Hopefully we'll do better than we did over the past ten or twelve years when a similar term, Asset Management, presented a similar opportunity. Instead of embracing the initial concept of Asset Management to expand horizons, emphasize value and effectiveness, engage the entire organization, and gain greater acceptance for our contribution to business success, it was continually reduced and diminished. Today, mention Asset Management to an executive and it is immediately interpreted as a fancy euphemism for maintenance-a shadow of its original intent.
What about maintenance? In all but the very best companies maintenance is considered a non-core competency, a necessary evil, an activity to be avoided, and a cost to be minimized; certainly not a value-producing business activity. Lest anyone think that this is solely the view of an out of touch author, many have voiced a similar frustration. A recently reviewed proposal from Italy expressed identical sentiments.
Probably the most poignant illustration was at last year's Solutions 2.0 conference. Shortly before being honored for their achievement, winners of one of the Best Program awards were notified that their entire program had been eliminated and all laid off as a "cost-saving" measure. Unfortunately this is not an isolated incident. Success endangers the most successful reliability programs. Many have heard some version of: "We don't have breakdowns or need greater availability; reduce costs by eliminating all those superfluous reliability programs and either get rid of the people or put them back to real work fixing things." Of course we all know how this turns out. Mayhem returns, failures reappear, availability slips, costs rise and the programs and people that were terminated a few short years in the past must be reconstituted at great cost and lost time.
We do have a second chance; but only if we broaden our horizons, think well beyond increasing the efficiency of maintenance activities, and adopt a business focus. How do our activities contribute to business value and success? What is the sightline between maintenance reliability and business value? What is the definition of value from the executive suite? While maintenance excellence, excellence in Planning and Scheduling, precision work, and effective stores management are all part of the tapestry, they do not link to a financial executive concerned with profitability and shareholder value. Just as you can't visualize the picture in a complex jigsaw puzzle from a few pieces, a financial executive holding our future in his/her hands can't see our contribution to corporate value from performance in a few specialized practices. In our own world, what good is excellence in Planning and Scheduling if there are excessive failures? Should scarce resources be devoted to developing and executing robust maintenance practices to counter excessive failures? How do you define excessive failures? Is the definition shared throughout the organization?
Fortunately the maintenance reliability community seems to have a second chance-if we will only grasp and run with the golden opportunity being offered. The opportunity is a term and program gaining attention at the highest levels of the very best companies and those striving to be the very best: Operational Excellence. What is Operational Excellence? One leading company defines it this way:
"Operational Excellence is the systematic management of safety, health, environment, reliability and efficiency to achieve world class performance." (Chevron Operational Excellence Management System)
Under the heading of Operational Excellence, another greatly admired global company states:
"Ensuring the safety and reliability of our operations is fundamental to our business success and a critical challenge that ExxonMobil takes on every day." (ExxonMobil 2008 Annual Report)
In an Operational Excellence workshop conducted during Solutions 2.0 in 2009, approximately two-thirds of the participants' companies had or were about to implement Operational Excellence initiatives. A larger percentage of participants in the Operational Excellence workshop conducted during Solutions 2.0 in 2010 had Operational Excellence initiatives in effect.
How can a term improve visibility and support for the maintenance reliability community? Here's how:
First and foremost, Operational Excellence is a term of interest at the highest corporate levels. It clearly states an imperative objective to assure success in a competitive environment. Corporate executives are seeking definitions and implementing methodology to gain the objective. Principles, definitions, and implementation are reasonably well established and presented at workshops such as those conducted at Solutions. Of course doing so is the really hard part!
Second, Operational Excellence elevates thinking within the maintenance reliability community beyond specialized activities to its essential role and contribution to overall business success. It demands transcending many barriers such as divisions between operations, maintenance and engineering, lack of sponsorship by executive management, goals and metrics based on activity rather than results that contribute value, short-term thinking, and too much reliance on technology and computer systems. The list goes on. We really need to focus energy and efforts on the sightline from maintenance reliability to business success, how we create value, and our specific contribution to business success.
Third, the definition of Operations Excellence must include the concept of maintaining equipment assets in a "satisfactory manner." This is the one part of the definition that can cause industrial teams to miss a huge opportunity. It is important to drill down on what is meant by "satisfactory manner" in order to gain the full value that can be delivered through the maintenance reliability organization. For some equipment, just keeping the equipment operating produces acceptable production results, although possibly not optimal value. For other equipment, just keeping it operating is not good enough. For example, in process plants, heat exchangers are common equipment for heating and cooling liquids and gases. They are also typically unspared, which means that any deviation from "satisfactory" affects the entire process. In operation, a heat exchanger is far more efficient and creates maximum value if it is well maintained to provide optimal heat transfer. Just keeping it operating may not produce the desired production results or necessary value. In this example, and others as well, reliability and maintained state of equipment are important aspects for the value gain of the production process. Determining what is satisfactory with respect to equipment maintenance must be determined by evaluating the maintained state of the equipment relative to the financial gain it provides across its maintenance and operating spectrum. This can be done by simply modeling the financial functions against the operating and maintained state functions and evaluating the optimal operations, maintenance and repair/replace strategy to drive the greatest financial returns.
Fourth, nearly every high-level definition of Operational Excellence includes a commitment to reliability that is broadened to include organization, data and information, processes and procedures. All are absolutely necessary to assure success.
Let's take a more detailed look at some requirements:
Corporate executives are generally enthusiastic about the term Operational Excellence and its promise. They are looking for implementing methodology. Most definitions, including the two quoted, stress reliability without a real definition. Let's begin with an accepted definition of reliability:
"Consistent, predictable results; the probability that a system, equipment, or product will perform its required functions in a safe, satisfactory manner for a given period of time when used under specified operating conditions." (Physical Asset Management Handbook)
Leading professionals within the maintenance reliability community understand the preceding definition as well as the elements needed to achieve the objectives. It certainly requires far more than good maintenance. To name four: safe, reliable operating procedures rigorously followed; operators and maintenance people constantly on the lookout for anomalies; documentation accurately defining operating requirements; and processes to monitor and assess current performance. With that perspective, who is better positioned than maintenance reliability in an operating organization to define requirements for Operating Excellence?
As outlined previously, success in manufacturing--Operational Excellence, requires two vital ingredients. The first is process efficiency. The ability to convert raw materials into finished goods with maximum efficiency and minimum waste is a given that has been accepted for decades. Total Quality Manufacturing, Lean, and the huge resources expended to increase production process efficiency testify to the importance of this area at the highest levels of executive management.
Second is the effective availability to meet demand. Methodology for process efficiency often makes a very flawed assumption--that the means of production is available to meet demand, or only experiences average unavailability over a given period. Average availability isn't a very good descriptor of performance if an entire year's unavailability is concentrated in one event!
It should go without saying that if the means of production isn't available to meet demand, all the production efficiency in the world won't produce essential value and business success. Thus, production process efficiency and asset effectiveness must be viewed as two perpendicular vectors with production effectiveness as the resultant. You can't get maximum production/operational effectiveness without optimal contributions from asset and process efficiency! The maintenance reliability community hasn't communicated that message very effectively. We must improve!
A great opportunity is presenting itself. Publically Available Specification 55 (PAS 55) initially published by the British Standards Institute in 2003, is being converted to an ISO Standard by an international working group. At this point, visionary professionals need to become involved to expand and direct the ISO implementation of PAS 55 from primarily maintenance program administration into a comprehensive documenting framework for Operational Excellence listing all elements necessary for success. Expanding PAS 55 into an ISO foundation for Operational Excellence will significantly accelerate the drive toward Operational Excellence, the effectiveness of the vital program itself, and will greatly add to acceptance and credibility from the highest levels of executive management.
Sooner or later the maintenance reliability community must face up to the fact that at the upper levels of a corporation, value is financial. Maintenance reliability professionals must be able to monetize contribution or be viewed as a non-value-add cost. Operational Excellence will produce optimal maintenance; optimal maintenance may not produce operational excellence or the value needed to assure corporate success. The adoption of Operational Excellence as a corporate credo provides an opportunity, perhaps the last, for the maintenance reliability community to define the process and demonstrate conclusively the necessity for, and business value created by what might be called Asset Operational Excellence.
Thanks to all the individuals who reviewed the first draft and contributed text and comments: Heinz Bloch, Paul Dufresne, Grahame Fogel, Dr. Peter Martin, and Bill Stieve.
“R.A.I.” the Reliability.aiTMChatbot
You can ask "R.A.I." anything about maintenance, reliability, and asset management.