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The primary intention of this book is to present the Maintenance Scorecare, a tool designed to help maintenance practitioners, owners, and managers develop and implement strategy for the management of their physical asset base.
The Maintenance Scorecard
(The Maintenance Scorecard Competitive Advantages)

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   by Daryl Mather
Published By:
Industrial Press Inc.
Unquestionably a maintenance scorecard (MSC) consistent with corporate goals will be invaluable. SALE! Use Promotion Code TNET11 on book link to save 25% and shipping.
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Competitive Advantages – Corporate Level

 

The beginning is the most important part of the work.

-          Plato

 

Balancing Perspectives

 

The previous chapter provided a brief overview of how the MSC can be applied via a hierarchy of objectives, or a structured approach. The structured approach consists of linked objectives through three fundamental levels, namely corporate, strategic and functional. (See Figure 2.1) The first step in defining this hierarchy commences at the corporate or executive levels of management. This is done through the definition of the competitive advantages, or corporate objectives, of asset management.

 

The definition of competitive advantage, within the context of the MSC, refers to the set of unique or hard to duplicate abilities, competencies and capacities contained within an organization that allows it to better compete within the markets that it operates in. These are the desired levels of performance that a company is going to need in order to better compete within its chosen markets.

 

The task of defining how asset management can contribute to a company’s competitive ability is one that is becoming increasingly complex. One of the distinguishing features of asset management in the beginning of the 21st century is the increasing need to make decisions based on an element of compromise. Although the need for improved financial performance is paramount, it cannot be gained at the expense of other important factors. A decision to purchase assets for a lower initial price needs to be balanced against potentially higher life cycle maintenance costs. Similarly a decision to increase levels of safety needs to be balanced against the potential additional costs that may be required.

 

The extent of these decisions, and their impact on shareholder value, has placed asset management in an almost unique situation. More than most other managerial disciplines, asset management is about striking a balance, whether balancing the requirement to release value with the responsibilities of managing risk, or balancing the requirements for short-term gains with the needs for long-term profitability. This remains the principal challenge for asset managers in the foreseeable future, maintaining the balance between profitability and other responsibilities, between short-term gains and long-term shareholder value and between acceptable and unacceptable risk taking.

 

These challenges have contributed to the need for a framework for administering asset management, a framework that provides the mechanisms to manage these issues, and others, to ensure competitiveness in both the short and long-term. The MSC provides a framework to assist companies in understanding how to make asset management a source of competitive advantage. This needs to take into account the range of pressures acting on this area. As such the rigorous application of the principles of the MSC begins by first defining the challenges that an organization faces in its chosen markets, and second through asking six fundamental questions in the defined areas of importance of asset management. (See Figure 2.2) While these areas are not always all applicable, there are few examples of additional requirements in the history of applying this management tool5.

 

The defining feature in all of these areas is the recognition that modern day industry is more dependent on machinery than at any time in history. The effects of this dependence are at the heart of the area’s growing importance to the operational performance of companies that need to manage physical assets.

 

Productivity Perspective

 

How can asset management contribute to the ability to produce more?

 

While a great deal of asset management is dependent upon machinery design and maintenance, much also depends on the individuals utilizing the machinery and the environment in which it operates. This introduces a variable that marks asset management as different from the majority of areas of routine corporate activity.

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5 Issues such as customer and stakeholder perspectives are addressed later within this chapter.

 

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