Author: Jason Apps | 22 March 2019

For organizations to optimize asset reliability to achieve the desired balance of performance, cost and risk, COOs need to focus the use of technology, adapt organizational culture and efficiently leverage internal experience and knowledge.

CHALLENGES FACED BY COOs

Balancing CAPEX/OPEX and risk

Organizations operate assets in a dynamic environment. Operational context is in a constant state of flux – and asset performance is continually affected by changing environmental conditions, duties, and business performance goals. Given this, the strategy for how assets are managed and maintained to deliver efficient and reliable performance can quickly become outdated or sub-optimal if not regularly reviewed and updated.

The impact? A COO’s ability to gain foresight and visibility into the optimization of CAPEX/OPEX to deliver target asset performance or maximum throughput is severely limited. It is compounded by the unknown level of risk associated with asset performance and how it compares to the optimal position.

The function of Asset Strategy Management is to constantly assess the gap between actual risk and costs and optimal risks and costs; and drive updates to ensure the reliability strategies keep pace with the operational context. 

IIoT, AI and Machine Learning

Within asset-intensive industries, organizations are increasingly adopting various equipment monitoring methods to improve equipment performance and protect against failure. These organizations are taking a predictive approach to maintenance.

The fundamental objective of Asset Performance Management (APM) is to predict impending failure using increasingly sophisticated techniques, to provide advance warning. APM is driving the growing IIoT industry and, coupled with Machine Learning, is making it easier to detect impending failure more accurately and with more warning.

While APM monitors performance, it doesn’t drive performance. ASM manages and evolves the reliability strategy that delivers the performance we see. By providing sound strategy and by extension a predictable level of performance, ASM provides a much-needed foundation and performance basis for Machine Learning to be applied and to be of value in an industrial environment where it can be scaled across an asset base and enterprise.

The state of asset reliability strategies

Many organizations set asset reliability strategies in silos, treating them as one-off projects. A true reliability strategy should incorporate routine maintenance, major overhaul/replacement decisions and renewals or upgrades. However, many of these decisions are not connected; they are often made by different departments, with competing priorities and goals.

A typical example is where constraints dictate that capital for a major replacement is deferred, but there is no connection or change to routine maintenance to account for the expected life extension.

With no formal ASM function in place, and without regular review or updates, reliability strategies deteriorate over time, resulting in most organizations investing in a costly major strategy review every four or five years.

With ASM, once a strategy review is completed, it is not set in stone. Rather, the strategies are dynamic and evolving, and continually managed over time.

Gaining ROI from Work Execution Management, ERP systems and Master Data

Many organizations have already moved or are planning to move to a single instance of their ERP, EAM or CMMS, with the goal of improving the consistency and completeness of Master Data and, as a result, boosting performance. Yet moving to a single instance will not improve performance by itself. Performance outcomes are delivered through sound strategy and efficiency; and productivity gains are achieved with accurate, consistent Master Data.

Without ASM, the ROI on any investment in ERP or the work execution management process is limited only to gains associated with the efficiency of execution. A high-quality reliability strategy is what will manage risk and costs and improve performance. COOs should be challenging their organisation’s ability to make effective reliability strategy improvement decisions, and their ability to keep those strategies live and responsive to changes.

WHY COOs SHOULD CARE ABOUT ASM

ASM drives performance

ASM gets you in front of performance, ensuring that the reliability strategies in place are aligned with performance goals. Effectiveness of the reliability strategies is then monitored in real time to identify where review is needed.

The ability to be responsive to changing business priorities, operational context and organizational changes is essential. COOs need the assurance that experience, knowledge and inhouse IP is leveraged across the entire asset base to deliver an optimal level of performance on an ongoing basis.

ASM uncovers risk

ASM monitors current operating risk levels related to execution of reliability strategies and current asset health and condition, and identifies the source of the risk as either deferred capital, operating context changes, or work execution management. Once identified, informed decisions can be made to reduce the risk to tolerable levels in the most cost-effective way.

This prioritization allows for the reliability resources to target the areas that have the greatest impact on risk and performance, driving productivity of the reliability team up.

ASM reduces costs

Optimal reliability strategies will deliver the lowest total cost scenario. If there is a deviation from the optimal strategies the ASM function will identify and trigger corrections to keep costs to a minimum whilst managing risk and safety.

ASM promotes a reliability culture

The ASM function drives a culture of reliability. It sets the purpose for the reliability culture, connecting reliability to the business and integrating a reliability culture into the business as usual (BAU) environment.

Technical outcomes of ASM

In addition to the broad business benefits of ASM, it also delivers specific technical outcomes at the reliability level:

  • Complete, accurate, consistent Master Data
  • Assessment of current risk level versus optimal
  • Assessment of current cost versus optimal
  • Optimal, learning reliability strategies
  • Consistent and efficient deployment of best in class reliability strategies to all assets
  • Risk-based reliability strategies deployed to all assets
  • Governance over reliability strategies
  • Reliability strategy review triggers

HOW TO ACHIEVE CHANGE

Match the process to the organization

At a high level, the ASM process is fixed. The objectives are clear and the mechanism to ensure consistent, relevant, accurate reliability strategy decisions is structured. However, to be effective within your organization, the ASM process workflows need to be tailored to align with existing business systems and the organization structure.

The ASM workflow alignment is a critical phase to ensure appropriate rigor for decision making, whilst supporting an efficient review and update capability. And the integration with other business systems will ensure seamless data flow between relevant databases – removing duplication of data and ensuring consistency, efficiency, and accuracy.

The build phase

The objective of the build phase is to get to the point of a value-adding process as efficiently as possible. Using current data and industry libraries, a rapid build phase can be completed with minimal drain on resources.

Focussed validation workshops ensure that any subject matter expertise is distilled and applied where it adds the most value.

It is essential to develop a stable foundation for the ASM process to begin and immediately add value. Education and awareness can be directed to key resources as they begin working to the refined data set.

Drive the process

Like any process, the ASM process requires sound triggers to kick-start the process workflow. The development of these triggers is an essential step to ensure that resources are focussed where they can add the most value, lifting the productivity of the reliability team and driving an uplift in the reliability culture.

Triggers should be automatic and wide-ranging with an emphasis on leading indicators to drive intervention rather than responding to events that have already occurred.

For COOs, ASM helps address many of the large challenges that can prevent organizations from seeing the productivity, production, or growth that they desire. By adopting the ASM process, executives can help embed and sustain a stronger reliability culture, derive more value from technology, and ultimately achieve an optimal balance of performance, cost and risk.

KEY TERMS

APM = Asset Performance Management – a process that uses asset condition monitoring technology to assess asset health and detect degradation so that planned interventions can occur with the goal of reducing unplanned failures.

ASM = Asset Strategy Management – a process designed to continually improve performance through ongoing management, refinement and alignment of the asset reliability strategies.

WEM = Work Execution Management – a process covering the aspects of performing maintenance work, including triggering work, planning and scheduling, issuing work, and gaining feedback.

Why you should care about Asset Strategy Management

Download this Solution Brief to learn how Asset Strategy Management could help you reduce reactive maintenance by 10-50%.

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