Monday, 28 October 2019

Considerations of Value in Asset Management

 ISO 55001:2014 defines asset management as the coordinated activity of an organization to realize value from assets, and ISO 55000:2014 states the value (which can be tangible or intangible, financial or non-financial) will be determined by the organization and its stakeholders, in accordance with the organizational objectives, so the standard consider that the value is subjective and is determined by the organization and its stakeholders, and it is not limited to a specific type of value.

 But as the value is subjective it specification could vary, even within the own organization. Look the following examples:
  • Potential investors or lenders, finance managers, accountants, and valuers can be focussed on the organization's carrying value, risk exposure and return on investment.
  • Some stakeholders can be focussed on the value of the assets and related financial representation of asset deterioration for taxation purposes.
  • Shareholders can be focussed on the return on their investment, value determination and value generation.
  • Customers can be focussed on the price-quality relationship of the product or service.
  • Public service providers can be focussed on the value perceived by the community and its relationship with the cost.
  • Regulators can be focussed on legal and regulatory compliance.

 Source: R M Media Ltd

 As the value does not focus on the asset itself, but on the value that the asset can provide to the organization to determine as best as possible the value of the asset consider how the asset management objectives align with the organizational objectives, the use of a life cycle management approach, and the establishment of decision-making processes.

 It is important to insist on the value derived from assets can change over the life cycle of the asset, so during the investment or acquisition phase assets are only incurring costs to the organization, but they have potential value that can be generated once in operation; some assets can have a time delay before generation of value and as higher the delay is higher the value; during the operation and maintenance phases circumstances can lead private organizations to price outputs at a price point that ignore the original acquisition cost; and during disposal phase the functional obsolescence due to changes in technology, changes in organizational objectives, or changes in customer preferences can mean that the value of the asset decrease dramatically.

 To support the concept of value some standards are available, like IEC 60300-3-3:2017 Dependability management - Part 3.3: Application guide - Life cycle costing, that establishes a general introduction to the concept of life cycle costing and covers all applications. the life cycle includes the phases of concept or definition, design or development, manufacturing, installation, operation, maintenance, and disposal.

 Related to risk and opportunities the ISO 31000:2018 Risk management - Guidelines, that provide, framework and a process for managing risk, The standard helps organizations increase the likelihood of achieving objectives, improve the identification of opportunities and threats and effectively allocate and use resources for risk treatment based in a risk assessment process.

 Finally, related to the performance of assets the standard ISO 14224:2016 Petroleum, petrochemical and natural gas - Collection and exchange of reliability and maintenance data for equipment - Annex E Key performance indicators (KPIs) and benchmarking provides a methodology to create KPIs and benchmarking aligned to the objectives organization.

 To create an Asset Management System that joints all these parameters to define value for organization and stakeholders and change it during the life cycle of the asset to adapt the real conditions is a challenge to support in the management of business improvement.

Monday, 14 October 2019

Organizational Structure for TPM Organizations

 TPM (Total Productive Maintenance) is a methodology based on improving equipment and improving people, to reach the second condition is mandatory to build an organizational structure to facilitate the autonomy of workers and their alignment with the organization's mission, vision, and values.

 In this way, the company Spotify classifies the teams in four quadrants based on their level of autonomy and alignment with the organizational goals, reach the high-high quadrant allows the achievement of goals in a more creative and efficient way by exploiting the potential of all the people involved in the project.

From Spotify.

 This approach is based on the Douglas McGregor Theory X and Theory Y, in which Theory X suppose that:
·   The average human being has an inherent dislike of work and will avoid it if he can.
·   Most people must be coerced, controlled, directed, and threatened with punishment to get them to put forth adequate effort toward the achievement of organizational objectives.
·  The average human being prefers to be directed, wishes to avoid responsibility, has relatively little ambition, and wants security above all.
 As can be seen, these conditions of the Theory X could be assimilated to the Spotify quadrants with low autonomy or low alignment.
 On the other hand, Theory Y proposes the integration of individual and organizational based in:
·   The expenditure of physical and mental effort in work is as natural as play or rest, and the average human being does not inherently dislike work.
·   Man will exercise self-direction and self-control in the service of objectives to which he is committed.
·  The satisfaction of ego and self-actualization needs can be direct products of efforts directed toward organizational objectives.
·   The average human being learns, under proper conditions, not only to accept but to seek responsibility.
·   The capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in the solution of organizational problems widely, not narrowly, distributed in the population.
·   Under the conditions of modern industrial life, the intellectual potentialities of the average human being are only partially utilized. 
 In the same line, Frederick Laloux in his book Reinventing Organizations proposes an evolution of the organizational structure of companies from impulsive organizations, based on the division of labor and command authority, to Teal organizations based on self-management, wholeness, and evolutionary purpose.
 According to this author, evolutionary or Teal organizations are based on these basic assumptions:
·   Trust, 
·   Information and decision-making, 
·   Responsibility and accountability, 
·   Equal worth, 
·   Safe and caring workplace, 
·   Overcoming separation, 
·   Learning, 
·   Relationships and conflict, 
·   Collective purpose,
·   Individual purpose,
·   Planning the future, 
·   Profit.
 A way to obtain this evolution is by exploiting the principles of Visual Management, so all the workers involved in the process hold real-time information needs to make decisions based on their individual and collective goals, and the responsibility to report in a transparent manner its performance with the target to improve benefits.
 By a Visual Management Dashboard workers report their own results and performance, the level of goals fulfillment, the work planning including the days-off planning, needs for qualifications, etc.

 Example of Visual Management Dashboard, from Michel Greif - The Visual Factory.

 These boards could be complemented with Kanban dashboards specifics for every project, these boards show openly and transparently the flow of work in real-time, show the process weakness, support to manage flow, make policies explicit and identify improvement opportunities.
  Congruent with these tools, we find the Spotify organizational structure, a floating and changing structure, based on individuals, with the following elements:
·   Squads, a small team to be 6 to 12 persons that work together towards a long-term mission.
·   Tribes, a group of several squads to be 40 to 100 persons, focused on a process, with a leader. 
·   Chapters, a horizontal structure formed based on competency areas.
·   Guilds, a non-formal structure or community of interests where the people across the whole company gather and share knowledge of a specific area.
 These structures are changing, even the role of the leader can change in every project, this system provides autonomy to involved persons and allows them to participate and focus on their own areas of interest, the areas where it can add the most value.
 As a summary, we could consider that TPM is the self-actualizing management, once the first stages of the Maslow's hierarchy of needs are fulfilled, they are physiological needs, safety needs, belonging needs, and esteem needs; because it considers the following key principles:
·   Work is a type of psychological therapy for satisfying our desire for self-actualization.
·  People and works are in a cyclic relationship; people grow and develop through their work, bringing prosperity to their companies and that prosperity lead to further individual development.
·   When people find a purpose in though their work, they become ever more passionate about it. 
 For an organization, to start up this type of organizational structure improves the velocity and simplifies processes, eliminates dependencies, makes easy troubleshooting, minimizes the hierarchy control and changes to self-control, promotes quality and transparency, and create a positive work climate.

Thursday, 25 July 2019

Estructura Organizativa de Empresas TPM

 TPM (Total Productive Maintenance) se basa en mejorar las máquinas y en mejorar a las personas, para conseguir este segundo aspecto es necesario crear una estructura organizacional que facilite la autonomía y el alineamiento de los operarios con la organización.

 En este sentido, la empresa Spotify divide los equipos de trabajo en cuatro cuadrantes dependiendo de su nivel de autonomía y de su nivel de alineación con los objetivos de la organización, alcanzar este cuadrante permite conseguir estos objetivos de forma más creativa y eficiente al aprovechar el potencial de todo el personal implicado en el proyecto.

    Tomado de Spotify.

 Este planteamiento se base en la Teoría X y la Teoría Y del trabajo, descrita por Douglas McGregor. En base a este planteamiento, la Teoría X presupone que los trabajadores cumplen con las siguientes condiciones:

  • No les gusta el trabajo y tratan de evitarlo.
  • Requieren ser dirigidos para alcanzar objetivos.
  • Prefieren evitar responsabilidades y les falta ambición.
 Como se puede comprobar, estas tres condiciones de la Teoría X se pueden asimilar a los cuadrantes en los que aparece baja autonomía o baja alineación en los cuadrantes de Spotify.

 Por el contrario, la Teoría Y propone que los trabajadores:
  • Consideran que dedicar esfuerzos al trabajo es natural.
  • Se auto-gestionan y auto-controlan.
  • Consiguen auto-realización mediante la superación de objetivos.
  • Aprenden a aceptar responsabilidades.
  • Tienen creatividad para solucionar problemas.
  • Desperdician potencialidades por la rigidez del sistema. 

 En la misma línea, Frederick Lalous propone en su libro Reinventing Organizations una evolución de la estructura organizacional de las empresas partiendo de organizaciones impulsivas basadas en la división del trabajo y la autoridad de la cadena de mando, hasta organizaciones Teal basadas en la auto-gestión, la integridad y el propósito evolutivo.

 De acuerdo a este autor, las organizaciones evolutivas o Teal se basan en los siguientes principios:

  • Confianza, 
  • Transferencia de información y capacidad de toma de decisiones, 
  • Responsabilidad, 
  • Igualdad de trato, 
  • Existencia de un ambiente seguro y protector, 
  • Capacidad de superar la separación, 
  • Interés por el aprendizaje, 
  • Capacidad de mejorar las relaciones y solucionar conflictos, 
  • Existencia de un propósito colectivo,
  • Existencia de un propósito individual,
  • Capacidad de planificación del futuro, 
  • Búsqueda de beneficios.

 Una forma de conseguir esta evolución es explotar los principios de la gestión visual, de manera que todos los trabajadores que participan de un proceso dispongan en tiempo real de toda la información necesaria para tomar decisiones basadas en sus objetivos individuales y colectivos, y la responsabilidad para informar con transparencia de su rendimiento con el fin de mejorar los beneficios.

 Así, en un tablero de gestión visual los propios trabajadores indican sus resultados y su rendimiento, el nivel de cumplimiento de objetivos, la planificación de su trabajo incluyendo la planificación de sus días libres, las necesidades de cualificación y formación del equipo, etc.

Ejemplo de tablero de gestión visual, tomado de Michel Greif - The Visual Factory.

 Estos tableros se complementan con los paneles Kanban específicos para cada proyecto, estos paneles muestran de forma abierta el flujo de trabajo en tiempo real, lo que permite mostrar las debilidades del proceso, ayudan a dirigir el flujo de trabajo, expone las políticas del proceso y reconoce oportunidades de mejora en el proceso.

 Compatible con estas herramientas encontramos la estructura organizativa que propone Spotify, una estructura flotante y cambiante, basada en el individuo, que se compone de los siguientes elementos:

  • Escuadras, formadas por entre 6 y 12 personas dedicadas a un mismo área.
  • Tribus, formadas por varias escuadras hasta alcanzar entre 40 y 100 personas, dedicadas a un proceso, con la presencia de un líder. 
  • Capítulos, forman una estructura horizontal de personas de diferentes escuadras con una misma especialidad.
  • Gremios, una estructura informal de personas de diferentes tribus que tienen un interés común.
 Estas estructuras son cambiantes e incluso la figura del líder puede cambiar de un proyecto a otro, este sistema da autonomía al personal implicado y les permite participar y especializarse en sus áreas de interés, que son las áreas en las que más pueden aportar. 

 De esta manera se puede conseguir que el TPM se defina como la gestión de la autorrealización, una vez satisfechas las fases anteriores de la Pirámide de Maslow, que son las necesidades fisiológicas, la seguridad, el reconocimiento social y el reconocimiento individual; al considerar los siguientes principios clave:

  • El trabajo satisface el deseo de autorrealización.
  • Personas y el trabajo están en una relación cíclica.
  • Encontrar un propósito en el trabajo aumenta la motivación y la pasión. 

 Para una organización, poner en marcha este tipo de estructuras aumenta la velocidad y simplifica los procesos, reduce las dependencias, facilita la resolución de problemas, minimiza el control jerarquico sustituyendolo por auto-control, promueve la claridad y la transparencia a la vez que mejora el ambiente de trabajo.

Friday, 12 April 2019

ISO 55001 Asset Management as a tool for Value Investing

 Value investing is the strategy of investing in stocks that trade at less than their intrinsic values. In other words, the goal of value investors is to determine companies that they believe are undervalued relative to the market or are trading at a discount to their intrinsic worth. 

 Therefore, this estimation of the intrinsic value is key when selecting companies to invest in, given the difficulty of calculating them and the uncertainty of the sectors, investors, exchanges, security, and the distortion of the process.

 Valuation of companies is mainly done by considering indicators such as the Price-to-Earning ratio (P / E ratio), Price-to-Book ratio (P / B ratio), Debt-to-Equity ratio (D / E ratio), Free Cash Flow (FCF), and  Price / Earnings to Growth ratio (PEG ratio).

 In addition to this, it should be considered that this investment strategy is based on the long term, so that a good administration by the management team will add value to the investor, while a bad administration will destroy it, regardless of the initial values of the indicators evaluated.

What's about physical Asset Management?

 Correct physical assets management has as its main function to coordinate the activities of an organization to obtain value from physical assets, that is, that these assets must be capable of generating value, whether by their use, ownership or custody.

 But in addition, these assets have an intrinsic value, which can be determined as their sale value at a given time, correct management will be able to maintain and even increase this value.

 Physical assets management, according to ISO 55001, consider that these assets must have objectives that must be completely aligned with the objectives of the organization; and it must extend to the entire life cycle of the physical assets.

 The life cycle includes CAPEX, understood as the costs of design, acquisition, installation, and commissioning; OPEX, which covers operating, maintenance, and risks costs; and renovation, disassembly, and disposal.

 The management of physical assets increases the value that this generates by improving the Overall Equipment Effectiveness - OEE, which is an indicator that combines the availability of equipment, its performance and the quality of products or services produced.

OEE = Availability * Performance * Quality

 In addition, it increases the intrinsic value of the physical asset by optimizing its life cycle and controlling its obsolescence.

The analysis and evaluation of the management of the physical assets of a company are fundamental for Value investors since this management has a direct impact both on its capacity to generate value and on its intrinsic value throughout its life cycle.

Thursday, 28 February 2019

La Gestión de Activos Físicos como herramienta para la Inversión en Valor

 La Inversión en Valor, más conocida como Value investing, es la estrategia de invertir en acciones que cotizan por debajo de su valor intrínseco, es decir, el objetivo de un inversor Value encontrar empresas que considera que tienen un valor de cotización por debajo de su valor intríseco, con la esperanza de que este valor de cotización aumente hasta igualarse con el intrínseco.

 Por lo tanto, esta estimación del valor intrínseco es clave a la hora de seleccionar las empresas en las que invertir, dada la dificultad de su cálculo y la incertidumbre de los sectores económicos los inversores deben aplicar un coeficiente de seguridad que distorsiona el proceso.

 La valoración de las empresas se realiza, principalmente, considerando indicadores como Ratio Precio - Beneficio (P/E ratio), Ratio Precio - Valor Contable (P/B ratio), Ratio Deuda - Patrimonio (D/E ratio), Flujo de Efectivo Libre (FCF), Ratio Precio - Beneficio a Crecimiento (PEG ratio).

 Además de esto se debe considerar que esta estrategia de inversión está basada en el largo plazo, por lo que una buena gestión por parte del equipo directivo añadirá valor al inersor, mientras que una mala gestión lo destruirá, independientemente de los valores iniciales de los indicadores evaluados.

¿Y la Gestión de los Activos Físicos?

 Una correcta gestión de activos físicos tiene como función principal coordinar las actividades de una organización para obtener valor de los activos físicos, es decir, que estos activos deben ser capaces de generar valor, ya sea por su uso, propiedad o custodia.

 Pero además, estos activos tienen un valor intrínseco, que se puede determinar como su valor de venta en un momento dado, una gestión correcta será capaz de mantener e, incluso, aumentar este valor.

 La gestión de activos físicos, según ISO 55001, considera que estos activos deben tener unos objetivos que deben estar completamente alienados con los objetivos de la organización; y debe extenderse a todo el ciclo de vida del activo físico.

 El ciclo de vida incluye el CAPEX, entendido como los costes de diseño, adquisición, instalación y puesta en marcha; OPEX, que abarca los costes de operación, mantenimiento y riesgo; y de renovación, desmontaje y eliminación.

 La gestión de activos físicos aumenta el valor que este genera mediante la mejora de la Eficacia Global de los Equipos - OEE (Overall Equipment Effectiveness), que es un indicador que combina la disponibilidad del equipo, su rendimiento y la calidad de los productos o servicios producidos. 

OEE = Disponibilidad * Rendimiento * Calidad

 Además, aumenta el valor intrínseco del activo físico optimizando su ciclo de vida y controlando su obsolescencia.

 El análisis y evaluación de la gestión de los activos físicos de una empresa resulta fundamental para los inversores Value ya que esta gestión incide directamente tanto en su capacidad de generación de valor como en su valor intrínseco a lo largo de todo su ciclo de vida.