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BUSINESS MAGAZINE ON INNOVATION, LEADERSHIP, STRATEGY AND VISION
ASSET MANAGEMENT POLICY & STRATEGY (3)
ADOPT A CLEAR ASSET
• Being suited to the nature
•
MANAGEMENT STRATEGIE
In the third article of this series, we zoom in on the Asset Management system (see
illustration) and, in particular, on Asset Management policy and Asset Management
strategy. Why are the two so important in the strategic management of physical assets? Daniël Pairon, Global Head KPMG Asset Management, explains.
CxO Editorial Office
“We have noted a
lack of awareness
of strategic Asset
Management at the
senior management
level of many
asset-intensive
companies.“
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WHY IS AN ASSET MANAGEMENT
POLICY AND AN ASSET MANAGEMENT STRATEGY SO IMPORTANT
WHEN SETTING UP AN ASSET MANAGEMENT STRUCTURE?
Daniël Pairon: “We have noted
a lack of awareness of strategic
Asset Management at the senior management level of many
asset-intensive
companies.
There is a need for specific integrated solutions to support
asset management initiatives.
The reporting on physical assets is also frequently too limited and incomplete, especially
in relation to ‘financial-technical’ reporting, asset performance and/or asset risks. An
Asset Management policy and
an Asset Management strategy
establish the framework for
fulfilling the mission, vision
and strategic objectives of the
organisation with optimum
Asset Management.“
WHAT DOES AN ASSET MANAGEMENT POLICY COMPRISE?
Daniël Pairon: “In the Asset
Management system, Asset
Management policy forms the
bridge between the corporate
strategy and the Asset Management strategy. The policy
translates the strategic busi-
ness plan, the vision, the mission, the values and the business
goals into Asset Management
principles. It establishes the
scope of Asset Management.
What does Asset Management
mean and what is an ‘asset’ to
the company? Are the assets,
for example, only the production lines, or are the packaging
installations, the finished materials and test labs also included? The Asset Management
policy is a statement and has
to satisfy a number of criteria,
including:
•
•
•
•
and size of the organisation;
Being committed to complying with the regulations
and standards, whether
self-imposed or not, to
which the company is obliged to conform;
Providing a clear definition
of the Asset Management
principles;
Laying the foundations for
shaping an Asset Management system;
Securing the full endorsement of top management.
It is essential for the Asset
Management policy to not
only be approved by the
entire senior management
team but, above all, to be
communicated and explained proactively.”
ARE THE ASSET MANAGEMENT
PRINCIPLES DEFINED IN THE ASSET MANAGEMENT POLICY? GIVE
EXAMPLES.
Daniël Pairon: “The principles are the internal arrangeBeing consistent with the ments and definitions concompany’s strategic plan, cerning the management of
policy, procedures and risk physical assets. What are the
management approach;
agreements, for example, con-
Daniël Pairon, Global Head KPMG Asset Management
NOV/DEC 2014
25
GENERAL MANAGEMENT
BUSINESS MAGAZINE ON INNOVATION, LEADERSHIP, STRATEGY AND VISION
IN ASSOCIATION WITH KPMG GLOBAL ASSET MANAGEMENT COMPETENCE CENTER
cerning the taking of maintenance and replacement investment decisions, what are the
governance rules, how is the
value of the assets determined?
These agreements will underpin the Asset Management
strategy. Without a policy, you
cannot start an Asset Management strategy.”
and future demand for our
product and/or service with
the anticipated output of the
assets/asset portfolio. In other
words: does the company have
the right asset portfolio to satisfy tomorrow’s demand? A
trend analysis will or can determine the replacement investment policy.”
CxO LINK offers
• Being consistent with the businesses,
Asset Management policy; federations and
• Paying sufficient attention governments
to asset risk management;
access to the CxO
• Drawn up on the basis of community. KPMG
an asset service life ap- is responsible for
proach, applying in-depth the contents of this
knowledge of the overall sequence.
WHO DRAWS UP THIS ASSET MANAGEMENT POLICY?
Daniël Pairon: ”A good Asset
Management policy is the result of a thorough process in
which both senior and middle management as well as
operational personnel are involved. An Asset Management
policy is therefore not drawn
up quickly by just one individual. Make no mistake: the
structure, length and content
of a good Asset Management
policy can be written on a few
pages at the most.
“The Asset Management system is also outlined in the Asset Management strategy, in
other words, the framework.
Only in this way can Asset Management be implemented,
monitored and continuously
improved in a structured and
sustainable manner. The question of who will manage this
system also needs to be asked.
Who performs the functions?
Will this be a separate Asset
Management department, led
by an Asset Management manager?”
•
•
•
•
cost structure (Total Cost
of Ownership);
Sufficient input from and
involvement of the (key)
stakeholders;
Clear, transparent and supported Asset Management
strategy objectives, critical
success factors and a set of
critical performance indicators;
Laying the foundation for
the qualitative value matrix
with criteria such as performance, risk, etc.)
The idea of a holistic Asset Management System
with clear alignment of the
underlying
Asset
WHAT MUST A GOOD ASSET MA- A good Asset Management
NAGEMENT STRATEGY ADHERE strategy has to fulfil a number
of criteria, including:
TO?
Daniël Pairon: “The Asset Management strategy translates
the Asset Management principles into an Asset Management mission, vision, strategic
objectives and KPIs. In a later
phase, these are retranslated
into the Asset Management
operational goals and concrete
actions. The strategy also identifies the various stakeholders
and their expectations, such
as the manner in which you
report to them. Every Asset
Management strategy and Asset Management plan is preceded by a demand analysis in
which we compare the current The Asset Management system. This framework illustrates the roles, activities and relationships for
achieving optimum asset management. (image: Asset Management Institute)
NOV/DEC 2014
Read more on
page 26
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BUSINESS MAGAZINE ON INNOVATION, LEADERSHIP, STRATEGY AND VISION
IN ASSOCIATION WITH KPMG GLOBAL ASSET MANAGEMENT COMPETENCE CENTER
“The Asset Management
strategy translates
the Asset Management
principles into an Asset
Management mission,
vision, strategic
objectives and KPIs.”
•
Management activities and
processes;
Full endorsement of top management. It is essential for
the Asset Management strategy to be approved by the
entire senior management
but, above all, to also be implemented and experienced.”
“Overall: a good Asset Management strategy will undoubtedly
lead to sustainable value creation for an asset-intensive organisation through their assets/asset
portfolio.”
WHAT’S NEXT
The Asset Management
plan will be discussed
in the next article.
This describes the
rules for the optimum
management of physical
assets in the day-to-day
decision-making process
over their service life.
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TERMINOLOGY
ARE ALL PHYSICAL ASSETS TAKEN
INTO CONSIDERATION IN THE SAME
WAY?
Daniël Pairon: No, the strategy
identifies which assets are to
be included. Definitions and
criteria are established for this.
When is an asset critical? What
do availability and maintainability mean? Will the organisation
handle the same assets differently? The latter may, in fact, differ.
A power generator as a back-up
for a laboratory cabinet where
vital product samples are stored
will be managed differently over
its service life than a power generator serving as a back-up for test
equipment. All of these criteria
will be translated into a qualitative value matrix created within
the Asset Management plan. We
will discuss this in detail in the
next article.
of the Asset Management system are also
defined in the strategy,
which makes an ongoing
improvement
process possible.”
WHAT ARE THE ADVANTAGES OF A
DELIBERATELY TARGETED ASSET MANAGEMENT STRATEGY?
Daniël Pairon: “An Asset Management strategy provides an
integrated and informed approach to Asset Management. Taking account of the needs of the
company and its stakeholders, the
rules, the trends and the quality of
the maintenance and investment
requirements, asset performance
and asset risks. It is the basis for
much-needed ‘financial-technical’ reporting that also enhances
transparency for shareholders.
And it is the basis of an Asset Management plan that is implemented in the different departments
and/or business units. The KPIs
What is Asset Management Policy?
An Asset Management policy is a statement by an asset-intensive organisation on the principles
relating to the management of physical assets. A commitment that is developed at the strategic
level, is formally endorsed by senior management and is binding on all the personnel, as well
as suppliers of asset-related services. It is the cornerstone of every asset-intensive organisation.
What is Asset Management Strategy?
An Asset Management strategy is a document in which the asset management principles become
objectives and are translated into an asset management mission, vision and strategic KPIs. It
describes the Asset Management system. The Asset Management strategy is a requisite for every
effective asset intensive organisation.
NOV/DEC 2014