Salla Marttonen

Modelling costs in maintenance networks

Purpose – The purpose of this paper is to create a cost model at the general equipment level for industrial maintenance services.Design/methodology/approach – The study is divided into two main sections. In the first phase the idea is to create a framework for a cost model with a literature review. The second, empirical part of the study is based on costing information from interviews and information given by network companies: a pulp mill, a maintenance company and an equipment provider. The maintenance of three different equipment processes is examined in the network through a case study, to get more specific information from real world situations to develop the model.Findings – The findings concern the cost items that should be considered in the model, the structure of the model, and how the general cost model is constructed. During the research the model has been extended, and new cost categories included.Practical implications – The cost model can be used in various performance measurement and decisi...

Profitable working capital management in industrial maintenance companies

Purpose – The purpose of this paper is to analyze the impact of working capital management on profitability. This connection is further studied in industrial maintenance service companies. Design/methodology/approach – Analytical modeling has been used as the research method. The empirical analyses have been made on the basis of financial statements. Findings – The paper presents an analytical flexible asset management (FAM) model, which reveals a significant negative correlation between the cycle times of operational working capital and the return on investment. The importance of working capital management is emphasized in the industrial maintenance service sector, because of light fixed assets and good profitability. Research limitations/implications – There are some mathematical limitations in the applicability of the model introduced in this paper. These limitations should be addressed in further research. Practical implications – The FAM model can be utilized as a tool in decision making in firms, bo...

Appeasing company owners through effective working capital management

In the dynamic financial climate of the present day, companies should be aware of the potential of effective working capital management in reacting to market transformations. It is important to include the company owners viewpoint in the research perspective. In this paper, we study the connection between working capital management and the return on equity. The managerial and financial perspectives of flexible asset management are integrated through analytical modelling. We conclude that the return on equity can be improved by shortening the cycle time of operational working capital. Both the interest rate of debt and the debt-to-equity ratio are taken into account in order to study the effects of dynamic financial conditions. Changes in the financial conditions could be compensated through effective management of working capital.

Modeling the Impact of Working Capital Management on the Profitability in Industrial Maintenance Business

In this paper, we present an analytical model for flexible asset management, which is a new tool for company decision-making. The model reveals a significant negative correlation between the cycle times of operational working capital and the return on investment. Conventional research on working capital management has mostly focused on manufacturing industries. We show that working capital should be managed actively also in unconventional environments like service industries. The focus is on the industrial maintenance service providers, which still remain somewhat unexplored in academic literature. The importance of working capital management is actually emphasized in this industry, due to its light fixed assets and good profitability. Interestingly, there are some major differences between large enterprises and small and medium size enterprises in the industrial maintenance service sector. These can be explained through economies of scale and the fact that large maintenance service enterprises often focus on providing services mostly for their former host companies.

Adapting the SHEL model in investigating industrial maintenance

Purpose – The purpose of this paper is to identify and categorise problems in knowledge management of industrial maintenance, and support successful maintenance through adapting the SHEL model. The SHEL model has been used widely in airplane accident investigations and in aviation maintenance, but not in industrial maintenance. Design/methodology/approach – The data were collected by two separate surveys with open-ended questions from maintenance customers and service providers in Finland. The collected data were coded according to SHEL model -derived themes and analysed thematically with NVivo. Findings – The authors found that the adapted SHELO model works well in the industrial maintenance context. The results show that the most important knowledge management problems in the area are caused by interactions between Liveware and Software (information unavailability), Liveware and Liveware (information sharing), Liveware and Organisation (communication) and Software and Software (information integrity). R...

The missing link between maintenance contracts and flexible asset management

The paper shows how additional value can be created in maintenance collaboration through integrating the features of flexible asset management into maintenance contracts. We expand the traditional typology of maintenance contracts and introduce a new contract type, flexible asset management contracts. Also value sharing in the new contract type is discussed. Our logic for sharing the value is based on reaching for win-win situations in industrial maintenance collaboration. Finally, we present scenarios which prove that significant financial benefit can be achieved through adopting these novel contracts. In the dynamic and challenging operating conditions of the present, companies should actively search for this kind of possibilities for closer collaboration with their customers and suppliers.

Using the life-cycle model with value thinking for managing an industrial maintenance network

The objective of this article is to create a general life-cycle model for maintenance decision making in different industries at the item level. The need for network-level tools will increase, as inter-organisational collaboration is emphasised more and more. Previous life-cycle models have mostly viewed the matter from the perspective of just one company, but our model takes the different members of maintenance networks into account. We have also integrated value thinking with life-cycle accounting, as it is crucial for companies to perceive which elements increase the value of each member in their network. The value-based life-cycle model introduced in this article has been mainly developed to support the future planning of maintenance operations. In addition, it can be designed how additional value can be reached through future maintenance and how this value can be equitably shared between the network partners.

Inter-organisational asset management: linking an operational and a strategic view

Interconnections and interdependencies are increasing globally. The formation of inter-organisational relationships is a result of the wide-ranging phenomenon of networking. When traditional organisational boundaries are blurred, many challenges arise in coordination and management. They can, however, be addressed by emphasising inter-organisational cost and asset management, a concept novel to the literature. We also claim that companies are able to realise concrete benefits from such joint actions, especially in the long-term. The main objective of the paper is to demonstrate the benefits of inter-organisational asset management on the operational and strategic level with our asset management models. Two focal conclusions emerge. Firstly, we exemplify, and prove, that companies can create economic value collaboratively on either, the operational or the strategic level. Secondly, the cause-and-effect relationship between operational decisions and strategic outcomes is highlighted by integrating the two levels of inter-organisational asset management. Managerial implications can be drawn from both.