When looking at managing a large scale asset base we are continually faced with large scale capital spending costs. These focus on three specific areas, new asset purchases, asset replacement and asset refurbishment.
The driving forces behind these are many, sometimes we spend to get greater efficiency or effectiveness, (new technology) sometimes because assets have reached the end of their economically useful life, and sometimes we spend because our current assets are no longer supported.
We have reached that point where it is far more expensive to try to source and manage spares for what we have than to replace the item altogether. Managing obsolescence is a very large issue in many industries, particularly within the asset infrastructure industries but also increasingly in process and discrete manufacturing industries.
In financial terms the assets are often depreciated so the company has claimed back their tax credits from the government, so they see them as paid for. But if they want to manage their assets cost effectively then they still have to spend capital funds that they may have been able to use elsewhere within the enterprise; even though the obsolete assets may still be in good working order.
Although we struggle with this problem globally, it is actually a thing of the past. Advances in technology and existing solutions have given industries the means of getting the full economic life from physical assets, as well as finding a way to earn money from them when you do decide to replace them. (Liquidity)
A good example of modern technology is Spares Finder. Originally founded in New Zealand in 1997, this company now exists in the United Kingdom. After humble beginnings this company now serves the Oil and Gas industries, discrete manufacturing and other industry sectors and has a very unique range of products.
Most of their product range is based around a technology they have termed Virtual Pooled Inventory. Basically the technology allows companies to use the system to check through millions of items that belong to participating companies.
The benefits of this sort of technology are enormous and it remains one of the undiscovered gems in modern asset management technologies.
For example, a company can use the VPI to tap into hard to find items that may be sitting in the warehouses of other companies, or they can use it to manage their own internal stock across many companies, sites and countries. They can also create their own communities.
So within an industry sector such as rail infrastructure for example various companies can form an internal community where they agree to share the information relating to certain portions of their inventory with each other.
This means that parts which have been hard to find on the open market have a better chance of being found locked away in someone’s store. It also means that parts they want to get rid of, due to technological advances say, can be listed where other companies may be able to find a use for them. This should be welcome news for a range of companies who are actively upgrading their asset bases, and for those who don’t have the funds to do so just yet.
I was very impressed with this technology when I first stumbled across it in the dot.com boom of the late nineties; and it is good to see that it is starting to be adopted across many different industry sectors finally.
Just another example of how cost effective use of modern technology can take you into a world of efficiency and effectiveness far beyond some of the current outdated technologies are capable of. And as they state on their own website, it allows people to spend more time managing inventory rather than managing the inventory system.
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