Tackling Maintenance Cost Through Effective Asset Management

By Peter Jackson. BSc (Hons)Mech Eng. MIAM, Senior Consultant, MCP Consulting Group

Leading manufacturing and service companies know that the effective Asset Management is a basic need for long term competitiveness.

But even today, MCP has evidence that fewer than 10% of company sites in the UK have mastered this skill and hence the ability to claim to have ‘leading-the-world’ status’. The overall UK profile of where sites are on the journey to becoming ‘world-class’ is shown in figure 1.

asset management status

So, where is your company in terms effective asset management?

You should consider the following 10 point asset management challenge…

  1. Are you following a long term plan to apply asset management’s best practice ways of working?
  2. Are you confident that each item of equipment (physical asset) has an appropriate, risk based annual maintenance plan?
  3. Are you using a planning process such that technician or craftsman’s time is mostly planned one week in advance?
  4. Are you sure you have the ‘right’ spares in stock?
  5. Do you know that the total cost of your maintenance is correct for the current approach to asset management?
  6. Is it clear that operations and project leaders care about the processes for effective asset management?
  7. Do operational roles include asset management duties, tasks and objectives?
  8. Do you apply specific asset management KPIs that are compared to targets and are actively used to drive continuous improvement?
  9. Are there partnering arrangements with key outsourced providers or suppliers that allow for sharing risk and rewards?
  10. Are you confident that the full scope of effective asset management is understood by all employees?

If your response is NO to even a few of these challenges, then an effective asset management programme will deliver benefits to your organisation.

Below we address the 10 challenges above for a sustainable asset management (AM) journey

1. Long Term Strategic Plan

Improving AM has to be done in a formal strategic manner. ISO 55000 clearly indicates the need for an AM system that describes the policy and strategy for life long care of installed assets. The AM Policy and Strategy documents need to be ‘owned’ by those involved

2. Maintenance Plans

After determining how important an asset is the appropriate tools and techniques must be applied to mitigate the likelihood of its failure. The resulting annual maintenance schedules for each asset must be stored in the CMMS for reference in the maintenance planning process

3. Planning Work.

Weekly maintenance schedules are essential and should not interfere with output. A maintenance planner is mandatory, with tasks managed as Works Orders and results recorded. Maintenance best practice is to plan in advance more than 80% of the available resource man-hours

4. Spare Parts Management.

Spare parts account for approximately a third of annual maintenance spends. The subject is gaining greater attention under the title Maintenance, Repairs and Operating Materials (MROM) management. From developments of techniques in Supply Chain Management (SCM) their application for engineering spares management is entirely appropriate. Traditional storemen are being encouraged to be ‘Subject Matter Experts’ (SMEs) in the complex world of MROM management.

5. Cost of Maintenance.

Guidelines suggest what should be the annual cost of maintenance relative to the replacement-as-new value of all the assets in a given portfolio. Depending on the business sector, world-class providers are expecting the maintenance budget to be between 1 and 3% for a highly developed AM system. Are you meeting this target?

6. Functional Involvements.

AM cannot be delivered as an engineering initiative alone. Managers, project engineers, HR and finance all need to recognise their involvement in the delivery of an effective AM system.

7. Operator Asset Care (OAC).

food operative controls

For highly reliable equipment performance it is essential that those who operate (use) the equipment do so it a sensitive manner. OAC engages the user in the correct use of equipment and to do whatever maintenance they can do for themselves.

8. KPIs.

Measuring the management of workload and the effectiveness of the planning to ensure costs are in-line with budgets, and the equipment is performing at the design standards is a must. Visually showing the results as trends in a dash board format is current best practice.

9. Outsourcing.

Is appropriate where there is a business benefit…but think before leaping into the arms of a provider hoping they understand the subject which is a mystery to you. If you cannot write a comprehensive user requirements specification (URS) for the outsourced subject you need to become knowledgeable before you outsource.

10. Understanding and Communication.

Regular communication of the progress and results of the full application of AM across the business is necessary to ensure a culture where application of world-class processes become ‘business as usual’.

MCP has supported clients from all over the world. Many who have recently completed the journey, achieving the world-class status as defined in the MCP assessment process, have stated the worth this has delivered to their businesses. Some examples below:-

A large service organisation *

MCP is providing ongoing support as a partner for change. The organisations’ asset base has grown by 80% in the past 4 years but with only a 20% growth in asset management costs. A multi-million cost avoidance through applying best practice ways of working following extensive re-training.

A drinks manufacturing site

Site productivity has increased from a starting position of 55% to 70% today over a 4 year journey. This was achieved through applying best practice asset care.

A food producer site

Following a programme of training and then sustaining new practices the site has been recognised as the site of choice in the group and developing from an AMIS score of 54% in 2012 to 72% in 2016.

A division of a major pharma company

Over a 5 year period the division (18 sites in 14 countries) was guided and supported by MCP to introduce better working practices. The development of confidence at each site is always difficult to express, but highly valued by all involved. Some practical results included:

  • Identifying 5 % more assets than were not previously recorded.
  • A total across the division of 40% fewer breakdowns
  • Overtime reduced by 45%
  • Late PMs…a thing of the past
  • A total AM cost reduction approaching 20% lower costs


MCP measures the status of a client site using the Asset Management Information Service (AMIS) it was established more than 25 years ago as a government incentive. Use of this benchmarking assessment at points along the journey ensures a focus on the way forward and a tracker for the progress delivered. The AMIS tool is a proven yardstick where a score greater than 75% demonstrates reaching world-class status.

Process Industry Informer

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