A risk-based asset strategy accelerates accurate decision-making

Posted: January 29, 2020

I often see that the teams in Production, Maintenance and the Boardroom are not speaking the same language when it comes to making decisions. Important decisions like where to invest and how to budget maintenance manhours and costs often lag when organizations are not able to define a business case for investment. When departments and functions exist silos, it's challenging to get a complete picture of interdependencies and develop a roadmap for achieving operational excellence.

Discover your improvement potential with the APM Maturity Assessment.

In my experience design and engineering choices, maintenance strategies, and budget decisions are, more often than you would think, made on a best educated guess. In my view, that is steering the enterprise blindly. Which results in a great deal of lost value in the enterprise.

So how can you structure your priorities and transform anecdotes into metrics that build a clear business case?

*To learn more - Watch the On-Demand webinar on Asset Strategy Optimization "Hundreds of truths, but which one to choose?" Finding the right balance and optimize asset strategies in record time.

Link your asset strategy to strategic business goals

I remember one company where the maintenance manager was called to clarify why a specific production line was malfunctioning. The incident was a so-called "priority 1" major malfunction. However, the asset was never marked as risk-critical when building the asset strategy. As a result, there were no spare parts in stock for this specific product nor any prescriptive actions to minimize downtime when the equipment experienced an unscheduled outage.

The result was frustration between departments that could have easily been avoided had a risk-based asset strategy been put in place throughout the organization. Meaning all related departments agree on the acceptable risk of a specific production line all the way down to the asset level. Reliability-centered maintenance (RCM) draws a clear line between asset failure behavior and consequences to business risk. It is important that you link your asset strategy to your strategic objectives like safety/compliance, cost management, production quality, and production output (availability/reliability). This way, you create one single line of communication between departments from the factory floor to board level.

Asset lifecycle decisions made easier

How do you decide on an asset lifecycle, and how do you validate the choice for a more expensive asset or a budget-friendlier one? In one specific case, I was asked to help out where the Asset Management department needed to make such a decision. One asset was approximately 30% cheaper than the other, with both promising an asset lifecycle of 20 years—it seemed like an easy choice.

AVEVA Asset Strategy Optimization software was used to conduct different simulation scenarios. AVEVA Asset Strategy Optimization takes into account the information from both manufacturers and the customers maintenance history, production results, and compliance rules. As a result AVEVA Asset Strategy Optimization was able to show the more expensive asset would be 60% cheaper when calculated across the entire 20 year asset lifecycle. The more expensive asset needed much less inspection and maintenance, and the asset reliability was significantly higher than that of the cheaper version, resulting in less downtime and increased production capacity.

Build the business case for a realistic asset management strategy

In another case, I helped a water municipality that wanted to lead a discussion with their upper management on the acceptable level of asset risk. The maintenance department was faced with a set budget and needed to create awareness of the risks involved in its work and the assets that drove the water treatment and distribution system.

A risk matrix was set up by the team. So far, so good. Yet, the risk matrix was not connected to the budget, meaning there was no clear picture of what the maintenance department could achieve within its operating envelope. There was no connection between the business objectives, the budget and operational costs like material, manhours, production loss, etc. It therefore did not sketch the complete picture and led to miscommunication and disappointment.

It doesn't have to be like this.

The methodic RCM approach that keeps your assets at optimum levels of availability and reliability

AVEVA Asset Strategy Optimization

AVEVA Asset Strategy Optimization enables you to build an asset strategy connected to the production strategy and corporate objectives. AVEVA Asset Strategy Optimization provides an in-depth understanding of failure patterns and the mitigating actions you can take before failures occur. It enables organizations to simulate different asset strategies to visualize the balance between risk, cost, and performance of assets, against your evolving business objectives. Imagine how much that could accelerate and improve accurate decision making within your organization?

Read the blog "Building an Asset Strategy doesn't have to be a daunting task. Get a head start with the Library in AVEVA Asset Strategy Optimization."


Download the Whitepaper: Digital Agility Forges Digital Resilience

Subscribe for Updates

Sign up for our newsletter, and get all the latest information straight from the source.

Subscribe Today