business procsses

8/11/2019 Business Procsses

1/19

James Davis Page 1

THE BUSINESS PROCESSES OF SAM

The business processes required to implement Strategic Asset Management (SAM).

James W. Davis, PE, Vice PresidentStrategic Asset Management Inc

Voice: 610-861-7472 E-mail:[email protected]

INTRODUCTIONIn the last few years many companies have begun to realize the importance of Strategic Asset Management (SAM) as an enterprisestrategy that, properly implemented, will improve financial performance. Typical results of an effective Strategic Plan for AssetManagement include a 20% - 50% reduction in maintenance cost accompanied by a 15% - 20% increase in real capacity, with nocapital investment in production equipment. The tangible results include a significant increase in profitability accompanied by adramatic reduction in unit cost. One of the key concepts required for successful development and implementation of SAM is theconcept of Business Processes. The SAM Business Processes are used to define and measure the means by which we implementthe best practices that lead to significant, sustainable financial performance improvement.

The Business Processes of SAM are cross-functional as shown in Figure 1. This means that developing and implementing SAMrequires the involvement of key individuals from Production, Engineering, Logistics and Senior Management as well as Maintenance.

Many so-called Maintenance Improvement programs have failed to achieve sustainable results when we have failed to recognize thiscritical aspect.

The processes typically break-down at the intersections between the various stovepipe organizations. These organizations often are

focused on strategies and objectives that are conflicting and competitive in nature. The operations organization is so intent onrunning that they push the maintenance organization to make quick fixes rather than to effect appropriate, lasting repairs.Engineering is tasked with reducing capital expense and controlling construction time rather than considering reliability, availability,maintainability (RAM) and life cycle costs when designing and constructing new facilities. Procurement is rewarded for acquiringparts and materials at least cost, often resulting in substandard items that have a negative impact on overall cost.

The Vice President of Southern Area Manufacturing for Saudi ARAMCO admonished me that, in our plant, the Production andMaintenance organizations were too friendly. In his words we were In bed together. He viewed this as an unhealthyrelationshipand said that he believed there must be a certain level of animosity between these two groups in order for Operations to push Maintenance to meet their needs. Our performance record eventually proved that the old dinosaur was wrong, but we took a lotof heat for awhile.

CapacityPlan

&Manage

AssetHealthcare

LogisticsMa

nagement

ProductionMa

nagement

Asset Management Processes"Asset Management Processes"

Figure 1: Business Processes of SAM


2/19

James Davis Page 2

Studies have shown that among industrial companies in North America:

The average Maintenance wrench time (hands-on work) is less than 30%.

The typical level of Preventable Maintenance (repairs that could have been avoide by better process) is approximately70%

The norm for Asset Utilization (level of on spec production) is averaging 65%.

These issues point to the need for designing appropriate integrated Business Processes to insure that we manage our critical assetsto the optimum capability.

WHAT IS SAM

SAM is an aggressive vision of the future and a related three to five year operational strategy. Key roles are identified anddefined in each element of the strategy. Performance standards are established for critical Business Processes. Key performanceindicators (KPIs) and standard definitions are in place and used for decision making. An effective change management plan isdeveloped and documented. An integrated set of Business processes is designed and implemented to establish a standard ofperformance including a plan for achieving the standard and realizing benefits.

The Strategy is a cross functional tool that identifies roles and expectations for all elements of the Asset ManagementProcesses. It becomes a prioritizing device that causes us to attack first things first. It enables us to develop a thrust ofcommonality across the enterprise.

In a recently published paper titled The Future of Asset Management Brad Peterson, President of SAMI, stated, This articleexplores a broader vision for asset management than has been previously articulated and brands this vision

Strategic Asset

Management (SAM). Based on successful experience with our clients, SAM is an integrated set of processes that systematicallyderive the highest value from plant assets, through a consistent philosophy, plans and objectives, and cooperative involvement byeveryone in the plant. SAM represents a higher level of performance than is currently practiced or even recognized by themanufacturing community today.

Any useful model to guide action will have several characteristics:

Simplicity: All of the greatest ideas are simple in concept. If not kept simple, they are not fully understood orremembered, and fail as guiding principles.

Intuitive: Readers should be able to understand the underlying principles without guidance.

Utility:The model should work consistently in application.

Completeness:All necessary elements of success should be contained.

Our experience with the SAM model indicates these criteria are met. However, you as the reader will need to make your own

judgments.

We will explore the SAM Model and its applications in detail in a subsequent paper.

Figure 2: The SAM Model


3/19

James Davis Page 3

WHY CONSIDER DESIGNED PROCESSES

An associate, Dr. Carol Vesier, once said to me, Business Processes always exist. However, in most cases, management doesntknow what they are. We came to refer to these as Virtual Processes. They are in use throughout your facilities, usually inseveral varying versions, but they are not well defined and often create issues and conflicts. Employees are free to adjust them oreven create new ones as required to do their assignments as they understand them.

A good example of a Virtual Process occurs when Employee Joe has a problem with his computer but is unable to get support

from the IT Department for whatever reason. Joe happens to know that Brenda, another Maintenance Employee is good withPCs, so he gives her a call and she comes over to solve his problem. After all, they have to get t heir jobs done in spite ofmanagement.

Mark Buchanan said in an article in The New Scientist, employees muck up or ignore about one out of every four or fivecommands that come down from their bosses - its a universal principle.

This implies that a Senior Vice President can expect employees on the shop floor to implement about 25% - 30% of hisstandards. The graphic in Figure 3 shows how it works.

The typical plant environment in the absence of well-defined, integrated processes goes something like; Business is triggered bya need. >> Something happens (transfer of information) >> Work is accomplished by someone >> Some Procedure is followed>> Informal network business process occurs (Who can help?) >> Results are evaluated >>>>>>>>> Good, bad, redo, trysomething else. The result is inefficiency at best and impending disaster at worst.

In the absence of well-engineered business processes, employees are going to create their own in order to get through the day.Unfortunately, their limited view of the landscape often causes these ad hoc processes to be inadequate and even detrimental tothe overall mission.

A managing system where the core business processes are left to the imagination of employees frequently becomes a quid pro

quo arrangement. Favors are traded and results are heavily dependant on the popularity and relationships of the employee.Because the Business Processes of SAM are nearly always cross-functional as is depicted in Figure 1, process failures often occurdue to conflicting priorities and adversarial relationships between the various organizations.

Figure 3: Employee Implementation of Standards


4/19

James Davis Page 4

BUSINESS PROCESS CONCEPTS

In order to have effective business processes, The Six Sigma Way by Peter Pande tells us that we need to understand thecomponents or characteristics required for defining a business process. The following diagram depicts these requirements.

The SIPOC model is defined as:

Supplier - the person or group providing key information, materials, or other resource to the process

Input - the thing provided

Process - the set of steps that transforms - and ideally, adds value to - the Input

Output - the final product of the process

Customer - the person, group, or process that receives the output

Process Measures and Service Requirements

These consist of:

A work flow diagram that models the process and identifies roles for each step in the process, and identifies interfacesto other processes

Definitions of the roles and terms used in the process model

Measures or performance indicators to measure the process

Definition of the inputs / suppliers and

Clear specification of output and service requirements

In managing your business processes it is important to avoid the mushroom syndrome and to keep the customers informed. Asan example, insure that the operations or production management dont feel like Maintenance Work Orders fall into a BlackHole once they are initiated. Establish effective reporting systems that provide the information needed to inform and inspireconfidence in the customer of your Business Processes.

Some examples in the Asset Healthcare arena might include:

Work order backlog management

Equipment with defects

Service Requirements:

What are the standards for how we interact

with & treat customers?

Output Requirements:

What features or

characteristics of our final

product or service are key to

customer satisfaction?

Customers

OutputsInputs

Process

Suppliers

Customer

Interface

Figure 4: SIPOC Model


5/19

James Davis Page 5

PM/PdM completion

Clearly list the expected results from each process and identify quality requirements and specifications. Specify delivery andturnover procedures for the customer of each process. Create and use measures to manage process output quality

Some examples in Asset Healthcare and Logistics management may include::

Turnover completed repairs to production

Accept new MRO equipment, parts, materials

BUSINESS PROCESSES VS. BEST PRACTICES

In many so-called Maintenance Excellence and other programs such as TPM and Lean Manufacturing, proponents focus onimplementing best practices. This approach almost invariably fails to achieve dramatic improvements that are sustainable in thecompany culture. Best practices focus on the what we should be doing while Business Processes define how we will do ourcritical work.

The Core Business Processes

There are nine Core or high level Business Processes that are addressed in SAM. The following section provides an overviewparagraph and two or three examples of each of these. Table 1 provides a partial list of the database that we have developed and

used in implementing business processes in several industries

The author has provided a detailed example of the Maintenance Work Management Process at Appendix I.

Strategic Management

Strategic Management processes define the way in which we establish and communicate the future of the company involvingstakeholders at all levels within the organization.

Strategy development and planning process

Goal setting and tracking process

Results measurement and process validation process

Information Management

Information Management incorporates all of the processes and tools that are used to store and retrieve information that is used to

support decision making based on hard data.

Repair tracking and reporting process

Informations systems evaluation and selection process

Reliability Management

Equipment Criticality 4.1.1 Assigning Equipment Criticality

4.1.2 Revising Equipment Criticality

Equipment Taxonomy

Equipment MaintenanceStrategies

4.3.1 Maintenance Strategy

4.3.2 Create Corporate Generic MaintenanceStrategies

4.3.3 Revising Corporate Generic Maintenance

Strategies

4.3.4 Applying a Maintenance Strategy to anEquipment Unit

4.3.5 Revising a Maintenance Strategy to an


6/19

James Davis Page 6

Equipment Unit

Standard Repair Procedures 4.4.1 Standard Maintenance Repair Plans

Acceptance Testing 4.5.1 Identifying Special Acceptance Testing

Equipment Condition

Monitoring

4.6.1 Condition Monitoring

4.6.2 Define Condition Monitoring Tools forEquipment

Failure Analysis and Response 4.7.0 Failure Analysis Core Process

4.7.1 Historical Data Analysis

4.7.2 Basic Failure Analysis

4.7.3 Advanced Failure Analysis

4.7.4 Implement Corrective Actions

Total Equipment Ownership

Cost

4.8.1 Life Cycle Costing.vsd

4.8.2 Applying Selection Criteria for PurchasingNew Equipment

Parts Management and

Inventory Control

4.9.1 Parts Management

4.9.2 Reviewing Part Historical Data

4.9.3 Implement Vendor Stocking Programs

Resource Management

Applying Criticality 5.1.1 Applying Equipment Criticality

Work Management (Reactive

Maintenance)

5.2.0 Reactive Maintenance Core Process

5.2.1 Execute Emergency Work

5.2.2 Identify Contingency Work

Work Management (Planning,

Scheduling and ExecutingWork)

5.3.0 Maintenance Work Core Process

5.3.1 Identify Work

5.3.2 Plan Work

5.3.3 Schedule Work

5.3.4 Execute Work

5.3.5 Execute PM/PdM Work

5.3.6 Document Work

5.3.7 Backlog Management


7/19

James Davis Page 7

5.3.8 Record Event Info Needed for FailureAnalysis

Shutdown Management 5.5.0 Maintenance Shutdown Core Practice

5.5.1 Develop Shutdown Scope of Work5.5.2 Create Preliminary Shutdown Schedule

Table 1

Organization Management

Organization Management involves establishing the Asset Management process management organization and defining the rolesof personnel involved in working with the reliability and maintenance business processes in all organizations. It defines ourManaging System business processes.

Managing cross-functional processes process management organization

Defining roles and responsibilities for processes

Capacity and Capital Management

Capacity Management processes address the methods by which we acquire or dispose capacity and manage capital investment. Itincludes all of the aspects of incorporating reliability, maintainability, and operability into the design and installation of new

systems and equipment or modifications to existing.

Reliability, Availability, Maintainability assessment of systems and equipment

Life cycle cost assessment

Capital equipment procurement data for reliability

Production Management

Production Management includes all of the processes necessary for establishing and maintaining proper process controls as well

as those required for day to day management of the production process. This process includes critica l equipment operatingprocedures, quality management, environmental compliance, and more.

Process quality assurance management

Critical equipment start-up and shutdown-processes

Environmental compliance assurance process

Resource Management

Resource Management includes all of the planning and supervision activities that go in to allocating manpower, materials, toolsand contractors to the accomplishment of the day to day function of the manufacturing site.

Daily work management

Major work and capital projects

Contractor and contract labor management

Reliability Management

Reliability Management involves the work processes and activities that focus on ensuring and enhancing reliability of the plantsproduction assets, the manufacturing equipment. It includes proactive activities like preventive and predictive maintenance andanalysis activities and record keeping.

Creating and implementing maintenance strategies

Equipment failure analysis and corrective action


8/19

James Davis Page 8

Preventive and predictive maintenance processes and follow-up

Logistics Management

Logistics Management includes all of the planning and day to day management processes the manufacturing reliability missionand objectives. Storehouse management, procurement of supplies and parts, and vendor management are all elements ofLogistics Management.

Vendor evaluation and consolidation

Crtical spare parts management

Material quality assurance

Change Management

Change Management includes all of the work processes and activities required for communicating the SAM objectives to theworkforce, to motivate them to take ownership of the SAM, to achieve success, and to maintain state of the art work processes.

Craft reliability reward process

SAM Key Performance Indicator tracking and results management

SAM communication process

Appendix one contains a sample set of Business Processes for the function of managing maintenance work. As an interestingexercise, see if you can identify the following characteristics for each process:

Supplier

Inputs

Process As given.

Outputs

Customer

KPI

As you can see, it is not always easy to identify the specific characteristics for a given process. In my next article, we willaddress the Value Proposition for SAM.

References:

Title Author Copyright Publisher

The Future of Asset Management S Bradley Peterson 2003 Strategic AssetManagement, Inc.

Improving Profitability Through Reliability Carol Vesier, PhD 2001 RonaMax

The Six Sigma Way Peter Pande et al 2000 McGraw-Hill

Uptime: Strategies for Excellence John Dixon Campbell 1995 Productivity Press

Article Mark Buchanan 1997 The New Scientist


9/19

APPENDIX I - SAMPLE BUSINESS PROCESS WORK MANAGEMENT

James Davis Page 1

5.3.0 Maintenance Work Core Proces

Rev: Date: 02/20/02

Backlog

Management

Process - 5.3.7

Identify Work

Process - 5.3.1

Plan Work

Process - 5.3.2

Schedule Work

Process - 5.3.3

Execute Work

Process - 5.3.4

Document Work

Process - 5.3.6

Execute PM/ PdM

Work

Process - 5.3.5


10/19


James Davis Page 2

Identify Work Item Create Work Request

Anyone

5.3.1.1

Select Work Priority

Anyone

5.3.1.2

Is this an emergency?

Create Work Order

Maintenance Planner

5.3.1.5

Is design change required?

Capture Minimum Event

Data

Maintenance Planner

5.3.1.6

Plan Work

Process - 5.3.2

5.3.1 Identify Work

Rev: 4

Identify as Design Change

Maintenance Planner

5.3.1.7Reactive

Maintenance Process

Process - 5.2.0

Is this a failure event?

Review Work Request

Maintenance Planner

5.3.1.4

Review Work Request

Shift Superintendent

5.3.1.3

Is this an emergency?

Design Change

Process

Process -

YES

YES

NO

NO

YES

NO

YES

Date: 02/20/02


11/19


James Davis Page 3

5.3.2 Plan Work

Rev: 4

Identify Work

Process - 5.3.1

Is archived plan available?

Define & Sequence Job

Tasks

Maintenance Planner

5.3.2.4

Define Resource

Requirements

Maintenance Planner

5.3.2.5

Review Job Plan

Maintenance Planner

5.3.2.2

Is plan complete?

Assemble Work Package

Maintenance Planner

5.3.2.8

Schedule Work

Process - 5.3.3

Revise Job Plan

Maintenance Planner

5.3.2.3

Is material available?

Initiate Procurement

Maintenance Planner

5.3.2.6

YES

YES

NO

Obtain Materials

Buyer

5.3.2.7

Sort Work Orders By

Priority

Maintenance Planner

5.3.2.1

YES

NO

Date: 02/20/02

NO


12/19


James Davis Page 4

Sort Planned Work Orders

by Priorit y

Maintenance Scheduler

5.3.3.1

Compare Available

Resources With

Requirements


5.3.3.2

Create Job Schedule


5.3.3.3

Review Job Schedule

Planning & Scheduling

Team

5.3.3.4

Did the schedule change?

Issue Job Schedule


5.3.3.8

Execute Work

Process - 5.3.4

5.3.3 Schedule Work

Rev: 4

Review Planned Backlog

Planning & Scheduling

Team

5.3.3.5

Expedite resources? Expedite Resources

Maintenance Planner

5.3.3.7

Revise Job Schedule


5.3.3.6

YES

YES

NO

NO

Plan Work

Process - 5.3.2

Date: 02/20/02

Identify Contingency

Work

Process - 5.2.2


13/19


James Davis Page 5

Schedule W ork

Process - 5.3.3

Review Work Package

Maintenance Supervisor

5.3.4.1

Receive Parts and

Materials

Craft Person

5.3.4.4

Obtain Work Permits

Craft Person

5.3.4.6

Lock Out/Tag Out Work

Area

Craft Person

5.3.4.7

Execute Work

Craft Person

5.3.4.8

Release to Operations

Craft Person

5.3.4.9

Document Work

Process - 5.3.6

5.3.4 Execute Work

Rev: 4

Verify Resources


5.3.4.2

Assign Personnel


5.3.4.3

Send parts or core back

to warehouse?

Conduct Site Visit

Craft Person

5.3.4.5

New defects? Should it be f ixed now?

Fix It

Craft Person

5.3.4.11

Return Parts To

Warehouse

Craft Person

5.3.4.10

Identify Work

Process - 5.3.1

YES

YES

NODate: 02/20/02

Execute Emergency

Work

Process - 5.2.1

YES

NO

NO


14/19


James Davis Page 6

Schedule Work

Process - 5.3.3

Review PM/ PdM Work

Order

PM/ PdM Supervisor

5.3.5.1

Receive Equipment and orTools

PM/ PdM Person

5.3.5.4

Execute Work

PM/ PdM Person

5.3.5.5

Document Work

Process - 5.3.6

5.3.5 Execute PM /PdM

Rev: 4

Verify Resources

PM/ PdM Supervisor

5.3.5.2

Assign Personnel

PM/ PdM Supervisor

5.3.5.3

Ne w def ect s? NO

Should it be fixed now?

YE S

Obtain Resources

Craft Person

5.3.5.7

NO

NOClean/ Store Equipment

and or Tools

PM/ PdM Person

5.3.5.6

YE S

Identify Work

Process - 5.3.1

Fix It

Craft Person

5.3.5.8

Date: 02/20/02


15/19


James Davis Page 7

Execute Work

Process - 5.3.4

Should work package be

archived?Archive Work Package

Maintenance Planner

5.3.6.1

Document Maintenance

History

Maintenance Planner

5.3.6.3

Close Work Order

Maintenance Planner

5.3.6.4

Mark-up Work Package

Craft Person

5.3.6.5

Update Work Package

Maintenance Planner

5.3.6.6

Was RCFA single eventtrigger reached?

Record Event

Information Needed

for Failure Analysis

Process - 5.3.8

END

YES

YES

NO

Was work package

adequate?YES

NO

Identify Work Performed

Craft Person

5.3.6.2

NO

5.3.6 Document Work

Rev: 4Date: 02/20/02


16/19


James Davis Page 8

Begin AnalysisPrepare Backlog

Exception Reports

Backlog Auditor

5.3.7.2

Review Backlog and

Reports

Backlog Management

Team

5.3.7.3

Prepare Backlog Aging

Reports

Backlog Auditor

5.3.7.1

Valid Work Order? Priority Appropriate? Ready to be Scheduled?

Obtain Necessary

Resources

Maintenance Planner

5.3.7.6

Cancel the Work Order

Backlog Auditor

5.3.7.4

YES YES

Adjust the Priority

Backlog Auditor

5.3.7.5

Schedule Work

Process - 5.3.3

NO

5.3.7 Backlog Management

Rev: 1

YES

End

End

Date: 02/20/02

NO


17/19


James Davis Page 9

Document Work

Process - 5.3.5

Notify Reliability

Engineer

Area Supervisor

5.3.8.1

Classify Work

Notification as RCFAEvent

Area Supervisor

5.3.8.2

Document Additional

Data on Template/Checklist

Craft Person

5.3.8.3

Validate that Appropriate

RCFA Data is Captured

Reliability Engineer

5.3.8.4

Advanced Failure

Analysis

Process - 4.7.3

5.3..8 Record Event Information Needed

for Failure Analysis

Rev: 0


18/19


James Davis Page 10


19/19

Hugh R. Smith, P.Eng, PMPPrincipalR-Tech Technology Inc.4319 Valencia AvenueNorth Vancouver, BC

CanadaV7N 4A7

(604) 728-0473

Hugh is a Mechanical Engineer (University of Alberta, 1987) and spent 10 years with the Cominco / Agrium family ofcompanies working in Operations and Maintenance. In his final years with Agrium, he was the business lead for aproject to reengineer maintenance and operating processes, implement RCM, and implement SAP Plant Maintenanceacross all of Agriums operations. For the last seven years, Hugh has worked as a management consultant initially

with Cap Gemini Ernst and Young, and more recently with his own consulting company helping various clients withmajor projects to reengineer operations, maintenance, and work management processes and implement supportingapplications. He continues to use tools such as the Deviant Cost Model to help clients develop appropriatemaintenance strategies, and most recently has worked with distribution utilities to apply the cost model and risk-basedmaintenance techniques to distributed asset bases. Hugh has written and delivered highly acclaimed courses onmaintenance methods, and has written and presented numerous articles on related subjects.

business procsses

Documents