More recently, lines have blurred substantially to address growing expectations; however, traditionally these systems are thought of as follows:
- EAM enables better management of assets throughout their life cycles. Information about these assets, including current condition and maintenance records, is used to understand asset reliability and operational integrity. Decisions within this methodology are tactical and operational in nature.
- APM is considered a subset of EAM. It is a strategy focused on decisions to maximize production availability and asset performance. APM systems often include monitoring and analytics to aid predictive and prescriptive maintenance decisions.
- CMMS are utilized to extend the effective life of assets, through disciplined management and execution of maintenance activities.
While these transformation areas support operational excellence — and are still in vogue — manufacturers are thinking about the next steps in their digital journey as profit margins tighten, growth agendas remain ambitious, staff turnover presents challenges and consumer expectations continue to elevate. These questions are among those at the top of the list:
- What size of capital budgets will be needed to address compliance, safety, and cost savings projects versus ongoing asset replacements?
- Is growth the business objective, or is it staying in business?
- How can innovation and the ESG agenda be accelerated?
- How can risk be tolerated to sweat assets in periods of capacity expansion/high growth?
Asset Investment Planning (AIP) enters as the latest methodology in the landscape addressing these questions head-on. AIP methodology involves strategic capital investment decisions, typically across five years and, infrequently, less than one year. AIP leverages operational and financial asset information to guide enterprise and site capital needs.
The types of operational information considered in this methodology include health of the physical asset (based largely on maintenance and event history sourced from EAM, APM and CMMS) and an understanding of criticality to the business (consequence of failure) to characterize and quantify risk within a predetermined framework.
The types of financial information considered in this methodology include asset book value (sourced from Enterprise Resource Planning systems) to understand initial investment scale, depreciation, and capital request justifications to determine spend timing. Software solutions have emerged in recent years to converge this operational and financial information with other key data sources considered in long-term capital spend planning.
Manual data aggregation, disparate spreadsheet management and spend determination, based on how well internal selling was done, is quickly becoming a thing of the past. AIP helps quantify asset risk, making it more predictable, and providing a deeper layer of substantiation for multiyear capital budgeting and planning.
Impacts of AIP implementation can be observed across the organization:
- Supply chain leaders recognize a reduction in unplanned expenditures due to outages, the achievement of innovation milestones sooner, and capex/opex budget optimization.
- Engineering leaders recognize improvement in planning efficiency, more time for detailed design and execution, and reduced dependence on tribal knowledge site to site.
- Finance leaders recognize that focused analysis efforts result in greater spend confidence with the agility needed to react to market conditions and maintain financial health.
- Procurement leaders recognize focused commercial activity (contract negotiation and supplier management) and an ability to better anticipate long lead times.
AIP enables less time deciding on the right asset priorities, with reduced concern of unplanned budget rework. It is the next step in a manufacturer's digital journey.
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