Strategic Sourcing & Contracts (AM)

Responsible departments:

Supply Chain, Finance, Operations, Maintenance

Strategic sourcing sets the foundation for successful asset acquisition by aligning supplier selection and contract terms with operational requirements and long-term business objectives. Procurement must work closely with operations, maintenance and finance to ensure suppliers can meet performance expectations throughout the asset lifecycle.

Supplier evaluation should consider quality, reliability, technical support, sustainability commitments, warranty provisions, and whole-of-life costs. Well-structured contracts establish clear obligations, service levels, risk allocation, and performance expectations. Strategic sourcing supports reliable asset delivery, minimises lifecycle risks, and strengthens supplier relationships that contribute to long-term operational success.

  • Evaluate suppliers against technical and commercial requirements.
  • Develop sourcing strategies and procurement plans.
  • Negotiate commercial terms, warranties and service agreements.
  • Establish long-term supplier partnerships.

Inputs

Asset specifications, business requirements, supplier information, sourcing strategies

Outputs

Supplier contracts, sourcing plans, approved suppliers

Benefits

Reliable suppliers, reduced procurement risk, improved asset lifecycle support

Demand Planning & Forecasting (AM)

Effective demand planning and forecasting is critical to aligning asset acquisition with operational needs. The procurement of a new asset should always align with the organisations long term strategic plan and should align with operational and financial goals and targets. 

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Criticality & Risk Assessment

Asset criticality analysis is the process used to assign a criticality rating to assets based on potential risk the business and drives decision making when asset is in service. All new assets should be fit-for-purpose and should be formally risk assessed to ensure it is capable of meeting business objectives safely and efficiently.

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Capital Investment Decision Making

Capital investment decision making ensures new assets are delivered in budget, on time, and meet business objectives. OPEX (Operating expenditure) and CAPEX (Capital expenditure) should be determined for new assets to ensure cost effectiveness.

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Strategic Sourcing & Contracts (AM)

Strategic sourcing sets the foundation for parts availability and cost control by aligning supplier selection and contract terms with operational needs. 

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Procurement & Vendor Management (AM)

Effective procurement ensures timely acquisition of goods and services that meet quality, cost, and schedule requirements. Operations and Maintenance provide demand forecasts and specifications, Supply Chain executes purchase orders and manages vendor relationships, while Finance oversees financial controls and payment processes. 

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Strategy Development

Effective procurement ensures timely acquisition of goods and services that meet quality, cost, and schedule requirements. Operations and Maintenance provide demand forecasts and specifications, Supply Chain executes purchase orders and manages vendor relationships, while Finance oversees financial controls and payment processes. 

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Spare Parts for Assets (AM)

Once the planning for a new asset has been completed, the organisation can proceed with how they will procure the asset (via a tender/contract, or purchase order etc).A critical spares analysis should be carried out to determine risk of extended downtime in the event of an unplanned failure & inventory holdings should be adjusted accordingly.

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Asset Master Data

Maintenance activities should be managed within an organisation’s computer system. This ensures historical maintenance data is captured consistently with relevant costs linked to assets. Data captured can be used to analyse performance, allowing decision makers to implement improved maintenance strategies and cost saving initiatives.

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Operate

Commissioning an asset once it has been delivered ensures that it is operating as designed. A handover checklist should be completed prior to operations taking ownership of the asset. Training packages should be developed and operators deemed competent before operating any asset. Operators should also know how to properly conduct a "pre-start" on the equipment.

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Maintain

Work management defines the process of ensuring maintenance work is identified, prioritised, planned and executed in a safe, efficient and cost-effective manner. Maintenance works should be scheduled in the ERP following a planning and scheduling process.

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Overhaul Management

Overhaul management ensures that major repairs or refurbishments are strategically planned, cost-effective, and aligned with the asset’s operational life. Overhaul management involves making informed decisions on replacement versus refurbishment.

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Decommission, Repurpose or Write Off

Once an asset is deemed no longer required, the decommissioning and disposal process will commence, bring the asset to the end of its life. An aspect of disposing a tangible asset involves ensuring the computer systems are updated to avoid confusion and data errors. 

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Continuous Improvement (AM)

Continuous improvement ensures assets, maintenance practices and management systems evolve to maximise reliability, performance, safety and value throughout the asset lifecycle.

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Cost Control (AM)

Cost control maximises value from assets by balancing acquisition, maintenance, operating and disposal costs across the entire asset lifecycle.

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Analyse Performance (AM)

Asset performance should be analysed through regular KPI and reliability reporting. These insights enable organisations to make informed decisions regarding asset strategies, maintenance investments and lifecycle management.

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Asset Management Framework

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"Asset management is the coordinated activity of an organisation to realise value from its assets. It is the systematic and analytical process of acquiring, operating, maintaining, and disposing of assets in the most effective manner - including all costs, risks, and performance attributes."