Need for a Robust Asset Management Business Algorithm

Abstract

The Sarbanes-Oxley Act created new standards for corporate accountability pertaining to all publicly-owned and traded firms. It holds top executives accountable for the accuracy of all financial data and statements, including reported tangible assets. It requires existence of auditable internal accounting control measures and specifies adherence to new internal controls and procedures designed to ensure the validity of their financial records and physical assets. The Act presents a challenge to every manufacturing firm to have a low-cost system implemented that can produce an exact physical-asset location, existence, verification and accounting on demand. Clearly, such low-cost solutions for enterprise-wide compliance would also provide verifiable and reliable data for corporate property tax, loan collateral, and audit requirements. In 2011, Chrysler LLC conducted a study for an improved and efficient process to locate, verify and track OEM-owned tooling assets at supplier sites, located across the globe. The collaborative effort focused on an innovative and comprehensive business algorithm (ALEXTM), for automotive tooling's “Acquire to Retire” asset locating, tracking and verification. A proof of concept pilot was initiated to evaluate the feasibility and effectiveness of the asset-acquire stage of the ALEXTM Business Algorithm. The initial phase of this pilot was focused on a third party tooling certification/verification and a supply-chain based annual validation alternative. Subsequent development phases will focus on the scalability of the ALEXTM Business Algorithm for new and legacy tooling, as well as capital equipment. This paper presents the current state of challenges with regards to supply chain asset management and inventory. It also outlines the requirements for a robust asset locating and management system. Introduction This is the first of three sequential papers, addressing financial and legal concerns related to the capability of automotive Original Equipment Manufacturers (OEMs) to accurately locate their physical assets and verify their existence as well as value in real-time. Part I focuses on current practice and issues related to asset location and verification as exercised in automotive and aerospace industries. Part II will discuss plausible solutions to asset location and verification capability based on existing technology. Part III will present a low-cost, effective solution proven through a pilot project that deploys a business algorithm for Asset Location and Existence verification (ALEXTM) and an Asset Management Identifier (AMITM). Having a full, accurate, and reliable account and control of physical assets has been a challenge for any mid-size to large manufacturing firm, particularly in the automotive industry, where the number of OEM-owned production tools at suppliers and their sub-contractors could range from 300,000 to more than a million. Such numbers of production tools would consist both of those tools in current production as well as legacy and service component tooling. Full, accurate, and reliable account and control of physical assets is important to the manufacturing firm's financial status and health. Additionally, public companies would have legal ramifications vis-a-vis 2002 Sarbanes-Oxley (hereafter SOX) Act1. for a Robust Asset Management Business Algorithm 2014-01-0783 Published 04/01/2014 Seyed M. Mirmiran and Vern Scott Chrysler LLC Bill Swenson and Stephen Funtig Accelero Solutions Inc. CITATION: Mirmiran, S., Scott, V., Swenson, B., and Funtig, S., Need for A Robust Asset Management Business Algorithm, SAE Technical Paper 2014-01-0783, 2014, doi:10.4271/2014-01-0783. Copyright © 2014 SAE International Downloaded from SAE International by Seyed Mirmiran, Thursday, March 06, 2014 09:03:06 AM