Top Asset Lifecycle Management: Driving Profit in a Budget Constraint Environment
Introduction to Asset Management
extracts from Aberdeen Group presentations
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Achieving Environment, Health and Safety (EH&S) in Today’s Plant
What is Reliability?
Definition
1
Reliability ‘by the book’=R(t)=
e
t
MTBF
Meaningful definition:
Overall
Equipment = Availability
In other words, we tie $ directly
Effectiveness
X
Performance
X
Rate
Quality
Rate
MTBF: Mean Time Between Failure
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Reliability Consulting provides a path to success
Total Plant Reliability®
People
Process
Vision & Mission
Mtce. Work Mgmt.
Critical Equipment Ranking
Org. Structure
Failure Investigation
Basic PM
Roles & Responsibilities
Standardization
PdM/Cond. Monitoring
Teamwork
Materials Mgmt.
CMMS/Data Mgmt.
Operator Driven Reliability
T/A or S/D Mgmt.
Life Cycle Costing
Multi-skilling
Contractor Mgmt.
Risk Based Inspection
Performance Mgmt.
Mgmt. of Change
Reliability Centered Mtce.
Customer
Education/Training
Design for Reliability
RAM Modeling
• OEE
Asset Management
Prevention
Empowerment
Best Practice
Working
Tools/Methods
Partially Working
Measurement
Financial
• Mtce $ as % RAV
Internal Business Process
• PM Compliance
Learning & Growth
• Training Hrs/Emp.
Reliability Scorecard
Not Working/Absent
Reliability Consulting benchmarks customers to identify strengths,
recognize improvement opportunities and deliver actionable roadmap
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Why reliability?
Operational Excellence is biggest profit contributor
Company Profit
Operational
Excellence
Operational Excellence
is biggest controllable
contributor to sustainable
profit.
Reliability Excellence
Operational Excellence needs a reliable foundation:
 People
 Processes
 Tools
 Metrics
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Outline
Introduction
 Research Methodology
 Survey Demographics
 Making the Best-in-Class
 P.A.C.E. (Pressures, Actions, Capabilities,
Enablers)
 Recommendation
 Questions

5
Aberdeen’s Methodology
End-User Investigation: PACE Framework
Pressures:
External and internal forces that impact an organization’s
market position, competitiveness, or business operations.
Actions:
The strategic approaches that an organization takes in
response to industry pressures.
C
The business competencies (organization, process, etc…)
apabilities: required to execute corporate strategy.
Enablers:
The key technology solutions required to support the
organization’s business practices.
6
Aberdeen Maturity Class Framework
Best-in-Class
key Performance
indicators (KPI)
- Top 20%
Asset Downtime
Overall Equipment Efficiency (OEE)
Total
Respondents:
Industry
Average
- Middle 50%
Laggard
- Bottom 30%
Maintenance Cost Reductions
Maintenance Budget Change
Respondents are scored
individually across KPI
7
Aberdeen Maturity Class Framework
Best-in-Class
Selected Performance
Criteria (KPI)
- Top 20%
Time-to-Action/Decision
Asset Downtime
Employee
Productivity
OEE
Total
Respondents:
Industry
Average
- Middle 50%
Laggard
- Bottom 30%
Reduction of Risk
(i.e.
Litigation)
Maintenance
Cost
Reductions
Respondents are scored
individually across KPI

What are Best-in-Class
companies doing differently?
Pressures:
External forces that impact an organization’s market position,
competitiveness, or business operations.

What pitfalls are they
avoiding?
Actions:
The strategic approaches that an organization takes in
response to industry pressures.

Why are they achieving
greater success?
business competencies (organization, process, etc…)
Capabilities: The
required to execute corporate strategy.

What technologies and
services are enabling them to
succeed?
Enablers:
The key technology solutions required to support the
organization’s business practices.
8
~ 145 Qualified Survey Respondents

Size:




31% Small (Rev. < $50 million)
33% Mid-size (Rev. $50 million ~ $500 million)
36% Large (Rev. > $500 million)
Headquarters:



60% North America
26% EMEA
13% Asia-PAC
9
Seniority Represented
Information Technology
18%
Reliability Engineer
12%
Maintenance Supervisor / Manager
9%
Manufacturing
9%
Business Process Management
2%
23%
7%
10%
CxO
Vice President
8%
Senior Management
Marketing
7%
11%
6%
5%
Finance
Procurement
4%
Maintenance Engineer / Planner
4%
Customer Service
3%
Logistics/Supply Chain
3%
0%
5%
Director
Manager
Staff
Other
41%
10%
15%
20%
10
Decisions for Asset Lifecycle Management
Asset reliability and maintenance
81%
New asset procurement
65%
Spare parts management
64%
Asset repair / refurbish / overhaul
60%
Training and certification
52%
Asset commissioning
47%
Asset decommissioning
41%
Safety - Employee and Asset
36%
Environment and energy management
0%
32%
25%
50%
75%
100%
Survey Question: Please describe which of the following decisions you influence?
11
Industries Represented
High Technology and Electronics
Telecommunication Services
11%
16%
Utilities
Industrial Equipment Manufacturing and Products
7%
2%
Automotive
Aerospace & Defense
2%
Chemicals
7%
4%
Metal Products and Mining
Food/Beverage
4%
6%
Energy
Public Sector
5%
6%
5%
5%
5%
5%
5%
5%
Water / Waste Water
Consumer Goods
Oil and Gas
Engineering Services
Pharmaceutical Manufacturing
Other
12
Top Pressures driving companies to focus
resources on asset management
Maximize Return on Assets
71%
Need to delay CAPEX in the current economic
environment
43%
24%
Respond to aging infrastructure
Regulatory Compliance
21%
Adhere to corporate sustainability Initiatives
Minimize health and safety related incidents
20%
8%
All Respondents
7%
Respond to attrition in workforce
0%
25%
50%
75%
100%
13
Defining Best-In-Class Performance
Definition of Maturity Class
Best-in-Class:
Top 20% of aggregate performance
scorers
Industry Average:
Middle 50%
of aggregate performance scorers
Laggard:
Bottom 30%
of aggregate performance scorers
Mean Class Performance

2% Asset Downtime

92% OEE (Overall Equipment Efficiency)

-14% Maintenance Cost Change
-8%
Maintenance Budget Change

5% Asset Downtime

84% OEE (Overall Equipment Efficiency)

-3% Maintenance Cost Change
-1%
Maintenance Budget Change

17% Asset Downtime

68% OEE (Overall Equipment Efficiency)

4% Maintenance Cost Change

4% Maintenance Budget Change
14
Strategic Actions
Improve visibility into complete asset lifecycle to
improve decision making
45%
Establish collaboration across functional
departments
45%
Synchronize asset performance with corporate
performance objectives
35%
Establish a risk based approach to be predictive
towards asset management strategies
27%
Equip operations and maintenance employees
with real-time visibility into asset condition
24%
0%
25%
All Respondents
50%
15
Competitive Framework –
Process Capabilities
Best-in-Class
Average
Laggards
Asset management decisions are based on a risk based approach
44%
Process
34%
32%
Dynamically updated asset management processes across the
enterprise as new best practices are developed.
38%
34%
20%
Process established to understand the criticality of asset to determine
the most effective maintenance approach
56%
44%
24%
Source: Aberdeen Group, June 2009
16
Competitive Framework –
Organization Management Capabilities
Best-in-Class
Average
Laggards
Executive ownership and sponsorship for asset management strategies
across the enterprise
60%
53%
29%
Established cross-functional team to foster collaboration across
production, maintenance, finance, engineering and corporate groups
Organization
44%
26%
14%
Established Centers of Excellence for capturing and promoting best
practices for asset management across the enterprise
53%
26%
20%
Social networking tools used to drive collaboration among current as
well as past employees
25%
17%
0%
Source: Aberdeen Group, June 2009
17
Competitive Framework –
Knowledge Management Capabilities
Best-in-Class
Average
Laggards
Centralized knowledge warehouse to store asset data from different
plants
44%
Knowledge
Management
32%
19%
On-demand asset lifecycle information easily accessible by employees
40%
32%
15%
Failure data is used to perform root cause analysis to understand the
impact and the probability of equipment failures
44%
36%
30%
Source: Aberdeen Group, June 2009
18
Asset Information
91%
Asset Location
73%
Maintenance Schedule
64%
Spare Parts Inventory
Asset value
61%
Asset Condition / Status
61%
Equipment Vendors
51%
Asset Utilization
47%
Asset Lifecycle Expectation
All Respondents
33%
0%
25%
50%
75%
100%
19
Competitive Framework –
Performance Management Capabilities
Best-in-Class
Average
Laggards
Asset Performance metrics are linked to financial metrics
Performance
Management
38%
34%
33%
Asset Performance can be compared across plants
38%
34%
33%
Source: Aberdeen Group, June 2009
20
Key Performance Indictors (KPI)
Total Maintenance Cost
66% 81%
63%
MTBF
49%
44%
Revenue Growth
25%
44%
Cost of Downtime
Asset
Reliability
63%
59%
31%
MTBR
Profitability
38%
32%
ROA
38%
34%
LTA
0%
50%
100%
Best-in-Class
56%
46%
50%
37%
0%
50%
100%
Others
21
Energy and Carbon Management
Best-in-Class
Average
Laggards
Energy management integrated with the overall asset management strategy
33%
Sustainability
14%
14%
Maintenance schedules and alerts are based on asset condition and energy
efficiency
33%
22%
10%
Carbon emission levels are regularly collected and monitored
53%
34%
29%
22
Percentage of Respondents
Criteria for Purchasing New Asset /
Equipment
100%
80%
94%
78%
75%
75%
63%
60%
58%
63%
50%
38%
34%
40%
27%
22%
20%
25%
19%
0%
Asset
reliability
Cost of asset
Asset
Availability of
Energy
maintenance functionality spare parts requirement
Best-in-Class
New product
Introduction
(NPI)
Learning
curve
Others
23
80%
67%
57%
40%
40%
EAM Adoption
0%
Best-in-Class
Industry Average
Enterprise Asset
Management (EAM)
Integrated with Enterprise
Resource Planning (ERP)
Percentage of Respondents
Percentage of Respondents
Competitive Framework – Technology
Capabilities Enterprise Asset Management
Laggards
50%
30%
28%
25%
14%
0%
Best-in-Class
Industry Average
Laggards
n= 114
Source: Aberdeen Group, June 2009
24
Technology Enablers
Percentage of Respondents
80%
73% 71%
67%
67%
67%
61%
60%
40%
50%
35%
53%
53%
56%
46%
47%
40%
37%
34%
25%
16%
20%
35%
21%
11%
0%
Alerts and
Alarm
Management
Asset
Dashboard
Master Data
Management
Best-in-Class
Workflows
Asset Analytics
Industry Average
Laggards
Wireless
Risk
Management
n= 114
Source: Aberdeen Group, June 2009
25
Recommendation: Laggard to Average
Establish executive focus for asset
management.
 Break down departmental silos and
establish cross-functional teams to enable
collaboration.
 Focus on understanding the criticality of
assets based on past and current asset
data.

26
Recommendation: Average to Best-in-Class
Improve visibility into complete asset
lifecycle.
 Consider energy requirements while
making asset buying decisions.
 Invest in an Enterprise Asset Management
(EAM) system.

27
Recommendation: Best-in-Class
Synchronize asset performance to
corporate performance.
 Enable real-time visibility into asset
conditions by investing in wireless
solutions.
 Establish Integration between EAM and
ERP systems.

28