Summary

There are many market conditions that drive cost optimization, and the pressure is high in 2016 for many industries to accelerate efficiencies. However, identifying opportunities to reduce cost can be difficult in an ever-changing market—some of the changes are:

  • Business conditions: When the market is up, companies produce at maximum output thresholds. But when the market is down, margins tighten and conserving cash becomes important
  • Technology: The tools people use are different, including those used by competitors, which makes leveling the playing field imminent
  • The game: Equipment is becoming more sophisticated, data is growing exponentially, customers are demanding more, and the price of raw materials is volatile

When it came to lowering costs, the old playbook mandated cutting training, travel, contractors, overtime, and work that can be deferred. But that isn’t enough anymore— nor is it safe or sustainable—and we need to create value in new ways. That means implementing a risk-based approach.

But not just any risk-oriented approach will work. Intelligent asset strategies (IAS) cost less than preventive maintenance or time-based strategies because this approach lets equipment tell us when it needs to be maintained or re-built.

When considering an IAS smart cuts approach, consider these three essential steps:

1.     Optimize your existing strategy

There are likely maintenance tasks that were generated that are no longer necessary, such as those that stemmed from a single incident as more of a reaction than a careful and preventive evaluation. Evaluate lower criticality equipment with the highest maintenance cost and assure the related maintenance strategies are updated to reflect current business conditions.

2.     Re-evaluate your risk tolerance

Do any of these areas have room for manipulation in your risk tolerance?

·       Safety: Probably not, you must keep both people and process safe

·       Environmental: Probably not, you can’t violate environmental hazard protections

·       Compliance: Probably not, you have to meet regulatory requirements

That leaves financial risk. Evaluate your financial risk tolerance curve and adjust as needed. Often when the market is down production rates are lower and we can absorb more downtime while still meeting the production plan. This means we can tolerate a higher risk of equipment failure. While we must be careful to not inflict any long-term damage, we can, in general, live with a lower level of equipment maintenance and reliability. This translates into dollars saved.

3.     Communicate risk options

Leverage technology to show risk over time, not just in year 1, but year 2 and beyond. By helping your peers visualize risk and the corresponding mitigation tasks, your organization can make informed decisions that not only address short-term challenges, but also support long-term goals.

Enabling Intelligent Asset Strategies

Oil pipeline maintenance for corrosion.

Continuously Maximize Asset and Operational Performance

Asset Performance Management from GE Digital helps asset-centric organizations drive safer and more reliable operations while ensuring optimal performance at a lower sustainable cost by enabling intelligent asset strategies. APM's holistic and risk-based intelligent asset strategies balance performance and cost by considering design, operational procedures, and maintenance plans for all assets. With APM, you get a risk-based view of the impact of asset performance management activities to help you make the best decisions.

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About the author

Paul Casto

Asset Performance Management Principal, GE Digital

Paul is a leading practitioner in reliability and maintenance improvement methodologies. He has hands-on experience in reliability, maintenance, operations and engineering in the steel, aluminum,automotive, chemical, aerospace, consumer goods and construction industries. His current areas offocus include: value creation through reliability and maintenance, leveraging reliability to reduceoperating cost, the application of advanced reliability tools, integrating operations into reliability andmaintenance, reliability-based maintenance and shop floor culture change.

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