Imagine you are seventeen years old (hardly in asset management!) and your parents buy you your first car. They also give you simple instructions but there is one condition – you only get one car, you can never get another. Never!
Now ask yourself how would you maintain that car? I am assuming, it would be looked after really well. Frequent tyre checks, oil changes, proper fuel, timely servicing etc. Now imagine if your parents also told you that none of the replacement parts for this car would ever work as well as the original parts. You may either give up and drive the car till it breaks and let it spend the rest of its life in a garage (unless you parents change their minds!). Or you may end up reducing the use of the car for the rest of the cars useful life? In other words, the car would continue to run but, not at the same speed and with the efficiency you were used to. Both are either an expensive or an inefficient options. This car economics trade-off dilemma of service, repair or replace is faced by most of asset intensive Utilities organisations. Today’s asset intensive organisations face multiple challenges; ageing assets, rising energy costs, stringent environmental quality standards, tighter regulatory frameworks, climate change and customer price sensitivity.
Utilities are looking to find smarter ways of asset care and balance capital asset investment with operational excellence, smart and digital assets. Gone are the days where asset maintenance was seen as a “necessary evil”; asset organisations now have more alternatives than ever to employ a costly “run until it breaks” reactive maintenance strategy, or an inefficient “fix it regardless” preventative maintenance approach.
Cost of an Asset Failure for Utilities
It is estimated that 1€, out of 3€ spent on maintenance, is currently wasted because the serviced asset did not require any maintenance. Capgemini’s research suggest that 90% of maintenance work is reactive and 33% of downtime losses are a result of unplanned maintenance, which is 50% more expensive than planned maintenance. The ‘true’ cost of failure to most organisations are typically hidden, as costs associated with early replacement, consequential impact on other network assets often aren’t captured or measured. Traditional accounting models define and capture ‘cost of failure’ events and incidents at the fix and repair level i.e. labour, equipment, return to service costs etc. multiplied by x no of failures per annum. Companies have always been establishing initiatives to get more from their existing investments.
Exhibit 1: Cost of Failure – Repair vs. Availability
How to Achieve Asset Operational Excellence
In order to successfully embed any solution, organisations need to review the following:
Skills and Competencies – does the workforce have the right capabilities and is it empowered to make decisions? Conduct a clear assessment of workforce skills and address capability gaps through upskilling, competency profiling and certifications etc. Build “operator academies” which not just address technical change but cultural and behavioural change as well.
Business & Process Change – what activities currently exist to encourage user adoption and consistency of use? Remove waste from processes by applying visual management, standardisation, error proofing, changeover/turnaround reduction etc. Install performance management system: measure key things which impacts bottom line – safety, people, cost and compliance.
Technology – is the business system intelligent enough to a) remove manual process steps or single points of failure, b) obtain an accurate TOTEX view of reactive failures or c) a view of critical assets reliability? Not only look to automate processes but also automate asset inventory and maintenance systems in order to get a single version of truth. Leverage digital technologies for field workforce.
Strategy – does the organisation have an integrated asset ‘whole life cost’ in its 5-10 years business plan and whether finance know a mechanism to measure it? Review your current asset management operating model – are capex and opex aligned? Finance need to rethink allocation of CAPEX and OPEX based on applying ‘whole life cost’ with inputs from strategy, capital and operations instead of using last 3 or 5 years of historical data.
Capgemini’s Asset Management Operational Excellence
At Capgemini, we take a ‘whole life’ approach to asset management with our clients, creating a maintenance and operations culture that extends equipment life, assets performance and bring a cultural change in asset care and innovation. Capgemini have tailored its methodology to reflect the key focus areas associated with asset failures in an organisation. This is centred on our Asset Management System (AMS©) framework, containing 16 modules which achieves productivity and process improvement gains through behavioural change as well as applying tools holistically across the three areas – process (doing the right work), people (doing the work right) and planning (managing the right way).
Exhibit 2: Achieving Asset Transformation Capgemini’s Asset Management System (AMS©)
• Do The Right Work: achieving lower cost by focusing only on value-adding activities, and confirming no waste in the value stream. For example, installing a Kanban system on critical spares inventory to avoid time wastage when dealing with an asset failure.
• Do the Work Right: a culture of continuous process improvements and a visible leadership at all levels so that everyone knows their roles and what is expected of them. For example, planned asset maintenance process optimisation, or supply chain optimisation.
• Manage the Right Way: Address data intelligence and decision making to create a culture of ‘bottom up’ performance management. For example, applying Visual Management, Asset League Tables, Learning passports, Performance Dashboards from Senior Manager to Team Leaders. Our Asset Management System (AMS©) help organisations to derive greater value from their assets estate by transforming asset maintenance and operations to improve efficiency, asset stewardship and reduce risk.
The toolkit helps utilities organisations to reduce cost, reduce risk and compliance with legislation. Our primary focus is on delivering business results, working alongside your people ‘in the trenches’ rather than fixating on academic theory or methods. This people-centred approach to implementing asset transformation is helping Capgemini clients achieve sustainable results: a 15-20% improvement in efficiency is within your grasp.
How Can Capgemini Help You? Capgemini understands the major issues and opportunities facing the Utilities sector today and in the coming years; and how these are likely to impact your organisation. Capgemini has helped its clients achieve asset operational excellence in Utility industry. Our work has achieved significant benefits in the areas of: • Asset Reliability • Asset Performance & Intelligence • Asset & Energy Optimisation Capgemini will work with your stakeholders and use a simple structured approach to develop and deliver solutions.
Phase 1 – Assess: Assessment of current performance including planning, delivery, organisational structure, management alignment and personnel engagement. This includes onsite meetings, field observations, performance data review, and various analytical techniques for screening. A gap analysis of best practices is performed and key performance metrics assessed.
Phase 2 – Roadmap: Organise workshop sessions with the senior leadership team to develop the roadmap for implementation. We will consider other ongoing initiatives and other constraints which will affect implementation. In collaboration with your team, we will design a transformation roadmap and other implementation activities, timing and resources for delivery.
Phase 3 – Implement & Sustain: The road map will be delivered by establishing a delivery team for the various components of the plan. We will then design streams and make stream teams accountable for delivering specific initiatives. With your team, we will design performance monitoring and support systems to drive data insights and achieve sustainable benefits.
Conclusion Asset management involves managing assets to minimise the total life cycle cost of owning and operating them while delivering the level of service the customer’s desire. Despite many theories that exist about how to best implement an asset management program, asset management doesn’t need to be complicated. Asset operational excellence is based on a step change in skills and competencies, business process and behavioural change and the performance analytics. This holistically moves the organisation away from the reactive model to a genuinely proactive approach with a behavioural change in the workforce.
Capgemini’s approach is to deliver a model which combines operational excellence that’s based on its System (AMS©) framework which achieves productivity and process improvement gains through behavioural change as well as applying tools holistically across the three areas – process (doing the right work), people (doing the work right) and planning (managing the right way). Back to the car analogy, I can choose to keep my car tuned and the oil changed, and I may make those choices based on my financial situation. If I fail to maintain my car, the car may stop running or fail to pass inspection. Worst case, it’s sent to the junkyard! If we cannot afford to take care of the condition of our assets, and our assets ceases to function normally, they will likely end up with an expensive repair or get replaced with an expensive replacement adding up unnecessary costs.
Capgemini’s asset management system approach to implement asset transformation is helping our clients achieve sustainable results: a 15-20% improvement in efficiency is within your grasp.