Asset performance management is the backbone to culture of reliability
Asset optimization holds new cachet as globalization forces enterprises to deal simultaneously with often conflicting objectives.
“All worlds come together at the asset,” says Alison Smith, an analyst with Boston-based AMR Research . “However, assets are viewed as appreciable sunk costs, but they’re not—they’re competitive differentiators, and contribute to profit margin.”
Compounding the conflict is the fact that functional groups most closely associated with plant equipment typically work at cross purposes.
“It starts with how we measure performance,” says Peter G. Martin, VP of strategic ventures for Invensys . “There are two key groups that drive plant performance: operations and maintenance. Operations is measured on maximum asset utilization; maintenance on availability.”
|The element that a September 2007 Aberdeen Group study found as most relevant to Best-in-Class performance wasn’t simply what technologies companies use, but how they were integrated.|
Some industry experts are beginning to address this so-called “dysfunction of functional silos.” One in particular is Mike Brooks, staff technologist for global refining at Chevron . “Looking at what is happening in our refineries, we needed to get to the next level,” says Brooks. “In the future, we are looking to find value between functions.”
And according to Bharat Nair, senior VP and research director for global manufacturing markets with Boston-based Aberdeen Group , asset performance management is about striking optimal balance between asset utilization and availability. “Optimizing asset performance to maximize economic value for your asset base offers the best path to increasing shareholder value,” Nair asserts.
A September 2007 Aberdeen Group report reveals a marked distinction between those who do it well—and everyone else. “Best-in-Class performers are twice as likely as the Industry Average and 10 times as likely as Laggards to standardize asset performance to optimize asset availability and utilization,” the report states.
“You see APM talked about as focused solely on maintenance, but that’s short-sighted,” says Nair. “I look at APM more broadly.”
Houghton Leroy, research director with Dedham, Mass.-based ARC Advisory Group , concurs. “APM goes beyond maintenance: It cuts across many boundaries. The bottom line is return-on-assets [ROA].”
Tying APM back to financial metrics is the key, says Nair. “A lot of companies are at the enterprise asset management [EAM] stage,” he says. “But EAM doesn’t tie back to the metrics of the business. When you start managing from a financial performance perspective, you’re talking about the next wave: APM. With APM, you bring in operations and the business aspects of enterprise strategy.”
Aberdeen uses four key performance indicators (KPI) to assess and segment best-in-class performers from the rest. Two of the four are clearly tied to physical assets: overall equipment effectiveness (OEE), and asset effectiveness. But two are elevated into the realm of business performance: on-time delivery, and plant throughput. Best-in-class companies performed on average at very high levels:
OEE: 89 percent
Asset effectiveness: 95 percent.
On-time delivery: 96 percent
Plant throughput: 97 percent
Maintenance comes of age
The increasingly strategic slant to maintenance and asset management coincides with the maturity of system-based solutions for maintenance.
“A lot of automation came out of instrumentation; then controls focused on operations—not on maintenance,” says Invensys’ Martin. “Until recently, most maintenance was done not with computers, but by people waiting around for something to break. The maturity curve of maintenance lags behind operations.”
|“Assets are viewed as appreciable sunk costs, but they’re not—they’re competitive differentiators, and contribute to profit margin.”
—Alison Smith, analyst, AMR Research
People began using computers for maintenance management to automate preventive-maintenance schedules and repair work orders. This evolved into computerized maintenance management systems (CMMS) in the 1990s, and EAM more recently. Now the focus is on embracing more predictive capabilities, as well as employing condition-based monitoring (CBM) tied to various data feeds coming out of control systems.
Reliability-centered maintenance (RCM) is the all-encompassing concept. “RCM is the best-practice approach in maintenance for world-class organizations,” says Leroy.
The maturity of maintenance technology and the strategic interest in asset management is reflected in major infrastructure and enterprise vendors adding asset management/maintenance capabilities to their portfolios. This includes IBM ‘s acquisition of Maximo, and Infor ‘s acquisition of Datastream.
“Infor is very interested in moving from EAM to APM, tapping into data coming from controls,” says Marty Osborn, senior director of industry product marketing for Infor EAM. “The vision is to get to the next level taking a holistic approach, basing decisions more on flow rates and run times that can help companies better manage assets based on real-time conditions.”
Right now there are some new ways to skin the cat when it comes to moving toward real-time CBM/RCM and sharing asset data more widely with decision makers.
“Central to the formalized organizational and procedural components that the Best-in-Class have in place are the technologies they are using to foster a culture of reliability,” says Nair, citing workflow capabilities for sharing historic performance data, and enterprise manufacturing intelligence (EMI) capabilities for adding value to it.
Doug Lawson, president of enterprise manufacturing intelligence solutions supplier Incuity , says the vendor is working with a global oil & gas company to create a real-time health-monitoring system for all upstream equipment.
“They have high value-add [assets] like wells, pumps, and rotating equipment,” Lawson explains, “and they have a lot of information on assets, but it’s all disjointed. From control systems, they [know] whether a piece of equipment is running or not, what the pressure is, and if there are vibrations. They also have information in their maintenance system on mean run times, parts lists, and scheduled repairs. And in ERP, they [know] who they bought equipment from, and warranty information.”
Incuity EMI is being used to pull all that information into one presentation platform where it can be aggregated and contextualized for asset performance management.
Tapping data historians is another approach. Delaware-based Connectiv Energy is applying the capabilities of OSIsoft PI historian for storing equipment operations data and OSIsoft RLINK, the historian-to-enterprise system connection, to leverage control data for condition-based monitoring/maintenance.
“We do equipment efficiency calculations in PI, and if it drops below a certain level, that triggers a message through RLINK to SAP to generate a maintenance work order,” says George Muller, IT business manager.
Connectiv also coupled PI historian with Condition Monitor from process information services provider DLL Solutions . Says Muller, “Condition Monitor is an orchestrator and calculation engine where you can write a rule that if a pump is running in a certain state, it will calculate how many times it’s in that state, [and when combined] with other variables that match a certain pattern, send the information to SAP for triggering a work order.”
Aside from systems involved in asset performance management, “The element Aberdeen found as most relevant to Best-in-Class performance wasn’t just what technologies companies use, but how they were integrated,” the September report states.
|The increasingly strategic slant to maintenance and asset management coincides with the maturity of system-based solutions for maintenance.|
Integration is the central focus of a new collaborative standards body targeting greater harmonization between operations and maintenance. Open O&M (operations and maintenance) is an initiative uniting a handful of industry standards-focused organizations—MIMOSA, ISA, OPC Foundation, OAGi, and the WBF—to a common cause: creating an integration model for structuring and sharing data between operational and maintenance management systems so that the left hand knows what the right hand is doing.
“Open O&M recognizes that maintenance and operations are two functions on the plant floor that impact the business minute by minute,” says Martin. “In truth, they’re not two different functions; they should be looked at holistically. Open O&M is an important first step in breaking down boundaries that developed around [functional silos], recognizing that maintenance is every bit as important as operations, and pulls the two together.”
Adds ARC’s LeRoy, “The objective behind Open O&M is to share information regarding the right time to do maintenance based on the health of equipment, coupled with the best time to bring an asset down given operational demands.”
Open O&M has only been active a couple years: in fact, a recent Internet search generated just more than 500 references. Alan Johnson, president of MIMOSA, hopes that will change, and is involved in pushing it forward.
“MIMOSA grew out of a concern for risk management,” says Johnson, “but the old integration model won’t work anymore. We have to go up an order of magnitude. Standards become the enabler. The owner operators are key to this.”
Open O&M recently formed an owner-operator steering team, of which Mike Brooks of Chevron is acting chair.
“In looking to design Chevron’s next-generation IT architecture infrastructure, we decided we’d be far better off sharing intellectual property with others to influence vendors to solve the problem,” says Brooks. “Vendors tend to talk about screens and reports, but those are only artifacts that follow the work process. We need owner operators involved in shaping the standards to ensure solutions aren’t imposed on the work, but fit the process that needs to get done. Open O&M gives us the best map that ties all the pieces together.”
|Aberdeen Group uses four key performance indicators to assess and segment best-in-class performers from the rest. Two of the four involve physical assets—i.e., overall equipment effectiveness (OEE), and asset effectiveness. The other two concern business performance: i.e., on-time delivery, and plant throughput.|
Looking at asset performance management within a refinery, “If you want to manage maintenance of a large compressor, you have to combine information from the maintenance system with the lab system and the quality system,” Brooks adds. “It’s only when you see all of that together that you can manage maintenance and plant operations performance effectively.”
Brooks began evangelizing for a new approach to achieve superior asset performance management within Chevron while searching in the public domain for the best approach to engineer it. That was how he encountered Open O&M. Once he understood its charter, he gladly joined the effort.
“I don’t want a special solution for Chevron. I don’t even want one for oil and gas. Vendors obviously need to build a solution they can make money selling, but it’s in the best interest of long-term asset performance to define the requirements for what is needed.”