Cover Your A$$ets. John L. Ross
organic to your location and your situation. If we all subscribe to Webster’s definition, then we might falsely saddle our constituents with a term that doesn’t actually resonate with them.
Here is an example of taking a higher authority’s definition and convincing others that it means something that just doesn’t settle with the population at large. In 2012, the United States government set the poverty line for a typical family of four at $23,050. Of course establishing a standard like this across such a vast and varied area as the United States is a bit of a non-starter. I would agree that a family of four might eke by in Slapout, OK on $23,051 (one dollar above the poverty line). But in New York City, at $23,051, that family is most likely still poor.
I encourage you, before you move on in this book, to completely define the words and phrases previously listed. It is important that you do this to gain initial experience with the interactive design of this book and to make sure that when you say ‘asset,’ you have clearly stated what you are talking about and there is no ambiguity.
Now that you have completed the assignment, ask two other people in your organization to document their interpretation of the words and phrases. This is important to gauge the degree to which our understanding of simple business-level words differ between members in the same organization. I would expect the answers to be similar, but not exact. No big deal right? I really don’t know. But, according to the government, you’re poor if you only make $23,050, and thus you qualify for all kinds of benefits. But if you make $23,051, then it’s “good luck out there.” So, do small differences matter?
Record your two colleagues’ responses here:
| Maintainability: |
| Reliability: |
| Asset: |
| Asset Management: |
| Asset Management Plan: |
| Strategic Asset Management Plan: |
| Maintenance Activities: |
| Maintainability: |
| Reliability: |
| Asset: |
| Asset Management: |
| Asset Management Plan: |
| Strategic Asset Management Plan: |
| Maintenance Activities: |
Is interpretation and understanding important in the workplace in a reliability setting? Put aside the definition of ‘poverty’ previously mentioned and in its place add the understanding of reliability, or better yet, a reliability strategy or approach. See Figure 1-1 to visualize how just three slightly different interpretations of ‘reliability’ and then three additional thoughts on connecting issues can lead to an unmanageable spare parts matrix.
Figure 1-1 A portion of the results for a slightly different interpretation of ‘reliability’
Figure 1-1 is highly unscientific but shows what I believe to be an all too real example of how we can end up off the mark by starting off with a loose definition. The figure shown is a portion of the larger results that stem from asking three people to define what reliability means. Then, three additional people were asked to take those three definitions and describe their ideas for the Bill of Materials, and so forth until the group ended up at eighty-one unique requests for a spare parts package to support the exact same machine.
Has it been your experience that you keep adding spare parts to the storeroom for equipment that has been in your plant for over ten years (or longer)? This phenomenon might be the result of different people with differing ideas of what is needed to support an operational asset. It is certainly a result of not having a clear process for determining how to put together a spare parts package. The skill of putting together such a package requires some decision-making criteria. This will be discussed later, in Chapter 4.
To summarize this introduction to Chapter 1, we have to understand each other in order to work, live, play, and prosper amongst one another. In describing the day of Pentecost, St. Luke painted the scene of a large crowd, made up of religious people from every country in the world: “They were all excited, because each one of them heard the believers speaking in his or her own language.” (Acts 2, 6-7 GNB)
Imagine the transformational feel of having everyone throughout your organization speaking in a language everyone can understand. A clear, crisp message can only be attained if the intended audience is part of the process of communication. We can start by first understanding exactly what makes an asset an asset in our company.
Just a few paragraphs before, you were asked to record your definition of the word ‘asset.’ At the risk of seeming like busy work, please document a combined definition, using your previous thoughts with those of your two colleagues. Please record that definition here:
| Asset: |
For the remainder of this book, or until you find it necessary to change this melded thought, let’s assume that this is your organization’s working definition of what an asset is. This exercise is important because now we are going to discover what makes an asset an asset in your company.
The working definition I use to explain what an asset is can easily be understood to be “any tangible or intangible item, thought, process, concept, or substance of value that can be manipulated for financial gain.” Ok, that got wordy, but I wanted to incorporate a lot of ideas into that working definition. In the business world, anything that has value and can be used for fiscal gain is an asset. The opposite of an asset in business is a liability. The two (assets and liabilities) make up what is known as a Balance Sheet. When a board member or corporate executive asks, “On the balance, how are we looking?” they are asking what the value difference is between assets and liabilities. As you can imagine, having more liabilities than assets is one attribute of bankruptcy.
This is not an exhaustive list, but rather an example of what an asset might look like in your organization. Very quickly, here are some assets you might consider:
■ Capital assets
■ Human resource assets
■ Financial assets
■ Property assets
■ Trade secrets or proprietary assets
■ Processes
■ Inventory
■ Accounts receivable
■ Your company’s brand
A careful review of the specific definitions of each of these might help in understanding their intrinsic value and to grow an intuitive desire to properly manage these assets. I caution you, these interpretations are not dictionary definitions, but rather my definitions based on three decades of field research. I strongly suggest that as you read this, you give some thought to how these assets are interpreted in your organization.
Capital Assets
I refer to capital assets as the ‘stuff that makes the stuff.’ This may be one of the easiest concepts to grasp. Capital assets may be a piece of equipment or machinery (e.g., office machinery, conveyor, oven, vehicle, etc.) that your company has ‘capitalized,’ indicating that you bought it to enhance, grow, or sustain your business for which the federal government