Measuring and Communicating the
"Big Three" Financial Gains from APM

With an annual growth rate of 25% since 2000, Silcar is an asset management organization operating across a wide range of locations and industries within Australia. In large part, the company credits its significant growth to a commitment to their customers' financial returns via improved asset performance.

Asset effectiveness represents wealth creation over time, and organizations create wealth when they generate a surplus of value over cost. So, what are the three key factors that drive and quantify asset performance value?

• extra production by reducing losses
• improved supply chain velocity (days of inventory)
• improved enterprise value at risk

A key challenge for these asset management programs, according to Cooper, is to clearly and consistently communicate their value to the financial domain.  Companies must drive acceptance of these programs by establishing - across key stakeholder groups - awareness of the value of APM for the organization and agreed measures of value.

SEMATECH affirms that communicating the value of the reliability effort to key decision makers and participants is vitally important and can be accomplished in three ways:

1. Translate the reliability efforts and benefits to measures such as cost savings, resource or cost avoidance, time to market, or market share gain.
2. Demonstrate a series of immediate short-term improvements and document those improvements noting the benefits gained.
3. Develop a champion in senior management who will support your reliability efforts when top level support is needed. The champion has the respect of decision makers and also the authority to influence and encourage participants.¹

Meridium's newest solution, Asset Strategy Management, (ASM) eases the transition to a value/risk/cost focused approach and can help companies more easily identify and communicate the value of developing, implementing and re-evaluating reliability asset strategies. (Click here to download a webinar featuring Silcar's Ian Gordon discussing their work with Meridium on developing ASM.)

Click here to download Bernie Cooper's presentation Demonstrating Value from Asset Performance Management: a Financial Perspective and learn more about making Asset Performance Management a key driver of value and financial gain.

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