If your organization calculates return on fixed assets, you should be aware of the impact maintenance has on that indicator. The investment a company makes in its assets often is measured against the profits the company generates. This measure is called return on fixed assets (ROFA). This indicator is often used in strategic planning when a company picks what facility to occupy or the plant in which to produce a product. Asset management focuses on achieving the lowest total life-cycle cost to produce a product or provide a service. The goal is to have a higher ROFA than your competitor, so as to be the low-cost producer of a product or service. A company in this position attracts customers and ensures greater market share. Also, a higher ROFA will attract investors to a company, ensuring a sound financial base on which to build further business.
When we are making an investment in any type of improvement program, there is usually a return on investment calculation that is provided to executive management to secure the funding for the project. The investment is usually straightforward to calculate – but what about the return?
Since I started in the maintenance field in the late 1960’s, maintenance has always been viewed as a necessary evil, an overhead, or expense function. Organizations have never learned to view maintenance as an “profit center”. This was true even though systems engineering courses taught that maintenance was necessary and the maintenance cost was specified in the design and installation of the equipment. Despite the overwhelming evidence that properly controlling maintenance costs could contribute to profitability, companies never viewed it as such. It is my hope that companies continue to explore this area for increased financial contributions to their profitability. Perhaps the total life cycle approach to managing assets as part of ISO-55000 may help companies start this journey.
“Earlier this year, Fluor opened a skilled craft training center in the Gulf Coast, stating that while the firm could not train its way out of the shortage, it hopes to alleviate the problem”. Increased training is a partial answer. However, in most skilled trades disciplines, it takes a minimum of four years to achieve a journeyman status. In some technical skills, the apprenticeship can take up to 6 years. Hence the quote “the firm could not train its way out of the shortage”.
In a recent Reuters news article “U.S. refiners face severe labor shortage for deferred maintenance” it was stated that US refiners have deferred routine work for the last two years while margins were high. However, now with an excess of global fuels, the refiners see an opportunity to undertake their maintenance shutdowns. However, there are multiple billion dollar projects that are competing for the skilled labor workforce. If the refiners do not start the needed work, the article points out that they run the risk of more unscheduled outages and safety issues. So with this in mind, US refiners are planning to spend $1.26B on planned maintenance in 2017. The article points out that refiners are going to have trouble finding skilled workers which is going to “complicate scheduling and even extend outages”.
Have we ever thought about career paths for reliability/ maintenance managers? How much does our executive management’s perception of us steer us toward a certain career path? How often are reliability/ maintenance managers perceived as technical wizards and their career path is to the top level of their department and it is at a “dead end”...
To understand how these four reasons impact asset management, we first need to understand why the EAM system is important to asset management. (For the sake of this blog, we will focus on physical assets.) In the ISO-55000 document, section 2.4.1 mentions the need for analytical approaches across the life cycle of the asset. The life cycle of an asset begins with the conception of the need for the asset through to the disposal of the asset...
“The past is the future; the future is the past: it all gives me a headache.”—This quote is taken from a Star Trek Voyager episode. Consider how Captain Janeway could apply this to reliability/ maintenance managers today. Consider this: How many “new” processes and procedures actually have been created in the area of maintenance and reliability in the last few years? Are the latest “buzzwords” simply new names for processes and procedures that have existed for decades? ..
Preventing human error will exist in at least two areas. The first to be considered is operations. If a piece of equipment is observed to be mis-operated, what really is the cause of the mis-operation?