Creating an Enterprise Asset Management strategy? Start with the Enterprise!

Define Enterprise Priorities First!

In creating an enterprise asset management strategy, it is important to maintain a robust process for achieving a valid, defensible result. The core truths in Enterprise Asset Management (EAM) are that organizations and assets continue to have needs, and resources are always scarce in relation to those needs. Assets don’t care that we don’t have enough funding to cover requirements; listening just to the assets is like listening to a crowd – it’s just so much noise. Relying on unplanned maintenance to maintain inventory is akin to allowing a five-year-old to select dinner plans. You end up with no consistency, and high risk. Letting inventory data alone suggest a plan is just not sufficient.

So how do we decide what to do? How do we build our capital requirements in a logical way? In EAM, the question we need to answer is “Where do I best spend my first and last dollar?”

The answer is that the first dollar should be spent where you get the most impact, and the last dollar where you have no choice. Determining those points is a matter of defining guiding principles, building asset data, and designing a robust management strategy to achieve a balanced asset plan.

As asset stewards, we can’t afford to make wild guesses about what things are important to our organization, or we risk doing things that have little impact, or even worse, a negative impact on our current state. Assets themselves have no knowledge of enterprise goals and priorities; they just tell us that they need attention. Before we can make good decisions about which asset needs are important, we need to start by examining our own enterprise priorities. We start with a strategic plan.

That plan contains a set of value propositions that are core to your enterprise.

  • What is our target market?
  • Does that market rate level of service or value most?
  • What products or services are we offering?
  • What benefit are we providing your target market?
  • What other alternatives to our offering are out there?
  • What proof can we provide that we are telling the truth?

When we can clearly state what is actually important to our organization, we can get a foundation for solid decision making.

From Policy to Strategy to Objectives

By paying attention to the priorities of the organization, we can start to generate the guiding principles that will drive how the EAM process should function. Looking at the ISO-55000 standard for managing physical assets, we see that it closely follows the traditional Deming-based “Plan – Do – Check – Act” cycle.

The “Plan’ is the critical starting point of this process, and the new ISO 55000 model includes the development of an asset management policy based on our organization’s strategic plan. The policy outlines the organizational parameters that must be followed in managing physical assets.

This policy can then inform the development of a targeted asset management strategy, which defines the overall approach that should be taken for managing our assets, in light of the stated priorities.

The strategy then aids in the generation of the objectives that the organization needs to achieve in order to manage the asset base strategically, and build plans that reflect the needs of the organization.

There are many ways of doing this, but in the end, it boils down to creating a set of measures that take the value proposition and overall strategic plan of the organization, and turns them into scales that can be applied to balance asset requirements.

Risk, cost, value, condition, reputation, environmental impact, profit, to name but a few, all can come into play. They can then serve as a framework for balancing competing and conflicting activities, to gain the most impact.

Defining the Output Determines Requirements

Alexander Graham Bell said: Before anything else, preparation is the key to success. Once we have an understanding of what is important to our organization, and the strategy and objectives we need to achieve those things, we can define what success will look like.

Strategic objectives are great, but nothing helps find holes in our inventory or understanding quicker than starting to define what attributes, measures, graphs and analysis results we want to create. It’s tough to report on condition-based asset value if you do not have asset condition, or value, or both.

True preparation is deciding where you need to end up, and then allowing everything you do to contribute to that destination. For this purpose, it is important to have defined a standard Asset Management Plan template, which is to be used across the various asset groups. By keeping this template in mind, gaps in asset data and analysis can be addressed early in the process.

By defining what success looks like, based on true strategic objectives, we create greater clarity of purpose as we attempt to manage our assets. Using this new focus, examining asset requirements takes on new meaning, as each new need can be measured against the priorities of the organization. In the end, getting clarity and focus allows us to act strategically, with less wasted energy and more impact.

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