Sustaining Asset Productivity
Author:
Glenn Rebello
Asset Management Principal
Work Management Solutions
Effective processes aptly link departments, functions, information flows, and resources within an organisationto build effective management systems. An asset management system represents processes to manage the way assets are planned and utilised to maximise productivity, reduce risks, and create value-based operating models. Therefore, asset management processes must be effective at what they do for the system to run efficiently and continue achieving productive outcomes.
Introduction
The term asset management has many facets. The Asset Management Council defines asset management as, “The life cycle management of physical assets to achieve the stated outputs of the enterprise” which includes processes for the planning of assets, operating and maintaining them, disposing of them effectively, and simultaneously obtaining efficiencies in costs, risks, and performance.
Effective or not, every management system has processes that, with the appropriate inputs, produce the outputs to achieve organisational objectives. Asset management is no different. Establishing productive asset management processes aligned with the overall organisational objectives provides the necessary road map to better capital outlay utilisation, maximising working performance, decreasing liabilities, and obtaining a long asset life span.
There is no doubt that ineffective asset management processes will also get the work done, but with limited efficiencies and at higher risks. Depending on the complexity of the organisation, several factors contribute to limiting productivity and may include aging assets, process changes, dated technology, and intricate organisational structures, to name a few. Fortunately, organisations can quickly recognise these undesired outcomes and employ techniques to help boost asset productivity.
This paper attempts to provide a perspective on how to sustain asset productivity through process improvements.
Why Asset Productivity?
In the current economic scenario, replacing aging assets with new expensive ones is perhaps the last option for many organisations. With escalating operational expenditures, reduced resources, staggering supply chains, tight margins, and low profitability, companies seek effective ways to boost the Returns on Investment (ROI) on the assets within their organisation. As such, the pressure to extend the life of existing assets has become paramount.
The twist, however, is that extending asset life means needing to revise strategies and carry out more frequent maintenance activities to keep old assets safe and reliable. In addition, making the asset available to operations with the same functionality and operability as a new asset is one of the larger challenges.
One way to achieve greater ROIs is to ensure that the assets are employed effectively and the asset management processes are managed well to improve their functionality and availability to help maximise asset productivity.
Observations
With the evolution of new technologies, managing assets is now simpler, easier, and more systematic than ever before. Most asset-intensive organisations deploy significant efforts to choose innovative solutions and improve or reengineer their processes to prevent downtime and eliminate failures. But often there is a disconnect. These improvement strategies are relevant and have yielded success stories within the asset management field. However, the challenge is a long-standing one when it comes to sustaining these success stories over time.
In the wider sense, asset management improvement initiatives begin by involving the right people in the discussions to identify the “pain points” in terms of reliability, availability, maintenance strategies and tactics, costs, culture, and validation of where the organisation would like to be in the future.
Answering the two typical questions at the onset — that most people forget to ask and answer upfront — ‘What is the problem you’re trying to solve?’ and ‘How will we know when the problem is solved?’ help narrow down the real problem and generate discussions with asset owners, end-users, and other decision-makers.
The insights obtained in this exercise will be invaluable to determine the maturity of the organisation from the asset management perspective. It may also highlight the value-add of the processes involved (including if the process or subprocesses are even necessary), the contributing factors for poor asset performance at ground zero, the methodologies to be used, and the potential for automation.
In a nutshell, reengineering or improving asset management processes is very different from obtaining the desired asset productivity at a consistent optimum level.
Main Discussion
Enhancing asset performance goes beyond improving systems, processes, and strategies. Taking a holistic approach helps enable the consistency that is required to continue obtaining asset productivity. For instance, having optimal processes and cohesive systems will impact asset performance. Implementing appropriate measures and integrating the commitment of leadership will help sustain the improvements made.
The probability of success in sustaining the gains in asset performance is higher when a full appreciation of the improvement life cycle and the value-adds within the process are well-understood. Below is a summarised view of the four important phases and associated failures in the improvement life cycle that can potentially influence sustainable and desired outcomes
Phase 1: Documented – Process Failure
Issues associated with process failure are generally visible through errors, consistent delays, and poor outputs/production. Some of the common causes attributed to these failures include missing process steps or steps that are difficult to perform, or because the available information to make processes work effectively is redundant, unclear, or missing (e.g., operating manuals/standards, terms of reference, etc.). Having established and documented asset management processes and procedures are the first steps to helping manage assets effectively.
Phase 2: Competent – Process Ignorance
The main causes of process ignorance are a lack of understanding of ‘how things work’, and inadequate buy-in into the process by stakeholders. Asset productivity cannot be obtained without the appropriate knowledge, skills, abilities, and motivation of individuals. Therefore, the competency of all personnel involved in asset management to understand the processes deeply is the key to getting the desired productivity. Involving them and seeking feedback on what is currently working not working, and how to get it to work or improve will provide them a degree of control over how the new way of working has been shaped.
Organisations put a lot of emphasis on completing the first two phases but fall short when they implement the follow-on phases. Generally speaking, this is a leadership issue. The leadership views sustaining the improvements as a downstream responsibility and takes a minimalistic approach to ensure that the improvements and processes are truly embedded in the system.
For instance, once the improved processes begin to provide some results, the leadership tends to celebrate success and quickly close the improvement initiatives. Subsequently, resources that helped with the transition of old systems and processes to new ones are directed elsewhere before the new ways of working mature. As a result, all the gains that were achieved during the first two phases begin to slip backward.
The next two phases have a pivotal role in maintaining the motivation of the workforce to remain committed to using the new improved processes till they reach maturity, and for the asset management organisation to continue to reap the benefits gained.
Phase 3: Accountable – Process Compliance
This is one of the critical features of ensuring every step in the process is complied with to obtain the desired outcomes. Unfortunately, lack of procedural adherence and consequences thereof when there are variations/deviations in the process is a common factor that prevents them from sustaining themselves. Establishing individual accountabilities and responsibilities in the process (e.g., using a simple RACI matrix to identify process owners, activity performers, etc.) and continuing to monitor the processes with appropriate measurements will help obtain expected outcomes and help root the process in place.
Phase 4: Assured – Process Control
This aspect is very crucial as processes are dynamic and require constant effort from everyone involved. In essence, processes tend to become redundant as business objectives change, priorities change, people in positions change and existing processes continue to evolve. One way to prevent this redundancy is by benchmarking and consistently measuring the process outcomes against the benchmark. Having visibility over adherence and demonstrated commitment to taking the actions required helps assure that the outputs are consistent no matter who uses them.
Conclusion
Process improvements in asset management have the potential to achieve high levels of asset reliability at effective costs and lower risks. Focus on effectively sustaining these improvements will continue to achieve the desired asset productivity and create long-term value.
Key Takeaways
- Involving the right people, setting measurable objectives and post-project accountabilities and responsibilities from the very beginning of the process improvement exercise will help with the buy-in and quickly influence process maturity.
- Acknowledging that processes not only need to be well-defined, well-documented, and well-understood but also be well-practiced and mature enough before letting people operate them in business-as-usual mode is crucial to their sustainability.
- Technologies are evolving and quickly changing how assets are managed, therefore moving towards improving and stabilising asset management processes will help build a solid foundation for automation and broaden the horizon for value creation.
How can Work Management Solutions (WMS) help?
WMS Advisory has experience in facilitating engagements for maturity diagnostics and methodically obtaining a snapshot of the current state of asset management policies, processes, people, systems, organisational structure, roles, budgets, and daily operating routines – all, of which are crucial to support and sustain the changes. In addition, WMS Advisory can provide an unbiased and integrated view of the asset management system and highlight potential opportunities for automation.
Graphic Credits: AMLA (Asset Management Learning Academy)
Glenn Rebello, Principal Consultant at WMS has successfully executed varied cross-functional, complex, and time-bound projects under the aegis of Asset management in demanding business environments with equal focus on people and change management.