Asset Resource Planning (ARP)

When companies that need to manage physical assets look to improve the efficiency of their operations they are often met with a lack of relevant information on the subject. Almost all the documentation on productivity and efficiency increases is aimed at production line companies. E.g. Manufacturing type organizations.

The sorts of things that are generally contained within this sort of documentation are tips on MRP (materials resource planning) MRP II (manufacturing resource planning) JIT (just in time inventory management) and ERP or enterprise resource planning. (A descendent of MRP)

However, due to fundamental differences in the way that these different industry sectors run, these techniques and methodologies can only deliver limited results to asset intensive companies, and in some cases they are actually counter productive in generating productivity improvements.

So why the big difference?

Within a production driven enterprise, resource levels and requirements are driven in the following way.

Demand forecasts determine the period, or annual, production plan.

The production plan determines the production orders.

The production orders determine the raw materials requirements, the labor requirements, the energy requirements and so on.

Within any manufacturing or production line business the pinch points where a company can increase the efficiency and productivity of the company is either in the way they order, (supply chain), the way they utilize their labor (autonomous teams, multi skilled teams and other methods) and through the way they regulate demand and supply to ensure quick delivery and stockpile reductions.

Lastly, manufacturing companies are limited by their demand forecasts and ability to bring new facilities online if required.

Asset-intensive companies are entirely different in their operating models. The main difference is that these types of companies require continual high levels of performance from their physical assets. it is frequently the case that Asset-intensive organizations are actually restricted in their production planning by the reasonable levels of availability of their physical assets.

The next post will look at the characteristics of asset intensive industries, the pinch points for increasing effieicney and the methods and tools that are available to do so.

Daryl...