Asset Management System

Peak performance: How to achieve world-class asset management

Too often, reliability professionals chase after opportunities where the potential payback is not worth the time invested.

By Phil Beelendorf, Roquette America

While the ISO 55000 set of standards is a great overarching document that establishes a general framework for asset management, the standards do not necessarily provide a detailed tactical road map to help organizations successfully execute an asset management strategy. If you are a reliability professional working in an organization that is considering adopting a formal asset management strategy, it’s highly likely that you will play a key role in the strategy’s creation and, most certainly, its execution.

So how does the reliability professional integrate asset management into his or her current set of objectives? Having a road map that aligns with and complements your current reliability program is key to a successful implementation.

First and foremost, you cannot adopt an asset management strategy for all asset classes at once. So where should you start? Remember, at the end of the day, your organization’s executive leadership cares only about three things:

  • Are we supplying customers product that meets their expectations (quality, quantity, on-time delivery, etc.)?
  • Are we effectively managing the risks that threaten business continuity?...And once these are addressed,
  • Are we consistently lowering the cost of our products?

If the goal of your asset management strategy is to master these essential hallmarks of a world-class business operation as quickly as possible, then the answer to the following questions might help you select your starting point:

1. Which class contains the greatest number of assets at your facility?

2. On which asset class do you spend the most money?

3. Which class contains the asset(s) that pose the greatest risk to your business (environmental, safety, customer impact)?

...And, finally,

4. By adopting an asset management strategy, where can you make the greatest impact with the least amount of time and energy?

When establishing priorities, question four is not asked nearly often enough. The number of new opportunities that present themselves each day can be overwhelming. As I review each opportunity that crosses my desk, I try to concentrate my time and effort on the ones that land in the upper left-hand quadrant of the matrix shown in Figure 1.

If the answers to the first three questions I asked above lead you to select an asset class where the opportunities for improvement are difficult to achieve (upper right-hand quadrant), I urge you to select another asset class.

Nothing will derail your asset management strategy quicker than getting bogged down in the weeds. If it takes a great deal of time or effort to resolve an opportunity, chances you will not find the time to resolve it. Last time I looked there were only 24 hours in a day, and most sane people would like to spend at least 12 of those hours away from work.

A few years ago when our organization decided to adopt an asset management strategy, we chose motors, centrifugal pumps, and mechanical seals as our starting point. Go back to the four questions I just asked you to consider.

1. Which class contains the greatest number of assets at your facility? Electric motors are the most numerous rotating asset in any facility. I haven’t seen too many hamsters on exercise wheels powering rotating equipment. In the corn milling industry, centrifugal pumps are the most common driven asset, and the pump’s mechanical seal acts like the fuse in an electrical circuit. Understanding the root cause of why it fails is crucial if you are serious about improved pump reliability.

2. On which asset class do you spend the most money? Based on the sheer number of assets, the amount of money spent on these two classes was significant at our facility.

3. Which class contains the asset(s) that pose the greatest risk to your business (environmental, safety, customer impact)? When a motor fails, rotating equipment stops rotating. And when a centrifugal pump fails, product stops moving from Point A to Point B. Again, by sheer number, many motors and centrifugal pumps are critical to our business. Leveraging what you learn across multiple assets improves overall equipment effectiveness (OEE) substantially.

4. By adopting an asset management strategy, where can you make the greatest impact with the least amount of time and energy? The most important factor in choosing motors, centrifugal pumps, and mechanical seals as our starting point was one of expediency. The reliability principles associated with these assert classes have been around a long time and are well-understood. It wasn’t a matter of “reinventing the wheel” as much as it was adopting basic tried-and-true principles that already existed.

Once you have selected an asset class and set “best practice” targets, the next logical step is to audit your current process and then perform a gap analysis to determine where you are in relationship to the state you hope to achieve. I have developed the audit tool shown in Figure 2 to identify the gaps in opportunities that existed in the way we managed our asset base.

The audit form lists eight common activities associated with asset management. There is a list of questions under each activity. Each question utilizes a 1-5 scoring range, with five being a “best practice.” The overall score allows the site to understand its current state, while the individual question and category scores help the site identify areas of relative strength and weakness. Selecting the lowest-scoring category or the questions where the score is relatively low lets the site focus its energy and resources on areas where the greatest and most immediate impact can be made.  

Once the site audit and gap analysis have been completed, the payback for each program element should be calculated. I did a webinar for Plant Services titled “Show ‘Em the Money” during which I emphasized that you need to ask yourself the following two questions before you decide whether an opportunity is worth your time:

  • How does resolving this opportunity improve OEE?
  • How does resolving this opportunity reduce costs?

Quantifying the overall payback for each program element based on the results of the gap analysis allows you to further narrow your focus and select a starting point for your asset management strategy. Too often, reliability professionals chase after opportunities where the potential payback is not worth the time invested. 

Once opportunities have been identified, a plan should be created to get the site to its targeted asset management goals. I like to use a continuous improvement tool I call the PDCA (plan, do, check, act) action cycle task list. An example PDCA action cycle task list for developing mechanical seal supplier partnerships is shown in Figure 3.

The PDCA action cycle task list identifies the individual action items; the resources (time and people) needed, the sequence or order in which these actions need to occur; an estimate of the time needed to complete each action; and an estimated start and completion date (these last two columns do not appear in the example task list above in order increase the legibility of the remaining columns).

Developing a plan with the PDCA action cycle task list has several advantages.

  • You can look at the big picture and determine whether the anticipated payback is worth the time and money invested before resources are committed.
  • Because you’ll be listing the estimated start and completion dates, one can easily see whether the program element is ahead or behind schedule.
  • Because the status column choices (P, D, C, or A) have built-in formulas that track program element percentage completion, one can easily communicate how far along the program element is to upper management.  

I ask myself the following questions before creating the PDCA action cycle task list to map out a program element:

  • What are the essential actions that need to be completed?
  • Is the program scope well-defined for each action?
  • What resources are required to complete each action? Are they committed to the assigned tasks?
  • What is the payback for the program element? What needs to be done to ensure payback is met?
  • Do I have stakeholder buy-in?
  • What needs to be done before roll-out to ensure I am successful?
  • How will I measure success?

Too often, when individuals identify an opportunity, they charge forward without knowing where they are going and not totally understanding what all they need to do to fully realize the opportunity. Take a moment to generate a list of all activities that are necessary to reach the desired state. By creating this list first, you can start to develop a picture of what is needed to realize the opportunity.

Start with the current state at the top of the page, and then list your desired state at the end. The steps in between (the actions) should connect the two dots. I like to use the PDCA template for this purpose, listing each activity; as the list starts to take shape, I start to see relationships form between the activities (i.e., #2 cannot be completed until #1 is finished). This approach allows me to sort the activities in sequential order, and then using the sort function over and over until my road map has no gaps and provides a clear path forward.

Just as often, we do not know how much of a time commitment we are asking from the individuals responsible to complete each action item. Again the PDCA template is useful for this purpose. I know that estimating the time it takes to complete a task can be difficult, but my advice is give it your best shot. The more you use time estimation techniques, the better your accuracy will become. If you do not provide an estimation of the time it takes to complete a given project and weigh this commitment against the potential payback, how will you know what opportunities offer the biggest return on your investment? Time is money. Remember, the goal is to live in the upper left-hand quadrant of the priority matrix shown in Figure 1 as often as possible. 

Have you ever noticed that your boss keeps adding assignments to your to-do list but never seems to take anything off your plate? Remember this as you map out each program element. Every time you decide to assign a new task to someone, consider what they have to give up to work on the task. It’s not just whether the new opportunity has an attractive payback, it’s whether the new opportunity has a better payback than the ones that fall by the wayside. 

Stakeholder engagement is another crucial element of any successful asset management strategy. All of your stakeholders, executive leaders, operations, maintenance, purchasing, storeroom personnel, and suppliers must be committed to the goals and objectives outlined in the program element. And they must fully understand the role they play in the execution of your program element strategy.

Finally, your PDCA action cycle task list should include performance measures. For me, the C (check) in PDCA is a KPI. I not only use conventional KPIs to measure hard-dollar cost reduction or OEE improvement, but also I use what I call behavioral KPIs to measure acceptance of an idea or to measure culture change. Behavioral KPIs are powerful tools to measure program sustainability.

During our mechanical-seal program audit, we found that we were not returning 100% of our mechanical seals and thus not taking full advantage of the cost difference of the repair versus new purchase price. A potential savings for achieving a 100% return rate was calculated, and actions were included in the Mechanical Seal Program PDCA. Within 12 months, a 98% return rate was realized.

In his book “How to Win Friends and Influence People,” Dale Carnegie wrote about trying to see things from the other person’s point of view. Our craftsmen often complain about being shorthanded. When I discussed this opportunity with them, I related the savings in terms of the cost of hiring one additional craftsperson. It helped them see the savings between the current state (at the beginning of the program) and the desired state (reaching a 100% return rate) in terms of something important to them.

Behavioral KPIs are not meant to be measured forever. As soon as the desired state is achieved, measurement frequency should be reduced to spot checks just to ensure the behavior is sustained.

I hope this article has spurred you to action and helped you generate ideas on how you might create your own road map to world-class asset management. Good luck and may the road ahead by safe, smooth, and free of potholes and hairpin curves.