Enterprise Asset Management – the Often Neglected Source of Competitive Advantages for Your Business
Most businesses, whether for profit or non-profit, have three types of assets: capital, people, and physical assets. These assets provide the businesses with means to be competitive, and to be efficient in delivering services.
Most businesses have Controllers or CFOs to manage capital and optimize the return. Most businesses have SVPs of Human Resources to select, manage, and develop their people.
However, how common do businesses have someone at the C-level to be responsible and accountable for optimizing the return on their investment in physical assets? Rarely. That’s why I think the discipline of Enterprise Asset Management is often the “Neglected Source of Competitive Advantages for Businesses”.
Why do I think that disciplined approach to Enterprise Asset Management can be a source of competitive advantages for your business?
- Improve the productivity of the staff because they have what they need at the right time and the right place. They no longer need to waste time in looking for lost or misplace equipment.
- Improve the level of services to customers because the right equipment are provided to enable the service delivery.
- Improve the profit margin because of tighter control of equipment purchases and usage.
When talking to many businesses and government entities, I have realized that most of them haven’t been able to leverage Enterprise Asset Management as a source of competitive advantages. Some known facts across both the private industries and the government sector:
- On average, a company wasted $430k annually because of misplaced or lost equipment.
- An average employee spent 1 full week annually in locating equipment.
- Department of Defense has the goal of “Clean Audit” by 2017, but DOD is facing significant challenges in Government Property Management.
In a DOD Inspector General Report published in March, 2014: “The Redistribution Property Assistance Teams (RPATs) did not have effective procedures for processing and safeguarding retail and wholesale equipment at the RPAT yards in Afghanistan.” “As a result, the Army reported total accumulated losses of $586.8 million on 26 Open Financial Liability of Investigations of Property Loss reports…”
Clearly, there is the opportunity for leveraging Enterprise Asset Management to improve the competitiveness of businesses and efficiency for government entities. But change is never easy. In order to build a disciplined approach to Enterprise Asset Management, businesses and government entities need to make changes at both the strategic and operational levels.