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This article explores a broader vision for asset management than has been previously articulated and brands this vision Strategic Asset Management ( SAM ). Based on successful experience with our clients, SAM is an integrated set of processes that systematically derive the highest value from plant assets, through a consistent philosophy, plans and objectives, and cooperative involvement by everyone in the plant. SAM represents a higher level of performance than is currently practiced or even recognized by the manufacturing community today.
Any useful model to guide action will have several characteristics:
Our experience with the Strategic Asset Management ( SAM ) model indicates these criteria are met. However, you as the reader will need to make your own judgments.
Figure 1- The SAM Model
Our description of Strategic Asset Management ( SAM ) begins with the key elements of success, namely Lead, Execute and Enable.
LEAD. There are hundreds of books written about leadership, and each one has some valuable point to make. Frequently, though, the description is of individual leadership, and often charismatic leadership. Leadership in the plant setting, in our opinion, is creating consistency of purpose and action. Manufacturing is a large set of complex and interrelated systems of marketing, technology, finance, human resources, execution functions and equipment. Physical Asset Management then must take all of these into account.
Putting things as simply as we can into the SAM model, the LEAD element consists of the Managing System, Strategic Planning and Information Management.
Managing System. Disciplined, aligned action is the underpinning of any human endeavor. Examine any consistently great achievement and you will find alignment and discipline. That is the purpose of the managing system. Among the elements found here are:
Figure 2 The Managing System
Strategic Planning. In every plant environment we encounter we hear the same (legitimate) complaints: “Improving maintenance is important, but we just don’t have time. We have 4 major plant initiatives and 5 corporate initiatives, and don’t know how any of them are going to get done!” Or, “Everything we do is a ‘flavor of the month’. We seem to start lots of stuff, but never finish”.
How do you set a plan that is timeless? One that has approvals all the way to the top of the company? How do you assure you have a single initiative instead of 20? Through the act of strategic planning!
The product of functional strategic planning is alignment around a multi-year improvement plan. To get alignment requires more than a few words in a book. It requires that every level of the organization believes the content of the plan is the most important set of things the company can do with its resources. That means a real and compelling business case for the senior executives. For plant executives it means working on those things which are most practical, which make a difference in daily control of the work and reduction of variance. For the staff functions it means an understanding of the support they must render to enable the plan to be successful.
The elements of the Strategic Plan are these:
Information Management. The good and bad news: as of the end of the last century most plants are now working with an ERP system. Initial results are typically very negative: lots of rejection of the new system as hard to use, can’t get reports out. But slowly organizations learn to live with and even like the new systems.
A deficiency typically find in IT is confusion regarding the difference between the system and the tool. The system is your set of internal processes and procedures. The tool may be the SAP PM module. When your actual work process and methods aren’t reflected in your tool, the disconnect creates great dissatisfaction and waste. But when integrated, there is great synergy to get information to manage the business.
SAMI’s method is quite simple. After the Strategic Plan, we undertake a detailed design for one or more of the Execution functions. In that design process we assure complete alignment between the tool and work processes, leading to a virtuous cycle of increasing understanding and utility of the system.
EXECUTE. Four functional areas exist in any manufacturing environment. These arenas are the typical focus of leadership. If done well, they lead to functional excellence.
We have developed improvement models for Production, Logistics and Asset Healthcare. Indeed, the Asset Healthcare model is the well-known SAMI Triangle , relabeled and integrated in the context of Strategic Asset Management.
Figure 3: The SAMI Asset Healthcare
Note: Please see www.samicorp.com for details of the SAMI Production and Logistics triangles as well as the corresponding maturity matrices detailing the characteristics of an organization at each stage of the models.
ENABLE . Many programs for change are viewed as a simple matter of documenting procedures and providing training. If these things are done, change should happen, right?
Wrong. Human nature doesn’t work that way. Prescriptive formulations may work for machinery, but (fortunately) the human machine is more complex!
First, why do I say this is fortunate? Most of our corporate clients have a large number of related but disintegrated goals. Safety, reliability improvements, 6 Sigma, Lean Manufacturing, Supply Chain rationalization, etc. These are often presented to the plant as a series of corporate staff visits, all requiring the plants time and attention. If the plant acted on the sum of these “required programs” with full gusto, they would quit producing product. Their time and attention would be taken in team meetings, developing procedures, and trying to rationalize the differing demands of each program.
Fortunately, plant personnel know their jobs are tied to making budgeted quantities of quality product. So their view of change is to ignore these directives until they evaporate from lack of momentum and commitment. Their approach is well-rewarded; most programs do indeed get replaced by the next wave of “best practice” from corporate. I apologize to readers who have corporate development roles, as I may seem cynical. But in my experience the only change that lasts in the plant are those things that make sense to the guy on the plant floor. Safety, for instance, is in his best interest. It may have taken a decade or more of emphasis on safety, but everywhere we go we see good results and lasting change.
Some criteria for change of any kind to take hold in the plant are:
Ownership. How do we enable our work with our clients? What might apply to your own organization?
Leadership Consensus to Proceed. SAMI won’t proceed with billable work unless and until we know our client’s leadership team, at the appropriate level, has consensus to proceed. Sometimes that means refusing an order for services from a plant manager, for instance, if we don’t think the operations manager is fully supportive. To accept work under these conditions violates a cardinal rule, namely: Anyone who has not been consulted does not feel he has to support the decision. No matter how assured the person at the top of the organization is that the group will follow his decision, our experience is that lack of commitment by the entire leadership team is the number one cause of failure for improvement initiatives.
Worker Consensus to Proceed. We usually begin our client engagements with a baseline assessment of current processes, practices and results. Our clients typically believe this is because we need the data to know how to improve. The more important reason by far, however, is to engage the organization in a decision-making process that includes representation from all areas. Our assessments are designed to touch the greatest number of people practical, to solicit from them their issues, ideas and experience. There is an interesting pattern we almost always see. Leadership wants us to get the hourly workers to be willing to change; the hourly workers in turn challenge leadership to do its job and lead with strength of purpose, consistency and with high standards. The assessment process brings their views together, enabling them to see they want the same results: a productive, safe and competitive workplace where people are valued.
Develop a Workable Process and Passionate Owners. Virtually every engagement we participate in has a work process design phase. The designers, typically a team of 8-10 part-time people, represent all types of jobs and all levels of the organization. We ask for leaders, even if those leaders can be negative at times. This team goes through the forming, storming, norming and performing stages of development, and we are careful to prepare them for the “J” curve effect (they go down emotionally before they go up). Their product is a completely thought out work management process, with all the details that will enable it to work in their environment. Our experience is that the product is 95% the same as virtually any other plant’s. The 5% difference is critical, though, in practical workability. But the most important result of the design is a team of people who see the future and are passionate about making that future happen.
Client-Driven Implementation. Only when workers see peers passionate about change will they pay attention. Outsiders (consultants) are seen as nuisances to be avoided. But if your respected peer is deeply committed to a new method of work, you will pay attention. And if he is willing to risk your relationship by making it not-optional, then you will believe it is a worthy change. Our consultants support the client in making the changes, not the other way around.
You may note that most of SAM description thus far is about enabling change, not about the core maintenance or production process. We assure that we have qualified experts in the work processes on the teams. Our clients seldom fail because they don’t understand best practices, but because they can’t get them implemented. We have learned to focus on change because it is the critical barrier for success!
Development. It is possible that your people can work at much higher levels than they are today. In a reactive environment vs. a proactive environment these are frequent roles:
Changing these roles is partially a matter of removing obstacles to being proactive and clarifying expectations, roles and responsibilities. But to a significant extent there is a requirement to assist people to be able to fill new roles. This requires training, but much more than training. It involves coaching and testing the limits of the individuals in the job. Some operators are mechanically inclined, and some are not. Some will be eager to take on new roles, and some very resistant. Development takes time and energy for a supervisor to understand what is possible, and work with each of his people on a specific development program, customized to the specific task, and the native abilities of the worker. A training organization can be invaluable here, but the task cannot be delegated. The approach must be rifle shots, not grandiose, one-size-fits-all programs.
Empowerment. The “E” word has lots of bad connotations from the failures of quality programs in the 80’s and early 90’s. The popular method of empowerment was a week’s worth of training in “soft skills”, and an admonition that they should step up and be their own bosses. The result was lack of direction, anger, disempowered supervisors and management, and a decrease in productivity. Lee Solomon, founder of Solomon Associates who benchmark most of the world’s refineries, once told me: “There is a high, negative correlation between implementation of self-managed work teams and performance”. Empowerment as implemented not only didn’t work, but it made things worse.
What is empowerment? It is enabling a worker to do more, and to take responsibility for his own performance. How can this best be done? First, by having a disciplined and well defined system to follow, and enabling the worker to be successful in the context of the system. Next, is to develop the worker to be successful in an expanded role. Finally, we give the worker the tools to understand whether he is mastering the job. This includes measures, feedback, coaching and encouragement. Empowerment is the result of a disciplined system of work, not a prerequisite.
Results. Leadership alignment around the strategic direction of the organization may be the single most important result of implementing the SAM model. This cohesiveness within an organization will certainly lead to financial results as well. These results are still being documented. However, SAMI clients have achieved benefits in excess of $100M within a short period of time by taking a strategic approach to operations excellence. The chart below depicts an actual cost/benefit analysis detailing financial benefits from increased efficiency and increased plant capacity versus the costs of implementing the SAM model over a period of a number of years.
Strategic Asset Management is the systematic process that enables the dream of Operations Excellence. It emphasizes a logical approach to best practices through the developmental stages of the EXECUTE Triangles. Functional excellence will never be enough, however, to be the best. LEAD functions are the glue that bring all the pieces together in an optimized set of systems, especially through the mechanism of the Managing System and Strategic Plan. Finally, we can only be as successful as our workers’ endorsement and participation in these functional excellence practices. We must ENABLE our people to bring us the success we all desire.
We are able to become the best if we start our journey with the right model.