Before discussing what are some Best Practices for Asset Management for the Transportation segments, it is important to define what we mean by a "Best Practice". I find the easiest business example is Three Way Matching in Accounting. With three way matching, an accounts payable (AP) person will first match three documents before issuing payment to a vendor. The AP person will look at the Purchase Order, compare that to the Vendor's Invoice and the Receiving documents from the company's receiving department. So, in essence, making sure you are billed for what you ordered, both in product, quantity and price, and making sure that the product and quantity was what was received, and undamaged. This seems to be common sense for most people, but when dealing with large numbers of orders, vendors who have historically provided proper quantities and documentation, and backed up receiving departments, it is possible to get sloppy. Enforcing three way matching makes good business sense and is a best practice, or a practice that the best organizations use.
In Transportation Asset Management there are many best practices. For instance, capturing all the tasks performed as well as all the costs of a repair on a work order is a best practice. Many companies fall short of this today, even those who have invested in industry leading Enterprise Asset Management (EAM) solutions. First, let's consider companies without a good EAM system. It is not uncommon for me to hear that a company is charging material to the asset, labor to the shop or depot, and services to a General Ledger (GL) code or account setup for that vendor, while tooling is not charged or tracked at all. Typically these companies use work orders only to identify work that needs to be performed and may not close out their work orders.
Like the three way matching best practice, good asset management best practices need to be enforced and technicians need to be trained. In moving towards this best practice of capturing all costs, the first step is to evaluate the EAM solution and make sure it is capable of capturing all costs: labor, materials, services and tooling. If the EAM solution can collect each of these, then the next step is to put in place a program to train the mechanics/technicians, storeroom staff, supervisors, administrative support, planners, managers - everyone that will use the EAM system - on how to record time, charge materials, capture tooling and connect internal or outside service costs back to the work order. The work order is there as a record, at a specific point in time, of all work and costs performed.
By having all costs and tasks on a work order, including costs by task where appropriate, the organization can do many things. They are able to compare repairs of similar equipment, thereby identifying equipment accruing greater than average costs. The organization can compare similar repairs between shops or people, identifying a need for training or standardization of processes. They can view trends, perhaps how costs increase based on age, resulting in better plans for overhauls or asset retirements. The best Transportation companies are very effective in capturing all their costs and see this as a cornerstone to having solid data for making decisions. Some industries organizations, such as the American Trucking Association (ATA), use specific standards called Vehicle Maintenance Reporting Standards (VMRS) to capture costs and work more consistently, allowing for its members to compare to others in the industry. Other transportation segment like railways, metro systems, shipping, airports and seaports, do not have similar "universal" standards for recording work and capturing asset management costs. It is left up to the company or their advisers to choose the best way to capture costs consistently. Regardless of whether standards exist, the company should have consistent coding schemes within the organization and ensure all costs are captured so proper analysis can be performed.
So, what are some other Transportation Asset Management best practices? Here are some examples:
- Warranty tracking and recovery on the asset, its components and sub assemblies, as well as spare parts
- Cycle counting critical spare parts inventory, particularly for unique assets with high cost spare parts
- Driving preventive maintenance programs based on time, usage and condition, such as changes in fuel consumption
- Tracking and posting asset reliability and availability statistics in the shop
- Managing by exception, including using Key Performance Indicators (KPIs) that are updated in real time to monitor the assets, the shop and the business
These are some of the key items that every Transportation organization I speak with has at the top of there list. As with any list like this, it is not all inclusive, but these are often the first areas of focus that a top organization will pursue on the path to becoming a Smarter Transportation organization.
If you have questions about these, or would like to know more about some of the best practices I listed, please let me know and I will provide greater detail in future blogs.