When we think about disruptive forces that can impact business, we often think about technological change, emerging competitors, or economic cycles. But today, policy and trade regulations may create greater exposure to risk than any of these things.
For example, import/export and other regulatory compliance legislation changes can impact where you manufacture goods and how you move raw and finished goods across the world. Trade policy is shifting rapidly, and we may be entering a time where tariffs and non-tariff trade barriers fluctuate rapidly. The resulting supply-chain volatility can cause a domino effect in your logistics strategy, making it more expensive to move goods in and out of inventory. Even changing consumer tastes can mean slower sales and lulls in production.
For organizations with significant investments in capital assets, this instability can be a huge financial drain. And market pressures and changes can impact the return on assets in ways you couldn’t predict when the asset was originally planned, purchased or created.
Using Visibility to Your Advantage
One of the ways to increase stability during times of disruption is to have a good handle on all your assets and their corresponding data. We all know that capital assets like manufacturing, mobile oil & gas rigs, energy plants, ports and other revenue-generating infrastructure have long lifecycles of 10 years to 50 or more years. Yet the business cycles that determine the cost to build and operate the assets, and calculate the return on your investment, work across shorter cycles of years or even months. These cycles can condense further in times of intense market disruption, so you can’t spend months strategizing changes to your asset mix – you often need to make decisions much more quickly.
Say you have a drastic reduction in demand. You may choose to sell off assets or idle portions of your asset portfolio for a set period of time depending on which strategy offers a better return. Similarly, regulatory or global trade pattern changes can render useless the assumptions used to justify an asset in one region while placing a premium on productive capacity in another region. It’s easy to see how the ROI of assets can decline quickly when the output produced by the asset fluctuates in volume and value.
When you have full visibility into your asset portfolio, it’s easier to make strategic business decisions that allow you to optimize use of the assets that add value in the current landscape. Small organizations operating within one region may be able to do this manually. But large, global organizations need to leverage a centralized system that manages assets and value using real-time data and financial inputs.
Automation and Insights
By using a leading enterprise asset management (EAM) software, organizations can gain a higher degree of visibility and control over asset operations and cost. An EAM solution doesn’t simply inventory assets, it can plan, optimize, execute and track all aspects of each asset, including maintenance, its operational demands and other needs based on the stage of the asset’s lifecycle.
Once set up, EAM inputs based on disruptive market changes, such as changes to tariffs in certain geographies, can provide insight into which assets will be impacted, and it can provide guidance on how to proactively manage assets in light of the changes.
An effective EAM solution should support strategic decision making by enabling you to streamline refits, shutdowns, decommissioning, and construction and commissioning of new assets, all while ensuring adherence to health, safety, environmental and corporate social responsibilities as required by law and/or company policy.
With hundreds, sometimes thousands, of assets to manage globally, you might feel overwhelmed just thinking about the level of data and reporting required to truly leverage an EAM. But a modern EAM should allow you to manage similar assets or asset classes at multiple sites without creating each asset separately in the system.
Look for a system that is both flexible and customizable. You need to be able to create a class of assets with standard maintenance, parts, tools and other data tied to the class. But, you also must be able to edit these objects to accommodate individual site differences such as pricing or regulations in different countries.
EAM as the Hub of Intelligence
To help manage effectively through disruption and volatility, your EAM system must be the system of record – not a point solution that lives alongside other software used to run the business. And it must address the entire design-operate-maintain asset lifecycle.
Take this example: During a drawdown of operations at an existing facility, visibility into maintenance
spares and repairs inventory is crucial. With an EAM, you can determine how much cash is tied up in spare parts and how useful those parts might be at other facilities. You can determine the market value of the asset or parts versus the cost of shifting them to another operation.
Without a fully integrated software system, organizations end up leaving money on the table during the sale of a plant. Or, you duplicate the purchase of existing parts and equipment that could have been consumed at a different location where production is being ramped up, simply due to a lack of enterprise-wide visibility.
Using an EAM this way – the right way – allows large global organizations to understand and make informed decisions to maintain the highest value possible for all your assets, even in the face of market disruptions.
About the author: Colin Beaney is global industry director, Energy, Utilities and Resources, IFS, and has 20 years of experience in the enterprise software industry. He is currently responsible for implementing and project managing IFS software into many asset-intensive organizations worldwide, covering industries that include energy, utilities, pulp & paper, aviation and defense.
Edited by Ken Briodagh