Asset Management System / Asset Monitoring

Don’t focus just on asset reliability

David Berger says your assets may turn on when they’re supposed to, but are they fully optimized?

By David Berger

Asset reliability is indeed all the rage these days, as highlighted by reliability-centered maintenance (RCM) training, new industry standards, advanced CMMS features and software add-ons, reliability-focused software and services, and so on.

But does asset reliability deserve the huge attention it is getting? The answer is a resounding “yes,” but only if this does not come at the expense of being mindful of many other measures that are equally or potentially more impactful relative to reliability in achieving asset optimization.

In the face of rising global competition, companies are looking for new and innovative ways to grow and become more profitable. Most senior executives would agree that asset optimization has not yet been fully achieved in their organization and that better management of their physical assets holds the promise for significant cost reduction and increased capacity. This is especially true as assets become more sophisticated and expensive. But how to get there is more elusive. Therein lies the challenge and opportunity for maintenance and operations management: Provide the road map for achieving asset optimization.

Asset optimization can be defined as maximum asset availability and performance at the least cost. Are we there yet? Not even close. So let’s break it down and see how a computerized maintenance management system (CMMS) can be a powerful tool in attaining the goal of asset optimization. Each of the three parts to the definition above is described in more detail as follows.

Maximum asset availability

There are many phrases synonymous with this important objective – for example, maximum equipment uptime, minimum equipment downtime, and maximum equipment capacity. Note that a piece of equipment can be available but not reliable. This is because availability is a function of both its reliability (e.g., time between failures) and its maintainability (e.g., its time to repair). Furthermore, an asset can be available but not utilized, such as when operators or raw materials are not available, or when a repair has been completed but operators have not been notified of this.

The larger the asset base, the more significant the investment required to make up for lost production time. Suppose you have 10 production lines each worth $10 million in equipment replacement cost. If each line experiences an average downtime of 10%, then it is as if one line is down all the time, costing you $10 million in equipment alone.

This is compounded by potentially far greater costs and opportunity losses such as:

  • Space and utility requirements for the “extra” production line
  • The additional spare parts kept in stock and required to fix the equipment,
  • Other operating costs such as equipment vendor support or licensing agreements,
  • The maintenance labor associated with servicing the downtime,
  • The operations labor that may be idle for part or all of the downtime period,
  • Any customer service impact in meeting delivery deadlines, and
  • The opportunity loss of production from unused capacity (i.e., if you could sell whatever you produce, then greater uptime means more sales revenue).

Remember, too, that downtime is not necessarily caused by machine breakdown. Setups, changeovers, cleanup, preventive maintenance and other planned maintenance activities may also decrease asset availability. The maintenance and operations departments can work together to minimize these disruptions for still further cost reduction.

The role of the CMMS is not only to help monitor the amount and cost of downtime, but also (and of more importance) to assist in determining the root cause of it. By analyzing failure codes, using condition monitoring, tracking the history of serialized parts and components, deploying a troubleshooting database, and using other key features of the CMMS, equipment availability will increase and the costs and opportunity losses described above will decrease.

Maximum asset performance

One of the maintenance department’s most often overlooked or misunderstood performance objectives is to ensure maximum asset performance. This is in part because the term “asset performance” is often mistaken to be equivalent to “uptime,” and therefore increased performance is achieved by reducing downtime. This is not necessarily true, nor does it tell the whole story.

Referring to the example above, suppose that the 10 production lines vary with respect to production output. Line No. 4 consistently has the highest average output of 10,000 units per day and the lowest reject rate on units of output, averaging about 1%. Unfortunately, it also has the highest average downtime, at 14%.

The other nine lines vary on average from 7,500 to 8,500 units output per day, but downtime is never greater than 10%. Reject rates range from an average of 2% to 4%. Which machine has the highest performance?

By definition, line No. 4 has the highest performance even though it has the lowest uptime. This is because asset performance is defined as the quality, quantity, and consistency of output. Maintenance must optimize both performance and uptime using tools such as the CMMS to track and analyze data.

Least cost

Some companies do a great job of maximizing asset performance and uptime, but they do so by throwing a lot of labor, material, and overhead costs at their problems. Would your asset performance and uptime improve if you tripled the number of tradespeople you have, doubled your inventory of parts and components, or conveniently ignored the safety and environmental impact of your decisions?
Indeed it would, but asset optimization requires that maximum asset performance and uptime be achieved with the least cost. The CMMS does an excellent job of tracking and analyzing costs. For example, the whole concept of work-order control pushes the least-cost concept.

Work orders are all about choosing the right labor and materials for solving a problem as efficiently and effectively as possible. Tracking planned versus actual labor hours on a work order and analyzing any significant variances is one way to keep labor costs to a minimum. Another way is through better scheduling – that is, ensuring that worker utilization is high, that the jobs are done by people with the right skills, and that the higher-priority and therefore more costly work is done first.

The inventory management module of a CMMS can also help reduce costs. Basic features such as reporting on usage history and supplier history can ensure that inventory levels are kept low, stockouts are minimized, and the quality and service from suppliers is optimal.

Advanced features within a CMMS can reduce costs still further. One example is the use of barcoding or radio frequency identification (RFID) technology on parts and equipment to keep more-accurate track of asset and parts inventories. Use of mobile devices for scanning assets/parts and to support e-commerce is expanding, as well; this eliminates the high cost of paper-based purchase requisitions, purchase orders, invoices, and receipt of documents.

A CMMS will also lower costs by helping better manage assets themselves. Basic functionality such as the recording of nameplate data and engineering specifications goes a long way in keeping track of dollars tied up in capital equipment and facilities. Standard reports such as equipment downtime and repair history can expose equipment that is costing too much money; the “bad actors” report, Pareto analysis, and variance-to-standard-budget report can provide invaluable context.

More-sophisticated functionality can then be used to determine the root cause. This includes analysis of problem, cause, action, and delay codes. The benefit is greater equipment reliability, more-accurate repair/replace decisions, improved understanding of which vendors supply superior equipment, and better understanding of the optimal mix of predictive, preventive, planned, and reactive maintenance. This, in turn, leads to lower costs.

Asset optimization

When we put the three components together – maximum asset availability and performance at the least cost – we get asset optimization, a formidable goal. And the CMMS is one of the most important tools that operations and maintenance management can use to attain it.