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An Asset Manager’s Guide: Strategy to Action

An Asset Manager’s Guide: Strategy to Action

An Asset Manager’s Guide: Strategy to Action

by James Mourafetis

The Feb/March 2017 Uptime article, “An Asset Manager’s Guide to Harvest Management Commitment,” explained how to sell your company’s vision to the executive level team of your organization. If you were not successful in getting to this point, don’t feel bad; not even a handful of asset managers across the globe have achieved successful enterprise asset management (EAM) transformation. However, if you were successful at harvesting management commitment, it is now time to take the next step and take it quickly: turning strategy into action!

The important thing to remember is to have a vision of what your successful EAM will look like. Do not underestimate the power of gaining management commitment.

Here are the four crucial steps, including important reports, necessary to move forward with EAM.

1. Determine poor performing operational areas within each EAM work stream in order to establish a pilot within each work stream

Every company has known weak performing functions, whether it is in the process of sales, operations and planning, engineering change orders, operations, or after delivery services. In order to implement change and strengthen the weak functions, it is important for asset managers to go to the right parties in the right order for their buy-in – a process that is extremely delicate.

It is crucial to start with the department level managers and gain their commitment to allow for a fact-based assessment of the known weaknesses. Not only does this show respect for the department managers, it also provides them the opportunity to take the initiative and start the EAM process with the team.

Next, present the department level managers’ assessment of weaknesses to the executive level asset steering committee for approval. This ensures the department managers do not lead you down a wrong path. Since asset managers might not always know the functional problems very well, an inaccurate assessment could steer you into a dead-end operation where there is not enough activity to determine a baseline for improvement.

Finally, approach the respective vice president. Don’t reverse the hierarchical steps, otherwise you end up asking the vice president before the department managers weigh in, creating an awkward situation.

2. Invite an objective third party to baseline performance through fact-based observed and analyzed assessments

Generally speaking, there are two main truths about an organization’s failure to self-attempt continuous improvement. One, an organization’s structure is designed to perform repetitive daily functions. Good industrial process design, which includes all processes in the organization, is often not implemented at the outset of these daily functions. This means good industrial process design is not part of the repetitive functional process. Therefore, poorly run processes are repeated day in and day out, and they are even viciously guarded to ensure the repetition does not change, even for the sake of improvement. This creates a culture where senior and middle managers safeguard original organizational design practices and block good industrial process design. The result is an organization that cannot and will not change.

Two, even when an organization has good intentions to break these cultural chains by establishing an internal continuous improvement (CI) team, this internal team is limited by its own fear of change unless there is outside intervention. By promoting persons from within to the CI team, the existing culture is reinforced. This leads to the CI team using math and science to reinforce its own poor practices. It’s understandable. Why would the CI team make or recommend changes if its visionary members know they may one day be reassigned to those whom they want to change?

Internal assessments always will be seen as biased within and between departments. That is why it is absolutely necessary to hire third-party consultants who are boots on the ground operators and can develop fact-based assessments without bias to speak the truth through observation, analysis and facts. Remember, in many organizations, department managers will be defensive and want to discredit findings. Therefore, it is important to select the right consulting firm that has the emotional maturity to baseline fact-based performance.

3. Have the third party report the assessment and pilot program to the executive level asset steering committee

The knowledge that the department and their respective vice president will have their souls exposed to the executive management team is frightening to that department. Luckily, consulting firms experienced in this area know how to manage this process effectively, professionally and with great sensitivity. These consultants provide fact-based reports that baseline the current performance of the assessed scope and make realistic recommendations, complete with projected base and best-case financial and operational improvements. The assessment reports need to reflect the magnitude and impact of the overarching asset measures and assess each measure in terms of operating expense (Opex) and capital expenditure (Capex).

Figures 1 through 6 provide sample elements of such fact-based assessment reports in the operation of trains.

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Figures 1-6: Snippets of fact-based assessments in train operations

4. Develop work streams to achieve the overarching asset measure

Once the fact-based assessment and recommendations are presented with impact and the asset manager has the executive asset management steering committee’s attention, it is time to sell the next phase: the development of work streams linking to the overall asset performance measure. In the next report to the executive steering committee, the functional business owners, typically the vice presidents, present their work streams linked to the overall financial and operational benefits. For large, heavy asset companies where sales are typically more than $10 billion, this may be up to a $700 million long-term benefit, which is a very exciting proposition to the CEO and board.

Figures 7 through 12 showcase examples of how work streams link to overall company benefits.

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Figures 7-12: Sample report snippets exemplifying work streams linked to overall company benefit

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Next Steps

Once an asset manager has accomplished the above steps, he or she has achieved the first major milestone of putting strategy into action. Most asset managers do not make it this far, mainly because they are not successful in articulating the linkage between better availability and utilization of assets for improving operating performance, future Capex offset and contribution margin capacity through improved use of the key assets. This is when an asset manager has the attention of senior management; it is now time to develop and deploy enterprise asset management.