Key points
As with life in general there are always two sides to an argument. This one is too wide sweeping to be totally true but for many UK companies, it is too close to the truth!
My name is Peter Jackson and I work as a consultant with MCP Consulting Group. Previously my background was in engineering and operations management with major blue chip companies before becoming an asset management consultant 20 years ago. In this capacity I have visited hundreds of different sites and been often surprised at the way assets are managed.
So, I will try to explain, with backup from MCP data, why I consider the statement to be valid, even today.
Established Programme
You may have heard of the Asset Management Information Service (AMIS). It was 25 years ago that a survey commissioned by the then DTI into the UK’s maintenance management practices revealed that an astounding £1.8 billion of potential savings could be made through increased understanding of maintenance management by industry. This led to the introduction of AMIS, the DTI supported benchmarking service provided by MCP.
By 1997, it was estimated that the AMIS approach had potentially saved UK industry over £300 Million. Fundamentally AMIS provides a benchmarking service that allowed sites within companies to appreciate where they stand in terms of effectiveness, compared to similar sites in a similar business sector, on the worldclass stage.
Many UK and International companies have used the service to support their asset management development programmes. You may not know the MCP has been recognised with a Queen Award for Enterprise, 2016 for business growth and success worldwide.
The AMIS database is the well we use to back up our claims.
At our current position with more than 4500 assessments completed we can profile the stages of sites on the journey to asset management excellence.
It is clear that a significant number of sites are not in control of maintenance, some have gained a measure of control, a number are trying to make the journey and precious few succeed.Because there are fewer site reporting beyond control…we argue..in conclusion…that the majority of companies do not look after their assets.
Caring for Your Assets
Not only in business but in our personal lives assets must be cared for.
Consider this from a health and wellbeing point of view. We know that if an athlete is to become world class, care must be taken of their body condition, tone and skills, such that, on the day of the competition the subject is fit for purpose and able to compete to be the best.
Considered in personal transport terms. We all understand that, if we depend on a mode of transport, e.g. a car, then it makes sense to attend to whatever is required that ensures the transport will be reliable whenever needed. We do not take the risk.
Considered in finance terms. When we own a property we know that when it comes to selling we have to demonstrate that we have cared for its condition as much as possible. A sensible householder will have had a programme of maintenance that presents the home in the best light.
So, why do so many companies let this logic evaporate when it comes to their business assets?
Businessmen often believe they sound productive when they trot out the old mantra ‘sweat the asset’. Great, but what really happens? Short term it may appear a productive benefit has been gained. In the mid to longer term the risk to underperformance is often ignored. Where is the logic? Why do business leaders override the longer term asset care logic that is evident in their private lives?
Why do companies not look after their assets?
Here are a few thoughts:
- Maintenance is considered a cost rather than an investment
- Shortterm thinking….ignore maintenance now because it will be someone else’s problem when I am promoted
- Engineers are unable to persuade companies to make the right refurbishment /replacement decisions because they do not have the data for the defendable business case
- Output is an overriding imperative and so do not stop for maintenance but be able to fix it quickly when the inevitable happens
- Production think that if a preventative maintenance (PM) schedule is completed on time there will never be a failure
- All failures must be engineering failures.
These attitudes will conspire to asset management becoming nothing but a breakdown service. They will lead to a downward spiral of effectiveness where reliability slowly reduces and no amount of push, shove or bullying will improve the situation. We need to look to senior management for leadership and a way out of this situation.
Is there hope?
Yes…ISO55001 is a game changing opportunity
Since the introduction of PAS 55 in 2004, its relaunch in 2008 and the subsequent arrival of ISO55001 in 2014 the interest in and awareness of asset management is growing.
For the very first time we have a standard for Asset Management and businesses are beginning to take note. Some of the key reasons are:
- FM service providers know how relatively easy it is for the clients to request in contract tenders that they can demonstrate the ability to conform to the new standard.
- Capital intensive companies are thoroughly aware that the regulator is expecting compliance to the new standard
- Manufacturers in general have welcomed the attention created by the introduction of ISO55000. It provides a rationale for asset management to be considered an essential pillar of any world class business model.
- There is widespread belief that ISO 55001 and asset management will be as important to future business leaders as ISO 9001 (Quality) and ISO 14001 (Environment). That’s a game changing situation.
This all adds up to a rising demand for companies to demonstrate their competency in a management compared to the standard.
But is competency enough?
Many companies, during an AMIS assessment, state their requirement is to be a company of natural choice for their customers and to do that they seek to be considered excellent at all they do.
A display of competency compared to the ISO standard is not enough. The AMIS challenge explains what world class looks like and recommends the steps to be taken to achieve world class ambitions.
The true goal of every company, or site within a company, can be signalled by the most seniorperson involved stating what he wants from the assets in order to be excellent.
“I want the highest possible equipment, building and people reliability”
Reliability is the key
To achieve this it must be understood that excellence depends on the 3 major elements of asset management being properly applied.
The diagram below shows the relative importance of these 3 elements as they contribute to overall reliability.
How equipment is used and operated is the prime activity. The contribution to reliability is estimated to be between 40 – 50 %. It is essential that companies understand this and put in place programmes to ensure operators are considered key to equipment reliability.
The choice of equipment is vital for optimum life time cost for using and maintaining the asset. Get it wrong and we deduce for AMIS data that typically 20% of the annual maintenance budget spent papering over the cracks from poor investment decisions.
Finally, if the first 2 elements are not excellent there is no amount of maintenance effort that can overcome the effects of poor operations and bad CAPEX decisions.
Test this logic considering the choice of a vehicle.
Bad drivers = unreliable vehicle
Wrong choice of vehicle for the task = unreliable vehicle
Good operator care + the ‘right’ equipment + optimum maintenance = reliable performance
How do best practice companies set out their plan to look after their assets?
The answer lies in the strategic appreciation of the role of asset management in the business plan.
ISO 55001 explains this as the ‘Asset Management System’ devised to explain to an investor how the asset will be cared for throughout its life.
My simplified explanation of this is shown in the picture below.
The Asset Management System is the formal recognition that looking after assets makes logical business sense.
The policy and strategy documents must be part of the business strategic plan. With these in place engineering and operational teams can confidently pursue the adoption of the body of asset best practice knowledge and seek the levels of reliability so easily demanded by leadership.
Is not an easy journey, the scope for thoroughly applied asset best practice is enormous and it will take a company several years to absorb, adopt and achieve the high standards required for reliable performance. The AMIS journey has been too much for some sites and companies.
The reward experienced by those who have completed the course and sustained the processes and behaviours required is testimony to the value of asset management for all successful businesses.
Those companies that do not look after their assets and choose not to change face a grim future. They are dinosaurs that will die!
