1 Better-performing Assets Make Better-performing Companies Skillful asset management can improve EBITDA as much as 15-25%
2 A sset performance management encompasses all maintenance activities that extend the lifespan of mission-critical assets to ensure that an organization achieves its strategic goals and objectives: scheduled restoration; scheduled discards; on-condition tasks (CLAIR cleaning, lubrication, adjustment, inspection, repair or replacement); and no scheduled maintenance (run to failure). Asset performance management is as much the responsibility of the C-level executive as it is the tradesman. Both must make sure that the machinery and equipment a company depends on to fulfill its mission runs smoothly and efficiently, at or near rated capacity, to achieve optimal throughput and ROIC. Our clients, some of the world s most renowned companies, have found that implementing a proactive asset performance management philosophy, and applying world-class maintenance management principles, is one of the factors that separates companies considered best-in-class from all others. These pages are intended to acquaint you with world-class asset performance management in its various forms, by its more familiar terms and through its typical applications. It is our hope that a basic understanding of these concepts, methods, and tools will make it easier for you to fulfill your responsibility to your company, whatever your role, level, or title.
3 Asset Performance Management Definition and Underpinning Methodologies Asset performance management is the systematic planning and control of a physical resource throughout its life. This may include the specification, design, and construction of the asset, its operation, maintenance and modification while in use, and its disposal when no longer required. Asset reliability is the controlled process of ensuring that physical assets continue to do what they are needed to do when they are needed to do it. World-class maintenance management is a collection of maintenance standards and practices used to benchmark and conduct maintenance within an organization. Reliability-centered Maintenance (RCM) is a process used to determine what must be done to ensure that any physical asset continues to do what its users want it to do within its present operating context. RCM II focuses on the understanding that the majority of failures are not age related, and that the most effective maintenance strategies rely on a combination of maintenance tasks to mitigate against the consequences of failure. These include conditionbased, scheduled restoration, scheduled discard, and no scheduled maintenance tasks.
4 Some Condition-based Examples On condition Assets remain in service on the condition they continue to perform at or above a predetermined level. Example: Visually inspect tires for wear. Remedial Action: Replace tires when tread wear mark exceeded. Scheduled restoration Assets are overhauled at fixed intervals regardless of condition. Overhaul must restore asset to its original condition. Example: A nitrogen producer executes a scheduled restoration on its turbine generators every four years. Scheduled discard Assets are discarded at fixed intervals regardless of condition. Example: Replace filter every 3,000 operating hours. No scheduled maintenance Run to failure. Example: A light bulb. (Most companies don t find it cost effective to have someone running from room to room checking lumen levels, particularly in a room lit with multiple lighting sources.)
5 What is World Class and Why Is It Important? Establishing, tracking, and analyzing key performance indicators (KPIs) as part of an asset reliability strategy is an important step in making the transition from reactive to proactive maintenance. Only by closely monitoring and managing leading and lagging indicators do you have a realistic chance of driving measurable results without significant capital investment. Superior asset performance is a direct result of world-class maintenance management, which has at its core Reliability-centered Maintenance, also known as RCM II. But what is considered world class and what will it mean to your company if you achieve it? At the macro level, world class looks like this: percentage of maintenance work that is planned > 95% percentage of planned maintenance work completed = 100% reactive unplanned/emergency maintenance work < 5% proactive work as % of planned maintenancework(includingpdm)=approx.45% actual maintenance hours compared to planning estimate = 100% overall equipment effectiveness (reliability x utilization x quality) > 85% Implementing best-in-class methodologies and proprietary business intelligence tools can leverage existing assets and reduce costs to improve EBITDA by as much as 15-25%. How Do You Determine Where You Rate? You can rank your operation against world-class maintenance management standards and practices by completing a world class reliability maintenance Diagnostic Audit found online at Simply answer the questions and return the audit to us to receive a report showing how your company ranks. There is no obligation and all information will be kept completely confidential. Current state maintenance assessment Once you understand your starting point, achieving world-class operational status and realizing the associated benefits is pretty straightforward. There are five core pillars to embrace. 1. Work management ensures that assignments are understood, that work gets scheduled well in advance (in week intervals), is completed as scheduled, and is of the required quality. Work management can entail the installation of a formal management operating system to coordinate and document all activities. 2. Work identification ensures that the right work is done at the right time, that assets are prioritized, especially when resources (skills, labor, time, parts) are limited, and that the proper tools (e.g., RCM analysis templates) are used. 3. Performance measurement typically, consists of identified KPIs (see above), leading versus lagging indicators, and heightened awareness and visibility throughout an organization. 4. Enabling technology includes optimizing existing or installing needed computerized maintenance management systems (CMMS), enterprise resource
6 planning systems (ERP), hierarchies (based on asset criticality), condition monitoring and data management tools, and other PdM technologies (e.g., vibration analysis, oil analysis, thermography, etc.). 5. Spares inventory optimization includes reducing your spares inventory and its carrying cost, ensuring that the right components are on hand when needed, and understanding spares inventory and order lead times without tying up valuable capital in excess inventory. Enabling Technology Asset reliability systems help ensure that the right maintenance is scheduled on the right equipment at the right time, thereby increasing production, lowering cost, and improving profit margins and ROIC. As the amount of condition-based monitoring increases through the application of advanced asset performance management practices, the amount of data fed to the maintenance management team increases exponentially. This technology allows for storage, retrieval, analysis, interpretation, and prioritization for action. In more complicated environments with lots of critical assets and/or shorter response times (e.g., a refinery or paper mill), an asset performance management software solution would be an ideal application to use. In simpler environments with fewer critical assets and/or longer response times (e.g., a discrete manufacturer of custom home furnishings or a job shop), USCCG s own LINCS Lean Information Control System is perfectly capable of repurposing data from existing computerized maintenance management systems toward the same ends. Our Approach For over 40 years, USCCG has successfully employed the following approach: develop a business case align organizational goals educate the organization conduct Work Identification analyses and activities prototype early to ensure results and build momentum train using direct hands-on with minimal lecture-style instruction leverage enabling technologies as required by the desired end-state ensure the right work drives the desired outcomes within the project timeframe and, depending on the baseline, significant ROI Whether an organization needs a quick solution to address the performance of a single asset, entire plant, or bring about a cultural change at the enterprise level, a flexible and scalable asset reliability program, used in conjunction with world-class maintenance management principles, can produce world-class results.
7 USCCG stands ready to help your organization deploy state-of-the-art enabling tools, implement the appropriate methodology, and provide reliability expertise to prolong the productive lifespan of mission-critical capital assets. We start with a feasibility study, normally conducted at our expense, to develop the value proposition. Given a strong business case, any ensuing engagement will typically generate an attractive return on invested capital. Just ask our clients.
8 An Invitation If you d like to learn more about our asset management capabilities and how they can be used to optimize your company s performance, please call us at (800) or visit our web site at USC Consulting Group, LP APMBR0610