Strategy Development Options

The key issue is always that of business value. The business may not always benefit from increased production capacity, for example. This may be the case where there is a limited or shrinking market. Even though the company could benefit from greater reliability during the periods when they are operating, it may not be the best focus.

Issues such as these are a part of defining the desired performance levels that make up step one of the MSC process. From the first chapter we determined that strategic advantages were-

The set of unique or hard to duplicate abilities, competencies and capacities contained within an organization that support the company’s competitive advantages

Once the desired level of performance is known, then the abilities, competencies and capacities that are required to bridge the gap between the current level of performance and the desired level of performance can be determined.

When analyzing the ability to achieve desired levels of performance, there are two possible outcomes. (See Figure 3.2) The objectives could exceed the design capacity of the organization. Or they could be within the design capacity of the organization, that is, the capacity that the organization currently possesses, including considerations of physical assets, employee skills and numbers, information management systems in place and a range of other factors.

Determining whether desired performance levels are within the current operational capacity of the organization is often a difficult task and frequently involves detailed analysis of a multitude of areas. Some of these may include: (in no particular order)

-          Regulatory and legislative requirements on the organization . This includes trends in this area in the planned future, and the impact that these requirements may have on the asset management function, and on the achievement of desired performance levels. The importance of this area cannot be understated, particularly within heavily regulated industries.

-          Current reliability performance information regarding the physical asset base. This is an area that, on its own, can be exceedingly large. There is a need to consider the state of the asset base at present with regard to functional condition, areas of low reliability, or availability as well as areas where unit costs may exceed what is required. This area will be the key area in the determination of current performance levels. Reliability is often mixed with estimations of equipment life during recent time. It needs to be clear that there is not always a direct link between the age of equipment and the need for capital replacement. This belief in deterioration accord ing to age has been disproved many times over the past two decades yet still remains at the forefront of thinking in engineering.

-          Historical information regarding the performance of the asset base. This type of information is almost never available, unfortunately. However over the past five years in particular there has been a great increase in the abilities of organizations to capture relevant data. Other sources are often available. Industry bodies or benchmarking organizations, manufacturers recommendations¹⁴, or engineering judgment of existing employees are often good alternative sources of historical experience. Historical information can be a vital indicator to potential bottlenecks in performance of personnel and machinery as well as an indication of the potential to achieve desired performance levels.

-          Organizational contractual arrangements. The detailed requirements of any contractual arrangements need to be carefully considered in the creation of strategy. These could include contracts for service or product delivery or, in the case of outsourced arrangements, it could mean the contract between the asset owner and the asset manager. In all cases, it is likely to be an important factor in achieving corporate objectives and goals, and a constraining or liberating factor when considering the creation of strategic plans.

-          The need for change management. When introducing new strategic planning into an organization there is often a need to fully understand the manner in which things are currently done. There may often be a need to put in place change management initiatives to ensure continuity of operations and performance while the company changes direction. The availability of change management initiatives may make the difference between whether or not the corporate goals and objectives are achievable with the current operational design of the organization.

-          Good practice in asset management or within the industry. This brings the area of benchmarking into the thinking within this area. Benchmarking is an area of asset management that is often misunderstood and misapplied. Good practices need to be reviewed and analyzed to ensure that they are compliant with the operating environment of the organization. Good practice information can also be gleaned from widely accepted and implemented standards throughout the world. For example, the guide to the RCM standard, SAE JA1012, is a reliable and widely quoted source for good practices in the application of Reliability-centered Maintenance.

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14 Despite being much maligned within the reliability communities of the world, equipment manufacturers remain a trustworthy source of performance information and data. There is always a need to bear in mind the commercial perspective of these companies and that they normally do not necessarily understand the operating context of your particular industry or company.

Exceeding Design Capacity

If the goals of the organization are not possible given the current design capacities of the company, then the following options are available to it:

1. Change expectations – The quickest, although often not the least painful, of decisions to make. If what a company wants to achieve is beyond what it can currently achieve, then the quickest decision is to lower expectations and aim for easier targets. Commercial realities or exceedingly optimistic goal setting often lead to desired performance levels that are too high. When considering risk management, this is an area where decisions need to be made while bearing in mind that they may be scrutinized in the years to come; therefore reduction of expectations may not be an alternative.

2. Redesign – Modifications to existing assets is often a small capital cost for a greater operational or risk mitigation gain in some form or other. In determining redesigns to assets and equipment, thought needs to be given to future operational impacts and costs of such redesigns.

3. Workforce configuration – Within this sector of the capabilities decision diagram, workforce configuration refers to changes from current design capabilities of the workforce. This frequently means increases in the overall number of the workforce or a change to the mixture of internal and outsourced workers.

4. Acquisition – The final option available is that of acquisition or purchasing of new equipment, new systems, tools or other assets required for achievement of the desired performance levels.

In order to turn this into reality, we need to break down corporate objectives into strategies, and then define the underlying abilities, competencies and capacities required to successfully implement these. In the previous chapter we reviewed the objectives that were put in place for particular strategy themes. One of these was the reduction of unit costs while another was the elimination of inefficiencies.

Within Design Capacity

If the goals and objectives defined within the first stage of the MSC are found to be within the current design capacity of the organization, then this can often be targeted via the following strategic areas.

1. Maintenance administration and regimes – This could include changes to the amount and types of maintenance that are being carried out to the machines and asset base, or a change to the way that we are applying current maintenance regimes. Either way it involves changes to the status quo to extract more value from the asset base. This can be accomplished without changes to the fundamental operational design of the organization.

2. Operating procedures – It is often the case that operational procedures and techniques can have a dramatic impact on the reliability and performance of the assets. Elimination of techniques that are aimed at periodically overloading, or permanently overloading, the assets are areas where benefits can often be quickly gained. In this area it is often very difficult to change operating techniques, particularly if operations staff believe that this is the only way that they have to meet production targets. Analysis of this area may well prove that there is not an ability to achieve corporate goals within current design capacities.

3. Workforce configuration – Within this part of the capabilities decision diagram, the term workforce configuration generally refers to the raising of skill levels, training, changes to shift patterns or other changes to the way that the workforce carries out the task of maintenance and operations. This area is also one that can yield some amazingly large benefits.

4. Renewals and replacements policies – Often this aspect of strategic planning is overlooked as companies are dominated by old thinking regarding age-based change-outs and concepts of deterioration. However application of modern reliability thinking regarding this area can be a way to extract substantial value from the asset base in the medium and long term.