Report on Strategic Asset Management

This study discusses strategic asset management in the power industry, focusing on different approaches and factors such as investment, decision-making, and distribution strategy. It also explores asset management for time-based and activity-based assets. The study emphasizes the importance of designing service processes based on consumer demand and the need for proper resource utilization.

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Assignment title: Report on Strategic Asset Management
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Executive summary:
In this study, the researcher has chosen Power Industry and twelve different peer reviewed
journals have been critically discussed in respect of strategic asset management. Through this
study, the researcher has highlighted different approaches of asset management in power
industry and their relative factors like investment, decision – making, distribution strategy
etcetera. Along with this, it has been criticised that industrial asset management has several
policies. On the other hand, there are different categories of assets in power industry like
asset management for time-based assets and asset management for activity based assets.
Through the study, it has stated that it is necessary to design the service process as per the
perceived demand and need of consumers; otherwise, companies might lose their customers.
However, developments of product are also necessary and for that proper utilisation of
resources are necessary.
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Table of Contents
1. Introduction:...........................................................................................................................4
2. Annotated bibliography on Strategic Asset Management in Power Industry:.......................4
2.1 Journal Article 1:..............................................................................................................4
2.2 Journal Article 2:..............................................................................................................5
2.3 Journal Article 3:..............................................................................................................6
2.4 Journal Article 4:..............................................................................................................6
2.5 Journal Article 5:..............................................................................................................7
2.6 Journal Article 6:..............................................................................................................7
2.7 Journal Article 7:..............................................................................................................8
2.8 Journal Article 8:..............................................................................................................9
2.9 Journal Article 9:..............................................................................................................9
2.10 Journal Article 10:........................................................................................................10
2.11 Journal Article 11:........................................................................................................10
2.12 Journal Article 12:........................................................................................................11
3. Conclusion:..........................................................................................................................11
Reference list (Citations for introduction):..............................................................................12
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1. Introduction:
Asset management is necessary for all industry and organisation; moreover, asset
management controls the investment of shareholders. Along with this, asset management in
power industry has become more essential due to increase in power production in nations.
Asset management is a core planning process for power industry to meet socio – economic
needs and create more return on investment1. On the other hand, the changes in data
management process and data mining process have changed the asset management process in
power industry. Towards the meeting of organisational objectives, the power industry might
need different information and data for asset management; therefore, proper way to manage
asset is necessary2.
Apart from that, asset management is a vital activity for all types of organisations and
industries as well; because all the equipments or machineries are companies’ assets. Towards
the continuation of this study, the researcher has chosen Power Industry and twelve different
peer reviewed journals have been critically discussed in respect of strategic asset
management. Through this study, the researcher has highlighted different approaches of asset
management in power industry and their relative factors like investment, decision – making,
distribution strategy etcetera.
2. Annotated bibliography on Strategic Asset Management in Power Industry:
2.1 Journal Article 1:
Khuntia, S., Rueda Torres, JL., Bouwman, S., & van der Meijden, M. (2016), “A literature
survey on asset management in electrical power [transmission and distribution] system”.
International Transactions on Electrical Energy Systems, 26(10), 3-7
This peer-reviewed journal has discussion on asset management and its components in power
industry. Towards the continuation of this journal, it has found that the power industry
undertakes different changes of technological, socio-economic and development of
environment. In this journal, the author has identified an asset operating and management
1 Peterson, B. and J. Holbus (2016) “Strategic asset management - A structured method is required to ensure successful implementation and
minimise barriers”. Energy Pulse: Insight, Analysis and Commentary on the Global Power Industry, 1(2), 211-230
2 Craig, F. and K. Parrish (2017) “There's no back to the basics in the T&D Business. It's always been about asset management Energy
Pulse”: Insight, Analysis and Commentary on the Global Power Industry, 3(1), 108-141
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system called Transmission System Operator. It is helpful for recording and monitoring the
changes in industrial assets. Along with this, it has been criticised that industrial asset
management has several policies. On the other hand, there are different categories of assets in
power industry like asset management for time-based assets and asset management for
activity based assets.
Figure 1: Categories of assets to manage
Towards the critical discussion of chosen journal, the researcher has pointed several
regulations to manage assets, for example, reducing economical and physical problems based
on strategized forces, reduction in operational expenses to enhance profit margin, proper
utilisation of natural resources and maintaining a proper schedule for those.
2.2 Journal Article 2:
Daniel N., Juan C. & Enrique M. (2017), “Review of asset management in distribution
systems of electric Energy” - implications in the national context and Latin America 67(06),
1-4
This journal is based on asset management process and distribution system in power (electric)
industry. Along with this, the journal has discussion on appraisal and asset development in
utilities of electrical, utilities of energy distribution etcetera. In this study, the author has
stated a definition of asset management where the process would control the costs, risk of
asset, and have a desired performance to gain perceived return on investment. Through the
asset management process, the industry or organisation would be able to justify the need and
importance of a particular asset. In this study, the author has criticised that the companies
whose activities are based on physical asset utilization, need to have proper attention on
return of investment.
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The asset management in electrical industry is consisting of evaluation of different electrical
devices used for supplying electrical services. That means, all assets that are used in electrical
industry can be considered as real time assets; and these assets need proper development with
sufficient investment. Towards the discussion, it has discussed that the online observation in
electrical industry is taken place by SCADA system, which keep record of all assets and
recall those at the time of necessity.
2.3 Journal Article 3:
Abd Halim S. (2012), “Development of renewable energy in Malaysia”, strategic initiatives
for carbon reduction in the power generation sector Procedia Engineering 49 (12), 4 – 7
This journal is based on Malaysian renewable power energy industry, where national
government has set National Energy Policy 2001 for asset management of renewable energy
in Malaysia. This projected work was started in late 2005, covering and providing 500 –
mega watt renewable energy. After that, the Malaysian government has started a new
renewable energy project of 350 – mega watt during 2010 with Renewable Energy Act 2010.
This act is basically the extended version of earlier National Energy Policy 2001.
Simultaneously, the government has planned to increase the energy consumption by 2080 –
mega watt by 2020. That means the extension of renewable energy project work has
involvement of power grids and power generators, which are considered as assets in this
industry.
The increasing demand of Malaysia has raised this opportunity to use renewable energy.
Therefore, the asset management has become vital for that industry. Along with this, the
investment process has enlarged to cover the bigger projects. In Malaysia SREP system is
used for asset management, which has guidelines for proper utilisation of renewable sources.
2.4 Journal Article 4:
Naoyuki F., Shuichi M., Yukio Y. & Kazuki N. (2014), “Thermal power plant asset
management with asset centric data method”, A journal on strategic management and control
of asset, 12(09), 3-7
This journal is based on asset management in Oil industry in Japan; because it has seen that
during late 70s, Japan has faced crisis of oil due to lack of proper utilisation and management.
However, the nation has recovered that slowly. Nevertheless, the country is still considered as
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a nation of fewer natural resources. Towards the discussion of this journal, the authors have
stated that in late 70s, Japan has dependency level 60% for natural resources especially for
oil; but now the dependency level has dropped to 20% due to their nuclear power, hydro oil,
coal and LNG.
Along with this, the asset management process is also developed by the time, which helped in
proper utilisation of natural resources, because natural resources are also important assets for
power industry. This study has stated that the Japanese power industry has been maintaining
a data model for asset management and another interval package function is used to operate
the assets as per requirement. This reduces the wastage of assets and brings good return.
2.5 Journal Article 5:
Otto G. (2013), “Strategic asset management for utilities”, optimising the business of
electricity transmission and distribution, 1(02), 02-03
This journal has discussion on European strategic planning of asset management. This study
has focused on the asset management process implemented by European power industry.
According to the author, the strategic asset management is used for maximising the use and
performance of industrial assets to have maximum return. The European power industry has
developed a critical management process, where operational costs and lifecycle of assets are
measured to have an informed decision for expansion. In this case, the authors have clearly
stated a systematic process to increase the performance of assets (a) evaluating the value
stream (b) relating the industrial asset to value stream (c) creating demand for the assets (d)
creating connection between supply and demand.
2.6 Journal Article 6:
Too, Eric G. (2010), “In Proceedings of 5th World Congress on Engineering Asset
Management”, Strategic infrastructure asset management: the way forward. 5‐10
In this journal, the author has stated in context of how far the asset management infrastructure
can be forwarded. Therefore, deductive method for costs has been prioritised through this
study. Along with this, the importance of strategic framework has been justified in this study.
Moreover, the author has stated that strategic planning framework is essential for having
proper guideline to have an effective strategic asset management process. Along with this,
this study has stated that different organisations have been publishing reports on their asset
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management. It has been cleared that the asset management has become important now a
days. Compared to past era, asset management has become more important and vital tool for
business decision – making process. On the other hand, shareholders are also focusing on
company’s asset management process to evaluate their return on investment. Company’s
corporate governance has also added asset management strategies for better return from
business, because assets are those tools, which help to generate cash flow in business.
2.7 Journal Article 7:
Mikhil K., Lazar G., Elena M., Romen M. & Alexandra A. (2017), “Risk Reduction Methods
for Managing the Development of Regional Electric Power Industry”, Risk management and
asset management, 2(2), 3-11
In this journal, the authors have discussed the asset management as a risk management tool in
electric power industry. The strategic asset management has become vital for reliability,
safety issues and impact of environment of power supply. Along with this, the authors of this
journal have stated that the strategic asset management is also important for renewable
energy management. Towards the continuation of this peer – reviewed journal, the authors
have given a conceptual framework for the better implementation of asset management.
According to the authors, the asset management in energy power industry is useful for
reducing risk factors. In this study, the authors have provided a task distribution model to
allocate asset management activities.
Figure 2: Involvement of corporate bodies for fair asset management
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The theoretical aspect of this figure is that all corporate bodies have roles towards strategic
asset management. This will lead to have economical advantage for the company in future. In
this study, the authors have said about Integrated Resource Planning (IRP) for managing
assets. This process is vital for end – use energy utilization with high priority.
2.8 Journal Article 8:
Ravish P.Y., Dhiraj D., Martin Van H. & Johan J. S. (2014), “Condition monitoring
framework for asset maintenance management”, Technology & asset management, 03(01), 1-
4
In electric distribution process, maintaining the assets is necessary as financial resource
management. Therefore, different methods and tools have been evolved for managing the
assets and to have proper utilisation. In this journal, the authors have stated that asset
management was not important in earlier stages, but due to increased attention of
shareholders and reduction in profit level, the global organisations and industries have started
focusing on asset management process. On the other hand, the authors have stated that the
organisations should have alternate approach for managing the assets. Towards the
continuation of this study, the authors have stated that SCADA system is important to
maintain the activities related to quality supply. However, it is necessary along with asset
management tool to have manual inspection by human resources. That means offline -
analysis is necessary along with online or technical analysis.
2.9 Journal Article 9:
Vahid M., Farrokh A., John McDonald, Venkata S.S. & Damir N. (2015), “Distribution
Automation Strategies Challenges and Opportunities in a Changing Landscape”, Journal on
strategic challenges, 13(2), 2-8
Strategic challenges are more critical compared to failure in strategic implementation,
because challenges in strategic implementation do not allow to create results and the
organisation would not be able to re-generate strategies for further actions. However, failure
in strategic implementation provides failed results, it is possible to get failure report easily,
and that leads to have more developed strategies for future implementation. In this journal,
the authors have discussed the challenges in automation strategy and finding opportunities for
further development. These challenges create problem for focusing on customer expectation
and organisation fails to provide customers’ perceived level services. The major problem,
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which has been identified in this journal, is incorporation of supplied energy resources. In this
case, it has been found that due to technical inference the issue takes place and creates
misbalance in supply of energy. Another issue is planning and incorporation of energy
storage. In this stage, the asset management process comes into action, where the industry
should imply a framework for managing the energy resources.
2.10 Journal Article 10:
Muhammad Ahmad T. & Knut Erik B. (2018), “Servitization: A Model for the
Transformation of Products into Services through a Utility-Driven Approach”, Journal on
strategic management, 11(2), 3-17
This journal is based on implementation of utility driven approach for transformation of
products and services. Along with this, this journal has focused on SME or small and medium
enterprises. Towards the continuation of this study, the authors have stated that SME
companies are mainly focus on easy business models to control business activities and
strategic implementation. In this study, the authors have framed an interrelationship between
product and service. According to authors, it is necessary to design the service process as per
the perceived demand and need of consumers; otherwise, companies might lose their
customers. However, developments of product are also necessary and for that proper
utilisation of resources are necessary. Therefore, strategic asset management is required to
have proper utilisation of assets.
2.11 Journal Article 11:
Marina M. G., Dilara R. M., Gylnara Z. N. & Olga A. A. (2017), “Formation of strategy of
effective management of fixed production assets of oil company”, Journal on asset
management, 38(01), 1-5
This study has directly approached to strategic formation of effective management plan of
assets. For an oil company, oil is the crux asset and an appropriate strategic management plan
is necessary for asset. According to this journal, asset management strategy should be framed
based on utilisation level of that asset, because without knowing utilisation level, managers
may not get proper steps to manage assets. In this case, technical approach might be used to
have a general analysis of assets. Nevertheless, technical approach is useful to allocate assets
for production process and recording the stock level; so based on that it would be possible to
know how much more stock is required for further production.
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2.12 Journal Article 12:
Tibin J., Carlos E. U., Jun L. & Paul F. (2018), “Asset Management Strategies for Power
Electronic Converters in Transmission Networks”: Application to Hvdc and FACTS Devices,
21(1), 2-12
This peer reviewed journal is based on asset management and planning strategies for power
and electronic industry. Towards the continuation of this study, the authors have stated that
clearing production backlogs and fulfilling urgent supply both are based on proper
management plan and utilisation process. Otherwise, the production department would not be
able to know how much asset or resources are required for production process. In this study,
the authors have stated need based management approach for assets. According to need based
asset management approach, the relevant department would know utilisation process and
stock planning for further production. In this case, power electric is considered as resources
and for which, signature analysis is used. Along with this, through this process, electrical
faults can be determined and temperature can be measured.
3. Conclusion:
The overall discussion in this report, the researcher has discussed different asset management
approaches used in power industry. Towards the continuation of this study, the authors have
stated that SCADA system is important to maintain the activities related to quality supply.
Apart from that, it has concluded the necessity of asset management tool to have manual
inspection by human resources. On the other hand, different strategic asset management tools
like IRP, SACAD, Utility based approach etcetera have been allocated. Therefore, it can be
concluded that the power industry has proper asset management approaches for maintaining
asset level and proper utilisation.
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Reference list (Citations for introduction):
Craig, F. and K. Parrish (2017) “There's no back to the basics in the T&D Business. It's
always been about asset management Energy Pulse”: Insight, Analysis and Commentary on
the Global Power Industry, 3(1), 108-141
Peterson, B. and J. Holbus (2016) “Strategic asset management - A structured method is
required to ensure successful implementation and minimise barriers”. Energy Pulse: Insight,
Analysis and Commentary on the Global Power Industry, 1(2), 211-230
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