Somewhere in the middle of competition and a changing business climate, Wall Street seemingly ignored operational failure and inefficiencies as costs of doing business. The financial community embraced a short-term view to reach immediate goals but failed to see an unintended consequence. Reliability wasn’t included in the business performance analysis.
Manufacturing businesses and energy companies may bring billions in revenue, but they may have unintentionally accepted significant delays, outages or other negative outcomes from poor prioritization or outdated strategy.
With technologies available for more than a decade that can predict equipment degradation and avoid costly outages, why do more facilities continue to follow outdated modes of reactive maintenance rather than adopting proven proactive maintenance strategies? Why do management teams and financial analysts allow a “break / fix” mentality to remain status quo?
Poorly managed asset portfolios can result in inefficient use of capital. Lost market value, brand devaluation, safety incident risk and failure recovery costs can impact billions of dollars of shareholder value due to poor reliability.
“Why address a situation only after it negatively impacts the bottom-line?”said Scott McWilliams, vice president of Global Operations at Emerson Process Management. “The damage is done.”
Here’s a good illustration: many industries adopt a standard of “Abnormal Situation Management”…protocols and procedures for what to do in the event of a deviation from normal operation. Certainly, you must have a game plan to mitigate damages. By why isn’t more effort put into “Abnormal Situation Prevention” instead? If you prevent it, you don’t ever have to manage it.
“A quick fix of a broken part or asset at a manufacturing plant isn’t a success story,” McWilliams said. “Instead, it is an example of autonomous decisions that operate on a run-to-fail approach instead of a reliability approach.”
Independent decisions impact specific plants but a corporation relies on the combined group of plants, which is why reliability is so important. Autonomy can be shifted into a universal operating system that applies all available plant expertise. That means there’s no variance among autonomous, plant-specific decisions.
Change is needed in balancing value with long and short-term perspectives, as there is much to gain from both. There are several corporations who maintain a harmony with achieving goals and maintaining reliability. For example, Emerson helped Constellation decommission computerized maintenance management systems (CMMS) and redesign common processes used on a singular platform. This type of change can increase productivity and proactive maintenance time, improve resource flexibility, and reduce inventory requirements for spare parts.
A culture change is needed to re-emphasize the benefits of a proactive approach. Maintenance should be scheduled in advance, and that’s where advanced technology comes in to monitor and measure situations. It is necessary to know and anticipate what spare parts are needed and when maintenance should take place (before a part breaks) to prevent wasting money. In order to ensure assets are available when needed and thus increase net income, these assets must be kept in optimal shape.
“There is an achievable reality where a project meets the intended deadlines and boosts corporate savings by reducing overhead cost,” McWilliams said.
This streamlined process is needed to achieve Top Quartile Performance and deliver greater shareholder value. It embraces a long-term investment perspective and results in a greater inherent value through this approach.
Reliability needs to be integrated into the overall strategic planning efforts and initiatives. An enterprise-wide assessment is an important initial step, and from there, a business dashboard is needed to communicate the impact of reliability and maintenance on profit and cash flow. Reliability is truly part of the business culture. For successful implementation and workflow, it should be aligned and recognized within strategic goals, and ultimately, should be on the minds (and desks) of Boards of Directors.