Asset Artifacts

In 1980, an ASRS at my company was the showpiece of a new plant, its capability for high-density automatic storage and retrieval of inventory heralded as step change in stockroom services.  Eight years later, as the company adopted a just-in-time philosophy however, the ASRS was viewed more as an automated waste, facilitating storage of unneeded inventory and creating a huge amount of delay in the kitting process.  Gradually the many drawers of the ASRS were unloaded and inventory moved to or near point of use.   The magnitude of our inventory opportunity was revealed as parts hidden in the machine were brought into the daylight for all to see. 

But the empty ASRS itself lingered as a white elephant, a “permanent” fixture too big to push to the side.   It remained a part of the production landscape while we debated, “What do we do with this thing?”   Some managers argued that it had been such an expensive investment, “We can’t just toss it!”  Our controller, Brian H., took the assignment to find a buyer.     But after two years with no takers, we paid the company who installed the ASRS originally to dismantle and remove it.   We took a loss on our books to free ourselves of an asset artifact:  an item that adds no real value but has either book or perceived resale value.

Ten years later the story repeated, this time with a different kind of ASRS – a new computer system.  Approaching the dreaded Y2K Armageddon, the search began. Our needs for automation of information, however, had been substantially reduced by this time.  Brian Maskell refers to computer transactions as the WIP of information flow.  We had much less of this WIP in 2000 than in 1980, a condition reflected in our request for proposal to potential hardware and software suppliers.   But when bids arrived, all proposed a bigger system with more storage and more peripheral devices.  One salesperson confided, “We thought you just made a mistake in your RFP.”   That newer computer systems can store massive amounts of information and process high volumes of transactions is not a benefit.  Stagnation of material or stagnation of information – what’s the difference?    We opted for “less is more”:  a smaller system that fit our new strategy, not an asset artifact. 

Today I watch for asset artifacts, devices built or bought for an old strategy that have become obstacles to improvement.  Here are a few recent examples:

• A glass-laminating machine in a window factory was covered with plywood and converted to a large table when the company decided to purchase laminated glass rather than manufacture it.   It looked like a table, but was actually an expensive machine.  Once discovered, this particular asset artifact was sold for a good price on eBay.
• An operating room converted to dead storage for broken gurneys, wheelchairs and spare parts.  “We have no way to dispose of unused equipment,” a worker tells me.
•  A machine shop so crowded with unused machines, that material transport was nearly impossible.   The company owner vehemently resisted the disposal of this “valuable resource” for several weeks.  Then one day as I approached the building entrance a sign on the front door greeted me:  “Equipment Sale on Dock.”  Call it top management 5S.   No one but the owner could have made this decision, whose result was a 50% increase in much needed floor space.  The cash generated was used to train employees – the most valuable resource.
•  At an architectural wood company, a warehouse bulging with expensive veneers purchased for custom cabinetry and then not used.  I gave workers in the warehouse red tags and asked them to mark the veneers that could be sorted.  The team lead told me “We only need one red tag, because the entire contents of this warehouse will never be used.  All the material in here is excess, purchased to assure grain and color consistency, but not all needed for the job."   In fact, the company had already initiated a project to double the size of the warehouse.  A tour of the floor with the company owner brought a tear to his eye. “I know we probably won’t use these veneers, but they are so valuable.”  He couldn’t part with the custom veneers – asset artifacts -- so he enlarged his warehouse (now also an artifact.)

In our DVD, 5S-5 Challenges, we make the case that intrinsic value – value on the books or perceived resale value --  is not real value.  Most often this challenge in understanding is for top managers who would like to believe that artifacts are real assets.   Take a wide-angle look at your workplace.  Do you have any asset artifacts that you can share with us?

O.L.D.