Asset Management was originally considered by many as an alternative name for Maintenance Management. This initial perceived interpretation lost many companies their competitive edge. Here we consider the term Asset Management as a referral to physical and engineering Asset Management.
To guarantee business survival in the current scenario of competitiveness, profitability from assets must be amplified. This implies certifying the improvement of productivity and profitability, while also ensuring the enhancement of safety, product quality and production efficiency, as well as lowering maintenance costs.
Say “No” to Silo Thinking and “Yes” to Cross-Functional Teams
In a bid to capitalise on the productivity of assets, business decision-making needs to consider all relevant disciplines and functions encountered in specific decisions. If companies are structured into functions, i.e. operations, engineering and maintenance etc. with functional heads of departments, poor visibility and a ‘silo mentality’ can result.
The ‘silo mentality’ as defined by the Business Dictionary is a mindset present when certain departments or sectors do not wish to share information with others in the same company. This type of mentality can reduce efficiency in the overall operation.
The result is that budgets are planned and measured with little reflection for the performance of the whole organisation. In order to counteract this, the Maintenance Manager needs to work in cross-functional teams to take decisions in the best interest of the business.
How the Position of Maintenance Management is Changing
Industries are paying an increasing level of attention to maintenance efficiency in a bid to optimise reliability and availability of assets. Many of the enhancements could be obtained
using new strategies and technologies to maximise service level and minimise maintenance costs, so long as it is achievable to identify the business areas where an advancement in technology could both condense and optimise the maintenance procedures.
An Asset Management improvement programme that includes close input from Maintenance Management can contribute significantly to the advanced running of a business…
Here we’ve listed some of the common issues facing Maintenance Management when starting an Asset Management continuous improvement programme, and how these issues might be addressed.
Issue 1: Develop Maintenance Strategy or Replace the Asset?
A common challenge for many organisations is the consideration of which of the following two choices is the most cost effective… Improving their maintenance strategy or renewing the asset?
Often companies don’t want to spend money on refining their maintenance strategy when both productivity and protection could be improved by renewing the asset. On the other hand, it’s often considered more cost effective to improve the maintenance strategy in order to boost the availability and dependability of the existing asset.
The decision between these two alternatives needs to be tackled conjointly by departments such as maintenance, operations, safety, quality and finance, to certify a mutual vision, strategy and profitable investment.
Life Cycle Costing
Such an issue, known as Life Cycle Costing (LCC) – an important economic analyis used in the selection of alternatives that impact both pending and future costs – demand that attention be given to the whole life cycle of an asset and how it alters during its life cycle, in a bid to compare and select the most cost effective long-term investment.
Such considerations include:
- Maintenance costs (planned and unplanned)
- Downtime for maintenance (planned and unplanned)
- Efficiency of the asset (productivity and output)
- Operating costs (energy etc.)
- Quality of operation or service (product and service rejects etc.)
- Safety to staff and the public
The only real way to decide on whether to stick with your existing asset or replace it with a new one, is to switch each of these considerations into £ values.
Issue 2: Are Engineering Projects Given a Fair Priority?
Each year, the Maintenance Manager has a variety of projects he or she wishes to drive forward within a company. These could include; modifications to plant and process, abnormal maintenance, design changes, major maintenance work etc. Yet, some of these developments may be funded through the constraints of the maintenance budget, while others need to be motivated for supplementary spending. Such projects thereby need to be addressed jointly by other departments such as Operations, Safety and Quality etc. in order to gain fair priority.
Issue 3: Keep A Strategic Spare or Get Rid of It?
Often, when an item has been in stock for a number of years but never moves, i.e. a motor, a colleague will insist on getting rid of it. However, there are items where it pays to keep an insurance spare, and therefore should ideally be kept in stock… Together, the Maintenance Manager and Operations Manager should calculate the potential lost time cost and how this may impact on the business. After all, a spare motor might fail only once in 20 years, but if not in stock could likely result in considerable downtime losses.
Asset Management Decision Making Modelling
Applying advanced Asset Management decision making modelling to your projects, can present considerable success in practice, particularly as part of a continuous improvement programme.
For more information about how EDG can help in evaluating your assets, please get in touch.