ENG8104: Asset Management Strategy for Precision-Plus Motors

This report provides a comprehensive analysis of asset management strategies, focusing on a hypothetical manufacturing company, Precision-Plus Motors Spare Manufacturing Company. It explores the company's assets, including manufacturing plants, machinery, and vehicles, and examines their current state and the services they provide. The report emphasizes the importance of effective asset management for achieving quality production, efficient operations, and financial control. It reviews the asset life cycle, including acquisition, maintenance, and disposal, and highlights the need for improved policies to streamline processes and reduce costs. The report underscores the significance of technological advancements and the adoption of new technologies to improve work efficiency and quality service delivery. It also covers the expectations of stakeholders and the board of directors, providing insights into how to boost their confidence through strategic asset management practices.

ASSET MANAGEMENT
[Author Name(s), First M. Last, Omit Titles and Degrees]
[Institutional Affiliation(s)]

Abstract
Asset management is an important exercise that must be taken seriously by any organization that
intends to achieve its missions, goals, and objective either in the short term or long term. An
organization may achieve a balanced quality performance if there are good governance and
effective-controls of its assets and asset network.
In the past years, several problems had been witnessed that included a traditional way of
production and constant use of obsolete in manufacturing processes that brought a lot of
difficulty in managing the company's assets (Love, Matthews and Lockley, 2015).
Therefore, the objective of this study is to come up with an effective strategy that will ensure
better asset management, improving the company’s asset management processes and necessary
standards that will ensure high-quality services in both the short and long term. This should be
done while reflecting on the expectations of the organization’s stakeholders and the board of
directors.
This study revolves around a hypothetical manufacturing company called Precision-Plus Motors
Spare Manufacturing Company with several tangible assets to be managed to ensure sound
performance, quality service delivery and better profit maximization (Smith, 2016). It is believed
that through the availability of funds, the company will be able to streamline its processes and
operations. In the end, the implementation of this reviewed asset management strategy will boost
the confidence of stakeholders, customers, and the management teams as well.
Background
Industrial manufacturing commenced in the past with people coming up with different products
from the existing natural resources with the aim of benefiting others. The industrial revolution

which was witnessed in the early 18th century catalyzes operations for the industrial
manufacturing industry. Innovations and inventions were the major activities that came into play.
This is the basis within which this hypothetical manufacturing company called Precision-Plus
Motors Spares was founded.
 Description of organization (The Precision-Plus Motors Spare Manufacturing Company)
This is a medium-sized company with a manageable number of human workforces. The
workforce in the company comprised of different staffs with different qualifications and
speculation.
On the topmost leadership of this company comprises the Board of Directors, Chief Executive
Officer (CEO), several departments and junior management staff. Asset management is found in
the finance department. This company too believed in revolutionary ideas and ensuring that there
is strong revolutionary leadership just like other companies (Campbell, Jardine, and McGlynn,
2016). The company believes in its core values, mission, vision, goals, and objectives for proper
functioning.
The board of directors is charged with the responsibility of making important decisions. The
Chief Executive Officer may come up with company policy for ratification by the board. The
company Chief Executive Officer is equally in charge of day to day running of the company. The
remaining staff is required to implement the board's decision and give feedback where
appropriate.

Precision-Plus Motors Spare Manufacturing Company organization structure (Torres-Machí et
al., 2015)
 Company’s assets and asset network.
The company is charged with the development of car spares parts in large-scale. These car spare
parts are sold to other industrial companies who use them for their consumption as well as selling
to customers. This gives it a unique identity in the field of manufacturing industry since its
tangible assets and asset network comprises manufacturing plant, machinery, lorries, motor
vehicles, office furniture and fittings, customers, suppliers, inventories, storage premises and
human capital who are specialized in different fields. These assets are used for different purposes
to facilitate production processes (Torres-Machí et al., 2015). The asset manager has sole
responsibility in ensuring that they function, being maintained and their records are kept and
safeguarded.
There exists a networking system of the company assets that facilitates the production of motor
spare parts. The network of assets is centralized. The movement of the company assets is tracked
from the company headquarters to its distribution outlets. The manufacturing plant is used in the

manufacture of the company motor spares parts. For the motor spares to be designed properly,
machinery is used for design, shaping and fixing purposes. These processes use old technology
methods to carry out which are considered to be slow. The manufactured motor spare parts
(inventory) are packed and packaged awaiting distribution by Lorries to several distribution
outlets and to other companies that require the motor spares parts for various industrial
applications. These spare parts cannot be manufactured without the supply of relevant raw
materials. Suppliers are charged with the mandate of making some supplies to the company. It
can be reported that the supply of low-quality raw material has greatly contributed to the low-
quality production of motor vehicle spare parts (DiMase, Collier, Heffner and Linkov, 2015).
In the asset, networking are the customers who use the manufactured motor spares parts for their
various consumption needs. The has been a shift in the demand for these consumers due to
several challenges that the Precision-Plus Motors Spares manufacturing company has undergone.
The short-term assets in the Precision-plus Motor Spares manufacturing are considered to have
five years of useful lives and are even projected to continue functioning slightly above their
useful lives. For long term assets, their useful lives are ranging from ten to twenty years.
 Services provided by the asset network
The assets in this company are primarily used to generate the spare parts for motors. The
manufacturing plant is based on factory building having several offices. Some of these offices
are used for the general administration of the company (Pavlovskis, Antucheviciene, and
Migilinskas, 2016). The fleet of Lorries and motor vehicles helps in the distribution of the spares
to various outlets accessible by customers and other manufacturing which uses them for various
industrial applications. The management staff is also allocated some motor vehicles to promote

their movement to and from distribution outlets. The asset storage premises are purposely meant
for storage of the company’s inventory.
 The current state of asset network
The current condition of these assets network requires a lot of improvement to increase
efficiency, productive capacity and quality products. The use of old model Lorries and vehicles
in the network has led to the loss of time and money as a result of delayed processes. Due to the
current technology some assets have become obsolete. The customer's attention also has shifted
to the new entrants in the market.
Introduction
Asset management refers to a strategy that incorporates processes like financial-management,
engineering work, operations, and regular maintenance to achieve the best life-time
effectiveness, usefulness and best return from the tangible assets
Precision-Plus Motors Spares Manufacturing Company just like other companies in different
sectors does face several challenges. Asset management is a general concern across many outlets
of this hypothetical company which requires management intervention. Assets had short useful
lives and many cases of breakages were reported. The productive capacity of this company was
low and equally, the company was faced with a lot of financial challenges (Shahid, Mahamood
and Das, 2016).
It can be noted that in the past decades many manufacturing companies were using obsolete
systems in managing their assets. Quality of production was an issue and many customers
expressed a lot of dissatisfaction and this lowered the profitability of several companies. The

asset management exercise was really cumbersome because there were no proper asset registers.
Entries made by new firms in the market became a threat to the company.
Effective and sound asset management plays a very important role in the company since it
facilitates the production of quality products, provision of quality services and good financial
control. In the previous few years, a good number of companies started realizing the significance
of asset management as a business strategy that should be fully implemented to achieve effective
and better financial performance. The framework within which this exercise underpins is the
process of strategy implementation as well as integrating the processes into one single system
that will ensure asset security, performance and useful life (Shahid, Mahamood and Das, 2016).
The basis of this research report is to review the strategy and framework within which the assets
of Precision-Plus Motors Spares manufacturing company are managed, improve on the
production efficiency and to ensure quality standard services.
For manufacturing companies, technological advancement is key to many activities. It facilitates
the spirit of technology market research, unique innovation, and product development.
Automating many processes will help increase the work efficiency in the company.
It is also intended the management company will implement the new policies framework and
regulations regarding the company’s asset networking systems, control measures and
maintenance processes. Further, the adoptions of new technology which help improve work
efficiency, quality production, and quality service delivery.
The asset life cycle
Many organization posses several tangible assets of different kinds that employees in the top
leadership are expected to manage or can get value on them. The company is indeed one of the

many kinds. These assets could comprise of inventory, equipment, motor vehicles, Lorries,
storage premises, and factory building. Management of these assets by the asset manager is not
so much the assets-themselves but rather the value addition that a given class of assets would be
able to deliver to the company over its useful life commonly referred to as “asset life cycle”.
The asset life cycle has played a pivotal role in the acquisition of assets in the Precision-Plus
Motors Spares manufacturing company (Shahid, Mahamood and Das, 2016). The asset life cycle
is very essential in determining processes of the asset acquisition, the supply or delivery period
and the attached workforce that will ensure its maintenance.
The asset acquisition normally involves several processes that should be properly carried out as
indicated below;
 There should be well thought out the need to identify the assets by being in constant
conversation with parties using or operating that particular asset.
 Development of asset plans to meet the intended expectations from the acquired asset.
 Asset specifications-meeting the minimum purchase design requirements. In this stage,
the asset modification procedure is well set out for effective cost control than carrying out
this modification at the acquisition stage.
 After careful evaluation of the three procedures, asset procurement should be carried out.
The management team is held responsible to decide on the asset purchase and to rent or
lease the asset.
 Installation of the acquired asset by ensuring the company is able to meet its intended
objective based on the purchase-contract promise (Amaratunga, Baldry, Sarshar and
Newton, 2002). The acquisition-team should commission the asset delivered and ready
for immediate use after careful installation.

 The asset acquired should be put to use, well maintained and monitored regularly.
Capturing of full asset life-cycle costs is very essential at this stage and regular checks to
ensure its efficiency.
 The need for proper modification or upgrade of the acquired asset should it meet its
intended expectations, use and objectives.
 The appropriate methods of asset disposal facilitating its immediate replacement
From the above steps, it can be noted that for a better asset the company should adhere to its key
policy guidelines regarding asset acquisition up to the time it should dispose and replaced with
another.
The Precision-Plus Motors Spares manufacturing company has been faced with a bigger
challenge in managing its entire assets life-cycle in an effective way. The asset costs have been
selectively applied in isolation and sorted out in a fragmented form (Kassem, Kelly, Dawood,
Serginson and Lockley, 2015). Implementation of the acquired assets is based on the confines of
the approved budget and prescribed time limit at the same time ensuring that the asset is in strict
compliance of technical-specification requirements.
The asset life cycle approach in this company has made the maintenance cost go high due to poor
record keeping that should be useful in tracking the costs of the acquisition of various assets.
Therefore, there is a serious need for the management team to carefully come up with
appropriate policy measures that should ensure that the procedures outlined above are frequently
applied.
Expectations of stakeholders

Stakeholders are very important individuals in a company set up. They consist of individual
people who care about the company or have a lot of vested interest. These stakeholders expect
high returns on their investments in a given company. The company is expected to distribute its
dividends in a given financial year. This can be distributed if a company is able to make a profit
and this main concern of most stakeholders.
Stakeholders can be categorized into different groups namely employees, customers, suppliers,
and the community or government. These groups have different expectations of the company.
Employees
These are staff that is employed by the company. They are composed of management from Chief
Executive Officer to junior staff. Their primary concern is to get paid for the work done.
Employees devote much of their time in production activities that will ensure that the company
generates maximum revenue at a very minimal cost. It is out of these revenues that the company
is able to pay salaries and wages for the work done Matějka et al., 2016.
Employees use the assumption of going concern principle to enable them to achieve their various
dreams, objectives, and goals. They get motivated in the sense that the company will continue
operating in a foreseeable future that will make them remain in employment. In situations where
a company faces going concern problems then the employee’s expectations are greatly
diminished and threatened.
Customers
A company without customers is a dead one. These are the final consumers of the manufactured
products in the company. Their level of confidence is exercised in situations where the company
is able to meet its demand sufficiently. They expect that the company will provide quality

products that match their demand, offers effective and efficient service delivery and a sufficient
variety of products to choose from at affordable prices.
Customers can be disappointed if the company's product quality is that of a substandard one.
This discourages them hence shift their attention to alternative companies that are able to provide
competitive quality products in the market. In situations where the operations of the company are
curtailed, customers hope deteriorates and withdraw from such a company.
Suppliers
They play a very important in an organization by ensuring that there is an adequate supply of raw
materials or supplies of services. This group of individuals expects that the company will offer
competitive prices and make prompt payment for the services rendered or products supplied.
Suppliers are the creditors in the company and when the company is wound up or liquidates, they
rank higher. Therefore, they should be paid first before other stakeholders. A company that is
incapacitated in paying its debts will have very few suppliers (van Riel et al., 2016). The gearing
ratio is a going concern indicator.
Community or Government
The government expects to raise its revenue through the taxation process. A company that is able
to pay tax to the government on time will enable the government plans its fiscal policy in
advance. Community, on the other hand, expects that the company will carry out important
development in its surroundings that will ensure better living standards. They further expect that
a company will provide employment to the members of society as well as protecting the
environment.

Possible outcomes to achieve in Short-term (5-years period)
Following a number of challenges that have been witnessed in the Precision-Plus Motors Spares
Manufacturing Company, the following possible outcomes are expected within a period of 5
years;
 A monitoring and evaluation committee that is tasked to assess the statuses of the
company’s assets life cycles to be formed immediately reporting directly to the asset
manager and gives its findings in a period not more than two years.
 Investigate the main causes of low product quality and design appropriate measures that
will ensure correct procurement and tendering procedures are followed. The tendering
committee to work in tandem with the procurement department.
 Design a new asset networking system that will result in a high level of effectivity and
efficiency (Pasini et al., 2016).
 Acquisition of new machines to replace the outdated ones and this to be done in phases
within three years.
 Ensure proper records of each company assets are well prepared, frequently updated and
safely guarded.
 Address several complaints raised by different stakeholders with regards to asset
management in the company and come up with immediate solutions.
 Modify and upgrade the inefficient existing company assets to meet their intended uses
within this short period of time.
 Train sets of employees in phases on how to operate the newly acquired machines and the
needed safety measures in a period of two to three years.
 Conduct a piloting process using the technology in production processes.