Cover Your A$$ets: Asset Management at Your Place and at Your Pace

By John L. Ross

Assets are the resources a company manipulates and uses to make income. This book helps to ensure your assets are always available to make income. It describes how to design for and care for production and facility assets.
    In his fun and informative second work, Cover Your A$$ets: Asset Management at Your Place and at Your Pace, John Ross breaks down the concept of asset management into relevant working elements. With ample space to jot down your thoughts and own experiences, this work is like Mad Libs™ for anyone wanting to implement Asset Management. In the end, readers can review, edit, compile, and pull together their own recorded thoughts and ideas to form a very obtainable vision for the future.
    There are many technical references on asset management, but what is truly needed in the field is a step-by-step process for taking care of the assets and equipment that makes the company profitable. By reading this guide, users will feel as if they are personally working with a seasoned, experienced asset management professional to put together a customized strategy for how asset management could and should be implemented at their own location.

Features
 

• Focuses on physical industrial assets (manufacturing, service, and facilities) and creating an asset management strategy to help generate revenue.
• Reviews the ISO 55000 standards and explains how to implement them with your personal asset management strategy in mind.
• Takes a deep dive into designing equipment for optimum maintainability and reliability.
• Includes a section on Bill of Materials and Spare Parts, two topics that are often misunderstood.
• Each chapter ends with a review of the main points. The synopses will form segments of your overarching approach to asset management.

• Language: English
• Publisher: Industrial Press, Inc.
• Release date: Aug 13, 2019
• ISBN: 9780831195229

John L. Ross

John L. Ross, Jr., Ph.D., CMRP, is a seasoned practitioner of maintenance and reliability with over three decades of field and plant experience.  He is a former Captain and Gulf War Veteran with the United States Air Force.  Dr. Ross is the President of the international reliability consulting company, Maintenance Innovators, Inc., and the sole proprietor of State Line Group, LLC.  He proudly serves as a Senior Consultant with the widely renowned Marshall Institute.   

Book preview

ONE

What Are Assets?

"...Language differences frequently—if not

usually—erect a barrier to understanding."

—Ed McMinn, Oklahoma State Daily Devotions for Die-Hard Fans (p. 17)

Imagine that you have woken from a coma in a familiar land, but communicating with those around you seems to be difficult. Difficult because, although the words are all familiar, the context, structure, and inflection of the inhabitant’s speech doesn’t conform to your known norms or your familiarity with the spoken language. You can clearly hear every single word, and you know what each word means, but as a structured sentence, your compatriots are not making any sense. How frustrating would that be?

When I was in the military I made an accidental discovery that I went on to prove many times. I had noticed that the higher grade a senior officer (major through general), the more ambiguous and unclear his or her communication seemed to be. I left many colonel and general’s offices asking, What did they just say? It was difficult sometimes to differentiate between a thought, a direct order, and just an idea. Fortunately, the good senior NCOs (non-commissioned officers) I worked with could help me decipher the intent.

I contend this is the level to which our business vernacular and communication has declined. We are in an organization with other professionals, presumably on the same mission, shooting for the same goals, but for some reason we can’t understand our cohorts and they don’t seem to understand us. We are not speaking the same language. When it comes to the language of equipment performance and availability, there doesn’t seem to be a common language at all. (Ross, p. xx) And further, A common language is foundationally needed for a working relationship. In order for maintenance, engineering, production, purchasing, corporate leadership, and others to work and thrive together, understanding the most primary terms is required. (Ross, p. xx)

In the introductory chapter, I mentioned that you would be actively participating as you read through this book. I went on to explain that I was writing a book that had the feel of you and me sitting across the dining room table, drinking coffee and just talking about stuff. Here is your first task, and one that I hope successfully demonstrates this need for us to get alignment on our words, and more specifically, the meaning of those words. Please fill in your definition or description of what the following words or phrases mean.

Of course there are canned and widely accepted definitions for these words and phrases, but I feel it’s important that you and your organization accept an explanation that is 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:

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.

What Makes an Asset an Asset?

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:

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 rewards you by allowing you to depreciate its value over time. Depreciation amounts and time frames are dependent upon what type of asset it is, its cost, and use. Capital assets are usually identified in a business by having an individual asset tag and asset number. It is not unusual for maintenance departments to get involved by performing an annual ‘asset audit’ to assure the accounting department that all the assets being ‘depreciated’ are in fact still on the premises.

Several years ago, some crafty accounting loopholes were discovered that allowed for what were traditionally expensed repair activities to be ‘capitalized.’ This seemed like fuzzy math, but it also appears to be legit. The unintended consequence is that maintenance and the storeroom have to track spare parts as capital assets. Very few companies or organizations do this very well. If you track these new capital additions and you’re good at it, then consider yourselves leaders of the pack.

There will be greater discussion on capital assets as this is actually the focus of this book. For now we’ll keep this as just an introductory session.

Earlier I shared my working definition for an asset as, any tangible or intangible item, thought, process, concept, or substance of value that can be manipulated for financial gain. In Table 1-1, please list a single capital asset in your facility and at least two ways this asset can be (or is) manipulated for financial