Every year, Wall Street analysts take a look at some global icons and place a few on a list of companies or brands expected to go out of business in the near future. More often than not, a low expectation of survival is a result of poor management that has led to a failure to react to a changing competitive environment.
Some examples of companies and brands that have fallen by the wayside include, Pontiac, Life Magazine, Blockbuster, House and Garden. Other brands and industries in dire shape include but are not limited to; soap operas, record stores, photo kiosks, Sears, Kellogg’s Corn Pops, MySpace and print publishing (newspapers, magazines etc.).
In some industries such as textiles and manufacturing, sharp declines have occurred over the years as cheaper foreign labor has made domestic operating margins more difficult to achieve. However, for most industries including record stores and newspapers, it wasn’t technologic change that spelled their doom, it is their inability to adapt and change that is sinking the ship.
Defining a Changing Competitive Environment
What is a changing competitive environment? A changing competitive environment describes the business dynamics every organization or part of an organization (such as a product line, business unit, subsidiary etc.) must adapt to in order to survive as a viable business entity.
Business Survival Necessities
An organization’s ability to handle a changing competitive environment is dependent upon their:
- Having adequate cash flow to make changes: Once a need for change has been determined, there must be enough resources to make it happen. Hindsight is great but it doesn’t help a company survive.
- Balance of sales and operations objectives: For some organizations the reason operational costs are out of control is because the company has always been sales focused with most development monies going toward the sales process. The balance is part of the company culture and must be addressed at the top in order to fix.
- Operational flexibility: Underfunded operations in purely reactive or firefighting mode can never make the adjustments necessary to survive.
- Understanding technology implications: Organizations should always be keeping an eye on changing technology. Ignoring technological change will not make it go away (just ask Blockbuster). Technology can also be used to improve sales and/or maintenance operations to remain competitive in a global economy.
- Ability to make good long-term decisions: Many of today’s companies got in trouble because they failed to plan accordingly. Decisions (acquisitions, adapting technology etc.) should be well thought out with an understanding to the organization’s bottom line over the years to come.
Thriving with an EAM System
Organizations lacking in the listed areas run a significant risk of not being able to adapt and survive. The good news is that an Enterprise Asset Management (EAM) system can make an impact in 4 of the 5 variables.
Having adequate cash flow to make changes
The biggest cash drains in operations are labor, energy and repairs. A quality EAM system will:
- Lower labor costs by scheduling work. Scheduling allows time to be used more efficiently and effectively.
- Reduce paperflow by automating manual processes such as work requests, work orders, inspections and rounds. Less paperwork enables maintenance management to accomplish more with the same amount of resources.
- Better maintained assets require less energy to operate often bring an energy savings up to 30%.
- EAM solutions have tools for document handling and storage. No more lost documents, making copies or spending hours trying to locate important information.
An EAM system allows maintenance management to be proactive instead of constantly fighting fires. This not only saves money but enables facility management to have greater flexibility in addressing new or old issues.
Understanding technology implications
Operating margins are not just determined by labor costs. More importantly, the proper use of EAM systems and mobile technology can add significant margin improvements by controlling costs, increasing uptime, lengthening the useful lifecycle of assets as well as increasing asset reliability.
Ability to make good long-term decisions
Implementing an EAM system is a long term decision with benefits that grow over time. For example, an EAM system keeps an accurate historical record of all work performed. Having an accurate work history database enables:
- Better capital budgeting freeing up cash reserves in the process.
- Establishment of standard operating procedures.
- Liability claims to be contested by demonstrating consistent quality care of assets.