Understanding the “Impact” Cost of Reliability and Maintenance – A Terry Wireman Blog

 

Understanding the “Impact” Cost of Reliability and Maintenance

 

In previous blogs, I have discussed the cost of inefficient maintenance practices and the impact they have on a company’s expenses. In this blog, the focus will change from maintenance costs to what I refer to as “The Impact Cost of Reliability and Maintenance”.

When considering the impact costs, consider this scenario: A production plant in a sold out condition. Everything that can possibly be manufactured is being sold to customer. If a production line or critical piece of equipment fails (unreliability) during the production run, the production is halted until the equipment is repaired and returned to service (reactive maintenance).

What did the production disruption cost the company? Was it the total lost sales dollars or was it only the profit that was lost? First consider the difference between lost sales revenue and lost profits. Profit is usually calculated by taking total income (sales) and subtracting total expenses (salaries, energy, etc.) and what is left are the profits. If the production disruption reduces the total income by lowering the possible sales volume, then lost sales would have to be a factor in calculating the impact of the production disruption. This reduces the numerator in the impact calculation.

At the same time, the expenses may also be increased during the production disruption. There may be overtime for the maintenance technicians making the repair and there could be product loss in quality or quantity (particularly in a continuous process operation). These increased expenses impact the denominator in the impact calculation.

While this may seem simplistic, very few organizations consider all of the parameters when considering the cost of lost production. Visualizing the problem becomes more clouded when a plant is not in a sold out condition. Now the impact on lost sales revenue becomes a matter of debate among managers (especially financial managers). Can the lost production be made up and still meet the customer delivery in a timely manner? If the answer is “Yes”, then the sales volume may not be impacted. However, the profit component of the calculation will still be impacted, since expenses will be increased to make up the production. This is true since the equipment will now have to be operated when it was scheduled to be shut down. So there will be increased labor costs (usually at an overtime rate) and increased energy costs. There is a possible increase in raw material costs, since the supply chain demand will fluctuate. So again, the true profits of a company will be impacted negatively.

There is yet another scenario: What if the company has an extra line or excess capacity? Can the production crew be moved over to the spare line and run the product without any impact on profit? Possibly, but this line of reasoning leads to a much larger problem: A poor financial standing with investors. Why? Simply stated – profits are only part of the picture.

A higher level indicator used to evaluate companies today is Return on Invested Capital (ROIC). This indicator is utilized in Industry Weeks Best Plants program ROIC is – in its simplest form – the profits a company generates versus the invested capital that is being used to generate the profit. A quick analysis of this calculation would show that a company that uses fewer assets to produce the same profits as a competitor would be viewed as a better investment by Wall Street. So back to our position at the start of this blog – Would assets that are more reliable (higher output) and have a lower cost to maintain (lower life cycle cost) be more valuable to a company? The answer would clearly be “Yes”. The impact cost in the form of fewer assets and increased profits (ROIC) would make the company a much more attractive investment for the financial community.

How much of an impact does your reliability/ maintenance organization have on your company’s assets that are utilized produce its product? This is the TRUE impact cost that companies must focus on to maintain a competitive edge.

 

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Understanding the “Impact” Cost of Reliability and Maintenance – A Terry Wireman Blog 2017-07-21T20:02:17+00:00

Return on Investment – People or Technology?

 

Return on Investment – People or Technology?

 

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?
What produces the return on the investment? Is it a direct reduction in cost? It could be, if for example, it was an investment is some technology that directly reduced energy costs. However, what about a new CMMS/EAM system? Is calculating the return on that investment as clear? You would only have to review surveys such as conducted by ReliabilityWeb to get your answer. The majority of companies feel they never realized the projected return on investment for their CMMS/EAM systems. Why is this the case?

It is because the CMMS/ EAM system requires changes in behaviors, both from the organization and employees if it is to produce a return on investment. For example, a typical part of the ROI on a CMMS/EAM system is increased labor productivity for the maintenance technicians. However, if the organization continues to be reactive, does not implement and execute a preventive maintenance program, does not implement good planning and scheduling processes, then nothing really changes. No savings is realized, since the organizational behavior did not change.

Just purchasing technology does not produce a return on investment. Unless organizational processes are developed and enforce and the people in the organization change their behaviors to conform to the new processes, we only have the investment – not the return.

So if we are going to have a return on investment for technology in maintenance and reliability, we need to focus on helping the people in the organization change their work processes to fully utilize the technology. If the technology is the investment, then the people provide us the return on that investment.

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Return on Investment – People or Technology? 2017-06-13T18:03:47+00:00

Terry Wireman – A Retirement Retrospective

 A Retirement Retrospective by Terry Wireman

One dictionary defines retrospective as a contemplative view of the past…

That definition is appropriate, since this is my last blog, as I am riding off into retirement on June 2, 2017.  As I take a few minutes and look at the past, there are several topics related to the maintenance/ reliability community I would like to address one last time.

  1. Maintenance as a Business

  2. Maintenance/ Reliability Leadership

  3. CMMS/ EAM Functionality vs. Business Processes

  4. ISO-55000

Maintenance as a Business

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.

Maintenance/ Reliability Leadership

This is the second area that needs attention in the majority of organizations today.  It is still a common belief that competent technical personnel can be promoted into a leadership role and they will instantly be good at it.  This is quite simply not true.  For example, what is your organization’s annual maintenance budget?  $5M, $10M, $25M?  Even More?  Let’s choose $20M.  Would you set up a business with revenues of $20M per year and interview for the “C” level positions, requiring a reliability/ maintenance background for the applicants.  Ludicrous, is it not?  Yet many companies have this size budget (most even larger) and they promote a maintenance supervisor, engineer, or planner into the leadership position with no business education.  I am not advocating that all maintenance/ reliability leadership have an MBA (although I know some who do and it truly helps them), but to place them in such a key position with ZERO business training does not make good sense.  Perhaps a changed perspective on the qualifications of a good maintenance/ reliability leader will help to mitigate this problem.   This change of perspective is already occurring with the Certified Reliability Leader (C.R.L.) certification.  Perhaps other certifications will add this leadership requirement and move maintenance/ reliability leadership forward.

CMMS/ EAM Functionality vs. Business Processes

This may seem like a strange topic to address; however, it has been a difficult issue for decades.  I worked on my first CMMS implementation in the 1970’s as an end user.  It was a reasonably successful implementation, with data accuracy high enough that payroll for the maintenance technicians was paid from the work order system.  Yet companies today still struggle with the CMMS/ EAM system utilization, with most studies showing a 50% or less success rate.  Many organizations do not trust their data to the point where they believe analysis such as MTBF or MTTR when produced by their system.  Why is this the case?  Is it the software?  Or is it something else?  Having attended literally hundreds of conferences in my career, I can tell you it is not the software.  Pick any major EAM software vendor in the market today, such as SAP, Maximo, Oracle, Infor, etc. You can attend their user conference and find very positive examples of companies fully utilizing the software.  To the point that you wonder how they can do it and you, with the same software are not producing 50% of the results that they have achieved.

Having spent the last 11 years of my career at Vesta, who specializes in SAP implementation and utilization, I can tell you it is not the software.  I have watch some of my colleagues at Vesta work virtual “magic” with the functionality in SAP.   Yet most organizations fail to fully utilize it.  Why?  It is because they fail to set up and execute their maintenance/ reliability business processes.  One of my favorite authors Erik Brynjolfsson – highlights this problem in many of his texts.   While, not dealing with maintenance/ reliability specifically, his studies have shown that properly executing any business process is key to having a successful, profitable business.   If the functionality exists in an EAM system, yet we do not enable it through supportive business processes, how can we ever expect to achieve a return on investment for the purchase and implementation of the software system?   Perhaps organizations will finally overcome the lack of EAM system utilization by focusing on improving their business processing in the future.

ISO 55000

The asset management standard.  The ISO organization commissioned a group to begin work on the ISO-55000 standard in 2011 and it was finally published in 2014.  This standard focused on a management system for assets.  Without repeating much of the standard, let’s just say that it was difficult for the various committees to stay focused on the Management System part of the standard.  However, once the standard was published, most accepted that if it was implemented correctly, it would help organizations achieve more value from their assets.

There was a struggle to define assets; and to different businesses, assets meant different things.  For example, in industry, an asset often meant a piece of equipment.  In a government institution, it could often mean something as simple as a chair.   One term to me that always helped to put asset management in perspective was “managing the asset for its life cycle”.  The term “life cycle” produced countless debates among the various committees.  While I may have been narrow minded, one text that helped me understand asset management in the context of life cycle was the texts by Professor Benjamin S. Blanchard.  In his writings, Professor Blanchard demystifies asset management by putting it in the context of systems engineering.  His texts on systems engineering were biblical before we really understood what asset management was as a process.

As asset management becomes more and more a driving force in how organizations manage their assets, it is hoped that they will learn from some of the system engineering writings, which should help them shorten the time it takes to realize their return on investment on an asset management initiative.

Conclusion

It would take many more pages of text if I were to list everyone that has played a part in making my career enjoyable.  Just let it suffice to say that in the maintenance/ reliability, and asset management communities, there are many skilled professionals willing to share their expertise and help others to have successful careers.  At the end of the day, through my lectures or writings, I hope that many of you are currently having successful careers –  now and will continue to do so in the future.  I hope that I have contributed to the body of knowledge that our predecessors began developing and have helped provide a foundation for additional improvements of the maintenance/ reliability/ asset management processes into the future.  As I leave for retirement – I wish you all the best in the future.

Sincerely,

Terry Wireman

As Terry Wireman departs Vesta, we invite you to join our newsletter subscription to stay connected to his thoughts and commentary on industry topics. Be sure to visit our site for his bi-weekly blogs which will continue for many more months to come.

To subscribe to our blog click here now. 

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Terry Wireman – A Retirement Retrospective 2017-06-05T14:41:29+00:00

Is the Internet of Things (IoT) the Answer?

Is the Internet of Things (IoT) the Answer?

While our last few blogs focused more on problems that the lack of expertise in the skilled trades is causing us; in this blog, we would like to try to find some solutions.  We will start by considering the Internet of things.  IoT is a scenario in which objects, animals, or people are provided with unique identifiers and the ability to transfer data over a network without requiring human to human or human to computer interaction.  IoT has evolved from the convergence of wireless technologies, micro electromechanical systems, and the internet.

A “thing” in the Internet of Things can be a heart monitor implant, a wild animal with a bio chip transponder, an automobile that has built in sensors to alert the driver when tire pressure is low, or any other man made or natural object that can be assigned an IP address and can transfer data over a network.  So far, the Internet of things has been most closely associated with machine to machine (M2M) communication in manufacturing and in power, oil, and gas utilities.  Products that are built with machine to machine (M2M) communication capabilities are often referred to as being smart machines.

The Internet of things revolves around increased machine to machine communication.  It is mobile, it is virtual, and it provides instantaneous connections.  It is going to make everything in our lives from street lights to seaports smart.  In fact, Daniel Burrus, in “Wired”, November 2014, said “There is no one sector where the Internet of things is making the biggest impact – it will disrupt every industry imaginable.”

The real value that the Internet of things creates is at the intersection of gathering data and leveraging data.  All the information gathered by all the sensors in the world isn’t worth very much if there isn’t an infrastructure in place to analyze and utilize it in real time.

Here’s where the problem comes in.  How do we analyze the data that is coming in from various sensors to a central location and make sense of it?  What is it telling us to do?  This is where companies must leverage the knowledge of their aging workforce before it is lost.  If we can build “rules engines” that tell us the “if this –  then that” scenarios, we can fully utilize the data.  If this analysis structure can be built, then when information is captured, then it is not only telling us what the condition is, but how to correct it.

Where is the information to build this “rules engine” database stored?  There are at least three locations.  They are:

  1. In the brains of our skilled trade employees
  2. In our existing work management systems
  3. In our equipment/ asset design documentation

Based on our last blogs, (1) we must move quickly to capture the knowledge of our skilled trades employees before they retire.  (2) Our existing work management systems can be utilized: however most have inaccurate or incomplete data.  (3) Our equipment or asset design documentation is quite often lacking because someone failed to negotiate its inclusion in the transaction when the equipment was purchased.

So, while the solutions to gathering knowledge appear to be simple, the sources are truly complex.  It is only when an organization takes a true asset management focus will they be able to leverage the value that can be provided by the Internet of Things.

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Is the Internet of Things (IoT) the Answer? 2017-07-20T15:26:41+00:00

Vesta Partners, Exhibiting at Asset Management Ecosystem (AME) in Las Vegas

Vesta Partners, Exhibiting at Asset Management Ecosystem (AME) in Las Vegas

Vesta Partners is proud to announce our participation at the first ever Asset Management Ecosystem conference in Las Vegas, Nevada on March 27-30, 2017! The Asset Management Ecosystem conference is an alliance of many organizations from all asset intensive industries to discuss, debate, present and learn from others about why holistic asset management is a critical aspect of business transformation.

This is a thought-leadership forum for organizations and practitioners to share experiences peer-to-peer, and learn from others about the successes and shortfalls of developing a world-class asset management initiative. The focus is on the people, process, strategy, methodology and the culture side of the equation, not just the technology. All asset stakeholders are involved in these discussions including c-suite decision makers, business leaders from HR, procurement, operations, production, engineering, IT, reliability, and maintenance.

Vesta Partners, Nick Cecil will be presenting a session at this year’s conference called “Escaping the Planning & Scheduling Cycle of Despair”. In this presentation, Cecil will discuss the importance of the process, the importance of quality inputs and outputs, what a well-planned job looks like, scheduling requirements, who’s responsible and considerations that should be taken when measuring the performance of these processes from a best in class perspective.

Vesta’s Terry Wireman will be closing the conference with his keynote presentation, “Are We There Yet?”. This presentation will cover the past, present, and future of maintenance, reliability, and asset management and their impacts on the asset management ecosystem.

Join #AMEcosystem community today! Click here for information and be part of the discussion.

Already registered? Stop by booth #19 and see how Vesta Partners can help solve your asset management needs.

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Vesta Partners, Exhibiting at Asset Management Ecosystem (AME) in Las Vegas 2017-04-25T18:07:52+00:00

We were Warned – Proposed Solutions…

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We were Warned – Proposed Solutions…

In our last blog, I referenced the Reuters news article “U.S. refiners face severe labor shortage for deferred maintenance” (1/2/17 – by Jarrett Renshaw).  In this article and others, the current skilled labor shortage was highlighted.  However, we also promised some solutions in this blog.  What are they?

Let’s go back to the Reuters article again.  In the article, this quote was also found:

“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”.  However, as a tradesperson begins their training, they become more and more skilled each year, so in year two, the apprentice becomes more capable, and in year three even more so, etc.  So, if we started training right now, the problem will be eventually eliminated.  Or so it looks on paper.

However, this approach overlooks the second part of the problem.  How do we overcome the headcount shortage when our retiring labor resources exceed our incoming apprentice resources?  How do we raise the number of individuals that “sign up” for skilled trades apprenticeships each year?  The answer to that question is simply it must start in middle or high school.

It is during that time that we must interest the student in what a skilled trades future holds for them.  One of the best ways to do this is to enroll them in shop class.  Oh – wait a minute!!  Most school boards have eliminated shop class from their school curriculum. In fact, how many high school guidance counselors do you know that recommend that a student choose a path to the skilled trades?  Even Germany, who used to be the bastion for skilled trades apprenticeships, cannot fill the apprenticeship openings in their country.

Let’s not even start on the income potential for a skilled tradesperson vs. the student debt required to earn a degree.  I have already covered that in detail in a previous blog.

So, the major hurdle here is PERCEPTION.  When will we start realizing that a skilled tradesperson is truly a Gold Collar Worker? (see our last blog for this point).  When is the skilled trades profession considered to be an acceptable career, so that parents, guidance counselors, etc. will encourage their teenagers to sign up for an apprenticeship?  We really need to change our perceptions otherwise our industrial future appears rather bleak.

With this in mind, are there some ways to speed up the resolution to this problem?  Are there technologies that could shortcut the learning process that will accelerate the progression of individuals into the skilled trades?

We hear a lot about the Internet of Things (IoT).  Is there some potential help there?  We will explore that in our next blog.

Join my upcoming webinar “The Good,The Bad, The ISO55000” to learn more about the international asset management standard – ISO55000. This presentation will holistically examine issues regarding ISO55000; since they all impact one another. In addition, it will look into the future and see if these topics will be good, bad, or indifferent to businesses. Click here to reserve your webinar spot on February 28th!

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We were Warned – Proposed Solutions… 2017-02-07T18:57:29+00:00

We Were Warned…

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We were Warned…

Warned about what?  About this…

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”.

How bad will this shortage be?  From Brownsville, TX to New Orleans it is estimated the refiners will be short 37,400 craftsmen needed to complete all the planned capital projects in 2017.  The area impacted the most is Lake Charles, LA where there will be a shortage of over 18,000 workers in 2017. In Baytown, TX labor costs are projected to drive up a project’s cost by 10% from previous expectations.   In fact, 74% of Texas contractors are having trouble filling hourly craft positions.  Over 60% of the survey respondents said they had to bump up salaries to attract more skilled craft workers.

How could this happen? When did we first know about it?   Did this problem develop overnight?  No, it did not.  In 2001, Harvard Business Review published an article “Cultivating the Gold Collar Worker”.  In this article, it warned that our educational systems were “unhinged from the needs of the business world”.  The article continued (about the educational system) “it Fails to prepare students in the primary and secondary grades for 21st century work”.

But the educational system is not the only culprit.  The article continued with a second problem – our perception that you are either a blue collar or white collar worker.  It highlighted the fact that companies today are ignoring a new class of knowledge worker – The Gold Collar Worker.  This is a highly skilled employee who combines the mind of a white-collar worker with the hands of a blue-collar employee.

Skilled trade technicians fall into this new class of workers.  If you do not believe this is true, reference the previous quote dealing with how contractors are acquiring these employees – by “bumping up the salaries”.

One additional reference is “The 2010 Meltdown”.  The material in this text continues the theme of skill shortages.  In this text, the author contends that the year 2010 was the tipping point, where the skill trades shortage would become sever due to the lack of new applicants and the departure of many of the older, highly skilled “baby boomers”.  The only thing that stopped this prediction from occurring by 2010 was the recession, which delayed the retirement of many of the skilled “baby boomers”. However, that time has now passed and most of the “baby-boomers” have recovered their finances to the point that they can retire in the very near term.  In fact, a recent Bloomberg article by Luke Kawa, said that the number of Americans 65 and over rose by over 800,000 in Q-4 of 2016.  He made the additional comment “the secular trend of retirements can only be delayed for so long”.

We have known for over 15 years that industry (worldwide) was facing an eventual skilled labor shortage and we did nothing.  The positive part about the labor shortage is we will solve the problem in the next decade or we will see the industrial age (as we know it) end.

Where do we start?  The next blog will present some ideas.

Join my upcoming webinar “The Good,The Bad, The ISO55000” to learn more about the international asset management standard – ISO55000. This presentation will holistically examine issues regarding ISO55000; since they all impact one another.  In addition, it will look into the future and see if these topics will be good, bad, or indifferent to businesses. Click here to reserve your webinar spot on February 28th!

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We Were Warned… 2017-02-03T20:39:00+00:00

Perception IS Reality – a Terry Wireman blog

Perception  IS Reality – a Terry Wireman blog

In his book “The Real Truth about Success” Garrison Wynn says this:

“You must be willing to get real about how you are viewed by others, accept how they see you, and get past how you want them to see you.  Perhaps some people can effectively change the way others perceive them, but it is much easier, much more realistic and effective, to understand how you are viewed and find a way to make it work for you.  We have to understand what other people see when they see us.”

So, that leads to the question, …

…“What does our company’s executive management see when they see us?”  Do they see a technical wizard?  Do they see a great engineer with marginal interpersonal skills but with no real business management vision?  Do they see a great financial manager, a person who always has all their budget numbers right on target with no interpersonal skills?

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”.

Not that there is anything wrong with that from a career perspective – many individuals can have a financially and personally rewarding career in that position.  However, how often do we see a plant manager evolve from the reliability/ maintenance leadership position?  While it does occasionally happen, it is unusual to see.  Is perception reality for senior executives making these decisions?

What if we have a hybrid individual that has a degree in engineering, but never developed the interpersonal skill necessary to be a leader.  Does this perhaps lead the individual to a career path in engineering, becoming a great design or project engineer?  There is nothing wrong with setting that as a career path.  But again, how often do we see strong technical people chosen for a leadership role in the organization, when they don’t have strong leadership skills?  Is perception reality for senior executives making these decisions?

Finally – why are we discussing this subject?  For two reasons.  The first is many of our current reliability/ maintenance/ asset management leaders are nearing (if they are not there already) retirement age.  Who will (a) fill their current roles? And (b) move into leadership roles that are being created in other parts of the organization (operations, engineering, division or corporate level)?

Secondly, what about the asset manager’s role?  As more and more companies move toward ISO-55000 or an asset focus business strategy, who will take that leadership position in their organization?  Should it be accounting? Operations? Supply Chain? Or Reliability/ Maintenance?

Your company’s perception could soon become YOUR reality.

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Perception IS Reality – a Terry Wireman blog 2017-01-25T13:29:18+00:00

Somewhere in Time – Part 2 – A Terry Wireman blog

Somewhere in Time – Part 2

In our last blog, we discussed the reasons for failures of CMMS/ EAM systems to produce the results for which they were purchased.  In this blog, I would like to take a different focus –The impact a CMMS/ EAM system has on Asset Management.  How are the two interrelated?  Consider (from the previous blog) the common reasons CMMS/ EAM systems fail:

  1. Lack of management support (55002 – 5.1)
  2. Lack of business processes to support the system (55002- 5.3)
  3. Insufficient implementation resources (55002 – 7.1)
  4. Insufficient staff to properly utilize the system (55002-7.5)

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 conception of the need for the asset implies that there is a business need and the purchase of the asset will add value to the organization.  It could be that there is a market demand for a product we are producing and our current asset base cannot meet the demand.  It could also be that the assets we current have are aging and are no longer capable of meeting the existing market demand.  A third reason may be that the business processes for the life cycle activities of the asset are inefficient and ineffective, resulting in excessive maintenance, repair and refurbishment expenditures.  (The ISO sections are mapped to this list)

For the sake of the brevity of this blog, let’s focus on the second item: the business processes for the life cycle activities of the asset are inefficient and ineffective, resulting in excessive maintenance, repair and refurbishment expenditures.  Various publications state that up to 95% of the life cycle costs of a physical asset are incurred in the operational and maintenance phase of a physical asset’s life cycle activities.  An organization’s failure to allow inefficient and ineffective operational and maintenance procedures to exist will have a negative impact on the value that the physical asset will provide the organization.   This indicates there is a significant financial impact that reliability/ maintenance policies and practices can have on the cost to manage an asset or asset portfolio.

Now continuing this line, what is likely to happen to the organization’s maintenance expenditures if there are poor business processes in place when a CMMS/EAM system is implemented?  Don’t these poor practices become “institutionalized” locking in higher than necessary maintenance and repair costs?  Consider the impact that a reactive reliability/ maintenance organization can have on maintenance and repair costs.

A reactive reliability/ maintenance organization will have a “hands-on” time of about 20%.  A proactive organization with good planning and scheduling processes may achieve 60%.  This basically triples the amount of reliability/ maintenance activities that they perform: ultimately lowering the reliability/ maintenance expenditures necessary for the asset to achieve the business goals it was purchased to achieve.

This is only one example of how CMMS/ EAM systems are needed to support Asset Management and how improper CMMS/ EAM system implementations can impact asset management. We could list many additional examples. However, if organizations don’t have CMMS/ EAM systems implemented correctly, delivering the data necessary to manage their assets, they will surely fail at asset management as they have at implementing and utilizing their CMMS/ EAM systems.  It is no wonder the failure to learn from past mistakes will continue to give managers a headache.

For additional information reference the IAM’s Subject Specific Guidelines (SSG) on asset information.  It can be found at: https://theiam.org/knowledge/iam-project-work/Subject-Specific-Guidelines

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Somewhere in Time – Part 2 – A Terry Wireman blog 2017-01-25T13:29:18+00:00

Somewhere in Time – a Terry Wireman blog

Somewhere In Time

“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? Preventive Maintenance, Reliability Centered Maintenance, Life Cycle Costing, etc.—many of these types of processes can be traced to the 1960s—maybe earlier. Consequently, the practices and processes that many companies are now planning to implement in the future actually have existed in the past.

Even Computerized Maintenance Management Systems (CMMS), which provided the foundation for many current Enterprise Asset Management (EAM) systems, have been implemented since the mid-1970s. While those early systems may not have utilized all the technologies to enhance the “user-friendliness” inherent in today’s systems, but they still supported good maintenance business processes.

If we focus just on the CMMS/EAM aspect of the maintenance and reliability market, what do surveys tell us about the implementation and utilization of our current systems?

Most studies show that today’s CMMS/EAM systems are not being implemented properly; that they are not being utilized once they are implemented; and, that they are not delivering the returns they were projected to achieve. There are many common reasons why, including:

  • Lack of management support for and understanding of the CMMS/ EAM project
  • Lack of organizational business processes to properly utilize the CMMS/EAM system
  • Insufficient implementation resources
  • Insufficient personnel to utilize the system

We’ve been watching CMMS/EAM systems fail for these and related reasons for years. Why, then, would we let another implementation fail? Can’t we learn from the past?

Do companies believe their implementations are so unique that they can’t learn from the successes and failures of others? Would this type of shared information not help a company optimize its investment in a CMMS/ EAM system?

In industry publications and studies (especially at https://reliabilityweb.com/ )  , CMMS/EAM system implementation is an especially hot topic, and it has been covered from almost every possible angle. Yet, despite the overwhelming information available, why has the percentage of perceived successful implementations still hovered at 50% or less?

How much money are companies wasting by making the same mistakes time after time—year after year? Since expense dollars not spent become profit dollars, what we should ask ourselves is: “How much of our company’s profit are we wasting by repeating documented historical mistakes?”

With so many educational resources available today, there’s no excuse for repeating the same historical mistakes in the selection, implementation and utilization of CMMS/EAM systems. If nothing else, we could find ways to make new mistakes. (This also holds true for other types of maintenance and reliability processes)

So, where does your company stand in its current CMMS/EAM efforts? In the past or in the future? To paraphrase that television show, just thinking about the question could be enough to bring on a headache!  It is one headache that many reliability/ maintenance managers should be able to avoid.

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Somewhere in Time – a Terry Wireman blog 2017-01-25T13:29:19+00:00
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