Manufacturers use asset optimisation to extract value

Aurecon Pty Ltd
Tuesday, 09 December, 2014

For manufacturers working in a competitive global market environment, product price point is an imperative. Yet the intelligent optimisation of assets, which can have a major impact on reducing production costs, is an area often overlooked. Aurecon’s head of asset management, Clive Ross, says manufacturers can enhance their success by creating a proactive asset management culture and taking a more sophisticated approach to maintenance that optimises asset performance and value.

Hardwired in the psyche of manufacturers is the constant vigilance on total production cost. Sometimes, deferring or minimising maintenance results in cost savings. However, these incremental savings are typically false economy. A strategic asset management approach can create far greater value for the business. Focusing on asset uptime availability and equipment peak operating efficiencies yields substantially more value than driving maintenance costs down. This value is at times less visible and tangible without a detailed knowledge of asset value creation.

Over the past two decades, the world has experienced an unprecedented demand for raw materials products and processed goods. As a result, manufacturing plant, production facilities and many ancillary infrastructure assets have been pushed to limits well beyond their initial design specifications. Our urgency to get more from less has brought many facilities to breaking point. Maintenance of the asset, a cost not directly linked to productivity or revenue generation, is often deferred or worse, ignored.

Organisations will take a range of approaches to asset management, with varying results:

  1. Measured and controlled asset de-bottlenecking exercises and asset efficiency design upgrades through sustainable work capital programs. These programs generally result in engineering standard and legislative compliant designs and production optimised assets that will continue to deliver enhanced production throughputs in future years.
  2. Fast-tracking projects that deliver immediate returns and enable the asset owners to capitalise on the demand experienced during these years. While these programs generally comply with the engineering design and legislative requirements, many are not optimised and deliver sub-optimal performance and efficiency.
  3. Increased production throughputs via existing assets, reducing access to plant for planned preventive maintenance and managing the higher rate of asset degradation through increasing breakdown maintenance. This short-term action solution results in overloading, higher wear-out rates and component stresses, and increased breakdowns, which ultimately lead to an increased forward maintenance log.

While the development of comprehensive asset life-cycle management plans and strategies may have been considered in tactic 1 above, it is unlikely they were in tactics 2 and 3. The primary consideration at the time would have been to produce as many tonnes of product as soon as physically possible. As a result, the performance of these assets is likely to be sub-optimal.

This operating environment created a culture resulting in an outsourced maintenance cycle, where maintenance is an activity focused on only restoring or maintaining functional capability in plant that has been lost through errors in the engineering, project delivery and operations cycle. Figure 1 explains this.

Figure 1: Product loss cycle - the contribution of maintenance to losses.

Product price point is vital for manufacturers working in a competitive global market. Strategic asset management enables an organisation to find the optimum level of asset management and maintenance activity to meet their organisational plans, as depicted in Figure 2. Focusing the appropriate resources on critical assets to perform an optimum level of maintenance work has proved to reduce production costs.

Figure 2: Balancing costs of maintenance and asset unreliability.

As manufacturers move to a strategy of higher levels of automation to further reduce dependency on labour costs, this focus on intelligently optimising the asset becomes even more important. The solution, as illustrated by Figure 3, lies in working to create a proactive culture, which drives asset management improvement plans that guide the engineering, project delivery and operations activities in the plant, process, product and people, to eliminate, prevent and control functional failures and extract greater value from existing investments.

Figure 3: Implementing cultural improvement to drive value.

The solution also lies in looking at the facility, its processes and its equipment with a forensic engineering lens, identifying equipment with the highest run-time hours or lowest availability rating, to find the weak point in the production chain. This type of analysis roots out the highest likely causes for breakdowns and production interruptions and eliminates them by implementing improvement plans and actions for execution by their maintenance practitioners. 

This entire process is even further enhanced if strategic asset management is embedded at the start of a project. If followed from the design stage, this approach incorporates asset reliability and maintainability to eliminate these as a source of breakdowns and production interruptions prior to commissioning future assets. It ensures equipment and processes are designed and selected with their long-term operability and value-adding potential in mind.

Clive Ross is Aurecon’s head of asset management. He has over 30 years of asset management experience, with an expert understanding of best-practice asset management, operations and maintenance, and engineering, procurement and construction services.

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