Stephan Kornelius: Strategy and Business Development Manager, Pragma
Making sure a business is sustainable is a concern all executives should share – after all, you don’t want your operation to curl up and die two years into your five-year plan. But what exactly do we mean by sustainability? In the context of this article we’ll talk about a sustainable competitive edge being the advantage a company has because their asset management systems and processes are appropriately sophisticated and entrenched for any challenge or change in their operating environment to be met with agility and responsiveness. It’s this agility and responsiveness that can keep your company alive even at the most difficult times in your industry.
Being responsive to a changing environment means not just fighting fires, addressing problems in your operating environment as they arise. It means having a system in place that can continuously assess and adapt to what could happen in the future.
Let’s take the example of a company that manufactures aluminium beverage cans. They build their plant to be extremely efficient. Aluminium stock is imported from Europe and it’s expensive. There can be no waste, and plant productivity, quality and accuracy must be very high. The entire plant is designed to produce a single product – a fixed-format can that their clients want. All goals are met but then the environment changes – there’s a curve ball in the form of the government introducing sugar tax. Suddenly large cans are obsolete and clients want slimmer cans. The entire manufacturing operation must change in order to adapt to a new format.
There’s an entire value chain in a company that needs to be prepared to respond to an event like this. It starts with the team that needs to be aware of market demand, through to the team that assesses production impact, through to the engineering team that has to look after, sustain and make engineering decisions on the asset base, and even all the way back to the supply chain and procurement team. What ends up ultimately being a balance sheet and cashflow decision has to be informed by a variety of considerations in the chain, and it has to balance cost, performance and risk. But it cannot be a knee-jerk response. That’s crisis management and it can work for a while, but it won’t give a company a sustainable competitive edge.
So, sustainability comes from having systemic disciplines that make it straightforward for any company to respond to any event without it being a crisis. And systemic disciplines come from having an enterprise asset management plan in place.
Getting there is a journey – at Pragma we call it the Enterprise Asset Management Roadmap – and it has three levels.
Putting the basics in place
Level 1 of the roadmap covers the fundamentals of maintenance management where the focus is on basic process discipline. Process discipline includes things like creating and maintaining an asset register, health and safety compliance, focused contractor management and spare parts administration. The processes that govern each aspect of maintenance management need to be standardised and systemic. A good example of process control comes from a major national food retailer. They have more than 1000 stores in the country, each with fridges for fresh produce. If each store sources a contractor to repair the refrigeration equipment, the contractor rates, quality and responsiveness vary widely. When the company standardised contractor SLAs and rates they not only saved millions of rands a year but had a standard process to follow when a fridge breaks down.
Zero unplanned stops
In the second level of the roadmap we move into reliability engineering. Here we do the technical analysis and planning that will improve equipment performance and related decision making. The result of this level is zero unplanned stops because we investigate the causes of equipment failure and eliminate them instead of repeatedly dealing with the consequences of equipment failure.
The third and final level of the roadmap takes us into true enterprise asset management. At Pragma, we have developed principles and processes that will help any type of organisation to build enterprise asset management competence. It’s when companies achieve the outcomes on this level that they gain a sustainable competitive edge. Here, companies implement and consolidate all the main compliance, management and development ‘biggies’ such as risk (environmental and safety), asset life cycle cost, and the use of true business partnerships. At this level, all skills are in place, reporting is fully operational and compliant, and capital allocation and decision making about life cycle costs is done properly. A company that has attained this maturity level will have every piece of information at their fingertips and every structure and system in place that is necessary to be agile and responsive to a changing environment.
Using technology to full advantage
In all three levels of the Enterprise Asset Management Roadmap, the fourth industrial revolution adds a significant layer of value. Thanks to the Industrial Internet of Things (IIoT) we can now be ‘smarter because of data’. Sensor technology and analytics enable us to figure out the precursors to asset failure – these could be things like number of hours in use or the levels of other critical operating parameters associated with potential failure such as temperature and vibration. With information like this giving us an early warning we will interfere less with equipment, therefore minimising the risk of things going wrong. It will also improve the efficiency of our planning and work execution.
The IIoT also helps with process digitisation, and this is most relevant in the first level of our roadmap. In basic maintenance management we can apply technology to automate processes. The process will stay the same, but with technology we can make it more efficient. For example, at our Pragma head office, we’ve digitised fault reporting with QR codes that can be scanned into an app. An employee reporting a fault can do so in a matter of seconds without touching a PC or making a phone call. The result is the same – the fault is logged and a job card created – but steps have been removed, making the process an enormous time and cost saver.
The increased availability and accuracy of asset related data also helps improve our decision making, policy formulation, strategy selection and reporting activities, adding significant value to the reliability engineering and enterprise asset management processes.
Capitalising on the incredible progress in technology and marrying this with mature enterprise asset management will really be the combination that keeps organisations alive and ahead of the pack in the future. The tools are at our disposal – they just have to be used.
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