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Studying the funding principles for integrating Asset Management in Operations: an empirical research in production companies
3rd IFAC19-21, Workshop Advanced Maintenance Engineering, Service and Technology October 2016.on Biarritz, France 3rd IFAC Workshop Advanced Maintenance 3rd IFAC19-21, Workshop on Advanced Maintenance Engineering, Engineering, Service Service and and Technology Technology October 2016.on Biarritz, France 3rd IFAC19-21, Workshop Advanced Maintenance Service and Technology October 2016. Biarritz, France Available Engineering, online at www.sciencedirect.com October 19-21, 2016.on Biarritz, France October 19-21, 2016. Biarritz, France
ScienceDirect Studying the funding principles for integrating Asset Management in Operations: IFAC-PapersOnLine 49-28 (2016) 001–006 Studying the funding principles for integrating Asset Management Operations: Studying the funding principles for integrating Asset Management in Operations: an empirical research in production companies in Studying the funding principles for integrating Asset Management in Operations: Studying the funding principles for integrating Asset Management in Operations: an empirical research in production companies an empirical empirical research research in in production production companies companies an I. Roda*. Macchi* an empirical research in M. production companies
I. Roda*. M. Macchi* I. I. Roda*. Roda*. M. M. Macchi* Macchi* I. Roda*. Macchi*Engineering, Politecnico di Milano, M. * Department of Management, Economics and Industrial [email protected] * Department of Management, Economics and Engineering, Politecnico) di Milano, Milano, Italy ( e-mail: [email protected]; * of Economics and Engineering, * Department Department of Management, Management, Economics and Industrial [email protected] Engineering, Politecnico Politecnico di di Milano, Milano, Milano, Italy ( e-mail: [email protected]; * Department of Management, Economics and [email protected] Engineering, Politecnico)) di Milano, Milano, Italy ( e-mail: [email protected]; Milano, Italy ( e-mail: [email protected]; [email protected] ) Milano, Italy ( e-mail: [email protected]; [email protected] ) Abstract: The aim of this paper is to investigate Asset Management (AM) implementation as a business Abstract: The production aim of this systems paper is to investigate Asset Management (AM) The implementation as a business process within to investigate contribute to operational excellence. main fundamentals to be Abstract: The aim of this paper is to Asset Management (AM) implementation as aa business Abstract: The aim of this paper is to investigate Asset Management (AM) implementation as business process within production systems to contribute to operational excellence. The main fundamentals to be considered to properly implement AM within production companies according to the existing literature Abstract: The aim of this paper is to investigate Asset Management (AM) implementation as a business process within within production production systems systems to to contribute contribute to to operational operational excellence. excellence. The The main main fundamentals fundamentals to to be be process considered to properly implement AM within production companies according to the existing literature and standards are identified and they are: two production dimensions – i.e., the asset life (Beginning of to Life, process within production systems to contribute to operational excellence. Thecycle main fundamentals be considered to properly implement AM within companies according to the existing literature considered to properly implement AM within production companies according to the existing literature and standards areEnd identified and they are: two dimensions companies –level i.e., of thethe asset life cycle (Beginning of Life, Middle of Life, ofimplement Lifeand phases) and the hierarchical asset-control activities considered to properly AMare: within production according to the(Beginning existing (strategic literature and standards are identified they two dimensions – i.e., the asset life cycle of Life, and areEnd identified they are: two dimensions –level i.e., of thethe life of Life, Middle of Life, of Lifeand phases) and thefour hierarchical asset-control activities (strategic level,standards tactical level, operational level) – and funding principles –asset i.e., life cycle cycle (Beginning orientation, system and standards areEnd identified and they are: two dimensions –level i.e., of thethe asset life cycle (Beginning of Life, Middle of Life, of Life phases) and the hierarchical asset-control activities (strategic Middle of Life, End of Life phases) and the hierarchical level of the asset-control activities (strategic level, tactical level, operational level) – and four funding principles – i.e., life cycle activities orientation, system orientation, risk orientation asset-centric orientation. An empirical investigation is then developed Middle of Life, End of Lifeand phases) and thefour hierarchical level of the asset-control (strategic level, tactical level, operational level) – and funding principles – i.e., life cycle orientation, system level, tactical level, operational – andproduction four funding principles i.e., lifeorder cycle orientation, system orientation, risk orientation and level) asset-centric orientation. An empirical investigation is thenthe developed through multiple case-study involving eight companies in – in assess level of level, tactical level, operational level) – and four funding principles –Italy, i.e., life cycletoorientation, system orientation, risk orientation and asset-centric orientation. An empirical investigation is then developed orientation, risk orientation and asset-centric orientation. An empirical investigation is then developed through multiple case-study involving eight production companies in Italy, in order to assess the level of orientation towards those funding principles within production companies as it is nowadays, in order to orientation, risk orientation and asset-centric orientation. An empirical investigation is then developed through multiple case-study involving eight production companies in Italy, in order to assess the level of through multiple case-study involving eight production companies in Italy, in order to assess the level of orientation towards those funding principles within production companies as it is nowadays, in order to identify existing gaps and areas for improvements. through multiple case-study involving eight production companies in Italy, in order to assess the level of orientation towards those funding principles within orientation towards those funding principles within production production companies companies as as it it is is nowadays, nowadays, in in order order to to identify existing gaps and areas for improvements. orientation towards those funding within production companies as itLtd. is nowadays, in order to identify existing gaps and areas areas forprinciples improvements. © 2016, existing IFAC (International Federation of Automatic by Elsevier All rights reserved. identify gaps and for improvements. Keywords: Asset Management, Life cycle, Decision Control) making, Hosting Production systems, Management systems identify existing gaps and areas for improvements. Keywords: Asset Management, Life cycle, Decision making, Production systems, Management systems Keywords: Asset Management, Life cycle, Decision making, Production systems, Management systems Keywords: Asset Management, Life cycle, Decision making, Production systems, Management systems Keywords:1.Asset Management, Life cycle, Decision making, Production systems, Management systems INTRODUCTION 1. INTRODUCTION 1. INTRODUCTION INTRODUCTION enables assessing the level of orientation towards those 1. Nowadays, the management of physical assets is recognized enables assessing the level of orientation towards those 1. INTRODUCTION fundamentals withinthe production as ittowards is nowadays; enables assessing level of ofcompanies orientation those Nowadays, the management assetsgeneration is recognized as an important contributor of to physical foster value for enables assessing the level orientation towards those fundamentals within production companies as it is nowadays; Nowadays, the management of physical assets is recognized besides, it helps identifying the existing gaps and areas for enables assessing the level of orientation towards those Nowadays, the management of physical assets is recognized fundamentals within production companies as it is nowadays; as an important contributor to foster value generation for companies (El-Akruti et al.of 2013; Maletic et recognized al. 2014; fundamentals within production companies as itand is nowadays; Nowadays, the management physical assetsgeneration is besides, it helps identifying the existing gaps areas for as an important contributor to foster value for improvements. fundamentals within production companies as it is nowadays; as an important contributor foster2005). value Moreover, generation for besides, it helps identifying the existing gaps and areas for companies (El-Akruti et al. 2013; et al. 2014; Mitchell 2002; Schuman & to the it helps identifyingasthe existingSection gaps and for as an important contributor toBrent foster Maletic value generation for besides, improvements. companies (El-Akruti et al. al. 2013; Maletic et al. al. 2014; 2014; The paper is organized follows. 2 areas provides besides, it helps identifying the existing gaps and areas for companies (El-Akruti et 2013; Maletic et improvements. Mitchell 2002; Schuman & Brent 2005). Moreover, the recent publication of the 5500x 2005). body ofMoreover, standards on improvements. companies (El-Akruti et ISO al. 2013; Maletic et al. 2014; The paper is organized as follows. Section 2 provides Mitchell 2002; Schuman & Brent the information on the methodology that was adopted for this improvements. Mitchell 2002; Schuman & Brent 2005). Moreover, the The paper paper is is organized organized as as follows. follows. Section Section 22 provides provides recent of the ISO 5500x 2005). body reinforcing ofMoreover, standards the on The Asset publication Management (AM) Mitchell 2002; Schuman & contributed Brent information on organized the methodology that was for this recent publication of the the ISO 5500x body body of of standards standards on on The research. In is Section 3, the as fundamentals foradopted AM 2integration paper follows. Section provides recent publication of ISO 5500x information on the methodology that was adopted for this this Asset Management (AM) contributed reinforcing the increasing interest on the topic both by industry and information on the methodology that was adopted for recent publication of the ISO contributed 5500x body reinforcing of standards the on research. In Section 3, the fundamentals for AM integration Asset Management (AM) in Operations production companies are detailed as they oninthe methodology that was for this Asset Management contributed the information research. In Section Section 3, the the fundamentals fundamentals foradopted AM integration integration increasing interest on(AM) the topic both byreinforcing industry and academia. Nevertheless, AM as a discipline and business research. In 3, for AM Asset Management (AM) contributed reinforcing the in Operations in production are as they increasing interest interest on on the the topic topic both both by by industry industry and and research. have beenIndefined based on fundamentals ancompanies extensive literature and Section 3, the for detailed AM review integration increasing in Operations in production production companies are detailed as they they academia. Nevertheless, AM as within a discipline and business process is still at its on earlythe stage debate Operations in companies are detailed as increasing interest topic boththebyscientific industry and in have been defined based on an extensive literature review and academia. Nevertheless, AM as a discipline and business discussions with people from industry. Based on that, Section Operations in production are detailed as they academia. Nevertheless, as within a discipline and industrial business have been defined defined based on on an ancompanies extensive literature literature review and process is still its earlyAM scientific debate in and solutions toat itsstage adoption inthe different been based extensive review and academia. Nevertheless, as within a discipline and business discussions with people Based on findings that, Section process is still still at support its early earlyAM stage the scientific debate have 4 provides a cross-case analysis of the main that have been defined basedfrom on anindustry. extensive literature review and process is at its stage within the scientific debate discussions with people from industry. Based on that, Section and solutions to support its adoption in different industrial contexts still definition. with people from industry. Based on findings that, Section process isarestill its early withininthe scientific debate discussions 4emerged providesfrom a cross-case analysis the main that and solutions toatunder support itsstage adoption different industrial the multiple caseof development. In discussions people from industry. Based on findings that, Section and solutions to support its adoption in different industrial 4 provides provides with a cross-case cross-case analysis of study the main that contexts are still under definition. AM, as it has been evolving during the last years, is 4 a analysis of the main findings that and solutions to support its adoption in different industrial emerged from the multiple case study development. In contexts are are still still under under definition. definition. particular, for each AM funding principle, the main findings 4 provides a cross-case analysis of the main findings that contexts emerged from from the the multiple multiple case case study study development. development. In In AM, as are it asstill has been definition. evolving during the different last years, is emerged considered a holistic It embraces kinds contexts under particular, foris each funding main findings AM, as it it has has been approach. evolving during during the last last years, years, is emerged on how itfrom addressed by case theprinciple, analyzed companies are the AM multiple study the development. In AM, as been evolving the is particular, for each AM funding principle, the main findings considered as a holistic approach. It embraces different kinds of actors that together aim at realizing value by managing foris each AM funding main findings AM, as it ashas been approach. evolving during the different last years, is particular, on how itFinally, addressed theprinciple, analyzed companies are considered holistic It embraces embraces kinds presented. Section 5by to the conclusions. particular, AM funding the main findings considered as aatogether holistic approach. It on how it itforis is each addressed byis dedicated theprinciple, analyzed companies are of actors that aim at and realizing valuedifferent by managing assets through coordination in alignment withkinds the on how addressed by the analyzed companies are considered as atogether holistic approach. It embraces different kinds presented. Finally, Section 5 is dedicated to conclusions. of actors that aim at realizing value by managing how itFinally, is addressed the analyzed companies are of actors that together aim at and realizing value by55000, managing presented. Section 55byis is dedicated dedicated to conclusions. conclusions. assets through coordination in alignment with ‘an the on organizational strategy. According to the ISO presented. Finally, Section to of actors that together aim at realizing value by managing assets through through coordination coordination and and in in alignment alignment with with the the presented. Finally, Section 2. METHODOLOGY 5 is dedicated to conclusions. assets organizational strategy. tohas the ISO 55000, ‘an asset isthrough an item, thing orAccording entity thatin potential or actual assets coordination and alignment with the 2. METHODOLOGY organizational strategy. According to the ISO 55000, ‘an organizational strategy. According to the ISO 55000, ‘an 2. METHODOLOGY asset is an item, thing or entity that has potential or actual value istoananitem, organization. The that value will vary between 2. METHODOLOGY organizational strategy. tohas the ISO 55000, ‘an This research is based asset thing or orAccording entity potential or actual on an extensive literature review and 2. METHODOLOGY asset istoanorganizations thing entity that haswill potential or actual value anitem, organization. The value vary between different and their stakeholders, and can be asset is an item, thing or entity that has potential or actual value to an organization. The value will vary between This research is based on anand extensive literature and on brainstorming activities workshops withreview industrial value an intangible, organization. The will vary research is based on an extensive literature review and different and their value stakeholders, and between can(ISO be This tangibleto or financial or non-financial’ research is allowed based onidentifying anand extensive literature and value to organizations an organization. The will vary different organizations and their value stakeholders, and between can be be This on brainstorming activities workshops withreview industrial exponents that and hypothesizing the This research is based on an extensive literature review and different organizations and their stakeholders, and can on brainstorming activities and workshops with industrial tangible or intangible, financial or non-financial’ (ISO 55000:2014(E) 2014). Overall, thisstakeholders, statement clearly brainstorming activities and workshops with industrial different organizations and their and outlines can(ISO be on tangible or intangible, financial or non-financial’ exponents that allowed identifying and hypothesizing the foundations for implementing the case study. In fact, the on brainstorming activities and workshops with industrial tangible or intangible, financial or non-financial’ (ISO that allowed identifying and hypothesizing the 55000:2014(E) 2014). this statement clearly outlines the main or purpose of Overall, AM, which isor tonon-financial’ realize value from exponents that allowed identifying and hypothesizing the tangible intangible, financial (ISO exponents 55000:2014(E) 2014). Overall, this statement clearly outlines foundations for implementing the case study. In fact, the synthetization ofallowed the foundations of case AM the basis for next exponents that identifying andisstudy. hypothesizing the 55000:2014(E) 2014). Overall, this statement clearly outlines foundations for implementing the In fact, the the main purpose of AM, which is to realize value from assets, and its scope of application generally referred to foundations for implementing the case study. In fact, the 55000:2014(E) 2014). Overall, this statement clearly outlines the main purpose of AM, which is to realize value from synthetization of the foundations of AM is the basis for next research steps and provides indication on how decisionfoundations for implementing the case study. In fact, the the main purpose of AM, which is to realize value from synthetization of of the the foundations foundations of of AM AM is is the the basis basis for for next next assets, and itsofscope of generally referred to synthetization different types assets andapplication industrial the main purpose of AM, which is sectors. to realize value from assets, and its scope scope of application generally referred to research stepsof and provides indication decisionmaking should be implemented within production companies synthetization the foundations of AM ison thehow basis for next assets, and its of application generally referred to research steps and provides indication on how decisiondifferent types ofscope assets andwithin industrial sectors. This paper looks at AM the context of production assets, and its of application generally referred to research steps and provides indication on how decisiondifferent types types of of assets assets and and industrial industrial sectors. sectors. making within in order should for AMbe toimplemented beprovides integratedindication in theirproduction management system. steps and on howcompanies decisiondifferent making should be implemented within production companies This paper looks at AM context of production companies (manufacturing andthe process industry) to research making should be implemented within production companies different types of assets andwithin industrial sectors. This paper looks at AM within the context of production in order for AM to be integrated in their management system. Based on that, the case study method was chosen for the making should be implemented within production companies This paper looks at AM within the context of production in order for AM to be integrated in their management system. companies (manufacturing and process industry) to investigate isat its in process supporting in orderof forthis AMpaper. to becase integrated in their management system. This paper what looks AMrelevance within the context of production Based on that, the study method was chosen for the companies (manufacturing and industry) to scope In fact, case study allows exploring in orderon forthat, AM the to be integrated in their management system. companies (manufacturing and in process industry) to Based study method was chosen for investigate what is its relevance supporting production systems operations. on this that,testing the case case study method was chosenexploring for the the companies (manufacturing and in process industry) to Based investigate what is its its relevance relevance supporting production scope of paper. In relevance fact, case study allows evidences and the of the postulated concepts Based on that, the case study method was chosen for the investigate what is in supporting production scope of this paper. In fact, case study allows exploring systems operations. The objective of this paper is to identify which areproduction the main evidences scope of this paper. In fact, case study allows exploring investigate what is its relevance in supporting systems operations. and testing the relevance of the postulated concepts according to the retroductive objective of this paper. In relevance fact,approach’s caseofstudy allows (El-Akruti exploring systems operations. evidences and testing the the postulated concepts The objective of this paper is to identify which areimplement the main scope fundamental elements to be considered to properly evidences and testing the relevance ofthe theimplementation postulated(El-Akruti concepts systems operations. The objective of this this paper paper is to to identify identify which are are the the main main according to2010). the retroductive approach’s objective & Dwight In this research, of a evidences and testing the relevance of the postulated concepts The objective of is which according to the retroductive approach’s objective (El-Akruti fundamental elements to be considered to properly implement AM within production companies according to the existing to the retroductive approach’s objective (El-Akruti The objectiveelements of this paper is to identify which areimplement the main according fundamental to be considered to properly & Dwight 2010). In this research, the implementation of a/ multiple case study enables investigating the existence according to the retroductive approach’s objective (El-Akruti fundamental elements to be considered to properly implement & Dwight Dwight 2010). 2010). In In this this research, research, the the implementation implementation of of a AM within production according to the existing literature and standards. Anconsidered empirical is then & fundamental elements tocompanies be toinvestigation properly implement AM within production companies according to the existing multiple case study enables investigating the existence absence ofcase practices towards principles inoftheaa// Dwight 2010). In oriented this research, the AM implementation AM within production companies according to study the existing multiple study enables investigating the existence literature and standards. Ancase-study. empirical investigation is then & developed through multiple The case multiple case study enables investigating the existence AM within production companies according to the existing ofcase practices towards AM principles the// literature and standards. standards. An An empirical empirical investigation investigation is is then absence analyzed production companies. In particular, this in study multiple study oriented enables investigating the existence literature absence of practices oriented towards AM principles in the developedand through multiple case-study. The case studyis then absence of practices oriented towards AM principles in the literature and standards. An empirical investigation then developed through through multiple multiple case-study. case-study. The The case case study study analyzed companies. In particular, this in study absence ofproduction practices oriented towards AM principles the developed analyzed production companies. In particular, this study analyzed production companies. In particular, this study developed through multiple case-study. The case study Copyright © 2016 IFAC 1 analyzed production companies. In particular, this study 2405-8963 © 2016 2016, IFAC IFAC (International Federation of Automatic Control) Copyright 1 Hosting by Elsevier Ltd. All rights reserved. Copyright 2016 1 Peer review© responsibility of International Federation of Automatic Copyright ©under 2016 IFAC IFAC 1 Control. Copyright © 2016 IFAC 1 10.1016/j.ifacol.2016.11.001
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targeted eight production companies in Italy. Medium or big size companies were selected, with medium/high maturity in maintenance management practices (according with the analysis previously implemented through the survey developed by TeSeM observatory (2014-2015) (www.tesem.net), that focuses on understanding the state-ofpractice of the technologies and services for maintenance in industry). In fact, it is assumed that only companies with certain maturity in Maintenance management are ready enough to talk about and implement the wider concept of AM. Finally, the selected companies belong to different industrial sectors in order to avoid biases and to cover a broader scope of the production industry. The data collected from the case studies were analyzed using a uniform approach. The main source of the primary data for this research is a semi-structured interview. The chosen unit of analysis is the company from the perspective of the maintenance function / industrial engineering function and a face-to-face semi-structured interview was chosen as the main source for data. The following Table 1 shows the panel of companies that was selected for this study.
Committee on Terotechnology Great Britain 1975), by keeping the perspective of production companies; allowed defining the fundamentals for integrating AM in Operations. In particular, two main dimensions and four funding principles are defined. First of all, referring to the management of production asset, like production plants, lines or equipment, two main dimensions have to be considered and integrated by the company in order to develop an AM process that can be integrated in Operations. The two dimensions are defined as follows: i. the asset life cycle; that includes the Beginning of Life (BoL), Middle of Life (MoL), and End of Life phases (EoL) (Ouertani et al. 2008); ii. the hierarchical level of the asset-control activities; that comprises the strategic, tactical, and operational levels (El-Akruti et al. 2013). A full integration of the two dimensions is the heart of AM. Any time a decision is taken about assets, the whole life cycle must be considered analyzing what is inherited from the past in term of influencing variables, and how the future will be affected by the decision in case it is taken. At the same time, all three levels of control within the organization need to be involved, ensuring alignment through feedback loops implementation. The ability of a company to implement AM stands in the capability to integrate the two dimensions into a robust and clearly defined AM system in its organization. Provided the two main dimensions to be considered, i.e. asset lifecycle and asset hierarchical control level, four funding principles are then introduced to generate the required substrate for AM implementation. In fact, the success of process execution should depend on how much these principles are incorporated in the process. Four founding principles are considered: Life cycle orientation System orientation Risk orientation Asset-centric orientation In the following subsections, each funding principle is better detailed.
Table 1. Case study: involved companies Company
Sector -
A
Chemical
B
Appliances
C
Steel
D
Steel
E
Petrol-Chemical
F
Machine Tools
-
G
Food & Beverage
H
Tyre
-
Interviewees Maintenance and technical materials Executive Site Industrial Engineering Manager Maintenance Manager Technical Director Maintenance Manager Maintenance Manager Technical Functions Manager Global Maintenance Director Real estate and Energy Management Corporate Maintenance Coordinator
3.1 Life cycle orientation
The data collected from the case studies were analyzed using a uniform approach. The responses to the interview were interpreted and analyzed from the transcripts, according to the coding technique which is the analytic process of examining data line by line or paragraph by paragraph for significant events, experiences, feelings, and so on, that are then denoted as concepts (Corbin & Strauss 2014).
The adoption of life cycle orientation in the decision-making processes means that the AM process should incorporate long-term objectives and performances to drive decision making. Supporting tools can be adopted by the company to aid the achievement of this objective, such as the LCC (life cycle cost) / TCO (total cost of ownership) (El-Akruti et al. 2015; Roda & Garetti 2014). Moreover, given that the three phases of the life cycle of the assets are different, different organizational functions need to collaborate in the AM process through multi-disciplinary approach, covering all organization’s hierarchical levels (El-Akruti & Dwight 2013).
3. FUNDAMENTALS FOR INTEGRATING AM IN OPERATIONS An extensive literature review on the recent publications about Asset Management (El-Akruti et al. 2013; AmadiEchendu & Brown 2010; Schuman & Brent 2005; ISO 55000:2014(E) 2014), but also considering the evolution of such a concept and discipline over the years (Liyanage 2010; Murthy et al. 2002; Tsang 2002; Waeyenbergh & Pintelon 2002; Al-Turki 2011; Crespo Márquez 2007; Taylor 1981;
3.2 System orientation Criticality of the assets at system level is an essential aspect to be considered in order to ensure focusing efforts and resources on the right activities. Indeed, as it is expressed in the ISO 55000: “an asset is defined critical if it has potential 2
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to significantly impact on the achievement of the organization’s objectives”; thus, the impact on the objectives can be detected only if looking at the systemic dimension. Industrial assets are, in fact, complex systems composed by different components interrelating among themselves. Such interactions, together with the state of each component, affect the state and performance of the system itself. In order to have a robust AM process, the systemic effect of any local decision has to be considered in decision-making. Finally, it is worth reminding that the final aim is to realize value from the asset system. Holistic consideration of asset system in their entirety and not merely of the individual components is essential to this end (Xu et al. 2013).
3
Operations by production companies, and to subsequently understand the main limitations, thus orienting future research on the topic. Based on the undertaken analysis and coding of the interviews with the companies under study, the findings coming from it are presented hereafter through a cross-cases synthesis. In particular, each funding principle is considered and the orientation towards it of each analyzed company is studied. 4.1 Life cycle orientation – case study findings As described in Section 3.1, life cycle orientation means: i) promoting an integrated organizational structure in which all the necessary competencies and functions are involved at each stage of the life cycle of the asset; ii) adoption of longterm performance objectives and indicators in managing assets. As far as the first issue regards, the findings from the case study analysis allowed assessing if companies present a proper level of integration among functions to manage the assets. In particular, by keeping the point of view of the maintenance function, a general trend towards integration emerged from the analysis. Nevertheless, there are still gaps at the organizational level to achieve a complete integrated management of assets, which are as follows. At the early stage of the life of the asset (Beginning of Life, BOL) - design, construction, and commissioning -, the desired condition is to get to closer cooperation among the various functions such as design, purchasing, and maintenance. In general, a certain trend towards this direction was detected in all the analyzed companies; however, the integration cannot be considered complete within all companies. What clearly emerged from the majority of the cases is the desire of the Maintenance function to have a more active role in the BOL phase. As for the management of the intermediate stage of the life cycle of the assets (Middle of Life, MOL) – use and maintenance, with possible adjustments by retrofitting / revamping during the life - in general, awareness of the role Maintenance of an “evolved" fundamental function that must work in an integrated manner with the various functions, and in particular with the production function, emerged. Nevertheless, in some cases, a certain "sufferance” by the maintenance function is still perceptible that would like to participate more to decision-making, and that instead is often confined to managing assets in terms of reliability and availability in a still partially isolated way. Looking at the end of life phase of the assets life cycle (End of Life, EOL) (disposal, recycling, reuse, etc.), it is the phase in which in general there is the lowest level of integration among the functions. In particular, the maintenance function in most of the analyzed companies mainly takes executive role, without participating in the decision-making process (reuse, life extension etc.). This leaves open space to achieve better integration. As for the implementation of Asset Management guided by long-term goals, interesting findings have emerged evaluating the tools and indicators used by companies to support decision making. Below, the evidence that emerged regarding investments on assets are showed.
3.3 Risk orientation Applying this principle, the AM process should be structured in order to build in risk orientation in decision-making, together with considering costs and benefits related to decisions. This research applies the definition of “risk” given in ISO 31000:2009. The focus of the case studies as on operational risk. In particular, the failure of critical assets proved to be the risk that is recognized by companies to have the biggest impact on business (according to the results of the industrial survey on operational risk management (Aberdeen Group 2007)). Being aware of such criticality, leading companies use analytical tools to gain better visibility into the risks within their operations (e.g. to predict when maintenance is needed). Establishing a risk culture and empowering the workforce with the information to be predictive decision-makers is instrumental to achieve Best-inClass performance’ (Aberdeen Group 2007). Moreover, a risk orientation is inevitably connected to tending to the realization of value taking into account likelihood and consequence of fulfilling stakeholders’ expectations. A multidisciplinary approach is required to be able to consider all relevant risk aspects related to AM in a company. 3.4 Asset-centric orientation The management of assets is dependent on knowledge about the organization’s assets, in terms of both current equipment, business role of the assets and future prospects. In other words, asset managers need to have a practical working knowledge of the major assets so to be able to make sound business decisions (Hastings 2009). Thus, it is advocated that it is necessary for AM implementation to have an asset common database where all the data about each asset and its components are stored together (Al-Najjar & Basim 1996; Kans & Ingwald 2008). The asset database would provide basic reference to information regarding assets’ properties, usable for strategic, tactical and operational decisions. Also, tracking of changes during the life cycle of the asset is facilitated by a common database, supporting integrating the life cycle dimension. 4. CROSS CASE STUDY FINDINGS ANALYSIS The defined funding principles above were used as the basis for studying the actual level of integration of AM in 3
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In the investments assessment, traditional methods are mainly adopted like ROI (Return on Investment), NPV (net present value) and IRR (Internal Rate of Return). Although these indicators theoretically imply the adoption of a long-term vision, in practice in the majority of cases their calculation is done through an accurate assessment of only CAPEX (the costs recognized in the capital of the company, i.e. Capital Expenditures) and by only including a rough estimate of OPEX (operating costs for the year, i.e. Operational Expenditures). In particular, it is evident that the approximate estimate of OPEX is likely to underestimate the impact of the investment decision to the future performance of the asset that can generate inefficiencies and therefore hidden costs. Few are the cases where the investment assessments (made with the above methods) are flanked by other methods such as the use of a TCO model, the assessment of the satisfaction of the stakeholders, or RAM analysis (Reliability, Availability, Maintainability) for a provisional estimate of industrial plant performance losses. In general, investments still seem a financial problem, while all the companies recognize the need to increase the contribution of the engineering vision to be integrated with the financial analysis. This hope is based on the need to evaluate the convenience of choices enriching the financial indicators with models capable of synthesizing the technical and operating dimension of industrial assets, with the ultimate goal to obtain adequate performance estimations, which are at the basis of informed financial analyses.
an accurate approximation of the effect of local problems on systemic performances. In other cases, there is not yet a full integration of tools or engineering techniques, within the reliability and maintenance engineering systems, so to enable that the global effect of local decisions is fully analyzed, in fact, some companies ae still relying on traditional KPIs like OEE keeping the local perspective. Finally, in other cases, the systemic analysis is restricted to a limited number of decisions in the life cycle, and the use of some specialized engineering techniques but with no systematic approach throughout the life nor fully exploiting the potentials of systemic RAM analysis. In conclusion, system orientation – as a founding principle of Asset Management – generally requires an enrichment of techniques already used in practice through the extensive use of advanced engineering tools, capable of systemic RAM analysis. 4.3 Risk orientation – case study findings As far as risk orientation regards, when making decisions related to assets, every company applies all the needed measures present in the relevant legislative framework of the specific sector to reach the level of compliance required for the management of critical risks (related to safety and environmental impact). In this study, the focus was rather on whether and how those operational risks that are under the category of "uncertainty", such as the risk linked to the effect of future behavior of assets on the expected performance, are managed. With regard of this issue, the sectorial contingency has an impact on the practices adopted by the different companies. In some sectors, the most capital-intensive ones, ensuring asset integrity is a priority due to its high impact on business. It is the case of the most advanced companies in terms of the systematic integration of typical approaches of RAM analysis and methods for operational risk management in Asset Management. Nevertheless, attention to the performance and operation of the assets is a critical element in all analyzed cases. In relation to the "uncertainty" issue, the aspect that stimulates greater reflection is then if the expected performance of the asset, and any inefficiency expected from its operation, are quantified in terms of cost to support decision-making by companies. In fact, the implementation of reliability analysis of industrial equipment should also become an issue to be included in the evaluation of an assetrelated investment. What in general is still missing - as noted previously about life cycle orientation - is an alignment between the system's technical performance measures and financial indicators, which are the ones that are taken into account in the company to make decisions. Engineering analysis should support the final choices, reducing the possibility of operational risk losses in production efficiency, ensuring an informed decision-making process.
4.2 System orientation – case study findings Regarding the system orientation, the case study allowed investigating whether the complexity characterizing the assets is taken into account in the decision-making processes. In fact, industrial assets are typically systems composed of multiple components with their own RAM characteristics. And those components interact with each other to perform the requested function of the industrial plant. All analyzed cases showed an awareness of the importance of adopting a systemic vision in the system performances analysis, with the ultimate goal to take into account the effect that every local decision inevitably has got at global level. This means, for example, making decisions for improvement for increasing productivity in an industrial plant on the basis of a careful analysis of the criticality of the individual equipment with respect to the function they have for the production flow at system level. Nevertheless, this does not necessarily coincide with the "local" criticality of equipment measured by traditional indicators like OEE (Overall Equipment Effectiveness) - which is by definition "centered" at equipment level. Although awareness was shown by companies, today analyses keeping the systemic perspective are not implemented in a systematic way. This may be justified by various contingent reasons. In some cases, that is the case of a production line with no (or of limited capacity) interoperational buffers among the equipment, the asset (as a system) requires the operation of all the equipment (components) for its operation. In this case, each equipment assumes the same criticality at local and systemic levels, namely the OEE the Equipment would be sufficient to have
4.4 Asset-centric Orientation – case study findings The adoption of an asset-centric management approach appeared to be influenced by the sectors of the companies. In the most capital intensive sectors, the role of the assets and their performance is definitely recognized as central to ensure 4
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the production and the achievement of business objectives. It follows the high emphasis on ensuring clear ownership of the asset and collecting data referring to each asset. In general, in all cases, the relevance of the definition of a clear ownership of assets to ensure control and commitment to Asset Management is recognized by the companies. The various analyzed companies, while proving to have all shared the need for a clear ownership, have made different organizational decisions. In some cases, a centralized ownership at the level of maintenance / technical direction functions has been chosen for different systems; in other cases, the ownership was instead given to an executive belonging to the top management board. In terms of information systems, in order to support an assetcentric management approach, maintenance information systems are seen with a central role. In general, the information maintenance systems are still partially integrated with other enterprise information systems and the need to move towards the definition of a better system, in which different kind of data (technical and economical) related to assets are collected and analyzed in an integrated manner, is recognized. Overall, this is considered an enabling element for effective implementation of Asset Management.
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research and practice in order to tailor Asset Management in the production companies’ context as a business process within Operations. Companies have to get more and more aware of the importance of addressing Asset Management by reflecting the four funding principles and by accordingly structuring an Asset Management system. Moreover, mechanisms have to be introduced so that the decisionmaking process within such system is faced through a life cycle perspective and through alignment among the strategic, tactic and operative control levels. Only by adopting these measures, sustainable value creation from assets can be ensured. ACKNOWLEDGMENT The research work was performed within the context of SustainOwner (“Sustainable Design and Management of Industrial Assets through Total Value and Cost of Ownership"), a project sponsored by the EU Framework Programme Horizon 2020, MSCA-RISE-2014: Marie Skłodowska-Curie Research and Innovation Staff Exchange (RISE) (grant agreement number 645733 — Sustain-Owner — H2020-MSCA-RISE-2014). REFERENCES
4.5 Concluding Remarks To conclude, it is worth remarking that the case study was developed by considering companies belonging to different industrial sectors to have a general overview and assessment on AM integration in production companies. Even if the companies selected for the case study development are companies with high level of maturity in terms of Maintenance Management, when widening up the perspective over Asset Management, gaps to be filled in have been identified. None of the companies resulted to fully incorporate the four funding principles for AM integration (i.e. life cycle orientation, system orientation, risk orientation and asset-centric orientation). Lifecycle orientation is the principle that more companies are looking at in order to tend towards it (re-organization, testing of new tools etc.), while system orientation is still quite weak in all companies. Moreover, it is worth noticing that the gaps that have been identified regarding the level of integration of the Asset Management in the companies not only are due to contingent reasons (industry, type of assets to manage etc.) but also to the low development level of the necessary technologies / methodologies, for example, the availability of a standard model for Total Cost of Ownership to support the decisionmaking process or the availability of performance indicators at system level.
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5. CONCLUSIONS
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The case studies indicate that the integration of AM within production management is appreciated by companies but its practical implementation is not clearly supported by empirical evidence from the considered companies. This research opens up considerable potential but also highlights the need of putting forward an implementation methodology for companies to achieve tighter integration between the AM and production management. Work is still required both in
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engineering asset management system. Journal of Quality in Maintenance Engineering, 19(4), pp.398– 412.
management. Journal of Quality in Maintenance Engineering, 8(1), pp.7–39. Waeyenbergh, G. & Pintelon, L., 2002. A framework for maintenance concept development. International Journal of Production Economics, 77(April 2000), pp.299–313.
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ISO 31000:2009 - Risk management -- Principles and guidelines ISO 55000:2014(E), 2014. Asset management — Overview, principles and terminology. Kans, M. & Ingwald, A., 2008. Common database for costeffective improvement of maintenance performance. International Journal of Production Economics, 113, pp.734–747. Liyanage, J.P., 2010. State of the art and emerging trends in operations and maintenance of offshore oil and gas production facilities: Some experiences and observations. International Journal of Automation and Computing, 7(2), pp.137–145. Maletic, D. et al., 2014. The role of maintenance in improving company’s competitiveness and profitability: A case study in a textile company. Journal of Manufacturing Technology Management, 25, pp.441–456. Mitchell, J.S., 2002. Physical Asset Management Handbook, Clarion Technical Publishers. Murthy, D.N.P., Atrens, A. & Eccleston, J.A., 2002. Strategic maintenance management. Journal of Quality in Maintenance Engineering, 8(4), pp.287 – 305. Ouertani, M.Z., Parlikad, A.K. & McFarlane, D.C., 2008. Towards an approach to Select an Asset Information Management Strategy. IJCSA, 5(3), pp.25–44. Roda, I. & Garetti, M., 2014. TCO evaluation in physical asset management : benefits and limitations for industrial adoption. In B. et al. Grabot, ed. APMS 2014, Part III, IFIP AICT 440. pp. 216–223. Schuman, C. a. & Brent, A.C., 2005. Asset life cycle management: towards improving physical asset performance in the process industry. International Journal of Operations & Production Management, 25(6), pp.566–579. Taylor, W., 1981. The use of life cycle costing in acquiring physical assets. Long Range Planning, 14(6), pp.32–43. Tsang, A.H.C., 2002. Strategic dimensions of maintenance 6
ScienceDirect Studying the funding principles for integrating Asset Management in Operations: IFAC-PapersOnLine 49-28 (2016) 001–006 Studying the funding principles for integrating Asset Management Operations: Studying the funding principles for integrating Asset Management in Operations: an empirical research in production companies in Studying the funding principles for integrating Asset Management in Operations: Studying the funding principles for integrating Asset Management in Operations: an empirical research in production companies an empirical empirical research research in in production production companies companies an I. Roda*. Macchi* an empirical research in M. production companies
I. Roda*. M. Macchi* I. I. Roda*. Roda*. M. M. Macchi* Macchi* I. Roda*. Macchi*Engineering, Politecnico di Milano, M. * Department of Management, Economics and Industrial [email protected] * Department of Management, Economics and Engineering, Politecnico) di Milano, Milano, Italy ( e-mail: [email protected]; * of Economics and Engineering, * Department Department of Management, Management, Economics and Industrial [email protected] Engineering, Politecnico Politecnico di di Milano, Milano, Milano, Italy ( e-mail: [email protected]; * Department of Management, Economics and [email protected] Engineering, Politecnico)) di Milano, Milano, Italy ( e-mail: [email protected]; Milano, Italy ( e-mail: [email protected]; [email protected] ) Milano, Italy ( e-mail: [email protected]; [email protected] ) Abstract: The aim of this paper is to investigate Asset Management (AM) implementation as a business Abstract: The production aim of this systems paper is to investigate Asset Management (AM) The implementation as a business process within to investigate contribute to operational excellence. main fundamentals to be Abstract: The aim of this paper is to Asset Management (AM) implementation as aa business Abstract: The aim of this paper is to investigate Asset Management (AM) implementation as business process within production systems to contribute to operational excellence. The main fundamentals to be considered to properly implement AM within production companies according to the existing literature Abstract: The aim of this paper is to investigate Asset Management (AM) implementation as a business process within within production production systems systems to to contribute contribute to to operational operational excellence. excellence. The The main main fundamentals fundamentals to to be be process considered to properly implement AM within production companies according to the existing literature and standards are identified and they are: two production dimensions – i.e., the asset life (Beginning of to Life, process within production systems to contribute to operational excellence. Thecycle main fundamentals be considered to properly implement AM within companies according to the existing literature considered to properly implement AM within production companies according to the existing literature and standards areEnd identified and they are: two dimensions companies –level i.e., of thethe asset life cycle (Beginning of Life, Middle of Life, ofimplement Lifeand phases) and the hierarchical asset-control activities considered to properly AMare: within production according to the(Beginning existing (strategic literature and standards are identified they two dimensions – i.e., the asset life cycle of Life, and areEnd identified they are: two dimensions –level i.e., of thethe life of Life, Middle of Life, of Lifeand phases) and thefour hierarchical asset-control activities (strategic level,standards tactical level, operational level) – and funding principles –asset i.e., life cycle cycle (Beginning orientation, system and standards areEnd identified and they are: two dimensions –level i.e., of thethe asset life cycle (Beginning of Life, Middle of Life, of Life phases) and the hierarchical asset-control activities (strategic Middle of Life, End of Life phases) and the hierarchical level of the asset-control activities (strategic level, tactical level, operational level) – and four funding principles – i.e., life cycle activities orientation, system orientation, risk orientation asset-centric orientation. An empirical investigation is then developed Middle of Life, End of Lifeand phases) and thefour hierarchical level of the asset-control (strategic level, tactical level, operational level) – and funding principles – i.e., life cycle orientation, system level, tactical level, operational – andproduction four funding principles i.e., lifeorder cycle orientation, system orientation, risk orientation and level) asset-centric orientation. An empirical investigation is thenthe developed through multiple case-study involving eight companies in – in assess level of level, tactical level, operational level) – and four funding principles –Italy, i.e., life cycletoorientation, system orientation, risk orientation and asset-centric orientation. An empirical investigation is then developed orientation, risk orientation and asset-centric orientation. An empirical investigation is then developed through multiple case-study involving eight production companies in Italy, in order to assess the level of orientation towards those funding principles within production companies as it is nowadays, in order to orientation, risk orientation and asset-centric orientation. An empirical investigation is then developed through multiple case-study involving eight production companies in Italy, in order to assess the level of through multiple case-study involving eight production companies in Italy, in order to assess the level of orientation towards those funding principles within production companies as it is nowadays, in order to identify existing gaps and areas for improvements. through multiple case-study involving eight production companies in Italy, in order to assess the level of orientation towards those funding principles within orientation towards those funding principles within production production companies companies as as it it is is nowadays, nowadays, in in order order to to identify existing gaps and areas for improvements. orientation towards those funding within production companies as itLtd. is nowadays, in order to identify existing gaps and areas areas forprinciples improvements. © 2016, existing IFAC (International Federation of Automatic by Elsevier All rights reserved. identify gaps and for improvements. Keywords: Asset Management, Life cycle, Decision Control) making, Hosting Production systems, Management systems identify existing gaps and areas for improvements. Keywords: Asset Management, Life cycle, Decision making, Production systems, Management systems Keywords: Asset Management, Life cycle, Decision making, Production systems, Management systems Keywords: Asset Management, Life cycle, Decision making, Production systems, Management systems Keywords:1.Asset Management, Life cycle, Decision making, Production systems, Management systems INTRODUCTION 1. INTRODUCTION 1. INTRODUCTION INTRODUCTION enables assessing the level of orientation towards those 1. Nowadays, the management of physical assets is recognized enables assessing the level of orientation towards those 1. INTRODUCTION fundamentals withinthe production as ittowards is nowadays; enables assessing level of ofcompanies orientation those Nowadays, the management assetsgeneration is recognized as an important contributor of to physical foster value for enables assessing the level orientation towards those fundamentals within production companies as it is nowadays; Nowadays, the management of physical assets is recognized besides, it helps identifying the existing gaps and areas for enables assessing the level of orientation towards those Nowadays, the management of physical assets is recognized fundamentals within production companies as it is nowadays; as an important contributor to foster value generation for companies (El-Akruti et al.of 2013; Maletic et recognized al. 2014; fundamentals within production companies as itand is nowadays; Nowadays, the management physical assetsgeneration is besides, it helps identifying the existing gaps areas for as an important contributor to foster value for improvements. fundamentals within production companies as it is nowadays; as an important contributor foster2005). value Moreover, generation for besides, it helps identifying the existing gaps and areas for companies (El-Akruti et al. 2013; et al. 2014; Mitchell 2002; Schuman & to the it helps identifyingasthe existingSection gaps and for as an important contributor toBrent foster Maletic value generation for besides, improvements. companies (El-Akruti et al. al. 2013; Maletic et al. al. 2014; 2014; The paper is organized follows. 2 areas provides besides, it helps identifying the existing gaps and areas for companies (El-Akruti et 2013; Maletic et improvements. Mitchell 2002; Schuman & Brent 2005). Moreover, the recent publication of the 5500x 2005). body ofMoreover, standards on improvements. companies (El-Akruti et ISO al. 2013; Maletic et al. 2014; The paper is organized as follows. Section 2 provides Mitchell 2002; Schuman & Brent the information on the methodology that was adopted for this improvements. Mitchell 2002; Schuman & Brent 2005). Moreover, the The paper paper is is organized organized as as follows. follows. Section Section 22 provides provides recent of the ISO 5500x 2005). body reinforcing ofMoreover, standards the on The Asset publication Management (AM) Mitchell 2002; Schuman & contributed Brent information on organized the methodology that was for this recent publication of the the ISO 5500x body body of of standards standards on on The research. In is Section 3, the as fundamentals foradopted AM 2integration paper follows. Section provides recent publication of ISO 5500x information on the methodology that was adopted for this this Asset Management (AM) contributed reinforcing the increasing interest on the topic both by industry and information on the methodology that was adopted for recent publication of the ISO contributed 5500x body reinforcing of standards the on research. In Section 3, the fundamentals for AM integration Asset Management (AM) in Operations production companies are detailed as they oninthe methodology that was for this Asset Management contributed the information research. In Section Section 3, the the fundamentals fundamentals foradopted AM integration integration increasing interest on(AM) the topic both byreinforcing industry and academia. Nevertheless, AM as a discipline and business research. In 3, for AM Asset Management (AM) contributed reinforcing the in Operations in production are as they increasing interest interest on on the the topic topic both both by by industry industry and and research. have beenIndefined based on fundamentals ancompanies extensive literature and Section 3, the for detailed AM review integration increasing in Operations in production production companies are detailed as they they academia. Nevertheless, AM as within a discipline and business process is still at its on earlythe stage debate Operations in companies are detailed as increasing interest topic boththebyscientific industry and in have been defined based on an extensive literature review and academia. Nevertheless, AM as a discipline and business discussions with people from industry. Based on that, Section Operations in production are detailed as they academia. Nevertheless, as within a discipline and industrial business have been defined defined based on on an ancompanies extensive literature literature review and process is still its earlyAM scientific debate in and solutions toat itsstage adoption inthe different been based extensive review and academia. Nevertheless, as within a discipline and business discussions with people Based on findings that, Section process is still still at support its early earlyAM stage the scientific debate have 4 provides a cross-case analysis of the main that have been defined basedfrom on anindustry. extensive literature review and process is at its stage within the scientific debate discussions with people from industry. Based on that, Section and solutions to support its adoption in different industrial contexts still definition. with people from industry. Based on findings that, Section process isarestill its early withininthe scientific debate discussions 4emerged providesfrom a cross-case analysis the main that and solutions toatunder support itsstage adoption different industrial the multiple caseof development. In discussions people from industry. Based on findings that, Section and solutions to support its adoption in different industrial 4 provides provides with a cross-case cross-case analysis of study the main that contexts are still under definition. AM, as it has been evolving during the last years, is 4 a analysis of the main findings that and solutions to support its adoption in different industrial emerged from the multiple case study development. In contexts are are still still under under definition. definition. particular, for each AM funding principle, the main findings 4 provides a cross-case analysis of the main findings that contexts emerged from from the the multiple multiple case case study study development. development. In In AM, as are it asstill has been definition. evolving during the different last years, is emerged considered a holistic It embraces kinds contexts under particular, foris each funding main findings AM, as it it has has been approach. evolving during during the last last years, years, is emerged on how itfrom addressed by case theprinciple, analyzed companies are the AM multiple study the development. In AM, as been evolving the is particular, for each AM funding principle, the main findings considered as a holistic approach. It embraces different kinds of actors that together aim at realizing value by managing foris each AM funding main findings AM, as it ashas been approach. evolving during the different last years, is particular, on how itFinally, addressed theprinciple, analyzed companies are considered holistic It embraces embraces kinds presented. Section 5by to the conclusions. particular, AM funding the main findings considered as aatogether holistic approach. It on how it itforis is each addressed byis dedicated theprinciple, analyzed companies are of actors that aim at and realizing valuedifferent by managing assets through coordination in alignment withkinds the on how addressed by the analyzed companies are considered as atogether holistic approach. It embraces different kinds presented. Finally, Section 5 is dedicated to conclusions. of actors that aim at realizing value by managing how itFinally, is addressed the analyzed companies are of actors that together aim at and realizing value by55000, managing presented. Section 55byis is dedicated dedicated to conclusions. conclusions. assets through coordination in alignment with ‘an the on organizational strategy. According to the ISO presented. Finally, Section to of actors that together aim at realizing value by managing assets through through coordination coordination and and in in alignment alignment with with the the presented. Finally, Section 2. METHODOLOGY 5 is dedicated to conclusions. assets organizational strategy. tohas the ISO 55000, ‘an asset isthrough an item, thing orAccording entity thatin potential or actual assets coordination and alignment with the 2. METHODOLOGY organizational strategy. According to the ISO 55000, ‘an organizational strategy. According to the ISO 55000, ‘an 2. METHODOLOGY asset is an item, thing or entity that has potential or actual value istoananitem, organization. The that value will vary between 2. METHODOLOGY organizational strategy. tohas the ISO 55000, ‘an This research is based asset thing or orAccording entity potential or actual on an extensive literature review and 2. METHODOLOGY asset istoanorganizations thing entity that haswill potential or actual value anitem, organization. The value vary between different and their stakeholders, and can be asset is an item, thing or entity that has potential or actual value to an organization. The value will vary between This research is based on anand extensive literature and on brainstorming activities workshops withreview industrial value an intangible, organization. The will vary research is based on an extensive literature review and different and their value stakeholders, and between can(ISO be This tangibleto or financial or non-financial’ research is allowed based onidentifying anand extensive literature and value to organizations an organization. The will vary different organizations and their value stakeholders, and between can be be This on brainstorming activities workshops withreview industrial exponents that and hypothesizing the This research is based on an extensive literature review and different organizations and their stakeholders, and can on brainstorming activities and workshops with industrial tangible or intangible, financial or non-financial’ (ISO 55000:2014(E) 2014). Overall, thisstakeholders, statement clearly brainstorming activities and workshops with industrial different organizations and their and outlines can(ISO be on tangible or intangible, financial or non-financial’ exponents that allowed identifying and hypothesizing the foundations for implementing the case study. In fact, the on brainstorming activities and workshops with industrial tangible or intangible, financial or non-financial’ (ISO that allowed identifying and hypothesizing the 55000:2014(E) 2014). this statement clearly outlines the main or purpose of Overall, AM, which isor tonon-financial’ realize value from exponents that allowed identifying and hypothesizing the tangible intangible, financial (ISO exponents 55000:2014(E) 2014). Overall, this statement clearly outlines foundations for implementing the case study. In fact, the synthetization ofallowed the foundations of case AM the basis for next exponents that identifying andisstudy. hypothesizing the 55000:2014(E) 2014). Overall, this statement clearly outlines foundations for implementing the In fact, the the main purpose of AM, which is to realize value from assets, and its scope of application generally referred to foundations for implementing the case study. In fact, the 55000:2014(E) 2014). Overall, this statement clearly outlines the main purpose of AM, which is to realize value from synthetization of the foundations of AM is the basis for next research steps and provides indication on how decisionfoundations for implementing the case study. In fact, the the main purpose of AM, which is to realize value from synthetization of of the the foundations foundations of of AM AM is is the the basis basis for for next next assets, and itsofscope of generally referred to synthetization different types assets andapplication industrial the main purpose of AM, which is sectors. to realize value from assets, and its scope scope of application generally referred to research stepsof and provides indication decisionmaking should be implemented within production companies synthetization the foundations of AM ison thehow basis for next assets, and its of application generally referred to research steps and provides indication on how decisiondifferent types ofscope assets andwithin industrial sectors. This paper looks at AM the context of production assets, and its of application generally referred to research steps and provides indication on how decisiondifferent types types of of assets assets and and industrial industrial sectors. sectors. making within in order should for AMbe toimplemented beprovides integratedindication in theirproduction management system. steps and on howcompanies decisiondifferent making should be implemented within production companies This paper looks at AM context of production companies (manufacturing andthe process industry) to research making should be implemented within production companies different types of assets andwithin industrial sectors. This paper looks at AM within the context of production in order for AM to be integrated in their management system. Based on that, the case study method was chosen for the making should be implemented within production companies This paper looks at AM within the context of production in order for AM to be integrated in their management system. companies (manufacturing and process industry) to investigate isat its in process supporting in orderof forthis AMpaper. to becase integrated in their management system. This paper what looks AMrelevance within the context of production Based on that, the study method was chosen for the companies (manufacturing and industry) to scope In fact, case study allows exploring in orderon forthat, AM the to be integrated in their management system. companies (manufacturing and in process industry) to Based study method was chosen for investigate what is its relevance supporting production systems operations. on this that,testing the case case study method was chosenexploring for the the companies (manufacturing and in process industry) to Based investigate what is its its relevance relevance supporting production scope of paper. In relevance fact, case study allows evidences and the of the postulated concepts Based on that, the case study method was chosen for the investigate what is in supporting production scope of this paper. In fact, case study allows exploring systems operations. The objective of this paper is to identify which areproduction the main evidences scope of this paper. In fact, case study allows exploring investigate what is its relevance in supporting systems operations. and testing the relevance of the postulated concepts according to the retroductive objective of this paper. In relevance fact,approach’s caseofstudy allows (El-Akruti exploring systems operations. evidences and testing the the postulated concepts The objective of this paper is to identify which areimplement the main scope fundamental elements to be considered to properly evidences and testing the relevance ofthe theimplementation postulated(El-Akruti concepts systems operations. The objective of this this paper paper is to to identify identify which are are the the main main according to2010). the retroductive approach’s objective & Dwight In this research, of a evidences and testing the relevance of the postulated concepts The objective of is which according to the retroductive approach’s objective (El-Akruti fundamental elements to be considered to properly implement AM within production companies according to the existing to the retroductive approach’s objective (El-Akruti The objectiveelements of this paper is to identify which areimplement the main according fundamental to be considered to properly & Dwight 2010). In this research, the implementation of a/ multiple case study enables investigating the existence according to the retroductive approach’s objective (El-Akruti fundamental elements to be considered to properly implement & Dwight Dwight 2010). 2010). In In this this research, research, the the implementation implementation of of a AM within production according to the existing literature and standards. Anconsidered empirical is then & fundamental elements tocompanies be toinvestigation properly implement AM within production companies according to the existing multiple case study enables investigating the existence absence ofcase practices towards principles inoftheaa// Dwight 2010). In oriented this research, the AM implementation AM within production companies according to study the existing multiple study enables investigating the existence literature and standards. Ancase-study. empirical investigation is then & developed through multiple The case multiple case study enables investigating the existence AM within production companies according to the existing ofcase practices towards AM principles the// literature and standards. standards. An An empirical empirical investigation investigation is is then absence analyzed production companies. In particular, this in study multiple study oriented enables investigating the existence literature absence of practices oriented towards AM principles in the developedand through multiple case-study. The case studyis then absence of practices oriented towards AM principles in the literature and standards. An empirical investigation then developed through through multiple multiple case-study. case-study. The The case case study study analyzed companies. In particular, this in study absence ofproduction practices oriented towards AM principles the developed analyzed production companies. In particular, this study analyzed production companies. In particular, this study developed through multiple case-study. The case study Copyright © 2016 IFAC 1 analyzed production companies. In particular, this study 2405-8963 © 2016 2016, IFAC IFAC (International Federation of Automatic Control) Copyright 1 Hosting by Elsevier Ltd. All rights reserved. Copyright 2016 1 Peer review© responsibility of International Federation of Automatic Copyright ©under 2016 IFAC IFAC 1 Control. Copyright © 2016 IFAC 1 10.1016/j.ifacol.2016.11.001
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targeted eight production companies in Italy. Medium or big size companies were selected, with medium/high maturity in maintenance management practices (according with the analysis previously implemented through the survey developed by TeSeM observatory (2014-2015) (www.tesem.net), that focuses on understanding the state-ofpractice of the technologies and services for maintenance in industry). In fact, it is assumed that only companies with certain maturity in Maintenance management are ready enough to talk about and implement the wider concept of AM. Finally, the selected companies belong to different industrial sectors in order to avoid biases and to cover a broader scope of the production industry. The data collected from the case studies were analyzed using a uniform approach. The main source of the primary data for this research is a semi-structured interview. The chosen unit of analysis is the company from the perspective of the maintenance function / industrial engineering function and a face-to-face semi-structured interview was chosen as the main source for data. The following Table 1 shows the panel of companies that was selected for this study.
Committee on Terotechnology Great Britain 1975), by keeping the perspective of production companies; allowed defining the fundamentals for integrating AM in Operations. In particular, two main dimensions and four funding principles are defined. First of all, referring to the management of production asset, like production plants, lines or equipment, two main dimensions have to be considered and integrated by the company in order to develop an AM process that can be integrated in Operations. The two dimensions are defined as follows: i. the asset life cycle; that includes the Beginning of Life (BoL), Middle of Life (MoL), and End of Life phases (EoL) (Ouertani et al. 2008); ii. the hierarchical level of the asset-control activities; that comprises the strategic, tactical, and operational levels (El-Akruti et al. 2013). A full integration of the two dimensions is the heart of AM. Any time a decision is taken about assets, the whole life cycle must be considered analyzing what is inherited from the past in term of influencing variables, and how the future will be affected by the decision in case it is taken. At the same time, all three levels of control within the organization need to be involved, ensuring alignment through feedback loops implementation. The ability of a company to implement AM stands in the capability to integrate the two dimensions into a robust and clearly defined AM system in its organization. Provided the two main dimensions to be considered, i.e. asset lifecycle and asset hierarchical control level, four funding principles are then introduced to generate the required substrate for AM implementation. In fact, the success of process execution should depend on how much these principles are incorporated in the process. Four founding principles are considered: Life cycle orientation System orientation Risk orientation Asset-centric orientation In the following subsections, each funding principle is better detailed.
Table 1. Case study: involved companies Company
Sector -
A
Chemical
B
Appliances
C
Steel
D
Steel
E
Petrol-Chemical
F
Machine Tools
-
G
Food & Beverage
H
Tyre
-
Interviewees Maintenance and technical materials Executive Site Industrial Engineering Manager Maintenance Manager Technical Director Maintenance Manager Maintenance Manager Technical Functions Manager Global Maintenance Director Real estate and Energy Management Corporate Maintenance Coordinator
3.1 Life cycle orientation
The data collected from the case studies were analyzed using a uniform approach. The responses to the interview were interpreted and analyzed from the transcripts, according to the coding technique which is the analytic process of examining data line by line or paragraph by paragraph for significant events, experiences, feelings, and so on, that are then denoted as concepts (Corbin & Strauss 2014).
The adoption of life cycle orientation in the decision-making processes means that the AM process should incorporate long-term objectives and performances to drive decision making. Supporting tools can be adopted by the company to aid the achievement of this objective, such as the LCC (life cycle cost) / TCO (total cost of ownership) (El-Akruti et al. 2015; Roda & Garetti 2014). Moreover, given that the three phases of the life cycle of the assets are different, different organizational functions need to collaborate in the AM process through multi-disciplinary approach, covering all organization’s hierarchical levels (El-Akruti & Dwight 2013).
3. FUNDAMENTALS FOR INTEGRATING AM IN OPERATIONS An extensive literature review on the recent publications about Asset Management (El-Akruti et al. 2013; AmadiEchendu & Brown 2010; Schuman & Brent 2005; ISO 55000:2014(E) 2014), but also considering the evolution of such a concept and discipline over the years (Liyanage 2010; Murthy et al. 2002; Tsang 2002; Waeyenbergh & Pintelon 2002; Al-Turki 2011; Crespo Márquez 2007; Taylor 1981;
3.2 System orientation Criticality of the assets at system level is an essential aspect to be considered in order to ensure focusing efforts and resources on the right activities. Indeed, as it is expressed in the ISO 55000: “an asset is defined critical if it has potential 2
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to significantly impact on the achievement of the organization’s objectives”; thus, the impact on the objectives can be detected only if looking at the systemic dimension. Industrial assets are, in fact, complex systems composed by different components interrelating among themselves. Such interactions, together with the state of each component, affect the state and performance of the system itself. In order to have a robust AM process, the systemic effect of any local decision has to be considered in decision-making. Finally, it is worth reminding that the final aim is to realize value from the asset system. Holistic consideration of asset system in their entirety and not merely of the individual components is essential to this end (Xu et al. 2013).
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Operations by production companies, and to subsequently understand the main limitations, thus orienting future research on the topic. Based on the undertaken analysis and coding of the interviews with the companies under study, the findings coming from it are presented hereafter through a cross-cases synthesis. In particular, each funding principle is considered and the orientation towards it of each analyzed company is studied. 4.1 Life cycle orientation – case study findings As described in Section 3.1, life cycle orientation means: i) promoting an integrated organizational structure in which all the necessary competencies and functions are involved at each stage of the life cycle of the asset; ii) adoption of longterm performance objectives and indicators in managing assets. As far as the first issue regards, the findings from the case study analysis allowed assessing if companies present a proper level of integration among functions to manage the assets. In particular, by keeping the point of view of the maintenance function, a general trend towards integration emerged from the analysis. Nevertheless, there are still gaps at the organizational level to achieve a complete integrated management of assets, which are as follows. At the early stage of the life of the asset (Beginning of Life, BOL) - design, construction, and commissioning -, the desired condition is to get to closer cooperation among the various functions such as design, purchasing, and maintenance. In general, a certain trend towards this direction was detected in all the analyzed companies; however, the integration cannot be considered complete within all companies. What clearly emerged from the majority of the cases is the desire of the Maintenance function to have a more active role in the BOL phase. As for the management of the intermediate stage of the life cycle of the assets (Middle of Life, MOL) – use and maintenance, with possible adjustments by retrofitting / revamping during the life - in general, awareness of the role Maintenance of an “evolved" fundamental function that must work in an integrated manner with the various functions, and in particular with the production function, emerged. Nevertheless, in some cases, a certain "sufferance” by the maintenance function is still perceptible that would like to participate more to decision-making, and that instead is often confined to managing assets in terms of reliability and availability in a still partially isolated way. Looking at the end of life phase of the assets life cycle (End of Life, EOL) (disposal, recycling, reuse, etc.), it is the phase in which in general there is the lowest level of integration among the functions. In particular, the maintenance function in most of the analyzed companies mainly takes executive role, without participating in the decision-making process (reuse, life extension etc.). This leaves open space to achieve better integration. As for the implementation of Asset Management guided by long-term goals, interesting findings have emerged evaluating the tools and indicators used by companies to support decision making. Below, the evidence that emerged regarding investments on assets are showed.
3.3 Risk orientation Applying this principle, the AM process should be structured in order to build in risk orientation in decision-making, together with considering costs and benefits related to decisions. This research applies the definition of “risk” given in ISO 31000:2009. The focus of the case studies as on operational risk. In particular, the failure of critical assets proved to be the risk that is recognized by companies to have the biggest impact on business (according to the results of the industrial survey on operational risk management (Aberdeen Group 2007)). Being aware of such criticality, leading companies use analytical tools to gain better visibility into the risks within their operations (e.g. to predict when maintenance is needed). Establishing a risk culture and empowering the workforce with the information to be predictive decision-makers is instrumental to achieve Best-inClass performance’ (Aberdeen Group 2007). Moreover, a risk orientation is inevitably connected to tending to the realization of value taking into account likelihood and consequence of fulfilling stakeholders’ expectations. A multidisciplinary approach is required to be able to consider all relevant risk aspects related to AM in a company. 3.4 Asset-centric orientation The management of assets is dependent on knowledge about the organization’s assets, in terms of both current equipment, business role of the assets and future prospects. In other words, asset managers need to have a practical working knowledge of the major assets so to be able to make sound business decisions (Hastings 2009). Thus, it is advocated that it is necessary for AM implementation to have an asset common database where all the data about each asset and its components are stored together (Al-Najjar & Basim 1996; Kans & Ingwald 2008). The asset database would provide basic reference to information regarding assets’ properties, usable for strategic, tactical and operational decisions. Also, tracking of changes during the life cycle of the asset is facilitated by a common database, supporting integrating the life cycle dimension. 4. CROSS CASE STUDY FINDINGS ANALYSIS The defined funding principles above were used as the basis for studying the actual level of integration of AM in 3
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In the investments assessment, traditional methods are mainly adopted like ROI (Return on Investment), NPV (net present value) and IRR (Internal Rate of Return). Although these indicators theoretically imply the adoption of a long-term vision, in practice in the majority of cases their calculation is done through an accurate assessment of only CAPEX (the costs recognized in the capital of the company, i.e. Capital Expenditures) and by only including a rough estimate of OPEX (operating costs for the year, i.e. Operational Expenditures). In particular, it is evident that the approximate estimate of OPEX is likely to underestimate the impact of the investment decision to the future performance of the asset that can generate inefficiencies and therefore hidden costs. Few are the cases where the investment assessments (made with the above methods) are flanked by other methods such as the use of a TCO model, the assessment of the satisfaction of the stakeholders, or RAM analysis (Reliability, Availability, Maintainability) for a provisional estimate of industrial plant performance losses. In general, investments still seem a financial problem, while all the companies recognize the need to increase the contribution of the engineering vision to be integrated with the financial analysis. This hope is based on the need to evaluate the convenience of choices enriching the financial indicators with models capable of synthesizing the technical and operating dimension of industrial assets, with the ultimate goal to obtain adequate performance estimations, which are at the basis of informed financial analyses.
an accurate approximation of the effect of local problems on systemic performances. In other cases, there is not yet a full integration of tools or engineering techniques, within the reliability and maintenance engineering systems, so to enable that the global effect of local decisions is fully analyzed, in fact, some companies ae still relying on traditional KPIs like OEE keeping the local perspective. Finally, in other cases, the systemic analysis is restricted to a limited number of decisions in the life cycle, and the use of some specialized engineering techniques but with no systematic approach throughout the life nor fully exploiting the potentials of systemic RAM analysis. In conclusion, system orientation – as a founding principle of Asset Management – generally requires an enrichment of techniques already used in practice through the extensive use of advanced engineering tools, capable of systemic RAM analysis. 4.3 Risk orientation – case study findings As far as risk orientation regards, when making decisions related to assets, every company applies all the needed measures present in the relevant legislative framework of the specific sector to reach the level of compliance required for the management of critical risks (related to safety and environmental impact). In this study, the focus was rather on whether and how those operational risks that are under the category of "uncertainty", such as the risk linked to the effect of future behavior of assets on the expected performance, are managed. With regard of this issue, the sectorial contingency has an impact on the practices adopted by the different companies. In some sectors, the most capital-intensive ones, ensuring asset integrity is a priority due to its high impact on business. It is the case of the most advanced companies in terms of the systematic integration of typical approaches of RAM analysis and methods for operational risk management in Asset Management. Nevertheless, attention to the performance and operation of the assets is a critical element in all analyzed cases. In relation to the "uncertainty" issue, the aspect that stimulates greater reflection is then if the expected performance of the asset, and any inefficiency expected from its operation, are quantified in terms of cost to support decision-making by companies. In fact, the implementation of reliability analysis of industrial equipment should also become an issue to be included in the evaluation of an assetrelated investment. What in general is still missing - as noted previously about life cycle orientation - is an alignment between the system's technical performance measures and financial indicators, which are the ones that are taken into account in the company to make decisions. Engineering analysis should support the final choices, reducing the possibility of operational risk losses in production efficiency, ensuring an informed decision-making process.
4.2 System orientation – case study findings Regarding the system orientation, the case study allowed investigating whether the complexity characterizing the assets is taken into account in the decision-making processes. In fact, industrial assets are typically systems composed of multiple components with their own RAM characteristics. And those components interact with each other to perform the requested function of the industrial plant. All analyzed cases showed an awareness of the importance of adopting a systemic vision in the system performances analysis, with the ultimate goal to take into account the effect that every local decision inevitably has got at global level. This means, for example, making decisions for improvement for increasing productivity in an industrial plant on the basis of a careful analysis of the criticality of the individual equipment with respect to the function they have for the production flow at system level. Nevertheless, this does not necessarily coincide with the "local" criticality of equipment measured by traditional indicators like OEE (Overall Equipment Effectiveness) - which is by definition "centered" at equipment level. Although awareness was shown by companies, today analyses keeping the systemic perspective are not implemented in a systematic way. This may be justified by various contingent reasons. In some cases, that is the case of a production line with no (or of limited capacity) interoperational buffers among the equipment, the asset (as a system) requires the operation of all the equipment (components) for its operation. In this case, each equipment assumes the same criticality at local and systemic levels, namely the OEE the Equipment would be sufficient to have
4.4 Asset-centric Orientation – case study findings The adoption of an asset-centric management approach appeared to be influenced by the sectors of the companies. In the most capital intensive sectors, the role of the assets and their performance is definitely recognized as central to ensure 4
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the production and the achievement of business objectives. It follows the high emphasis on ensuring clear ownership of the asset and collecting data referring to each asset. In general, in all cases, the relevance of the definition of a clear ownership of assets to ensure control and commitment to Asset Management is recognized by the companies. The various analyzed companies, while proving to have all shared the need for a clear ownership, have made different organizational decisions. In some cases, a centralized ownership at the level of maintenance / technical direction functions has been chosen for different systems; in other cases, the ownership was instead given to an executive belonging to the top management board. In terms of information systems, in order to support an assetcentric management approach, maintenance information systems are seen with a central role. In general, the information maintenance systems are still partially integrated with other enterprise information systems and the need to move towards the definition of a better system, in which different kind of data (technical and economical) related to assets are collected and analyzed in an integrated manner, is recognized. Overall, this is considered an enabling element for effective implementation of Asset Management.
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research and practice in order to tailor Asset Management in the production companies’ context as a business process within Operations. Companies have to get more and more aware of the importance of addressing Asset Management by reflecting the four funding principles and by accordingly structuring an Asset Management system. Moreover, mechanisms have to be introduced so that the decisionmaking process within such system is faced through a life cycle perspective and through alignment among the strategic, tactic and operative control levels. Only by adopting these measures, sustainable value creation from assets can be ensured. ACKNOWLEDGMENT The research work was performed within the context of SustainOwner (“Sustainable Design and Management of Industrial Assets through Total Value and Cost of Ownership"), a project sponsored by the EU Framework Programme Horizon 2020, MSCA-RISE-2014: Marie Skłodowska-Curie Research and Innovation Staff Exchange (RISE) (grant agreement number 645733 — Sustain-Owner — H2020-MSCA-RISE-2014). REFERENCES
4.5 Concluding Remarks To conclude, it is worth remarking that the case study was developed by considering companies belonging to different industrial sectors to have a general overview and assessment on AM integration in production companies. Even if the companies selected for the case study development are companies with high level of maturity in terms of Maintenance Management, when widening up the perspective over Asset Management, gaps to be filled in have been identified. None of the companies resulted to fully incorporate the four funding principles for AM integration (i.e. life cycle orientation, system orientation, risk orientation and asset-centric orientation). Lifecycle orientation is the principle that more companies are looking at in order to tend towards it (re-organization, testing of new tools etc.), while system orientation is still quite weak in all companies. Moreover, it is worth noticing that the gaps that have been identified regarding the level of integration of the Asset Management in the companies not only are due to contingent reasons (industry, type of assets to manage etc.) but also to the low development level of the necessary technologies / methodologies, for example, the availability of a standard model for Total Cost of Ownership to support the decisionmaking process or the availability of performance indicators at system level.
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5. CONCLUSIONS
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