How does asset management create a sustainable competitive edge?
Stephan Kornelius: Strategy and Business Development Manager, Pragma
Stefan Swanepoel: EAMS Product Manager
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 curveball 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. Change is a given that must be planned for. With the fourth industrial revolution, change is thrust upon organisations much faster than in the past.
Sustainability comes from having systemic disciplines that make it straightforward for any company to respond to any event without it being a crisis. Systemic disciplines come from having an enterprise asset management plan in place. A plan that enables rapid response to change without incurring excessive risk by ensuring that the appropriate processes, supporting technologies and skilled people are in place.
Getting there is a journey through which processes, technologies and people skills grow in maturity – at Pragma, we call it the Enterprise Asset Management Roadmap.
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.
Part of this phase includes establishing suitable technology platforms that are well integrated and flexible enough to adapt to changing processes. Sticking to the previous example, if the retailer wanted to reduce overall downtime and repair quality related to fridge failure, they’d require suitable integrated platforms to transform their processes to be more efficient. An IIoT platform integrated with their enterprise asset management system would allow them to collect sensor data from all their fridges. This data would then be processed and used to initiate job cards and drive completion of the repair work. To ensure that the quality of such repair work, a dedicated field service engineer should then receive alerts to check that the work occurred and was completed on spec. To do this, the engineer requires the information and real-time performance data from the fridge while on site.
Attempts are often made to address such requirements through quick-fix, ad-hoc implementations, which often turns out to be someone’s pet project. Without mature, flexible and well-integrated platforms, this approach requires expensive custom development to implement in a sustainable manner.
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.
Performing technical analysis requires data that adequately describes the reliability problem and the appropriate tools to perform the analysis.
This could partially be achieved by manually collecting data and lengthy Excel number crunching exercises. But, performing high-quality analysis to prevent failures requires comprehensive datasets and the appropriate tools. When a suitable analytics platform integrates with an EAMS, IIoT and other platforms, it can be used successfully to supplement human intelligence and problem-solving skills. Industry 4.0 is all about eliminating process inefficiencies. Soon relying on slow, disconnected technical analysis processes will no longer be good enough.
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 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.
Data is fast becoming an invaluable asset to organisations. The increased availability and accuracy of asset-related data help improve our decision making, policy formulation, strategy selection and reporting activities. It adds significant value to the reliability engineering and enterprise asset management processes. Better yet, when taking advantage of increased data availability from well-integrated technology platforms, Artificial Intelligence (AI) can be used to analyse and make some decisions on your behalf. It frees up human intellect to focus on problem-solving that requires innovation and creativity – something that cannot yet be automated.
Capitalising on the incredible progress in technology to mature your organisation’s enterprise asset management now, will play a critical role safeguarding your competitive edge and keeping you ahead of the pack in future. The tools are available – but has to be used.