1. Value Based Asset Management Smart Asset Management

2.  Business Statements  Objective  Basic Concept  Document Comparative Benefits To Management  Planning & Support  Getting Started  Develop A Plan  Implementing Plan  Document Results  Communications Discussion Items

3.  Most Companies:  Are Implementing ERP Systems  ERP Systems Do NOT Address Asset Accountability Or The Cost Of Ownership Of Assets  Company Assets  Government Assets  Customer Property  ERP Systems Do NOT Address Property Management Regulatory Requirements  Are NOT Aware Of The Cost To Acquire, Manage And Dispose Of Assets Business Statements

4.  Managing Assets Costs 3 To 4 Times More Than The Management Perception  Most Costs Can Be Reduced Or Eliminated With A Total Asset Management System:  Cataloged Assets  Single Database  Integrated Processes  Accountability & Responsibility Must Be Well Defined Business Statements

5.  Most Companies:  Do Not Recognize The Significant Resource & Cost Now Spent To Manage Assets Through The Life Cycle (Cost Of Ownership)  Property Management  Facilities  Calibration  Maintenance  Retirement & Disposal  Accounting  Depreciation  Taxes  Insurance  Physical Inventory  Etc. Business Statements

6.  Implement A Single COTS Accountability System & Proactive Processes For The Management And Control Of ALL Assets.  Eliminate All Systems That Overlap, Duplicate Or Are Maintained To Satisfy Individual User Needs  Integrate All Systems Necessary To Provide Data Needed To Accomplish Accountability & Responsibility  Implement Tools That Drive Consistency  Data Base Discipline  Catalog Assets  Drive Effective Solutions That Streamline Processes, Improve Efficiency, Substantially Reduce Cost And Generate Revenue! Objective

7.  Implement A Single COTS Accountability System For The Management And Control Of All Assets.  Most Corporations Are Directing Commercial Of The Shelf Solutions.  Corporations Are Slashing Software Development Budgets  Company Solutions Do NOT Stand The Test Of Time  Maintenance & Upgrade Funding Is NOT Supported  Resource Support Is Erratic At Best  System Documentation Is Poor Or Non-existent  Company Solutions Cost More To Develop, Upgrade And Maintain Objective

8.  Eliminate All Systems That Overlap, Duplicate Or Are Maintained To Satisfy Individual User Needs With No Benefit  Eliminate All Sub Systems Required To Manage Assets  Maintenance  Calibration  Disposition  Access Databases  Excel Spreadsheets  Subcontractor Control Objective

9.  Eliminate All Systems That Overlap, Duplicate Or Are Maintained To Satisfy Individual User Needs  Chose A Solution That Can Be Integrated With The Company’s ERP System For Key Interfaces  Material  Accounting  Contracts  EH&S  Export Control Objective

10.  The Purchase Of Capital Assets Adds $$$$ To The Investment Portion Of The ROI Equation  The Same Capital Assets After Purchase Add Costs Annually (Cost Of Ownership) Which Are Part Of The General & Administrative Costs (G&A) Costs Of The Organization Basic Concept

11. G & A = A Dollar For Dollar Reduction In Operating Profit = Return Basic Concept

12.  Cost Of Ownership Basic Concept

13. Initial Evaluation  Assets were costing the company Over $10M annually  $7M in equipment-related costs o $3.5M in engineering productivity impacts  Equipment resources were not being effectively managed.  Assets were held by departments as “Just in Case” inventories and reactive processes fueled inefficiencies  Implementing and institutionalizing a solution, due to logistics, expertise and deep seated and habitual hoarding practices of the engineering products, would not be a trivial task Document Comparative Benefits Hi Tech Company

14. Results  Utilization more than tripled, reducing the inventory from 19,000 assets to just 11,600  Capital expenditures were reduced from $9.6M to $1.7M  Control of assets was dramatically improved: o Write-offs were reduced from $800K to less than $8K o Past due calibrations went from 10.5% to 1% Product delivery time was reduced by 20 % Document Comparative Benefits Hi Tech Company

15.  Significant improvement in efficiency was achieved: o Bench-to-Bench calibration time was reduced from 10 days to 2 days o Equipment lead-time from user request to arrival of equipment was reduced from 16 weeks to less than 1 day o 20 man years of productivity were saved each year Document Comparative Benefits Hi Tech Company

16. Initial Evaluation  24 separate databases/spreadsheets were being managed in addition to the capital asset database  Over 30 different labs were working on programs  Equipment utilization was measured at 9%  Nearly half the equipment was no longer supported by the Calibration lab putting projects and schedule at risk  Test equipment was not standardized across labs and programs decreasing the likelihood of sharing  Engineers were fearful that they would not be in control and would not have equipment to do their jobs Document Comparative Benefits Defense Firm

17.  Results  Utilization nearly tripled going from 9% to 26%  Total Inventory was reduced by35%  Capital expenditures were reduced to 75% of historical norms  The inventory of obsolete unsupported equipment was reduced by 50%  Lab space was freed up allowing for growth needed by the contractor  The capital approval process was streamlined; over 95% of all requests are fulfilled through re-deployments from current inventory  ROI increased and cash flow savings exceeded the goal  Capital is available to acquire state of the art equipment required to meet increased demands Document Comparative Benefits Defense Firm

18.  What We Found: Document Comparative Benefits Personal Experience

19.  Majority Of Capital Assets:  Were Outdated Or Obsolete  Had Been Acquired For Only One Requirement  Were NOT Shared  Utilization Rates Were 20% At Best  Lack Of Coordination Between Engineering & Operations  Multiple System Improvement Opportunities  Multiple Record Systems In Use With No Integration  Significant Cost Savings Opportunities Document Comparative Benefits Personal Experience

20.  What We Did  Implement 3 Phase Plan  Improve Processes  Implement Integrated Data Base  New COTS Software (AssetSmart)  Must Have Data Discipline Controls  Must Have Standard Catalog Capability Including New Asset Updates  Improve Asset Utilization  Capital  Expense Document Comparative Benefits Personal Experience

21.  Phase I  Implemented Over 50 Process Improvements  Resulted In $21.3 Million In Cost Savings  Phase II  Consolidated Over 35 Systems Into AssetSmart  Resulted In $5.2 Million In Cost Savings  Phase III  Improved Utilization From 20% to 42%  Resulted In $11 Million  Total Cost Savings = $37.5 In Cost Savings Document Comparative Benefits Personal Experience

22.  Cost Savings By Phase Document Comparative Benefits Personal Experience

23.  Total Cost Savings Document Comparative Benefits Personal Experience

24.  Senior Management In All Departments  Capital  Budget  Resource  Expense  Information Technology  IT  Development  Administration  Software Support Planning & Support

25.  Key Functional Areas  General Accounting  Calibration & Maintenance  Security  Production/Operations  Engineering  Material Management  Receiving/Shipping  Depot/Spares Operations Planning & Support

26.  Obtain Management Support  Ensure IT Priority For Resource And Administrative Support  Involve All Functional Departments In Design & Implementation Plan  Make Sure They Understand & Accept Responsibilities  Place Responsibility With Physical Custody  Receipt/Disposition With Property Management  User Responsible For Day To Day Accountability  Assign Custodians Only When They Can Control & Be Responsible! Planning & Support

27.  Develop A Total Property Management Plan  Develop A Master Plan For All Areas  Develop Software Requirements  Ensure Data Element Control  Ensure Asset Catalog Capability Including Updates  Ensure Catalog Includes Technical Specifications For Assets  Identify Areas For Automation  Electronic Movement  Automated Forms  Integration Of Responsibilities Getting Started

28.  Develop A GAP Analysis For All Software Capability  Include All Functional Area Data Elements Are Included  Include Data Element Control Capability  Include Asset Description Control  Include Asset Utilization Capability  Include Regulatory Report Capability  Include Ad Hoc Reporting Capability  Include Automated Forms Capability  Sample GAP Analysis Sample GAP Analysis  file://localhost/Users/robertmcfarland/Desktop/Smart Asset Management/Sample GAP.xls file://localhost/Users/robertmcfarland/Desktop/Smart Asset Management/Sample GAP.xls Getting Started

29.  Conduct GAP Analysis  Develop Scoring Plan Based On Priorities  Required For Compliance  Required For Functionality  Required For Control  Required For Integration  Required For Improvement  Improves Efficiency  Improves Accountability  Improves Accuracy  Nice To Have Getting Started

30.  Conduct GAP Analysis  Chose At Least 3 Potential Suppliers And Score Results Based Established Priorities  Include All Supplier Input Not Included In GAP Analysis  Decide If New Input Is Relevant  Add Requirements As Determined By Team  Request Input From All Suppliers For New GAP Analysis Requirements  Obtain Supplier References !!! Getting Started

31.  Make Sure To Ask For References And Make Sure They Are Checked Out In Detail  Conduct Final Analysis And Team Decision  Make Final Software Decision  Communicate Software Decision:  Team  Users  Management Getting Started

32.  Develop A Comprehensive Plan  Start Plan As Soon As Management Approval Is Secured  Include ALL Required Actions  Be Specific  Assign Individual Responsibility For Each Action  Make Sure All Actions Are Broken Out  Independent Actions  Dependent Actions  Assign Time Frames For Start & Completion Actions Develop A Plan

33.  Make Sure To Communicate With All Employees!!  Formal Periodic Team Reports  Formal Management Reviews  Include All Issues & Problems  Test, Test & Test  Notify All Users Of Key Events  Process Improvement Implementation Dates  New System Testing Dates  New System Go Live Dates Develop A Plan

34.  Keep Communication Lines Open:  Team  Management  Custodians & Users  Be Open To Changes When Necessary  Regulatory Changes  Customer Input  Internal  External Implementing The Plan

35.  Provide Periodic Management Briefing Of Results  Process Improvements  Integration Successes  Utilization Improvements  Performance To Schedule  Performance To Budget  Any Obstacles Or Changes  Make Sure There Are No Management Surprises Document Results

36.  Communicate With Team On All Issues  Communicate With Users  E-mail  Employee Bulletins  Awareness Posters  Communicate Across Company  Peers At Other Divisions  Property Management Council Document Results

37.  Market Your Program & Results  Create Standard Formats For Each Improvement  Ensure Consistency  Ensure Clarification Of Each Objective  Define The Objective  Explain All calculations  Automate Results  Include Metrics  Sample Format & Tracking System Sample Format & Tracking System  file://localhost/Users/robertmcfarland/Desktop/Smart Asset Management/AMC-Metric Template.xlsx file://localhost/Users/robertmcfarland/Desktop/Smart Asset Management/AMC-Metric Template.xlsx Document Results

38.  Maintain Company Awareness Across The Company  Consider Corporate “Best Practice” Programs  We Received A Best Practice For Our Program  Provide Visibility Company Wide  Program Website  Corporate Property Website  Maintain A Narrative Report To Be Used For Corporate And Professional Publication  Sample Narrative Report Communicate Results

39.  You MUST Demonstrate The Value You Add  Property Management Can Provide And Endless Stream Of Projects To:  Improve Efficiency  Eliminate Overlap & Duplication  Reduce Cost  All Result IN Cost Savings or Cost Avoidance To Your Company  file://localhost/Users/robertmcfarland/Desktop/Smart Asset Management/SMART-VBAM-Narrative.docx file://localhost/Users/robertmcfarland/Desktop/Smart Asset Management/SMART-VBAM-Narrative.docx Summary