Asset Performance Management: three challenges that hold back

Maximizing asset performance and asset reliability directly influence output levels, time to market, energy efficiency, and, as a result, revenue targets. Asset Performance Management (APM) is, therefore, recognized more and more as a company-wide performance driver as it can significantly contribute to lowering the bottom line.

APM consists of three important dimensions: management, maintenance execution, and productivity or asset reliability. Connecting these cycles enables you to influence and improve asset performance and realize business targets. In this article, we focus on the APM management challenges that our asset management experts encounter at asset-centric clients.

1. I have too many Asset Performance Management KPIs

Asset Performance Management objectives should help drive (long term) financial results, optimize operations and safety, and should be linked to the performance targets that your organization has set. We often see that companies measure too many different Key Performance Indicators (KPIs). When we come across a KPI jungle, we follow up with these actions.

Use Asset Performance Management KPIs which support the business objectives

Do a sanity check: do all the KPIs support the company’s goals? Measuring and tracking metrics just because it is a possibility to do so is not a reason. Many organizations have a proliferation of metrics because all requests for tracking performance at various work levels and for different roles are carried out without keeping the end goal in mind. Always start with the finish by working back from the end goals you want to achieve. Don’t be afraid to be selective.

Limit the number of Asset Performance Management KPIs

This builds further on the previous piece of advice. While keeping that end goal in mind, how many metrics do you really need to measure success? Too many key performance indicators will make it impossible to get proper insights to facilitate better decision making. We cannot give you an exact number of KPIs here because every company’s situation asks for a different set and number. To give a ballpark figure: strive to select around 6 to 15 KPIs depending on your company size, number of targets and more.

Separate long-term from short-term goals

When selecting your KPIs, keep in mind that they measure metrics on different timelines as some are meant to track short-term goals and some are meant for the longer term. Distinguish between them. Usually, metrics for maintenance execution are shorter term, for example: work order backlog, trend in planned downtime or the percentage of plannable work. The asset reliability and management cycles usually entail long-term KPIs such as (the trend in) Overall Equipment Effectiveness (OEE) and Preventive maintenance cost, including labor, as a percentage of the total maintenance cost. Our advice is to bring back the number of KPI to a select view high level, long-term goals which contribute to your bottom line.

Make sure you measure correctly

Some companies think they measure and track performance but have set it up incorrectly. Check and improve the accuracy of your data. If possible automate tracking; connect IT and OT systems and ask an expert to set up a data dashboard which track the selected KPIs correctly. Ensure the quality of the data is high by auditing frequently. A shared company-wide data dashboard will enable you to understand your situation, make joint informed decisions for asset performance improvements across the departments.

2. Evaluating Your Organization for APM Goals

Creating or updating your Asset Performance Management objectives and choosing your KPIs usually means that change is on the horizon. When you have set up an asset performance improvement strategy and deployment plan it is important to re-evaluate your resources, especially your workforce and outsourcing strategy. Some questions that may help:

Do you have the right people at the right job?

Define the responsibilities per role and name connected competencies. What’s in it for them? It could be that someone would be more effective and happy in a different role because the job matches their ambitions and skills better than their current role. Have those conversations so you know everyone’s ambitions and strengths.

Do you have all the roles in your team to effectively apply the new way of working?

With a changing approach to asset management, it may be that you do not have all the roles that are necessary to get the job done. For instance if you want to move towards a planned maintenance organization a separation of planned and unplanned technician roles is essential to make that change.

Is the organizational culture ready for change?

Change demands a high involvement of staff and it usually highly impacts the way of working and company culture. Plan for change, some examples: include milestone moments in the improvement process, celebrate best practices, share learnings. Explicitly recognize successful staff.

In-house or outsourcing?

While key roles are usually carried out by our own organization, it could be that some (peripheral) roles and responsibilities are better outsourced. This can simply be more cost-effective or the job is so specialized that it is better to hire contractors to get the best result.

3. I always have an overspend on budget

Build up your asset-based budget (OPEX) and put yourself in the driver’s seat. If corporate leaders forecast a different budget, you can then give solid arguments why that budget might not suffice to reach asset performance targets. You can also more easily prioritize and explain choices to leadership in this way. To be able to do this you have to have the foundation in order. Have the insights into your asset condition, know which equipment is critical for production, and know the risks involved.

OPEX and CAPEX spend are of course linked. Our advice is to make sure you plan for CAPEX investments to safeguard a stable asset health. We often see an outlook that is too short, for example, two years. If you need to replace the asset in fifteen years because that’s the original end-of-life of the asset, then you need to plan until that time. By doing this you will avoid a CAPEX backlog pile-up which can negatively impact the availability of the asset due to outages.

More info: whitepaper with best practices about Asset Performance Management

Sustainably improve business results through asset performance management. Consultants Ernstjan Meinen and Marcel Hoekstra share their best practices based on many years of experience in asset management improvement programs in the Oil & Gas, FMCG, Manufacturing and Petrochemical industries.

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