Outsourcing a Part of Physical Asset Management – How to Decide
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Thursday, December 13, 2018
Asset-intensive industries have changed radically because of regulatory and technological changes. This has allowed many new investors to enter existing markets and forced established companies to consider new markets for growth. Simultaneously, new technology has levelled the playing field as high efficiency changes economies of scale and market dynamics. To manage their risks and uncertainties associated with new technology, while still focusing on improving profits, many asset owners look to outsourcing part of the physical asset management responsibility to specialized operations and maintenance companies. The owners gain advantages through the transfer of non-core activities to the supplier to reduce costs or to reduce risk. Whatever the rationale for outsourcing, the owner requires a method to evaluate outsourcing options to determine which is right for it, given its own internal capacity and strategy. The decision process must be capable of selecting the right type of service level based on a number of tangible and intangible strategic criteria. This type of multi-faceted decision necessitates process based on a sound theoretical foundation that can compare different options against the critical criteria of lifecycle costs, revenue influences, quality, health and safety, and other key drivers. In this workshop, we’ll look at a case study model using the analytical hierarchy process (AHP) as a tool capable of evaluating this type of diverse multi-levelled decision. AHP is simple and straightforward, and uses an easy-to-understand hierarchical structure to sort criteria based on their relative importance.