Asset management is a systematic, lifecycle approach of operating, maintaining, upgrading, decommissioning and renewing assets and infrastructure cost-effectively and to an acceptable standard. It has become a hot topic in recent years as it can have a significant impact on the operational performance and thus the profitability of an organization. When properly executed, asset management can increase system reliability while reducing maintenance related costs, increase the economic life of capital equipment, reduce company liability and optimize inventory spending.
Evidence-based asset management (EBAM)
Historically, asset management was not viewed as a professional activity and decisions were based on experience, technician complaints, OEM recommendations, hunches and strength of personality. Common sense and expert judgment play a role in evidence based asset management (EBAM), however, key asset decisions should be based on solid evidence.
Evidence based asset management is the science of making the right decisions and optimizing asset management processes with the best available data and with decision criteria clearly defined. Data-driven decisions provide the most advantageous methodology for minimizing costs and maximizing the return on investment from physical assets. Making evidence based asset management data driven decisions requires access to maintenance and financial data; therefore, accurately logging maintenance activities in a CMMS is critical. The four key asset management decision areas are outlined below:
The first area includes the determination of the optimal replacement time for spare parts. The decision is when to either replace components proactively or simply run them to failure. Replacing before failure ensures the repairs can be planned in advance but if the cost of reactive maintenance is less and there is no risk of collateral damage, then run to fail is the logical choice. Coupled with this decision is the determination of inventory levels for stock to complete repairs. The levels of stock on hand should ensure availability and cost criteria are met.
Optimizing the time interval between maintenance inspections can minimize the cost of preventive inspections and breakdown maintenance. Inspections should be performed where the total cost of maintenance is minimized.
Capital Equipment Replacement Decisions
The economic life, also called service life or useful life, is the expected period over which an asset is fit for purpose. The physical life of an asset could be considerably longer than the economic life. Without careful analysis, it is possible to confuse the two. Economic life of the asset occurs when the total cost of ownership is at a minimum. According to EBAM rule, at this point, the asset should be replaced. Organizations must ensure they have sufficient funds to purchase replacements at this point to reap potential savings. Other considerations such as technical improvement on newer models must also be factored into this decision area.
The final area involves right-sizing maintenance crews, machine shops, tooling and contractor labour to achieve productivity, system availability and costs targets.
In capital-intensive industries, asset management is taking a fundamental shift from reactive to proactive maintenance coupled with a focus on the total cost of ownership. Evidence-based asset management is a logical approach to maximize the return on investment from physical assets and strengthen the bottom line. EBAM provides direction on how to cost effectively manage assets while maximizing availability.