Knowledge is power
Treat maintenance as an asset, not an expense, by designing a data-driven strategy that improves asset and worker performance.
Today’s manufacturers face increasing expectations for asset management capabilities. According to the ARC Asset Management Trends November 2019 report1, these expectations are driven largely by new requirements to support digital transformation initiatives. The result is a need for greater connectivity, visibility and information sharing both from within and outside of enterprises.
Additionally, you must maintain low operating budgets while increasing efficiency, and you need to optimise operations to sustain success.
One way to address such challenges is investing in a comprehensive asset management strategy. By executing a well-planned, comprehensive approach and implementing the right technology, manufacturers can transform maintenance from an expense into a strategic, competitive asset.
According to the ARC Strategies July 2019 report2, Rethinking Asset Performance Management, successful asset management requires close cooperation between the maintenance, reliability, process engineering and operations functions in an industrial facility. New digitalisation tools can help make that cooperation easier.
Focusing on an asset management strategy can improve a range of metrics, such as overall equipment effectiveness (OEE) and return on net assets (RONA).
In turn, these metrics contribute to aggressive productivity targets, including various forms of risk mitigation, data-driven decision-making, workforce empowerment and predictable expenditures.
Research shows why asset management must be a priority
Many manufacturers struggle to prioritise the time and investment needed to put a comprehensive asset management strategy in place, simply because so many other expenses compete for their limited budgets. But trends in manufacturing employment and other factors are converging to make asset management a major priority.
As an example, the US Bureau of Labor Statistics estimates a shortage of more than 2 million manufacturing workers by 2025, with more than 10,000 baby boomers retiring daily. According to LNS Research in its 2019 Connected Worker eBook3, this impacts manufacturers as valuable skills, experience and institutional knowledge are lost. Although this intelligence gap appears daunting, an asset management strategy is relatively simple to initiate — especially if you rely on existing relationships with components distributors and vendors to develop customised, scalable solutions. Some of the benefits of comprehensive asset management include:
- Overall equipment effectiveness (OEE): Driving uptime is key to a smart asset management strategy because it’s focused on assuring the people, parts and processes are optimised to support the equipment. It also provides trend data visibility into asset performance by both machine and shift, which helps drive continuous improvement priorities.
- Return on net assets (RONA): Reducing inventory, maintenance costs and the number of downtime events raises productivity, while driving financial performance and predictability.
- Empowered and engaged employees: With fewer maintenance workers, those who remain need the right technology and tools to make good decisions about supporting plant performance. According to LNS Research, the next generation of employees entering the workforce and advancing through the ranks are digital natives with an entirely new set of perceptions and expectations regarding technology and attitudes about work in general.
Maintenance is central to operations
Because equipment maintenance is one of the largest single controllable expenditures in a plant, it must be included in a life cycle plan. It also should be an integral part of any reliability improvement program, because it’s critical to machine throughput, availability and essential spare-parts stock.
Once you’ve organised your storeroom and have a repair strategy in place, you can optimise spare parts inventory and reduce the number of unnecessary parts. Digitally enabled platforms provide ongoing visibility into your installed base.
Also, data gathered and analysed as part of the process can be used to implement future improvements, such as developing a roadmap for managing the obsolescence and migration of ageing equipment.
To justify capital expenditure projects, maintenance needs to be considered central to productivity. Your storeroom is the starting point for strategic maintenance improvement practices, such as minimising equipment life cycle cost and maximising production equipment performance.
Evolving asset management into a proactive, strategic component of better-managed manufacturing facilities can be done in phases, following three steps.
Step 1: Evaluate needs, set goals
The first step in any asset management strategy is examining your current situation while keeping in mind your business priorities, such as process validation over uptime or environmental impact over rate.
To establish a baseline for improvement, first understand your operation’s process hierarchy to determine equipment priority and thus risk.
Second, understand your equipment’s serviceable components and their life cycle status. For example, are the components new, available, repairable, replaceable or obsolete?
Finally, understand your storeroom content and identify all other locations holding spare parts.
This data will inform future decisions and allow immediate inventory optimisation. It also will support risk mitigation on the most critical equipment and provide the basis for all future management of your plant assets, including preventive maintenance (PM) program optimisation, storeroom optimisation, machine-builder changes and warranty capture.
Once you have completed data collection, assess critical areas of concern, outline needs for improvement and define your objectives so you can build an attainable asset management plan.
Step 2: Design an asset management strategy
Your goal-setting activities will yield the building blocks for your asset management strategy design, which likely will include these elements:
- Maintenance, repair and operations (MRO) process management redesign
- Reporting and dashboard creation
- Excess spare parts burn, sell-off and/or vendor-managed agreement
- PM activity changes
MRO process management redesign
A critical step is establishing best practices for part repair or replacement. Minimising your stock, optimising your repair process and building an actionable reporting structure is the most sustainable way to maximise your automation investment.
Reliability improvement uses a process risk assessment to track and understand the consequences of process and equipment failures, and recommend priority actions.
Optimising your repair process involves keeping track of where each individual component is in its life cycle. When a component on the line fails, you document where, when and why it failed, and determine if it’s under warranty.
To keep track of warranty detail and ease the process, the labelling system in your storeroom should include warranty information for each part to track its eligibility. Effectively managing your organisation’s warranty recovery can significantly contribute to the operation’s bottom line. Parts also should be tracked when sent for repair.
Typical savings categories for effectively managing MRO repair include:
- Repair price versus new
- Warranty recovery
- Inventory and carrying cost reduction
- New purchase and repair reduction
- Increased production uptime
Having a person electronically track this data can help identify opportunities for system and process simplification or improvement.
Reporting and dashboard creation
This phase can come in many forms and be accomplished in many ways. You might decide during the evaluation and goal-setting stages that an OEE information system is a necessary investment to create dashboards showing uptime, production rate and quality. The MRO process management redesign mentioned earlier also can provide significant information to be built into a usable and actionable reporting tool.
Excess spare parts burn, sell-off or vendor-managed agreement
Inventory reduction is a popular productivity target because it frees up budget for other assets. Remove or burn off excess or inactive inventory while filling in critical gaps you’ve found during the assessment.
Remember that you may have resources to help with your storeroom goal. For example, your local distributor may be able to help supply half of your needed parts from its available stock, leaving you to identify a plan for the remaining half. Also, your equipment vendor could implement an onsite parts management agreement, allowing you to avoid purchasing the remainder of the spare parts until they’re needed.
PM activity change
The more aware you become of your facility’s needs and challenges, the more fine-tuned and efficient your PM activities will become. You might choose to use vendor specialists with the resources to develop and sustain a PM program through scheduled service visits, fully warranted replacement parts and 24/7 remote troubleshooting — freeing your personnel to operate the equipment and manufacture products.
Step 3: Implement your unique solution
After establishing the right baseline of your facility and designing a plan that supports your business needs and mitigates your risk priorities, your asset management investment will be pointed, graduated and impactful.
The structure of your plan determines the implementation path. For example, you might be able to use your existing staff and processes to implement simple, immediate point solutions such as inventory disposition or burn-off. But when it comes to more complicated process implementations or redesigns, such as an MRO process redesign, seeking an external specialist to design and execute the right implementation plan might be an option.
Step 4: Measure and continuously optimise the process
The most successful asset management strategies evolve as equipment, process and people change. Therefore, be sure to investigate digital technology tools that provide a visual dashboard of critical plant assets and equipment changes.
After equipment purchases or retrofits, be sure to adjust inventory accordingly. This effort provides measurable data you can turn into actionable information to help inform future decisions to achieve continuous productivity gains.
The role of a reliability specialist
When production is lagging, unplanned downtime is mounting, maintenance budgets are shrinking and plant staff are overburdened, an asset management evaluation might be a good investment to help you regain your competitive edge and achieve your business goals.
With fresh eyes, an outside experienced professional can provide guidance that encompasses everything from inventory management, to employee training and workforce development, to plant-wide optimisation.
By understanding your environment, the consultant can help compare it to applicable industry standards and specifications, such as ANSI, TIA, ODVA, NIST, ISO, IEC, CE, OSHA, NERC CIP, Energy Star and DOE1. From there, your consultant provides recommendations for remediation and improvements to address any gaps, hazards and cost-savings opportunities, plus the applicable cost–benefit analysis.
In the case of a strategic maintenance consulting engagement, an asset management professional starts with a detailed evaluation of your current operation to understand your business priorities and company-wide goals, and to identify any potential inhibitors to your plant’s success.
Once those are identified, reliability solution consultants can develop a risk mitigation plan to help you increase production output while reducing costs through improvements to equipment and process reliability.
Often, a comprehensive mitigation plan includes safety improvements and reduced environmental impact. For example, when evaluating downtime during a risk assessment, an asset management professional analyses any potential fallout from such an event. If downtime endangers the environment or worker safety, the incident can pose far greater concerns to a company’s public image.
The goal is to transform maintenance from an expense into a strategic, competitive asset.
The right strategy
Leaders at smart companies know that successful asset management programs maximise uptime and offer other profitability benefits. With the right asset management strategy in place, you can achieve sustained growth and competitiveness.
- ARC Advisory Group 2019, Asset Management Trends, <https://www.arcweb.com/blog/asset-management-trends>
- ARC Advisory Group 2019, Rethinking Asset Performance Management, <https://www.arcweb.com/blog/rethinking-asset-performance-management>
- Bussey P 2020, Connected Worker: Connecting People and Systems to Transform Frontline Operations, LNS Research, eBook.
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