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What is Asset management and what are the most critical elements.

Asset Management is defined by the Asset Management Council of Australia as being, “The life cycle management of physical assets to achieve the stated outputs of the enterprise”. (2009) The British Standards Institution through a Publicly Available Standard PAS 55-1:2004 define Asset Management as “the systematic and coordinated activities and practices through which an organisation optimally manages its assets and associated performance, risks and expenditures over their lifecycle for the purpose of achieving its organisational strategic plan”.   These definitions convey similar thoughts and are debatable but they fundamentally make sense.  Businesses and agencies invest in physical assets to deliver an output, so they can make a profit or provide a service. Following from this it could be assumed that actions need to be taken to ensure the assets continue to deliver an acceptable output over their usable life. These actions may need to include more than just maintaining plant and should also address.

1. The selection of equipment

2. The design of equipment for operability, reliability and maintainability

3. The operating parameters of the plant so it can meet expectations by mitigating loses such as, changeover delays, plant maintenance, unplanned maintenance, rate loss, rework and scrap.

A system must then be in place to investigate and solve the root cause of any unplanned losses. (van Dullemen, 2009)

Asset management can be considered a collation of all of the elements above, but until recently most people in industry called this “Plant Maintenance”, so at some stage in time the term has evolved to be “Asset Management”. It didn’t happen overnight and some still call it Plant maintenance, but what is the significance of this change in terminology?  It really is open to interpretation of individuals but I believe it indicates and evolutionary change in the way businesses views maintenance, and the acknowledgement that the maintenance groups do not solely own asset performance. As a trainee Engineer in the early 80’s I learnt that the only key maintenance metric that was of any concern to management was costs. In relation to other plant maintenance KPI’s:

  • Equipment reliability was not well understood.
  • Requests for work were managed manually by recording requests in log book.
  • Planned maintenance systems were managed via a paper system and it was inherently difficult to monitor compliance.
  • Follow up work requests built up from inspections were sent to leading hand tradesmen who consequently filed them.

With the focus only on costs, the performance of the maintenance department was based on perceptions. It was very easy for production departments to blame maintenance for production losses and Maintenance clearly knew that all breakdowns and losses were caused by production. This was known as the “they break it we fix it” syndrome, and unfortunately this perception still exists within many industries.  If we wanted to be a little smarter back then we would have worked together to improve our Assets performance, but in reality few knew any better. Move back to the present and there is a growing realisation that Asset management is not just completing inspections, fixing breakdowns and managing shutdowns. It must include all elements that help the  “assets to achieve the stated outputs of the enterprise”(2009). These elements can be categorised under a few broad headings including:

1.      The organisation and leadership

2.      Plant capability and criticality

3.      Operational and Maintenance practices and behaviors

4.      Support services.

Assuming we have accepted the definition of the Asset Management Council, the next question would be; what are the most critical elements of any Asset Management System? It would be fair to say that individual businesses or indeed units within a business will be at different points in their Asset management journey and what is considered as “Critical” will be different in every case. If you had a brainstorming session on what are the important aspects of asset management in your business you are likely to get dozens of suggestions many with common themes.   Below, a is a list of asset management elements that has been sorted into the categories mentioned above.

The Organisation and Leadership.

Management support. To have a truly world class asset management system there must be support at all levels of management.  If corporate management support the cause of managing assets for reliability but the operations manager 3 levels down is not supportive, improvement initiatives are likely to fail.  If a Maintenance Manager tries to instigate a plan for reliability improvement and his direct supervisor is not supportive, again failure is the most likely result.

Operations and Maintenance reliability focus. This element is in line with management support.  In many industries managers associate maintenance with costs and downtime. Many maintenance people believe their primary role is to fix things as they break. A business with reliability focus will view breakdowns as an opportunity to improve and the cost to maintain as being an investment in the future. Focus on reliability should include all aspects of processes that can cause losses including breakdowns, operational practices, maintenance practices and quality issues.  All employees have a role to play in the improvement of Reliability of their equipment. Reliability needs to become part of the organisational culture.

Organisational culture. To head on the road to asset reliability the workforce must be prepared for organisational change. Some deep-seated beliefs will have to be challenged. E.g. Planned downtime can lead to more uptime, planning work well will increase tool time by at least 50%, all critical spares must be held in the store, giving operators some maintenance responsibility will breed ownership, feedback and continuous improvement of reliability and maintenance processes is valued by management.

Performance measures. These must be in place to determine if improvements have been effective. What measures do you have in place? There are literally hundreds in use in industry with common ones being Mean Time Between Failures, Mean Time to Repair, % downtime, Overall Equipment Effectiveness, Compliance to Planned Maintenance schedule, Reactive vs Preventative, Proactive, Predictive work, No of breakdown calls. You must have some performance measures in place or you will not have a base to review improvement against. A common saying in reliability and operational circles is “You cant manage what you don’t measure”.

Process auditing. An asset management process audit schedule must be put in place and adhered to. Efficiency of your asset management process is dependant on two things. The first is that you must have good systems developed for simplicity as much as possible. The second is to ensure that these systems are followed. Most people will try and do the right thing, but often this may not be the correct thing. Auditing your processes will help ensure systems are being followed as well as letting your people see that the systems are valued.

Organisational improvement philosophies. E.g. LEAN, 80/20, TPM etc. If any of these continuous improvement philosophies are being applied, they should not drive asset management into a reactive mode. As mentioned above systems are put in place to maintain efficiency. Efficient systems should not be affected by the latest change in direction from management without careful consideration. LEAN manufacturing when applied effectively can have a significant effect on the performance of a business, but it does drive a level of reactiveness due to the Kaisen events that require a quick turn around on problem solving. If you have a good work management process ensure you stick to it.

Business goals and objectives.  Reliability of assets should have goals set within business plans. It is best practice to ensure your asset management strategies are aligned to the business overall goals. For example if the business goals require an asset to be avaliable for 80% of avaliable time, there is no reason why your asset management strategies should be aiming for higher than this. Your objectives should be aimed at providing the agreed level of reliable capacity of assets at lowest costs without compromising plant condition and safety.

Plant Capability and criticality.

Not reaching plant capability. The business needs to understand all causes of plants not running to capability. There are a number of reasons why this might be the case examples being, unplanned breakdowns, issue with product quality, absenteeism, operating practices.  Understanding the causes of these losses is the first step towards improvement.

Not using capacity or Plant Utilisation. Assuming the products you are manufacturing are profitable it then makes sense that you would run your assets 24/7 if possible. Reasons why this may not be occurring include but are not limited to, not having enough demand for your product, not having enough labor to make the product or not having enough raw feed for the plant. These reasons must be understood so actions can be put in place to increase the utilisation of the plants that are making money.

Operating plant beyond design limitations. Uncontrolled changes to plant are fraught with danger. Examples could be may adding extra load, running products that were not designed to run on the equipment or changing the mode of operation of the plant. Machines should never be operated above design limits unless those limits have been increased via properly engineered upgrades.

Asset Criticality Assessment. Some will say that criticality assessments are often a waste of time and that this information is in the heads of experienced plant personnel. In many cases this is true, as you only have to ask a production planning about demand and production managers where the biggest margins are. Then there are the obvious plant services such as Power systems, Water supply, Gas supply, Boilers, Cranes etc. Often the loss of any of these services will stop a whole plant, so in most cases these will be considered critical assets. The other areas where criticality if often well understood is where failures lead to significant cost to repair , environmental or safety issues.

Criticality assessment can be a lot of work, so do you need to do it and if so how do you go about it? Often statutory requirements mean that records must be kept from this type of assessment. If statutory requirements do not affect your industry it is still a good idea to complete an assessment and document your logic behind the assessment. This takes the emotion out of deciding where asset management improvement should be focussed on.

Operational and Maintenance Practices and Behaviors.

Operational practices. Does the operations staff have targets and standards related to running their equipment? Are they in a position where they are able to modify the process because they “Have to” to keep it running as required? Do different shifts run the equipment differently? These practices lead into the next element.

Standard operational practices. One of the fundamental elements of LEAN manufacturing is Standardised practices. The key to this is to map your process well, and determine the most efficient and safe way to operate your equipment. These processes are then documented and deployed as the standard methodology.

Operator machine care. In many plants operations are not made responsible for any part of the maintenance of their equipment. This often leads to a don’t care attitude and degradation of plant. Responsibility breeds ownership and ownership leads to improved reliability

Shift handovers. Poor practices in relation to shift handovers in some industries can be a major cause of losses. Is your equipment stopped while shifts are changing? If yes, then how can this be changed to maximise continuous running?

Product changeovers. Product changeovers are often the focus of Lean manufacturing improvement (Kaisen) events as any improvement in changeover time immediately affects machine availability.

Production planning practices. The way a production plan is put together can have a significant effect on output. Is the product mix making the best use of the assets capability? Does continuous change over of product lead to an ineffective process.

Loss accounting. Does your business understand where all losses to output are occurring, and if they do what they are doing about it. Operations groups are often quick to look at maintenance when machines break down, but what actually caused the breakdown. It may be poor maintenance but equally it could be the way the equipment is being run. Does absenteeism and quality issues lead to losses?  Are there systems in place to monitor losses.

Analysis of loss data.A loss accounting system must account for all losses and results from the system must drive improvement actions. If you are measuring your losses and not initiating improvement actions then gathering the data is a waste of time.

Planning and Scheduling. The best organisations spend 80% of their time on planned and scheduled work. The effect of utilising planing and scheduling will far outweigh the initial pain of selecting and training people for these roles.

Work management process. Planning and scheduling can only be improved if a well-defined work management process with measurable KPI’s has been developed. It is imperative that all associated with the process understand and follow it.  A well applied Work Management process will improve the flow of work by allowing the most critical work to be addressed as soon as practical, while at the same time it will filter out the work that can be deferred.

Proactive Maintenance. The analysis of losses will lead to the identification of modes of failure of equipment. Proactive maintenance is aimed at the stabilisation of equipment reliability by addressing the root cause of potential failure modes, so as to prevent failures from occurring in the first place. If your organisation is focussing on proactive maintenance you are well on the way to improving reliability.

Rebuild and Installation Standards and Practices.   Maintenance tasks must be completed to a standard to ensure the long-term reliability of the equipment. Do you have the right quality oil, the correct bearings and other materials? Has the equipment been put back together with the correct clearances? Has your DC motor brushes been bedded in correctly? Does your equipment start on time after work is done, and keeps running?   These standards are closely linked with how the job is done. Are the right tools used for the task? Are your tradesmen qualified for the tasks they complete? Eliminate rework – Do it Once, do it right.

Planned maintenance. The planned maintenance system is the backbone of your reliability journey. The important factor here is that the work from your system must be relevant and up to date. To achieve this PM inspections need to be built using methodology that addresses failure modes such as RCM or PMO. To further optimise your system feedback must be gathered from the people who are doing the work. A PM system needs to be a living system that is constantly being reviewed and improved.

Lubrication.For those with rotating equipment; the development of planned maintenance strategies based on lubrication must be your starting point. Lack or incorrect lubrication is the single most significant reason for plant to fail. It is obvious to state that machines break when they are not lubricated correctly, but how often is poor lubrication the cause of unplanned downtime in your business? If you don’t have lubrication strategies in place, start now.

CMMS application and use.Your CMMS is your maintenance management database, and like any database, if the input is bad the output will also be bad. The CMMS is the place where the foundation of your asset management system sits, being the functional hierarchy. Embedded in this structure is your equipment assemblies and components, the strategies you develop to maintain your assets, the schedules that support your strategies, the record of costs associated with maintaining and the history of breakdowns. A well utilised and managed CMMS is an invaluable tool that should be in close alignment with Work Management system.

Maintenance strategies. Development and review.A strategy is the who, what, when where and how of maintaining your assets. Strategies are not “set and forget”, they are living documents that should be reviewed and improved continuously. At some stage in your facilities life cycle, decisions were made related to what maintenance would be completed on your assets and how often it would occur. Often these decisions are never questioned and the logic behind the decision is lost when the people that initiated them leave the business. For Asset Maintenance strategies to remain effective over the life of the plant there must be an element of continuous review. In effect your Maintenance Strategies must be a “living program”.

Many businesses are really good at the “Planning and Doing” in the PDCA cycle in relation to developing Asset maintenance strategies, but the “Check, Act” part of the cycle is often neglected. What do you need to do to have a living program? What methods do you use to review strategies? Do the strategies address the failure modes of your assets? Who is involved in the review process? What do you need to do to have a living program? The review and development of strategies is a critical component of Asset Management.

Condition Management/Predictive Maintenance.The most efficient and effective maintenance organisations will maximise their condition-based maintenance. After all, why overhaul equipment when it is not showing any signs of wear? There are two specific components to condition management. The first is based on inspections that are not intrusive. E.g. Check for wear, check for end float, check for burning, check it spins freely. Where possible this type of inspection should include acceptable parameters, such as worn by 3mm or more.  The second is based on the use of technology such as Thermography, Oil analysis, Vibration analysis. The key to using technology is having the skill to understand the early warning signs and the systems to act on them. Often a condition-based strategy will reduce the amount of overhaul work saving material and labor costs as well as reducing the instances of early life failure.

Reliability, process and practices audits. There is a very common saying in reliability circles these days being, “You can’t manage what you don’t measure”. If you don’t know the reliability level of your equipment how can you possibly improve it?  How do you know that the practices you have in place are being followed and are they correct to begin with? Auditing your processes and practices is a must so you can acknowledge your reality. This becomes the starting point for improvement. Involving your people in a positive manner during the Audits will grow ownership and improvements.

Root Cause Analysis. The key to performing proactive maintenance well is being proficient in root cause analysis processes. To gain this proficiency it would normally require some formal training and regular use of the process. It is ideal to have some of your more analytical minds trained in the process and use it regularly. Businesses that apply Lean principles use an RCA process called Practical Problem solving on a daily basis which gives excellent results for the majority of issues, but it can fall short complex issues. This is related to the assumption that 5 whys will lead to a single root cause of a problem when rarely is a complex failure wholly related to one issue. A two tiered approach to problem solving is an option to consider. E.g. 5 whys for a simple issue and a more detailed process for significant issues.

Contractor services and management. Very few manufacturing businesses or service providers are in a position where they can operate effectively without contractors. While many core activities remain within businesses, often non-core activities such building maintenance, cleaning etc are contracted. The use of contractors creates the need to manage overall costs and compliance standards set by your company, which would include safety standards, work and documentation standards.

Shutdown Management.Shutdowns are undesirable events as they are often costly and reduce plant availability. To minimise the effect on output, organisations need to manage shutdowns so all work is completed safely, to a defined standard, and within the shortest possible time frame. This requires detailed planning and scheduling utilising many task lists and procedures.

Resource allocation.  Are your resources being effectively tilized? What percentage of the work they complete is planned? Are you always having your planned work interrupted by reactive work? Do you know how much of your peoples time is being tilized? Setting up your maintenance resources to effectively cope with reactive work while maintaining compliance on your PM program can be a balancing act. Getting it right can improve your efficiency and effectiveness significantly.

Support services.

CMMS support. Contrary to the belief of many senior managers, the CMMS does require a significant amount of support including: maintenance of master data, creating and maintaining Bills of Materials, creating and managing the equipment hierarchy, task lists, maintenance plans, system authorizations and training and mentoring in the systems.  Does your business have a resource that manages these and other issues with your CMMS? If not how are these issues being managed now. If the answer is they are not, then your whole system will fall apart in a short time frame. An effective CMMS support service must be in place just to maintain what you currently have.

Engineering and concept design. Do you design for reliability or is price the main driver of your capital purchases? Do you design for maintainability? Typically over the life of a plant the cost of maintenance will be over 10 times more than the capital outlay. Is the whole of life costing included as part of the design review? I haven’t every seen this done well after 28 years in industry. Can you access all maintainable components? Have maintenance strategies been designed as part of the overall Engineering design? Are spares requirements embedded in design concept? There can be many long term wins for businesses if these things are done well.

Capital management. It is important that you have a view of the future state so you can plan for capital management. Sure you can’t always see the future but it is far better to have a plan. What is becoming redundant? Are any machines at the end of their serviceable life? Is the market changing and investment may be required? So far this has all been about the need for capital; there is the management of capital projects and associated costs. How many capital jobs have you seen run out of cash and somehow this extra expenditure ends up on the maintenance budget? Are people held accountable for the successful delivery of a capital project?

Purchasing services. Purchasing services are an integral part of asset management. Being able to obtain materials and services on time in perfect order and at a reasonable cost can make or break your efforts. It is obviously not practical to have all components on site or services on hand 24/7 so asset managers rely on trustworthy supply agreements that encompass quality, price and delivery. Do you have 100% trust in your purchasing department? If not why not?

Stores practices. When you look in your CMMS can you find the exact location of a component in your store? Will the part be there if it says it is? Will the part be in serviceable order? How long does it take to goods receipt items into the store and how do you know they are there? Does your store package items for planned work? And the biggest question of them all…. Do you have squirrel stores all over your plant?  Having the best practices occurring in your store can improve the planning of tasks significantly, hence improving reliability and increasing uptime.

Training and development. “We never get enough training!”, “How can we do what you want when we haven’t been trained?” Do these comments sound familiar? Training must be based on needs of the business and competencies have to be assessed in real situations, and reassessed within regularly time frames to ensure the skill is not lost. E.g. All electricians will be trained in brand X PLC programming and software. How many really need to be programmers. What they most likely need is the training around using the software for diagnostics. This is a skill they are likely to use regularly. Complete a skills gap analysis and understand your requirements, then ensure there is enough money in the budget followed by effective timing scheduling of the training.

In all there are almost 40 elements briefly described above, all of which have significant importance that will be at different levels for individual businesses. It is highly unlikely that all of these elements need immediate attention so the trick is to understand where the biggest bang for your buck lies.

Selecting the Eight most Critical Elements.

To improve your performance in asset management all of the above elements will need some attention, however with nearly 40 elements, not all can be addressed at once. Using the 80/20 rule will highlight the Eight elements that are the most critical for your business. The selection process should be based on the lowest scoring elements that would give the greatest benefit if they were focussed on and improved.

Identifying areas of improvement is acknowledging your current reality is the first step in improving your physical asset management.

References:

Asset Maintenance Council Website. “Definition of asset management”http://www.amcouncil.com.au/wiki/index.php/Asset_Management Viewed 1/08/09

PAS 55-1:2004. “Asset Management. Part 1: Specification dor the optimized management of physical infrastructure assets. British Standards Institution

Van Dullemen, R, Comment on, “Preview survey results from the eight critical elements of asset management”. Reliabilityweb. Viewed 9-8-2009. http://reliabilityweb.com/index.php/articles/preview_survey_results_from_the_eight_critical_elements_of_asset_management/

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Copyright, Mark Brunner, 2009

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