Baking&Snack - February 2012 - 43

INDUSTRY INSIGHT Jim Kline
jkline@theensolgroup.com

Managing Valued Assets
Managers can develop a new tool to help make capital expenditure decisions easier.
With maintenance and operations managers pulled in so many directions, they can find it difficult to remain focused on the bigger picture. How often have you attempted to justify a replacement need only to find the approval process protracted and difficult? Granted, money is tight, and spending must be carefully guarded, but as the maintenance manager, plant engineer or plant manager, you are charged “lot line to lot line” with balancing the best interests of the company with the financial responsibility for the assets you control.

Developing the plan
Establishing an asset management program using valued asset management can provide an overview of the bakery and expedite the planning and approval process. Valued asset management is the development and use of a comprehensive asset summary for the facility, process equipment and systems beyond traditional costbased accounting systems. It is a tool that encompasses each asset’s original cost, capital improvements and depreciated value. It also accounts for expected asset life;

operational efficiency; cost of maintaining the asset, including routine and unplanned maintenance; cost of operation; and impact on operations and any labor requirements to operate the equipment. At first glance, this tool may not seem new or revolutionary, and many of you might be saying to yourselves, “We have that.” Really? I expect many of you have pieces of this program, and that is great because you are well on your way. But how many of you have it assembled as a comprehensive database that senior management recognizes as the seminal and accepted body of information to be used for planning and decision-making purposes? Think of it much like the work done to develop an annual budget. Initially, you need to gather supporting information. Next, you need to go through a review process and, finally, reach agreement. You need to evaluate, manage and track facility and process assets as you do your departmental budget. You should develop a plan on a cost basis, establish expected performance criteria tracked against it and create a continuous improvement program that includes asset improvement and investment decisions.

Getting into details
Information contained in program databases must be current to be usable, and for those companies with an integrated enterprise resource planning (ERP) system, the information can be updated in real time. All in all, valued asset management offers a comprehensive look at your facility and process and helps provide answers to questions such as: What drives costs? Where can investments be made to reduce costs? What is the value of an investment? A valued asset management program answers all of these questions. The available information can assist decisionmakers as they strategically plan capital expenditures as well as provide a tool to evaluate unexpected expenditures as they arise. Once you have compiled a valued asset management plan, present it to the stakeholders — such as the senior managers and the principals of the business — for review and buy-in. Once these stakeholders have bought into the dataset, you can use it for planning purposes to establish an annual budget, develop a 5-year plan and evaluate the merits of unplanned expenditures. Because you have an agreed-on baseline, management can now evaluate the alternative impacts associated with the available options, whether it be rebuilding, overhauling, replacing or remaining as-is. Here are questions you may want to ask: Will it reduce utility use, and if so, by how much? Will headcount change? Is line efficiency improved? Developing a valued asset management program takes some initial work, but consider the benefits and the time it will save later. It will provide you and management the tool to make confident investment decisions.

Determining spending needs

Assembling and maintaining the information required by valued asset management provides the ability to answer questions key to operational success, such as: • What utility hogs can be trimmed to reduce the facility’s carbon footprint and improve the bottom line? • What equipment requires the greatest time to maintain? • Which equipment has the greatest cost for replacement parts? • What equipment requires the greatest sanitation time to meet GMPs and HACCP requirements? • Which operations require the most labor? • Where does the facility’s planned downtime come from? • Where is unplanned downtime coming from?

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Baking&Snack - February 2012

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