Mike Caliel, President of Invensys Process Systems, examines the importance of managing industrial assets for economic performance
One of the biggest challenges facing industrial companies today is managing the operations of their manufacturing plants to match ever-changing business objectives. This is accomplished by driving business measurements down to the plant floor and balancing asset availability and asset utilisation in a manner that allows manufacturers to maximise overall business value.
The problem is that the operations and maintenance departments are typically managed and measured independently. The operations staff in an industrial plant is typically measured on asset utilisation, while the maintenance staff is typically measured on asset availability. These measures are inverse functions. That is, they tend to fight each other, especially as a plant approaches the maximum points for each.
Today conventional independent perspectives of maintenance, operations and engineering have resulted in under-performing plant asset bases.
To solve this problem, we have developed an asset optimisation modelling approach called Performance-Based Asset Management. This approach enables manufacturers to identify the optimum balance between asset availability and utilisation for any asset set at any given time, based on the real-time performance measures prioritised to current business strategy.
Using what we call dynamic performance measures (DPMs) we can then help manufacturers calculate the impact on overall resource productivity and business performance,
Maintenance and asset viability
The primary objective of a maintenance department is to ensure the plant equipment assets are available to operation when required. In an industrial plant this is a complex issue due to the quantity of interrelated assets. The only practical way to approach the matter of overall plant asset availability is to decompose the plant to its base equipment assets, analyse the availability of each asset, then recompose the assets to evaluate overall plant availability.
Our research has shown that few of the operations have implemented any effective measure of availability at even the component level. Therefore, the primary performance measure of many maintenance departments is keeping the plant running at a given acceptable level, at the lowest possible cost.
Applying an asset availability management approach to maintenance enables a scientific approach to the activities of a maintenance department. Our company has found that strategies such as reliability-centred maintenance have started to move maintenance in this direction, but most take a steady-state perspective.
Also, once availability analysis has been performed at the component level, recomposition to a higher level requires fairly sophisticated network analysis and even the application of circuit theory. Therefore, the level of sophistication in the management of the maintenance function in industrial operations remains fairly low with the maintenance budget being the primary measure of success.
Operations and asset utilisation
The primary objective of the operations group is to utilise the plant assets to produce the desired slate of products, also at the lowest possible cost. Since the capacity of the equipment assets often present the primary constraint to this objective, many times the objective for operations is simplified to maximising asset utilisation. Managing the asset utilisation for an entire plant presents as complex a problem as asset availability does.
Plant asset utilisation is very difficult to measure, and therefore is almost never directly measured. The most common approach for utilisation improvement in the more advanced industrial operations has been to apply advanced technologies, such as process control, advanced controls and optimisation. The assumption has been that the more advanced the technology the better the asset utilisation. This may or may not be true, but we believe that the increasing market constraints of the past decade necessitate a much more rigorous approach to utilisation.
Asset availability v asset utilisation
Considerable advances have been made of the past few years in state-of-the-art of both asset availability and asset utilisation.
Both domains are starting to become much more sophisticated, but, for the most part, are still addressed independently. The problem is that they are not independent. In fact, the relationship between utilisation and availability is multiplicative, meaning that the impact each has on the other is very significant to the overall performance of the operation. At their optimal ranges they are actually inverse functions (Fig. 1). This means that in many cases an improvement in availability can be realised only through a decline in utilisation and, likewise, an improvement in utilisation may drive availability down.
Clearly, asset utilisation and asset availability must be optimised in relationship to each other in order to optimise the economic performance of the plant.
This model demonstrates that maximising either asset availability or asset utilisation independently can lead to a strong decline in the economic value generated by the asset component.
Performance-based asset management
The practical solution to optimising the value delivered by an industrial plant asset base over any period of time is called performance-based asset management.
At Invensys we believe that the key to any optimisation problem is being able to measure the variables associated with both the constraint and objective functions involved in the analysis in a systematic manner. This can only be systematically and effectively accomplished in an industrial plant by extending the scope of the plant financial system to provide higher resolution financial information from two perspectives: time and space.
From a time perspective, the monthly data commonly provided by an ERP finance system is inadequate. The financial data must be made available according to the operational time constant - real time. From a space perspective, the plant-wide financial data provided by an ERP finance system is much too broad. The financial data must be made available to the detail level of the impact and improvement initiative.
In most plants that would be to the process unit level, although there is certainly nothing limiting going even further down the decomposition than this. DPMs, which we invented, were designed to meet all three requirements. They provide real time, prioritised financial and non-financial measures of the performance of the operation to the resolution of process unit level or below.
Once the DPMs are installed, historised and integrated into the plant finance system, all of the essential measures will be available to determine if any initiative, or set of initiatives of an operation are driving the prioritised value from the asset base in the right direction.
The DPMs will immediately calculate the economic value being produced by any part of the operation or for the operation as a whole. Any activity in the plant that drives value improvement, or that destroys value, can be immediately detected and recorded. With the availability of this information the relationship between resource productivity, asset availability and asset utilisation can be modelled over time without the need for additional mathematically rigorous bottom-up availability and utilisation models.
Real time dashboards and scorecards can be developed for each node in the operations and maintenance organisation so the personnel can immediately discern how their actions impact the economic productivity of their domain of responsibility.
This shifts the objective focus for both operations and maintenance personnel from utilisation and availability, respectively, to overall economic value. They tend to support each other rather than contending because their metrics are not aligned. With this initiative, economic performance of the manufacturing strategy becomes the driving factor.
Performance-based asset management still involves the effective management of asset availability and asset utilisation, but by measuring the impact on the total resource productivity using DPMs, manufacturers can balance across both availability and utilisation to drive optimal economic value. This approach essentially allows a multiple objective optimisation view, with an assigned priority based on the manufacturing strategy.
From an organisational perspective, this approach provides each person in every part of the organisation with a holistic view of economic value. We have found that maintenance personnel become utilisation sensitive and operations personnel become availability sensitive. All groups within the operation become economic performance sensitive. This is the key to performance-based asset management.
There’s no doubt that traditional perspectives of maintenance, operations and engineering have resulted in under-performing plant asset bases. The lack of effective performance measures for maintenance, operation and engineering has resulted in performance approaches based more on budget cost management than on plant performance management.
A new approach to asset management based on direct performance measurement of the economic value being generated by the overall asset base, or subsets of the plant asset base, allows plant personnel to establish a balance between asset utilisation and asset availability that drives optimal economic performance from the assets according to the current manufacturing strategy. Invensys calls this new approach performance-based asset management and it is poised to become the next force in the drive for economic plant management.
Our experience demonstrates that, when problems are approached in this manner, return on investment is typically realised in under three months, with the economic benefits sustainable well beyond that point.
Quote: “The primary objective of a maintenance department is to ensure the plant equipment assets are available to operation when required. In an industrial plant this is a complex issue due to the quantity of interrelated assets.” Mike Caliel, President of Invensys Process Systems