Extracting efficiencies in asset intensive industries
What makes cost reduction programs in asset intensive industries different?
Companies in asset-intensive industries need to manage their capital assets effectively and efficiently to ensure financial sustainability can be maintained. Those industries all have a typical set of common yet unique challenges:
The need for large capital investments and expenditures for deploying and maintaining assets
The need to maintain assets that are often geographically dispersed, remote and difficult to access
The need to operate in environments that are harsh and exposed to the elements
The need to maintain assets continually whilst keeping asset availability high.
Core to any asset-intensive business though is operational efficiency because of the scale of the dollars consumed through the operation and maintenance of those assets and dealing with the challenges above. Even seemingly small % efficiency gains in service delivery processes can amount to large sustainable financial improvements.
In any business, long-held assumptions and business norms are typically great places to test the cause and effect relationships and form views on areas where the business can be more efficient in creating its value. After all, our assumptions impact our ability to think, reason, create and imagine and can ultimately hold us back.
Typically, in large organisations the risk profile has been built up incrementally over many years in response to discrete events and isn’t regularly reviewed by the organisation or freshly scrutinised with an independent lens. Through constructive challenge a fresh pair of eyes can identify unexpected opportunities where new forms of value can be created and or efficiencies realised.
Another aspect to consider:
Prioritisation of expenditure – There is always more to do then money available so smart constraints will need to be applied to ensure safety and regulatory compliance isn’t compromised, desired performance levels achieved but asset investment is managed within available capital funding.