Your Core Practices Can Provide Protection
Enterprise asset management is a resiliency program at its core. These programs help asset-intensive businesses perform the processes and practices that achieve the greatest value from their assets. Processes guided by a sound strategy create a layer of resiliency and sustainability because continuous improvement and knowledge acquisition are built into everyday actions. You can leverage these practices to meet the challenges caused by disruptive and dynamic events that are often out of your control.
Asset Management: Best Appropriate Practices
Your enterprise asset management strategy and processes are like insurance which pays out when something extraordinary happens. The future cannot be predicted precisely but you can protect against disruptions with process practices in place supported by effective technologies.
Appropriate asset management processes and practices not only optimize the costs and risks by providing value but also provide an organization some resilience, or “insurance”, against sudden and largely unforeseen shocks. You can secure this flexibility by:
- promoting appropriate levels of asset management leadership and maturity throughout your organization, including an appreciation of how asset management improves organizational resilience
- having in place stable and effective systems that provide:
- real-time data and just-in-time asset inventory, containing “as much as necessary” and “as little as possible” and is not planned for the extreme situation yet can adapt to it
- the latest technology with information on the condition of your assets and the cost of servicing and maintenance
- a method to achieve a feedback loop between planners and technicians, so that continual improvements can be made based on actual automatically recorded maintenance history
- building contingency plans of common scenarios that disrupt production and supply, such as natural disasters, extreme weather, supply shocks, or civil disruptions.
Asset Management Best Appropriate Practices Example
The diagram above shows the core processes in the inner circle, and examples of core practices that support the processes in the outer circle. They are arranged clockwise to establish an overall process sequence and continuous improvement. The type and emphasis of these processes and practices depend on the needs and requirements of the organization. This is also an effective method to specify technology and information requirements to best support your asset management efforts. With this framework in mind, we can analyze the potential resilience of the organization.
While every company is unique, there are some common disruptions that can affect a large swath of an industry or multiple industries. In general, these events fall into four buckets.
- Civil Unrest
Countries suffer disruptions from labor shortages, strikes, and at the extreme end, war. Even if these events are contained within its borders, they can affect the supply chain. Logistics need to reroute around the area or key materials become limited. On the customer side, civil unrest affects supply and demand for products temporarily.
We like to think financial and other business systems tend to be steady. However, when a drop or surge happens, there is a ripple effect. You might not be able to get a loan for new equipment, or the parts you need a spike in cost or finding good suppliers is hard. The supply and demand chains suffer from changes in usage patterns, unemployment levels or multiple business closures.
- Natural/Weather Disasters
These occurrences are becoming more frequent due to climate change. Weather impacts have intensified, such as fires, flooding, or hurricanes/typhoons. These events can create economic and supply chain shocks, yet they also directly cause great damage to your assets and property. It isn’t feasible to prepare your systems for an extreme scenario because of the resources required compared to the risk. Instead, there are ways to minimize the impact and support a quick recovery.
There are infectious disease epidemics that affect large regions or the entire world. While the occurrences do not occur frequently, pandemics often include economic instability and even civil unrest. Some examples are the 1919 Spanish Influenza outbreak and COVID-19.
While it is difficult to determine when any one of these conditions will occur, knowing how they could affect your business and operations is part of being prepared. Your daily processes can be built to help accommodate as much of the disruption as is economically feasible.
The Way Toward Resiliency
The real world is dynamic. Still, organizations adopt predictable patterns over time. These routines are typically flexible enough to handle most changes. However, larger disruptions stress normal systems. Understanding how to prepare your organization is part of the process of becoming resilient.
Below is a summary of some practical applications for using asset management to promote organizational resilience:
- “Supply shocks” from pandemics or similar events: These disrupt regular operations including supply lines, human resources and production materials. A best practice of asset management supports well-defined business processes and asset information systems that provide a “digital fingerprint” of normal operations. These can be used to model and analyze scenarios. What would your operation look like if only 50% of staff could make it to work, or if a critical supply of materials was stopped for two weeks? This data will help identify possible weaknesses and help build contingency measures.
- Economic shocks occur from unusual industry or financial conditions. What if there was a prolonged recession or a significant drop in demand and revenue for your business? Asset managers would need to adapt to fluctuating budgets and staffing levels without sacrificing their regular programs. How do they stop their assets from going into the “death spiral” of inadequate maintenance? Using asset management information and history, options include suspending non-critical assets and production lines and evaluating maintenance activities by risk level. Asset managers can also work with their procurement managers to negotiate with suppliers. Taking steps such as this are more beneficial to the organization versus trying to sell assets and property when there is low demand or they may be needed during the next expansion. Asset management can help get you through the economic market cycle.
- Natural disasters and extreme weather: By having core asset management processes and information in place, organizations have the capability to handle the initial response and recovery. This preparation helps them get back online quicker to provide the goods and services that are needed.
When you have appropriate enterprise asset management practices in place paired with technology, such as a CMMS and mobile technology, you are better able to meet these challenges. This knowledge also helps you build a business case for resilience program support. This resilience becomes an important factor in staying competitive.
Resiliency Use Cases
We’ll review two different cases where the companies were able to leverage their enterprise asset management programs to cope well with the situation.
- Natural Disaster
The first disruptive event was a natural disaster, a significant flood, that a large organization had to respond to and recover from using their current asset management processes. This organization used its network of asset managers to quickly mobilize information and resources for rapid response and effective decision making. They also used their asset information to make initial damage assessments to better estimate costs and make insurance claims. The asset registers contained records and photos that it used to make insurance claims and demonstrate the extent of damage. The core asset management processes and systems provided the primary method of managing and overcoming a difficult situation.
- Economic Disruption
The second instance is an organization dealing with the sudden and sharp drop in both business revenue and funding due to an economic downturn—very similar to what many experienced during the pandemic. Asset managers had to balance the normal obligations of safety, performance, and compliance, while preserving their employee knowledge base that fluctuated due to furloughs, layoffs, etc. They were able to do this because they had the information available to make the least risky decisions to defer and delay maintenance and renewals.
Both real-life situations demonstrate how contemporary asset management processes and practices help organizations become more resilient to common and extraordinary disruptions. These methods contribute to maintaining current operations while also aiding in response and recovery.
Your core asset management processes not only keep your operations running during the good times but also during disruptive events. By prioritizing EAM throughout the organization as it relates to your most appropriate core processes and practices, your teams understand the value of maintaining systems and information and help cultivate expertise across multiple departments. Supporting personnel and leadership with reliable asset data that is enabled by effective master data governance creates well-maintained asset management information systems, including maintenance history. Organizational resilience is built when these two parts of people and information are paired with the continuous improvement of maintenance practices through regular analytical review.
If you would like a free assessment including mobile business intelligence, schedule your meeting today with our asset management, maintenance and mobility experts.
Originally published in the Plant Services CMMS/EAM eHandbook.