. This is natural. How many, though, also think of it as an opportunity to create a competitive advantage? Let’s explore.
Some years back, researchers Robert H. Hayes and Steven C. Wheelwright created a model showing how operational excellence can create a competitive advantage. As shown in the accompanying chart, I’ve adapted their model in terms of reliable asset management.
Hayes and Wheelwright defined the following four stages for creating competitive advantage through improved operational capability (which included reliable asset management for asset-intensive manufacturing, process, and mining industries):
Internally Neutral. This type of organization is internally focused. From an asset-management perspective, the Internally-Neutral organization usually only corrects its worst problems and typically in a reactive fashion. From a competitive perspective, its actions are neutral: These organizations don’t create or contribute to establishing a competitive advantage in their respective industries.
Externally Neutral. These organizations begin to look around. They read books and articles and attend conferences and meetings. They’re learning how others, including their competitors, are performing various activities, such as predictive and preventive maintenance and planning work management, among others. As such, they’re external in their focus, which is good, but still neutral as it relates to creating a competitive advantage. That’s because the Externally-Neutral organization is always behind the competitor against which it benchmarks.
Internally Supportive. This type of organization has really turned a corner. It has figured out that its design/procurement, sales and marketing, operations, and maintenance functional groups don’t compete against each other, nor should they. It also has determined that reliable asset management is a team effort, i.e., assets must be designed and procured for reliability, we can’t sell things that we can’t make, we can’t operate the assets beyond their limits, and we must maintain assets effectively. The Internally-Supportive organization clearly understands the importance of working as a team toward a common goal and has policies, strategies, procedures, and practices to support it.
Externally Supportive. These organizations are the advanced players in the reliable-asset-management world. As they become increasingly effective and efficient at managing their assets, compared to the competition, they discover they’re better at surviving market downturns than their competitors. According to the Hayes and Wheelwright model, during a market downturn, poor asset operators may find themselves in tough cash positions and struggling to pay their bills. The effective asset manager, however, is still getting by. In some instances, where it makes sense, the effective and Externally-Supportive reliable asset manager can go shopping and possibly pick up additional plants, divisions, even entire companies at bargain-basement prices, as opposed to increasing capacity through conventional expansive capital.
The point of this discussion is simple: Don’t limit your asset-management process to just doing maintenance better. Leverage it as a tool to set your operations apart from your competitors in the market. EP