In a multi-plant environment, getting everyone across the sites working together and managing their assets in similar ways can be challenging. Geographical separation, lack of documentation, limited corporate assistance, no standards, etc.. encourages everyone to do their own thing. To go your own way. That is a great song by Fleetwood Mac but it does not work well in a corporate multi-site environment. Managing identical and similar asset classes in different ways, introduces variability, risks and higher costs into the operation. And, you miss the golden opportunity to fully leverage resource knowledge and build an asset management community within your organization.
In asset-intensive industries such as manufacturing, physical assets are critical to meeting business objectives and driving profits. You can’t create value without them. The discipline of enterprise asset management (EAM) seeks to maximize return on assets (RoA) by establishing consistent and controlled processes across the organization. In a multi-plant environment, establishing organizational asset management standards is central to this effort.
But although establishing standards for who does what, and how things are done, and what the data should look like, etc. is widely regarded as a best practice, many multi-site organizations struggle to get everyone onto the same page. Unfortunately, it is all too common to see one plant managing their assets in a different way than another plant. This is an information killer.
This failure to establish standards is due to several reasons (like mentioned above), but one of the biggest challenges is presented by documentation. To formalize anything, it must be written down. Best practices cannot be effectively communicated through telepathy. The key asset management drivers (processes, business rules, master data conventions, roles and responsibilities, KPIs, etc.) must be put to paper. As the old saying goes, you say (write down) what you do, and do what you say.
Putting your practice to paper makes sense but this is also where it gets tricky. The effort to establish value-added asset management standards can be a lot of work and require advanced skill sets. Many businesses may not have the resources or the expertise to develop the documentation that is necessary to standardize asset management across the enterprise.
The documentation challenge can be overcome, however, by using industry-proven frameworks and models to expedite the development process. These models provide a comprehensive and customizable starting point for the establishment of an organizational asset management model. They accelerate documentation, reduce the resources required, and provide a solid foundation of industry-accepted best practices. Several examples of such model documents are included.
One of our clients, a 3-billion-dollar petroleum company, used and existing industry-proven framework to develop a documented model for its asset management operation. The company then used this model to standardize asset management processes and technology across the enterprise. This standardization effort lowered risks, as evident from insurance regulator assessments, improved equipment availability by 3% and reduced MRO costs by 15%. It also increased productivity and facilitated the successful implementation of an EAM software system.
The Case for Standardization
A business that has thousands of physical assets spread across multiple sites needs a consistent approach to managing those assets. This is not a new idea. Most companies in asset-intensive industries know that standardization is a best practice for enterprise asset management.
Standardization does not mean that every plant must do things exactly the same way. Site-specific practices will always be necessary. It simply means that processes and data should be consistent from one plant to the next. When each site devises its own way of doing things, reinventing the wheel every time, it wastes resources and leads to incompatible practices and data within the same organization. Instead, sites should start with the same model for asset management—the same foundation of best practices—and customize from there.
This common wisdom is backed up by data. A 2008 survey conducted by Aberdeen Group revealed that best-in-class manufacturers (based on overall equipment effectiveness, plant throughput, and downtime) were 50% more likely to standardize asset maintenance and reliability processes across the enterprise. In addition, best-in-class manufacturers were almost three times more likely to standardize KPIs and condition monitoring processes.
In fact, standardization is key to improving return on assets (RoA). When a business owns and operates a large portfolio of physical assets, consistent asset management is essential for maximizing the value those assets deliver over the long term. Standardization drives profit by
- enabling centralized decision-making;
- reducing total cost of ownership (TCO);
- increasing equipment availability;
- reducing MRO costs;
- minimizing and mitigating health, safety, and environmental (HSE) risks;
- improving EAM/CMMS software performance;
- and more.
Standardization is not just a utopian ideal. It is an essential step on the journey towards effective and efficient asset management.
Tackling the standardization challenge
Although most asset-intensive companies know that standardization is important, few are successful at achieving it. Consistent, controlled asset management remains a pipe dream for many, perhaps most, organizations. The bigger the operation, the harder it is to achieve.
Usually, organizations are deterred from standardization by one of two hurdles. The first is the scale of the effort. Traditional approaches require a herculean investment of time, money, and other resources. Even if a company sees the value in standardization, the effort involved is intimidating and, in some cases, presents an insurmountable obstacle.
The second hurdle is the expertise required. Many companies have the requisite knowledge and experience to standardize a certain area, such as KPIs, but few have the expertise to standardize all the elements of the asset management operation. As a result, the other areas—codes, naming conventions, policies, business rules, practices, processes, procedures, roles and responsibilities, and so on—remain incomplete or undeveloped.
Both of these challenges can be overcome by taking advantage of existing industry standards, frameworks, and models for asset management. These fall into two categories. International standards, such as ISO 55000 and PAS 55, give requirements and serve as roadmap for the standardization effort. Industry-proven models, such as the EAM Library from SwainSmith, provide a more comprehensive foundation of processes, data conventions, roles and responsibilities and other standards.
Existing frameworks like these can springboard the standardization effort. They provide a solid base of best practices while drastically reducing the time and money required to make standardization a reality.
Six Benefits Of Standardization
Often, asset management (maintenance, storeroom, procurement) processes are known only inside the heads of experienced team members. Creating precise documentation to supplement and replace this “tribal knowledge” provides many advantages. Below are six important benefits that we see with clients as a result of standardizing work.
1. Consistency and collaboration between shifts and sites
Documentation ensures that a given process can be duplicated on all shifts and across all sites. This promotes quality and productivity, and it also invites ongoing collaboration. As suggestions and discussions ensue and improvements are made, the entire operation benefits from knowing and using the best practices.
2. Reductions in variability
When asset management processes are standardized, variability in product characteristics and service levels decreases greatly. While slight variations still exist because of different types of work, most of these variations are eliminated because of the achieved consistency of steps and sequences in both material work and downstream activities. This aspect of standardizing also delivers tremendous value to operations personnel, who rely heavily on the production and facility equipment. Finally, if additional changes are required, they are easier to implement because of the existing standardized work processes.
3. Easier training for new asset management personnel
Bringing new asset management personnel up to speed quickly is a challenge in any complex, asset-intensive manufacturing environment. Standardized work and well-crafted documentation simplify the process.
The best process documents not only spell out steps in clear language, but are also highly visual—with images, charts, drawings, and other helpful illustrations. This training resource provides a continuous reference for maintenance and enables a new communication system for the team. In the maintenance shop, team leaders and others from outside the department can use the documentation to determine the level at which each technician is qualified on machines, work cells, and specific repairs.
4. Improved safety
In repetitive, high-volume departments, standardized work enables team members to avoid unnecessary risk. Because the processes, steps, and sequences are visible and understood, there is no need to attempt shortcuts or try to improve efficiencies on the fly, because the processes in place have already been evaluated in terms of safety and efficiency. Standardized processes make work safer.
5. Consistent performance measurement
Having documented standards helps to critically evaluate asset management operations. Project Management, Maintenance, Storeroom, Operations and Procurement have a big impact on production, cost, and compliance. Taking a closer look at how maintenance work is identified, planned, scheduled, and completed, and how the storeroom manages spare parts, can yield big savings. This, in turn, encourages dialogue among different levels of personnel and functional areas, and ultimately reinforces the sense of ownership among those who execute the actual processes.
6. Baseline for continuous improvement
Standardized work facilitates continuous improvement by establishing a performance baseline. Because a documented process had already been evaluated and tested, everyone can quickly visualize improvements. Further, teams are able to work together to evaluate all variables before determining whether any changes need to be made.
What does standardization involve?
Standardized work means having processes that are organized and presented in such a way that all team members can easily understand, consistently follow, and constantly improve them. This is key in the chaotic world of asset management. Having a fixed reference for work activities—a standard model for how things are done—is the antidote to asset management chaos.
Of course, standardization is not limited to business processes. It also encompasses data standards, such as nomenclature, EAM/CMMS coding structures, and taxonomies; role definitions, responsibilities, and reporting relationships; EAM/CMMS software configuration; performance measures and targets; and more. Almost every aspect of the asset management operation can and should be standardized.
Documentation is essential to this effort. Getting maintenance teams at different plants to execute work routines the same way is impossible without a documented process. Keeping inventories consistent across multiple storerooms is unfeasible without a standard naming convention for MRO parts and materials. Having a common materials catalog allows procurement to fully leverage its negotiating power. In every area of asset management, formalization is a prerequisite for consistency.
Standardizing an asset management operation is like building a house. Before buying the first piece of lumber or pouring the first slab of concrete, a contractor needs a blueprint that shows what the finished house will look like. The blueprint serves as a reference and a guide, ensuring that all of the pieces fit together seamlessly to create the finished structure.
This is what documentation does for the standardization effort. It provides a blueprint for enterprise asset management. It ensures that all of the pieces of the asset management operation—business process, data conventions, organizational structure, and so on—are consistent across the business and work together using common standards to achieve common goals.
To make standardization a reality, a business must establish policies, processes, data conventions, roles and responsibilities, KPIs, and other standards for asset management. Together, these pieces form a future state model for the business’s asset management operation. Developing such a model is the first step towards standardizing asset management across the enterprise.
What Needs to be Documented and Standardized
To achieve standardization, an organization needs to formalize and document key asset management elements. These components may be divided into five key areas.
1. Organization and management
Goals and approach should be the same wherever the company does business. Policy, objectives, and strategy should be determined by executive leadership and communicated as a mandate to all plants.
Roles and responsibilities should be identical across the organization. Every role and business function should have the same responsibilities at one site as it does at another.
Processes and procedures should be consistent. A given task, such as scheduling work or requesting parts, should be performed the same way regardless of the location or the person performing it.
3. Information systems
The EAM software system should be configured the same way throughout the business. Screens, menus, fields, and so on should be identical from one plant to the next.
Master data should conform to uniform standards. Equipment names, part descriptions, and other information should follow the same format at every site.
Coding structures should be the same for the whole enterprise. Codes for work order priority and status, equipment class and criticality, problem and failure reasons, and all the rest should be identical.
5. Performance management
KPIs should be consistent. The same performance measures should be used, with the same performance targets, across all sites.
Auditing should happen the same way across the business. Auditing tools, methods, and schedules should not vary from site to site.
Together, these five areas form a documented organizational model for asset management. A model defines goals and standards, establishing a common point of reference that can be used to implement consistent practices across the organization.
Using industry standards to guide the standardization effort
The kind of organizational model described above—a documented framework of policies, processes, procedures, and so on—is exactly what industry standards recommend to increase profit and reduce risk in asset-intensive organizations. In fact, the two most prominent standards for asset management—ISO 55000 and PAS 55—both provide valuable guidance for implementing such an organizational model.
ISO 55000 was released in 2014 by the International Organization for Standardization (ISO). It represents the consensus of an international team of experts on best practices for asset management. ISO 55000 provides recommendations and requirements for establishing a management system for physical assets. (“Management system” in the sense of a quality management system or a safety management system—not a software system.) An ISO 55000 asset management system is one type of a documented organizational model for asset management.
ISO 55000 was based on a publicly available specification (PAS) for physical asset management, PAS 55. Like ISO 55000, PAS 55 recommends the development of a documented model, which both standards call an “asset management system,” to standardize the asset management operation.
(Even though PAS 55 and ISO 55000 lack detail and focus on what you should be doing vs. how or who should be doing it, they offer excellent starting points for an organization’s asset management journey.)
For an organization that wants to standardize its asset management, ISO 55000 and PAS 55 are excellent resources. ISO 55000 is more current, and allows an organization the option to seek certification to an international standard. However, PAS 55 is more detailed than ISO 55000 in some areas. Either standard will provide valuable guidance for a standardization effort.
Using proven models to expedite the standardization effort
Documentation may sound overwhelming. The process can be greatly expedited, however, by starting with an industry-proven framework or library. Such frameworks and libraries, which are available in the marketplace, provide a comprehensive and customizable foundation for an organizational asset management model. They accelerate the development process, reduce the investment of resources that is required, and ensure that the finished model is based on industry-accepted best practices.
Some companies dislike the idea of frameworks because it sounds like a straightjacket. They don’t want to be stuck with one-size-fits-all practices that constrict their business or squeeze them into a mold designed for another organization.
In reality, industry models are just a means to an end. They are not meant to be implemented without customization. Rather, they provide a framework with which to begin the design process. Taking advantage of them allows a business to develop a better model in less time, and with lower costs, than starting from scratch.
Existing industry models can eliminate as much as 90% of the time involved in designing and documenting an asset management model. At the same time, they put the operation on a firm footing of best practices. This allows a business to focus on reviewing and adapting the model to fit their specifications.
Best practice templates for asset management
The EAM Library from SwainSmith is one such framework. It provides a comprehensive model for asset management, including over 300 documented processes, KPIs, and other elements. A selection of sample documents from EAM Library is provided below by way of example.
Standardizing asset management at a $3 billion food production company
One of our clients, a $3 billion food production company, used a documented organizational model to standardize its asset management as the prelude to an EAM software implementation.
Our model provided a foundation of documented best practices. We then worked alongside the client to customize this foundation. The result was a model of company-specific policies, processes, business rules, roles and responsibilities, performance measures, and other organizational elements.
With this model, our client was able to standardize preventative maintenance across their plants internationally. They also used the model to guide their EAM software implementation. This led to significant improvements in uptime and costs:
- Improved equipment availability by over 3%
- Reduced maintenance costs by over 20%
- Improved maintenance productivity by 25%
- Significantly reduced maintenance overtime
- Reduced MRO inventory levels by 15%
Making standardization a reality
Standardizing asset management operations across the enterprise makes sense. It establishes common actions and common vernacular, getting the whole organization working and thinking together. This creates a culture of improvement. In lone-wolf operations, gains at one facility are limited to that facility. But when asset management is standardized, improvements at one facility can be duplicated at the rest, creating more gains and improving return on assets.
Standardizing asset management across the operation may sound daunting, but it is within reach for any organization. You can jump-start the effort by taking advantage of international standards and existing frameworks, which will slash development time and provide a base of rock-solid practices. A trusted consulting partner can also help to make the standardization process smooth and cost effective.
New technology is often touted as the wave of the future for asset management. Twenty years ago it was EAM software systems; today it’s the industrial internet of things (IIoT). These technologies certainly have value. But no matter what technology comes down the pipe, you can be sure of one thing: the future of asset management is standardized. Physical assets and the technology systems that manage them cannot thrive without standardized asset management practices. That’s why standardization is essential to improvement.