VALUE
Assets, physical or otherwise, are the source of income for the company. Any asset should provide value to the company and associated stakeholders. It is important to make this distinction early; the focus of asset management is not the asset, but rather the value of the asset to the organization. Figure 1-7 is reprinted here to drive this last point home.
Figure 1-7 The result is profit (reprinted)
To make the asset-to-value connection, participants in ISO 55000 are required to present a clear statement aligning the organizational objectives with the asset management objectives. What are your organizational objectives? Have they been communicated to you? This will become a significantly important phrase. List your organizational objectives here:
Additionally, a life cycle management approach must be used to identify when and to what degree the assets will demonstrate the value that is anticipated. Remember, the life cycle of an asset doesn’t end when it is no longer useful to your organization. The asset may have life and value at another facility. The term used to describe the asset’s time of use in your facility is its asset life.
In terms of life cycle, or stages of its life cycle, ISO 55000 makes it clear that the organization must be conscious of the need for the asset, and the performance of the asset over the different levels (read that as ‘evolutions’) of its time in the organization. Furthermore, there has to be some analytical study of its performance and status during those stages of its life cycle. In other words, your organization has to have the metrics or Key Performance Indicators (KPIs) in place to determine if the asset performance is returning value.
Can you list three asset performance metrics used at your company that demonstrate value-to-performance? List those here:
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I can think of a few that might be helpful to consider:
■ Cost of goods sold
■ Conversion costs
■ Maintenance as a percentage of total Replacement Asset Value (RAV)
■ Total Effective Equipment Performance (TEEP)
The formula for TEEP is:
Utilization Time % x Availability % x Performance Efficiency % x Quality Rate %
It is essentially Overall Equipment Effectiveness (OEE) with the Utilization value added.
The description of the ‘value’ term concludes with a notice of the requirement to establish the decision-making criteria to be used. This decision-making process must reflect the stakeholder’s needs and define the value of the decision being made. It will be interesting to note in the follow-on standards that ‘stakeholder’ refers to: customers, government regulatory agencies, and others who have a concern for the proper function of your organization’s assets. This includes the employees of an organization. It is not overly common in the United States to ask the customer what they think of your asset management plan. Their input is not generally sought, but customers always seem to be the victim of whatever asset strategy the company comes up with.
The phrase or idea of a decision-making criteria is a new one to most folks; certainly it may be to your hourly employees. Has it ever been your experience that a decision is made at the top of an organization and those left to enact the decision are left to wonder why (or how) that decision was possibly made? In the few lines provided, explain how physical asset-related decisions are made at your location. What is the decision-making criteria?
ALIGNMENT
If you’ve taken any of my classes, you have no doubt heard me say that the maintenance and reliability objectives, and now asset management objectives, should not be tangential, perpendicular, or parallel to the organizations’ objectives. They have to be congruent and right on top of the organizational objectives. Anything different leads to competing priorities.
Alignment is an interesting concept and if you play out the thought, you’d most likely conclude that from time to time, things need to be brought back into ‘alignment.’ How that is done is the real question. The asset management standards suggest that any decision on how to align and how much to align is based on data (or information), risk assessments, and what is called a decision-making process or criteria. What is key here is that the alignment is made towards what the standards call the organizational objectives. This is perhaps the most referenced phrase in all three standards. Burn this idea into your brain because it’s that important: organizational objectives.
Presumably this effort to align the asset management objectives with organizational objectives is supported by a locally designed and implemented supporting asset management system. The specification for such a support system should work to ensure that all the activities for asset management are in line with where the company is heading.
LEADERSHIP
It is not only leadership that is required to make asset management a part of the culture of the organization, but commitment. It is the commitment from the organizational leaders that is essential to improving asset management within the organization.
This fundamental section lays out the necessity of clearly defined roles and responsibilities along with a mandate that employees be competent and empowered. Once again, the term ‘stakeholders’ is mentioned in conjunction with employees, spelling out a need to consult with them regarding asset management.
Consider again the subjective terms competent and empowered. How exactly would you prove that your employees are competent and empowered? In the space provided, list several ways your organization ensures that its associates are competent and in what ways the company works to empower them:
ASSURANCE
ISO 55000 has an honorable intent, which is simply that the asset will do what it was purposed to do. If you will excuse the forced comparison, this definition is very close to Ramesh Gulati’s textbook definition of reliability: “The probability that an asset will perform its intended functions for a specific period of time under stated conditions.” (p. 53)
Asset Management vs. Asset Management System
Asset management has within its sphere the asset management system. The Venn diagram in Figure 2-2 shows this relationship.
Fortunately (yet vaguely), ISO 55000 gives us some insight into their definition of what asset management might be: generally, that all agencies of an organization will work to capture the value of an asset. Now, that’s paraphrasing the standard, but in essence, the value that assets bring to a company is a result of all the work accomplished by all the people in the company. As a result, everyone ought to be pulling in the direction of ensuring that the asset will perform according to the plan, and that the value will be recognized, just as planned. This is a purposefully broad definition and gives companies an opportunity to establish the details for themselves. I believe it is helpful to think of asset management as “how do we intend to use this