Asset Management Using a Value Chain Approach

joe nichols — Fri, 19 Jan 2024 09:29:51 +0000

The concept of the value chain emerged with Michael Porter of Harvard University in the mid-1990s. In Professor Porter’s model, “Products pass through a chain of activities in order, and at each activity the product gains some value.” (Wikipedia)

Using a Value Chain Approach for Asset Management Thinking

The value chain approach to asset management provides us with an important mental model that helps us develop asset management thinking. Asset management thinking helps the organization consider how investments in assets helps them maintain competitive advantage, be accountable to their commitments to sustainability, and meet the needs and expectations of their internal and external stakeholders.

Asset Management & Sustainability

Whether they realize it or not, the C-Suite’s ability to materially demonstrate, deliver, and report on sustainability objectives, has a critical dependency on the asset management system. The value chain approach to asset management is a useful mental model to help communicate that dependency and demonstrate how the asset management system is consistent and aligned with sustainability goals. Without it, asset management efforts can suffer from blind spots, be misunderstood by the organization, and fall short of intended outcome.

Using a Value Chain Approach for Selecting Technology

The topics of digital transformation, IoT, and artificial intelligence have dominated the marketplace. These are relevant topics and deserve some attention given how the economics have rapidly evolved and how accessible powerful technology is today. The marketplace is teeming with vendors promoting their digital solutions. This can distract management’s attention away from existing processes and organizational capabilities and cause them to overlook what’s already in place and working well.

Using a Value Chain Approach for Business Outcomes

Market fundamentals have permanently shifted. Energy transition, renewables, and other green projects are now permanent fixtures of the landscape of every market – be it public sector or private sector. Sustainability objectives are top of mind for executive leadership, all day, every day. Asset management practitioners can be invited into the board room and earn a permanent seat at the table the same way other management systems like environment, safety, and quality have in recent decades.

We Invite You to Join the Discussion

On January 10, 2024, Itus Digital hosted a webinar on this subject. It was a conversation among the most knowledgeable people on this subject. Tom Smith – is an author, lecturer, and advisor on asset management. Susan Lubell – author and business leader in implementing asset management business decision processes. Rob Arseneau – experienced subject matter expert on aligning corporate vision and continuous improvement for reliability and asset management.