The current draft of the ISO-55000 standard is being reviewed in South Africa by the world-wide TAGs (Technical Advisory Groups) next week. While I am not making this trip, I couldn’t help but reflect on the topics that will be included in the discussions. I also wonder who is really qualified to set an “asset management” standard?
Consider the definition of asset management as it currently exists in the draft of the ISO-55000 standard: “Asset management involves a disciplined approach which enables an organization to maximise value (or minimise liabilities) from the portfolio of assets for which it has a responsibility in delivering its strategic objectives.”
Let’s focus on the “maximizing value” part of the statement. If we were to actually maximize the value of an asset, we would first have to know why we acquired the asset. Consider:
- Why was the asset purchased/ built/ modified?
- What business need was it purchased/ built/ modified to address?
- When it was installed and commissioned, did it actually meet the business need?
- As it has aged, has the assets ability to meet the business need diminished?
- Is the asset being operated according to design specifications?
- Is the asset being maintained according to the engineering requirements?
- Is a major overhaul required to restore it to baseline design specifications for it to continue to meet its designed business needs?
- How many companies actually have accurate data to answer these questions?
Can most companies answer these questions about their critical assets? The answer would have to be a resounding NO! Consider this quote:
“The true capacity of companies that make the Business Process Improvements are as if they have invisible factories (hidden capacity). It is estimated that there is $2 Trillion in additional productive capacity in the United States, which does not show up in GDP statistics or on the balance sheets of companies.” - Professor Brynjolfsson – MIT Sloan School of Management
A second source said the following:
“ARC estimates the global process industries lose $20 billion, or 5 percent of annual production as the result of unscheduled downtime. Drilling down into this number, we estimate that nearly 80 percent of these losses are preventable.” - Passing the Insurance Acid Test with APM by Steve Clouther, Paula Hollywood and Wil Chin
If we are currently mismanaging assets to this great of a degree ($2 Trillion in the US and $16 Billion in Global Process Businesses), can we actually expect a group with very diverse perspectives to produce a standard that actually improves how we manage assets? What organizations can the assembled group of TAGS use as “Best Practice” examples? Have the TAGS ever seen a true example of a company that is the “Best” at asset management? Can the TAGS actually produce guidelines that are prescriptive enough to help companies achieve asset management? Will the ISO-55000 standard be nothing more than a few general statements about the TAGS view of asset management without a roadmap to achieve it? Will the standard help international and domestic companies reduce the amount of asset related losses we see world-wide? Will there be a “Line of Sight” that connects the standard to true business benefits? Will the standard make a true business difference?
These questions along with many others will be answered as the proposed ISO-5000 standard progresses through the development process. It is only hoped that the TAGs focus on the necessary business reasons for an asset management standard and maintain a clear “line of sight” and connect the proposed standard to the business (financial) impact of asset management.
It seems as though it will be difficult to capture "best practices" in all areas of asset management, hopefully there will be some sort of "continuum" method utilized. After all, the requirements for the Aviation Industry are far more stringent than those for a commercial bakery. There needs to be room to NOT utilize RCM methodologies on every machine if the business needs and costs mitigate against it. I guess I'm hoping for the ability within ISO-55000 to "right-size" maintenance and not have to push "world class" at every manufacturing plant in the world.
Posted by: Mike Meehan | 03/06/2012 at 11:05 AM