Understanding Basics of Asset Management: A Conversation with my daughter

September 13, 2018

As we pass the holiday season, I have had time to reflect on what is it that we, as asset management professionals, try to bring to our clients and our organizations. I realized that we do asset management on a day to day basis and teach the same to our kids. Here is an example of what I mean. The intent here is to demonstrate the value of asset management as a tool for survival and a tool to grow. I will try to reference the ISO 55000 framework as much as possible.

Last week, I had asked my daughter to clean up her toys and organize them as part of the seasonal cleaning (Think: Policy). I gave her specific instructions on what I expect her to do and by when (Think: Objectives/ Goals). This included clear responsibilities for her and her younger brother (Think: Roles and Responsibilities). I had also told her that her holiday budget was $100 (Think: Budget) that she could spend on (with her brother of course).

I asked her to first figure out all the toys they had (Think: Asset Register). This was a challenge given that their toys were spread over three floors of the house, in closets, and under the bed. This involved a toys consolidation exercises (Think: Data Collection and Consolidation). Following that, I had asked her to group the toys in a way that all part of any given toy are grouped together (Think: asset hierarchy). For example, the dolls and the cars of the doll house, need to be with the doll house. Batman and bat mobile need to be together. All super heros figures will need to be together (Think: Asset Classes).

Then, I asked her to evaluate which toys are the most important to her and her brother (Think: Asset Criticality). This included figuring out her favorite toys, toys that are expensive and new, toys that is part of her play time set up, etc. (Think: Level of Service (LOS), Criticality Criteria, etc.). Once she figured out what was important to her, I had asked her to figure out how she plans to make sure her toys do not break or get lost in the coming months (Think: Asset Planning). I helped her figure out different ways that could happen (Think: Risk Assessment/ FMEA) and how she could prevent it (Think: Risk Mitigation). For example, not to use her favorite toys when some of the more rowdy kids come in for playtime (Apologies for any insensitivities, but this action was necessary to ensure the level of service is maintained). For some of the toys that were beyond her age group or required some assistance, she would need some support and assistance in developing those skills (Think: Competency Development). I promised to spend couple of hours with her over the weekend to help her figure out how to set up those toys (Think: Competency Roadmap).

Lastly, the most exciting part was to figure out what to do with the $100 (Think: Capital Planning and Optimized Decision Making). She will need to know what toys she has (Asset Register), if the toys are old and rundown or new (condition of the assets) what she wants over the next few months (Level of Service, etc.), what are the risks to the toys based on how important they are to her (asset criticality and risk assessment) and what she needs to buy to meet her requirements (based on optimized decision making model).

Obviously, things did not work exactly the way I have laid out above (Think: Continuous Improvement), but it provided me with an important perspective. I must also note that there are some exaggerations here for the purposes of organizing the article. Furthermore, there are some elements of the asset management framework that were not included here (e.g. financial analysis, etc.)

The ultimate objective of the above exercise was to ensure that my kids get the best possible value of the $100 that they get these holidays, that they preserve the toys they love for the longest possible time and they can continue to learn new skills to use newer toys as they grow.

P.S. My daugther is 4 year old. So it is important to understand the maturity of the organization and to scale the asset management program accordingly.

 

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