Value Based Asset ManagementSmart Asset Management

Business Statements Objective Basic Concept Document Comparative Benefits To Management Planning & Support Getting Started Develop A Plan Implementing Plan Document Results Communications

Discussion Items

Most Companies: Are Implementing ERP Systems

ERP Systems Do NOT Address Asset Accountability Or The Cost Of Ownership Of Assets Company Assets Government Assets Customer Property

ERP Systems Do NOT Address Property Management Regulatory Requirements

Are NOT Aware Of The Cost To Acquire, Manage And Dispose Of Assets

Business Statements

Managing Assets Costs 3 To 4 Times More Than The Management Perception

Most Costs Can Be Reduced Or Eliminated With A Total Asset Management System: Cataloged Assets Single Database Integrated Processes Accountability & Responsibility Must Be Well

Defined

Business Statements

Most Companies: Do Not Recognize The Significant Resource & Cost Now

Spent To Manage Assets Through The Life Cycle (Cost Of Ownership) Property Management Facilities Calibration Maintenance Retirement & Disposal Accounting

Depreciation Taxes Insurance

Physical Inventory Etc.

Business Statements

Implement A Single COTS Accountability System & Proactive Processes For The Management And Control Of ALL Assets.

Eliminate All Systems That Overlap, Duplicate Or Are Maintained To Satisfy Individual User Needs

Integrate All Systems Necessary To Provide Data Needed To Accomplish Accountability & Responsibility

Implement Tools That Drive Consistency Data Base Discipline Catalog Assets

Drive Effective Solutions That Streamline Processes, Improve Efficiency, Substantially Reduce Cost And Generate Revenue!

Objective

Implement A Single COTS Accountability System For The Management And Control Of All Assets. Most Corporations Are Directing Commercial Of The

Shelf Solutions. Corporations Are Slashing Software Development

Budgets Company Solutions Do NOT Stand The Test Of Time

Maintenance & Upgrade Funding Is NOT Supported Resource Support Is Erratic At Best System Documentation Is Poor Or Non-existent

Company Solutions Cost More To Develop, Upgrade And Maintain

Objective

Eliminate All Systems That Overlap, Duplicate Or Are Maintained To Satisfy Individual User Needs With No Benefit Eliminate All Sub Systems Required To Manage

Assets Maintenance Calibration Disposition Access Databases Excel Spreadsheets Subcontractor Control

Objective

Eliminate All Systems That Overlap, Duplicate Or Are Maintained To Satisfy Individual User Needs Chose A Solution That Can Be Integrated With The

Company’s ERP System For Key Interfaces Material Accounting Contracts EH&S Export Control

Objective

The Purchase Of Capital Assets Adds $$$$ To The Investment Portion Of The ROI Equation

The Same Capital Assets After Purchase Add Costs Annually (Cost Of Ownership) Which Are Part Of The General & Administrative Costs (G&A) Costs Of The Organization

Basic Concept

G & A=

A Dollar For DollarReduction In Operating Profit

=Return

Basic Concept

Cost Of Ownership

Basic Concept

Initial Evaluation Assets were costing the company Over $10M annually

$7M in equipment-related costso $3.5M in engineering productivity impacts

Equipment resources were not being effectively managed. Assets were held by departments as “Just in Case”

inventories and reactive processes fueled inefficiencies Implementing and institutionalizing a solution, due to

logistics, expertise and deep seated and habitual hoarding practices of the engineering products, would not be a trivial task

Document Comparative Benefits

Hi Tech Company

Results Utilization more than tripled, reducing the inventory

from 19,000 assets to just 11,600 Capital expenditures were reduced from $9.6M to

$1.7M Control of assets was dramatically improved:

o Write-offs were reduced from $800K to less than $8Ko Past due calibrations went from 10.5% to 1%

• Product delivery time was reduced by 20%

Document Comparative Benefits

Hi Tech Company

Significant improvement in efficiency was achieved:o Bench-to-Bench calibration time was reduced from 10 days

to 2 days

o Equipment lead-time from user request to arrival of equipment was reduced from 16 weeks to less than 1 day

o 20 man years of productivity were saved each year

Document Comparative Benefits

Hi Tech Company

Initial Evaluation24 separate databases/spreadsheets were being managed

in addition to the capital asset databaseOver 30 different labs were working on programsEquipment utilization was measured at 9%Nearly half the equipment was no longer supported by the

Calibration lab putting projects and schedule at riskTest equipment was not standardized across labs and

programs decreasing the likelihood of sharingEngineers were fearful that they would not be in control and

would not have equipment to do their jobs

Document Comparative Benefits

Defense Firm

ResultsUtilization nearly tripled going from 9% to 26% Total Inventory was reduced by35% Capital expenditures were reduced to 75% of historical normsThe inventory of obsolete unsupported equipment was reduced

by 50%Lab space was freed up allowing for growth needed by the

contractorThe capital approval process was streamlined; over 95% of all

requests are fulfilled through re-deployments from current inventory

ROI increased and cash flow savings exceeded the goalCapital is available to acquire state of the art equipment

required to meet increased demands

Document Comparative Benefits

Defense Firm

What We Found:

Document Comparative Benefits

Personal Experience

Majority Of Capital Assets: Were Outdated Or Obsolete Had Been Acquired For Only One Requirement Were NOT Shared Utilization Rates Were 20% At Best Lack Of Coordination Between Engineering &

Operations Multiple System Improvement Opportunities Multiple Record Systems In Use With No Integration Significant Cost Savings Opportunities

Document Comparative Benefits

Personal Experience

What We Did Implement 3 Phase Plan

Improve Processes Implement Integrated Data Base

New COTS Software (AssetSmart) Must Have Data Discipline Controls Must Have Standard Catalog Capability Including New Asset

Updates

Improve Asset Utilization Capital Expense

Document Comparative Benefits

Personal Experience

Phase I Implemented Over 50 Process Improvements Resulted In $21.3 Million In Cost Savings

Phase II Consolidated Over 35 Systems Into AssetSmart Resulted In $5.2 Million In Cost Savings

Phase III Improved Utilization From 20% to 42% Resulted In $11 Million Total Cost Savings = $37.5 In Cost Savings

Document Comparative Benefits

Personal Experience

Cost Savings By Phase

Document Comparative Benefits

Personal Experience

Total Cost Savings

Document Comparative Benefits

Personal Experience

Senior Management In All Departments Capital Budget

Resource Expense

Information Technology IT

Development Administration Software Support

Planning & Support

Key Functional Areas General Accounting Calibration & Maintenance Security Production/Operations Engineering Material Management Receiving/Shipping Depot/Spares Operations

Planning & Support

Obtain Management Support Ensure IT Priority For Resource And Administrative

Support Involve All Functional Departments In Design &

Implementation Plan Make Sure They Understand & Accept Responsibilities

Place Responsibility With Physical Custody Receipt/Disposition With Property Management User Responsible For Day To Day Accountability Assign Custodians Only When They Can Control & Be

Responsible!

Planning & Support

Develop A Total Property Management Plan Develop A Master Plan For All Areas Develop Software Requirements

Ensure Data Element Control Ensure Asset Catalog Capability Including Updates Ensure Catalog Includes Technical Specifications For

Assets Identify Areas For Automation

Electronic Movement Automated Forms Integration Of Responsibilities

Getting Started

Develop A GAP Analysis For All Software Capability Include All Functional Area Data Elements Are Included Include Data Element Control Capability Include Asset Description Control Include Asset Utilization Capability Include Regulatory Report Capability Include Ad Hoc Reporting Capability Include Automated Forms Capability

Sample GAP Analysis file://localhost/Users/robertmcfarland/Desktop/Smart

Asset Management/Sample GAP.xls

Getting Started

Conduct GAP Analysis Develop Scoring Plan Based On Priorities

Required For Compliance Required For Functionality Required For Control Required For Integration Required For Improvement Improves Efficiency Improves Accountability Improves Accuracy Nice To Have

Getting Started

Conduct GAP Analysis Chose At Least 3 Potential Suppliers And Score

Results Based Established Priorities Include All Supplier Input Not Included In GAP

Analysis Decide If New Input Is Relevant Add Requirements As Determined By Team

Request Input From All Suppliers For New GAP Analysis Requirements

Obtain Supplier References !!!

Getting Started

Make Sure To Ask For References And Make Sure They Are Checked Out In Detail

Conduct Final Analysis And Team Decision Make Final Software Decision Communicate Software Decision:

Team Users Management

Getting Started

Develop A Comprehensive Plan Start Plan As Soon As Management Approval Is

Secured Include ALL Required Actions

Be Specific Assign Individual Responsibility For Each Action Make Sure All Actions Are Broken Out

Independent Actions Dependent Actions

Assign Time Frames For Start & Completion Actions

Develop A Plan

Make Sure To Communicate With All Employees!! Formal Periodic Team Reports Formal Management Reviews

Include All Issues & Problems Test, Test & Test Notify All Users Of Key Events

Process Improvement Implementation Dates New System Testing Dates New System Go Live Dates

Develop A Plan

Keep Communication Lines Open: Team Management Custodians & Users

Be Open To Changes When Necessary Regulatory Changes Customer Input

Internal External

Implementing The Plan

Provide Periodic Management Briefing Of Results Process Improvements Integration Successes Utilization Improvements Performance To Schedule Performance To Budget Any Obstacles Or Changes

Make Sure There Are No Management Surprises

Document Results

Communicate With Team On All Issues Communicate With Users

E-mail Employee Bulletins Awareness Posters

Communicate Across Company Peers At Other Divisions Property Management Council

Document Results

Market Your Program & Results Create Standard Formats For Each Improvement Ensure Consistency Ensure Clarification Of Each Objective

Define The Objective Explain All calculations Automate Results Include Metrics

Sample Format & Tracking System file://localhost/Users/robertmcfarland/Desktop/Smart

Asset Management/AMC-Metric Template.xlsx

Document Results

Maintain Company Awareness Across The Company

Consider Corporate “Best Practice” Programs We Received A Best Practice For Our Program Provide Visibility Company Wide

Program Website Corporate Property Website

Maintain A Narrative Report To Be Used For Corporate And Professional Publication

Sample Narrative Report

Communicate Results

You MUST Demonstrate The Value You Add Property Management Can Provide And Endless

Stream Of Projects To: Improve Efficiency Eliminate Overlap & Duplication Reduce Cost

All Result IN Cost Savings or Cost Avoidance To Your Company

file://localhost/Users/robertmcfarland/Desktop/Smart Asset Management/SMART-VBAM-Narrative.docx

Summary