There is no doubt that the physical work required to manage and maintain company equipment has always been (and will continue to be) substantial and of high value. In the end, it takes a person who is willing to climb the tower, crawl into the confined space, or put on the protective suit to perform the work necessary to protect the investment.
However, those important tasks are only part of the overall approach to managing assets to maximize their value to the company. After all, the company has made these investments to get some return from them. Whether the asset is part of producing a product on a production line, or delivering a service to a customer’s premises, there was an initial decision made based on cost and continued observation is necessary to ascertain how that investment is working out. People, processes, and technology all play a role in asset management.
This article is going to explore several operational elements of managing physical assets that need to be in place to maximize their value. While similar equipment may be operating in very different environments, requiring a nuanced approach rather than a “one size fits all,” there are several pillars that provide an excellent foundation for any organization that is managing physical assets.
Part One – Do you have clear goals to achieve?
Before you start looking for more work to do, it is important to note that the approach for managing assets should be closely connected to the goals of the organization. It can be argued that a “run to fail,” approach for some equipment is quite valid in some contexts. If it is less costly to remove/replace equipment when it fails, given some cost allocated to the failure itself, and the goals of the organization are still met, then all is well.
However, most organizations have performance goals such as the following where the health of the equipment involved will have an impact:
- Increase production by 10% to meet forecasted demand
- Reduce per unit production cost by 5%
- Have the recently moved factory certified and producing by end of the FY
- Reduce the cost of downtime reactions by maintenance teams by 1 FTE
- Maintain or improve worker safety measures
- Reduce audit findings and fines by 50%
- Move Operational expenses to Capital expenses over a period
While the maintenance and operations department will have “local” goals as far as budget, response times, etc. the goals of the organization need to be well understood because of the direct relationship between those goals and the supporting physical assets.
Take some time with leadership and the teams responsible for the maintenance and operations of the equipment to map the organization’s goals to the supporting equipment. It may be surprising what the outcomes of those conversations result in.
This is a good point in our discussion to bring up the need for a documented Strategic Asset Management Plan (SAMP) as well as a reference for ISO 55001. Both frameworks can be very helpful in forming not only the overall asset management plan but to also maintain the connection to the organization’s goals.
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What are the physical assets you need to care about?
While it is true that every piece of equipment you see out on the production floor had an initial cost and an expected return on investment, not all of them are “critical” to the operation. The first step is to identify the equipment that is the most important or critical to the success of the company. Equipment redundancy may help maintain the reliability of the production line, but if the redundant equipment is not healthy it might not function well during a switchover event. The assumption that, “Oh, we have lots of those,” might not be true and will of course arise at the least opportune moment.
What defines a “critical” piece of equipment is up to the organization. In many cases, all equipment that makes up a production line is critical in that without it being functional then the production line is down. As such there is a risk that “everything,” is deemed critical.
Some considerations that can be used to refine criticality are:
- Does maintaining or operating the equipment have unique safety concerns?
- Is the equipment particularly difficult to access or maintain?
- Are spare parts difficult to obtain?
- Is the equipment sophisticated and has a track record of being finicky?
- Are certification or qualifications required to maintain or operate the equipment?
- How quickly can the equipment be switched out upon failure?
- Is the disposal of the equipment at the end of its lifecycle particularly costly or difficult?
The result should be a reasonably comprehensive list of physical assets that also has an estimation of how critical one piece is from another. No more than the top 10-20% of physical assets should be marked as “most critical.” Not that the other 80-90% are to be ignored, but it is important to be able to focus on some equipment more than others.
An often-forgotten element of defining equipment as critical is the continued availability of spare parts and consumables. If the maintenance approach does not include rebuilding or refurbishing equipment, then spare parts availability can be a non-issue. However, consumables such as filters, oils, seals, etc. can develop into a huge problem. In these modern times, organizations are purchasing 3D printers to manufacture their own spares as manufacturers have ever-shortening support cycles! As equipment is designed to be less and less maintainable, the need to stay well ahead of the parts availability curve is very important.
People and Processes… Nothing good happens without these in ship-shape
Can a 30-year maintenance veteran walk up to a brand-new piece of equipment and troubleshoot it? Maybe… not a certainty. It is very possible that those 30 years can be invaluable during those moments, but it is equally possible for the equipment to be damaged beyond repair when the “old ways,” are applied in a new situation.
People are the most impactful element of any approach to physical asset management. No matter what the plan, the goals, the processes, or even the good intentions of an organization, it is people who are physically interacting with the equipment. People can be the best ally and the worst enemy of the equipment… often at the same time.
People need to understand what role the equipment plays in the overall operation and goals of the organization. They need to have a big picture in mind, not just what is directly in front of them. Think of it this way: Very often the circuit breaker for an important piece of equipment is rather far away from the equipment itself. Both are very important to the life of the production system, yet the person fixing either may be overly focused on one over the other. Any staff maintaining or operating equipment needs to have the big picture in mind as they go about their detailed work.
These elements point to training. Not just one and done type of training, but an ongoing and comprehensive effort to keep people informed, skilled and safe. As new equipment finds its way into the systems, often alongside very old equipment, specific equipment operations and maintenance training are necessary. It is not a valid assumption that a new pump that looks much like the old one it replaced can be operated and maintained in the same way as the old one. On the contrary, the new pump may require a significantly different approach.
Documented processes often cause eyes to roll and are avoided until they are made to be important by an audit or a lawsuit. Processes could be in the form of job, shutdown, or safety plans, or even swim lane flowcharts that show who does what, even if the “who” is a software tool.
Processes do not need to be overly detailed at first. A high level 5 step approach to the overall maintenance process is a great place to begin. Then, as discussions are held and observations are made, the details of each block in the process can be expanded. A successful process is one where the inputs and outputs are defined, as well as who provides the inputs and who makes use of the outputs. In the middle is the process itself, again at a high level.
A very useful tool to initially map processes is a SIPOC… Suppliers, Inputs, Process, Outputs, and Consumers.
Management is all about making decisions based upon available data
Just because a piece of equipment is humming along and not costing much, does not mean that it is exempt from the decision-making process. In fact, it is the device that is left alone that will fail in spectacular ways at the worst time.
There is no shortage of data to use as part of the decision-making process. There is “slow data” such as historical work orders, failure reports, spare parts usage, operator logs, inspection results, and the like that contain very valuable insight into the performance of the equipment over time. Considered qualitative in nature and should be looked at with a healthy degree of skepticism, this kind of data captured by and from humans is none the less very useful.
“Fast data,” that which is real-time telemetry coming from the equipment itself, may seem only useful to the immediate operation of the equipment. This is true, but with current failure prediction and anomaly detection software tools, this constant flow of detailed data is easily used to form views into future conditions. Given we now can get alerts about forming failure signatures a few weeks or even months in advance, management efforts can look further into the future vs. always being in reactive mode. Data of this sort certainly supports condition-based maintenance, but it also is heavily used for predictive maintenance approaches.
When decisions are made that make material changes to a process or a method, they need to be clearly documented and tracked. This is not to place blame when the “new way,” proves to be a failure. Rather, by tracking improvement efforts and their impact (be it ever so minimal at times) this is good information for the organization to be aware of. If the organization is ISO 9001 or other quality system registered, having an active corrective action system is an essential part of the overall management approach.
Some decisions may take years to see results, while others may be as soon as the next hour. Most organizations make the same 5-10 decisions repeatedly, so a documented approach for decision making is to maintain consistency and to train newcomers.
Determining the Value of Equipment – In Whose Eyes?
It may be an unwelcome surprise to know that the financial and accounting side of the house has a very different view of the equipment that is being operated and maintained. The major distinction is between capital expenses and operational expenses. The industry or public/private situation that the organization is in will determine which one of these categories is most important. This goes back to mapping the goals of the organization to the approaches taken for managing the equipment that supports those goals.
As discussions occur around managing assets, be sure to include the financial side (including purchasing and inventory management!) to gain their perspective as to the “value” of the equipment. Engaging these folks becomes very critical as the equipment reaches the end of its serviceable life and needs disposal. Disposal is not just a physical activity… there are financial transactions that must be performed as well.
Wrap Up
Feel free to pick up those wrenches again and get back to work. Managing physical assets has many aspects to it and is a constantly evolving endeavor. It will take some initial planning and the involvement of many levels of the organization… over time… to achieve a mature level. No matter the industry or the context of equipment, the People, Processes, and the Tools all play a role in the health of the equipment over its lifecycle. Each of these elements can have a dramatic positive and negative impact and, of course, need to be managed well. Don’t let any of them get out of sight!
