If you're not an expert in asset management, you're depleting core business value – let's fix that.

By Dirk Vermooten | March 9, 2020

For a moment, just imagine your business with its assets in sub-optimal condition–what's that doing to the bottom line? Now imagine your business with assets in poor and deteriorating condition–is your business flourishing? As you can see, financial prosperity is inextricably linked to asset health, which is why long-term asset management is a required core competency in asset-intensive industries.

The future of your business depends on transitioning from short-term to long-term thinking

Given the number of years humans have been around, you’d think we would have figured out how to have things and also take proper care of them. Yet long-term values and costs remain on the back burner. We continue to lose more in the long run than if we paid more attention and took a more proactive approach to taking care of the things we have already.

For the overall success of our businesses, we need to make a shift from short-term to long-term thinking when it comes to asset management. It seems like an obvious thing to say, but translating it into action is still a challenge for many organizations. The sooner we do that, the more we’ll gain in the long run.

With new technology continuing to emerge at an accelerating rate, over time fewer and fewer people are going to know how everything works. Thinking and planning will need to be done upfront. Once your systems come online and you’re running in a complicated operating environment, it will be much harder to troubleshoot problems.

Without a good asset and maintenance management (AMM) process in place, ready to deal with growing levels of complexity, downtime will increase and revenues will drop.

Why AMM gets overlooked and how businesses can take advantage of its value

One of the main problems is that maintenance is often seen as a cost instead of an investment. It’s one of the first things to be cut when business cycles get squeezed.

The good news is that it doesn’t have to be an either-or trade-off. There’s a way to engage in proactive maintenance at reduced costs.

To do this you'll need to leverage off people with the right operational experience, deep industry knowledge, and a keen understanding of AMM principles. With such horsepower, you'll be able to create a well-designed AMM strategy enabling lower costs, reduced risk, improved performance, and most importantly, enhanced profitability.

The benefits of a comprehensive AMM strategy extend well beyond the health of your physical assets. A value-oriented AMM process can improve the overall productivity and efficiency of your entire operation. The potential scope of improvement needs to be understood across the organization, not just to those involved in maintenance.

Four steps to building a value-oriented AMM process

Getting AMM right involves starting from the fundamentals to build a plan, executing the plan properly, enabling your organization to achieve success in execution, and establishing a continuous improvement cycle.

  1. Start with the fundamentals. A great deal of value—including actual cost reduction—can be gained almost immediately by addressing the fundamentals. Making sure you’ve identified the right work that needs to be done on the right equipment at the right time.
  2. Build a plan and execute it properly. A strong plan needs to be specific, measurable, and value-oriented. Good execution requires proper communication and training so people know exactly what they’re supposed to be doing when, and what to do when situations deviate from the norm.
  3. Enable your organization to achieve success. The right technology, systems, infrastructure, and tools need to be in place to maximize the effectiveness of your workforce in executing the plan.
  4. Establish a continuous improvement cycle. As assets, technologies, systems, and people evolve, a continuous improvement cycle needs to be set up to incorporate inevitable changes into the process and ensure your AMM strategy continues to deliver value over time.

Low-capital levers to achieve maximum gain from minimal investment

Contrary to many operators’ assumptions, gaining value from a proper AMM process isn’t difficult and doesn’t take a long time. Several low-capital levers are relatively simple and affordable to initiate.

  • Get equipment parameters right. Pay closer attention to the health and operation of your equipment and adjust the parameters where needed. If you establish the right parameters around your equipment, there’s a tipping point you can reach that will lead to exponential returns on the life of an asset and its output.
  • Do the right work. Make sure your teams are doing the right maintenance work. When you identify a task that’s being performed that doesn’t add value, changing or removing it will instantly save on cost.
  • Measure the right KPIs. Review and update the KPIs you’re using to track asset and maintenance management. Make sure what you’re measuring is the important stuff like equipment health and work management process effectiveness.
  • Improve training. Remember that your equipment is only as good as the people that operate and maintain it. Often asset performance can be greatly improved simply by making sure the people that interact with the equipment know what the right work is and how to do it properly.
  • Be willing and ready to make changes. Adjusting how you manage and maintain assets over time is just as important as updating the software you use or modifying the way you run your operation in response to changing circumstances.

From operations to assets, a business’s imperative is to balance costs, risk, and performance in a way that optimizes value over time.

Clients engaged in effective AMM processes typically experience a 10%-15% reduction in maintenance costs, a 20% reduction in risk in the form of fewer accidents, and a 10%-20% improvement in performance. These results are not only substantial, they impact the entire organization. That’s why AMM is everybody’s business.

Here’s the bottom line: if you’re in an asset-intensive industry and you’re dependent on your assets, you need to be an expert in asset management.