Asset Management in the Supply Chain

Over the last decade more and more companies have implemented returnable and reusable transit packaging fleets and pools, whether it is pallets, tote bins, steel stillage, cages or even wooden crates. What is guaranteed is that these fleets require a capital investment, (whether directly or by a fleet / pool provider), and should be protected as you would any other company asset.

The specifications of the packaging vary enormously depending on the industry, the application and budget. However one thing common to many of the established packaging fleets or pools is that when they were originally specified, costed and implemented, a number of elements were not considered, and often still aren?t. These include repair and maintenance costs due to normal wear and tear as well as misuse, equipment loss, stockpiling and extended dwell and cycle times, lifespan of the equipment and the flexibility of the chosen design to adapt with developing and changing supply chain demands. These elements all have a cost impact, which can be substantial, and surprisingly many companies are either unaware of the real cost of their packaging pools, or just accept that it is a high cost and budget accordingly.

The key to managing costs of a packaging fleet is the in the initial equipment design and specification, the processes specific to the fleet within the supply chain and having an effective management and control system which can be easily integrated into the existing supply chain operation.

The starting point is therefore establishing the objectives of the packaging fleet and the requirements within the supply chain that you are looking to satisfy. Analysis of the operation and supply chain requirements, now and for the next five years, needs to be carried out and once the objectives and requirements are confirmed then the methods of handling and the type of packaging required can be established and specified. Success will be facilitated by a simple cost effective process design, which adds value to the existing operation by generating ?self funding? fleets, to include cost control mechanisms to reduce cost of damage, loss and misuse.

Process designs are unique to the individual customers supply chain needs, whether it is a simple hub and spoke operation or a complex multi tiered supply chain. Identifying the subtle differences between the needs if an inbound or outbound pallet or container pool is crucial to a successful solution.

The actual equipment design must take into account the physical requirements of the packaging, as well as the lifespan under actual working conditions, the ease of maintenance and repair, the ease of handling and of course the capital investment. It must be remembered that when costing a fleet it will probably be an initial high capital cost, compared to disposable packaging, but it is also an asset that can be depreciated over a number of years. The annual cost of running the fleet can be budgeted and this will vary depending on the individual supply chain needs. However these costs can also be monitored and controlled with a suitable management system.

There are a number of asset management systems being used to manage fleets or pools, and experience shows that a simple system, using established technology can provide the perfect tool for controlling your fleet effectively.

The objectives of a fully integrated pro-active fleet management system are as follows:

? To reduce overall packaging fleet costs
? To increase fleet visibility and cost control
? To optimise packaging fleet utilisation and minimise cycle times
? To provide proof of accountability for damage and loss
? To manage a repair and maintenance program

A suitable system should be modular, enabling it to cope for example, with a simple hub and spoke operation developing into a more complicated multi-tiered supply chain over a 3 to 5 year period.

Equipment losses can be put into two categories, actual loss and perceived loss. Perceived loss is where it is assumed that the equipment is lost as no one can account for its physical location. In reality the equipment is sitting in a warehouse or yard area unaccounted for and ignored. Actual loss is as its name would suggest and the equipment has been permanently mislaid or destroyed. Effective management will identify actual loss via audit trailing facilities and should negate perceived loss.

Damage will always occur to packaging equipment in the supply chain. However experience would suggest that an estimated 70% of damage is avoidable. Effective management will allow you to identify who is damaging equipment in the supply chain and handling processes of regular offenders can be examined and changed or improved to ensure damage is reduced. Damage data can also identify any design areas within the equipment itself that could be changed to reduce overall damage levels and therefore costs.

The example below shows the effect that increasing or decreasing the delivery trip cycle time in a pallet pool has on the pallet pool costs.

Cycle time management is key to the fleet size and therefore cost, so all efforts to reduce or maintain a minimum cycle time are paramount. This can be achieved through synchronous container flows integrated with lean manufacturing process. Cycle times should not be averaged out across the whole fleet and a good system will enable you to set individual cycle time parameters for specific user requirements. Minimising and reducing cycle times can create a surplus of equipment in the packaging fleet or pool. However this should not be regarded as wasted capital, but as cost avoidance on future packaging requirements as your business expands.

In order to ensure your objectives and requirements are met the system specification process must be thorough and realistic and tailored to suit the individual customer and supply chain needs.

? Your current management systems and process will be evaluated, and a suitable packaging management system designed and implemented
? Packaging fleet data can be captured via RFID readers, bar code scanners, or by manual entry of bulk movements.
? Data entry should be minimal so as not to increase on-costs and the risk of human error.
? There must be a high degree of control and a wide range of reporting capabilities, available via a local network or over the internet on a secure password access basis.
? The system must manage overall packaging fleet performance, including additional operations such as repair and maintenance, cleaning, damage inspection procedures and KPIs.
? There should be no limit on pallet / container types or the amount of locations where the fleet can be used in order that it can be flexible to a growing business.
? Data synchronisation with other systems within your business will facilitate accurate equipment planning for future or seasonal requirements.

The impact of packaging on overall supply chain costs, and indeed the impact on packaging costs brought about by changes elsewhere in the supply chain, can be tested theoretically using various cost modelling soft ware prior to actual implementation.

Gideon Hillman Consulting can assist you with knowledge and experienced based proposals and modelling solutions for Asset Management in the Supply Chain Investment into planning and consultative project management at the outset can negate over investment and additional cost in the longer term.

Gideon Hillman was employed at a Senior Management Level throughout Europe within the Materials Handling, Logistics and Specialist Supply Chain Services industry for over 12 years, (7 of which with TNT Logistics), prior to establishing Gideon Hillman Consulting in 2004. Gideon is a Member of the Institute of Logistics and Transport & The Institute of Management Consultants. As well as presenting to, and working with, Industry specific forums such as BARD / BPI in the music retail industry, the IISRP in the Global Automotive Tyre Industry and the Odette Group for Automotive Materials Handling, he was a Keynote speaker on "Asset management in the supply chain", at the 1998 IFPWA Global conference and has worked closely with the IARC (International Automotive Research Centre) on RFID implementation for Automotive Stillage Tracking. He was also a speaker on Asset Management in the Humanitarian Aid Supply Chain, at the 2006 Aid & Trade Humanitarian Relief Conference in Geneva.

Asset Allocation Management Without Mutual Funds

Many Investment Gurus, with a straight face and a gleam in their eye, will insist that successful investing is a function of expansive research, skillful market timing, and detailed technical analysis. Others emphasize fundamental information about companies, industries, and markets. But trends and numbers are secondary to a thorough understanding of the basic principles of Investing and Management, and their interrelationships. The ingredients for a successful investment portfolio are these: stubborn belief in the Quality, Diversification, and Income trinity from Investments 101, and operations that employ the Planning, Leading, Organizing, and Controlling skills introduced in Freshman Management. Here are some things to keep in mind while you season your experience with patience and marinate your investment process with discipline:

* A viable Investment Program begins with the private development of an Investment Plan. The first step is the identification of personal goals and objectives and a time frame for goal achievement. The end result should be a near autopilot, long-term and increasing, retirement income. Asset Allocation is used to structure the portfolio so that it operates in a goal directed manner. The finished Plan must be flexible in design, based upon reasonable expectations, simple in structure and operation, and easy to supervise.

* Use a "cost based" Asset Allocation Model. Although most of the Investment World operates on a Market Value basis for everything from performance analysis to Asset Allocation and Diversification decision modeling, you will improve your long-term results and stay within your allocation and diversification guidelines better by using a system based upon Working Capital. This widely unknown Asset Allocation "model" takes the hype out of daily stock market reporting and keeps the income investor's focus on appropriate statistics.

* Control your emotions, among other things. Clearly, fear and greed are the two that require the most control in the investment environment... particularly in these days of a reckless media, Internet empowered scam merchants, high-speed information gathering/processing, and cheap personalized trading capabilities. Love and hate need to be dealt with as well, but there are fewer out-of-body influences on these. Only strictly disciplined decision makers need apply for your Investment Management position... and you may not be the ideal candidate. Investment Management is a continual responsibility, not a weekend and occasional evenings avocation.

* Avoid hindsightful analysis, and uninformed (or salesperson) criticism. It is painfully comical how hindsight has taken over in our society... in sports, finance, politics, and the professions, everywhere... everyone you hear is second-guessing and finger pointing. No one is willing to take responsibility for their own actions and everyone is willing to sue whoever coulda', woulda' or shoulda' prevented whatever happened. Investors cannot afford to be Little League crybabies. Make one of the three basic decisions (which are?) and don't look back. No person or program can predict the future, and your portfolio requires management today. The playing field for the investment game is uncertainty.

* Establish a profit-taking target for every security you purchase. The purpose of investing is to make more money than you could in a guaranteed, non-negotiable instrument. This larger money making expectation comes with an assumption of some form of risk... there are several, and its "in there" in all investments. In Equities, set a reasonable profit target and take less if you can get it quickly. With income investments, never say no to a profit equal to a year's income, or 10% if you like round numbers. There are always new investment opportunities, and there is no such thing as a bad profit... or a good loss.

* Examine Market Value numbers at intelligent intervals. Frequent examination is stressful and non-productive. There are no averages or indices that compare with a properly diversified Investment Portfolio, particularly if your Equity selections are screened for Quality and Income. Investing is a long-term endeavor, and neither Shock(sic) Market symbols nor current yields operate on a calendar year schedule. Look at market peaks and troughs over significant time periods that include "cycles"... and do separate your analysis by class.

* Avoid what the crowd is doing and shun investment products. Consumers buy products; Investors buy securities. The crowd is driven by the very emotions that you must learn to control. Stay focused on your plan; analyze your annual income and trading statistics. Buy and hold creates more real tax problems than real millionaires, and gimmicks and fads last just slightly longer than spring fashions. Always buy good stuff on bad news and sell into good news announcements.

* Don't try to save the world with your investment decisions. Never limit your investment opportunities artificially. Votes work better when it comes to changing your world, and corporations should not be the targets of your political hates... get rid of incumbents, state and local, until there are changes in the tax code, social security, tort law, environmental issues, etc. In the meantime, invest with your head, not your heart. The business of a capitalist society is...

* Keep in mind that you need Income to pay the bills, and that your cost of living in retirement will be higher than you think. If you insist on some income from every Equity security you ever own, and beat-the-bank income from income securities, you will obtain two important things: An annually increasing cash flow that will rise at a rate greater than most normal inflation rates, and a higher quality investment portfolio for better long-term investment performance. (If you use a cost based Asset Allocation model with at least 30% invested in income securities and no open end Mutual Funds or Index ETFs.) Never settle for tiny short-term yields or get hooked on those that are unsustainably high.

* Investing is not a competitive event, ever. You don't need to beat the market. You need to accomplish a set of personalized goals. Not even your twin's portfolio should be the same as yours. The faster you run, the less likely it is that you will succeed over time. Big risks, foolproof gimmicks, and exotic computer programs occasion more failures than success stories. Remember the Investment gods? They created Stocks and Bonds... only Stocks and Bonds!

* Avoid Unrealized Gains, Embrace Volatility, Increase Annual Income, and remember that all key investment moments are only visible in rear view mirrors. Most unrealized gains become Schedule D realized losses. As of today there has never been a correction (rally) that has not succumbed to the next rally (correction). Only an increasing income level can beat back inflation... a bigger market value number just doesn't do it.

Perge'

Steve Selengut http://www.sancoservices.com http://www.valuestockbuylistprogram.com Professional Portfolio Management since 1979 Author of: "The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"

Property Management Company - Hiring One

Hiring a property management company is a great idea if you have even a small apartment building. Having someone taking care of all the small details of a rental property means you'll have more time to find the next good investment. Also, trying to do it all yourself is the surest way to make your real estate investment experience a bitter one. To find a good property manager, ask the following questions.

1. Other properties they manage? It's best if they have rental properties that are similar to yours. You can also drive by their other properties to see how they are maintained.

2. The fee? They vary around the country from as low as 4% of gross rents for larger buildings, to as high as 12% for single family homes. Be sure the fee is clearly stated and understood.

3. Extra costs? Are showings extra? Do evictions cost extra (beyond the legal fees)? Any other extras?

4. Who actually handles your property? It's best if one person handles your building all the time, and has some experience. Get their name.

5. How and when is the fee collected? Will you be billed, or will it be deducted from your account directly? Monthly? Quarterly?

6. Type of advertising? Exactly how will they advertise the units and what will it typically cost you?

7. Time and cost to prepare units? What's the typical cleaning fee on a vacancy, and how long will it normally be before it's rented out again?

8. Type of accounting? Which types of reports do they send, and how often? How are accounts set up?

9. Their hours of operation? What are their business hours, and who takes weekend calls?

10. What needs owner approval? What dollar amount needs your authorization, and is this negotiable?

You should ask other questions, based on your particular needs and the particular property. Be sure to ask everything up front, and you'll have fewer misunderstandings, and a good manager. Real estate investing and being a landlord is a lot less stressful with a good property management company.

Steve Gillman has invested in real estate for years. To learn more, get a free real estate investing course, and see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com