top of page
Search
  • Kleber Siqueira

Industrial Assets Custodianship: The Organizational Paradox

Updated: Oct 19, 2023



Para visualizar a versão em português, por favor CLIQUE AQUI


Introduction


In the world of business, where success hinges on the efficient management of various assets, industrial assets occupy a unique and critical position. These assets encompass an array of elements, from complex machinery and digital control systems to maintenance protocols and management information systems. Their proper care and management are paramount to business continuity, but here's the paradox: these assets are often relegated to the periphery of organizational structures, distinct from the strategic assets directly managed by corporate leadership, such as financial assets, human resources, and IT.


The Significance of Industrial Assets


For the sake of clarity, let's begin with a definition: Industrial assets encompass the entirety of a system, from inputs to outputs, controls (DCS, SCADA, IACS, HMI), condition monitoring, protection, digital twins, and management information systems (CMMS, APM). ISO 55000, a widely accepted standard, defines asset management as "the coordinated activities of an organization for the purpose of generating value from assets."


The question then arises: Is it logical to relegate the management of industrial assets, which play a fundamental role in a business's value chain, to a secondary or even disregarded hierarchical level, when other strategic assets are under the direct purview of top management?


This contradiction, with its associated risks to business objectives, creates an organizational paradox that requires careful consideration in light of each business's unique corporate risk profile.


Objectives of Industrial Asset Custodianship


The custodianship of industrial assets encompasses three primary objectives:

  1. Asset Owners: Satisfied when their investments in industrial assets generate returns and remain profitable over time.

  2. Asset Users (Operators): Content when the industrial assets they operate consistently perform within established standards, mitigating risks to their well-being and minimizing operational disruptions.

  3. Society: Pleased when industrial assets do not fail in ways that threaten the safety of individuals or the environment, affecting communities near and far.

From these objectives, it becomes evident that industrial physical assets, including production systems, are strategically vital components of a business's value chain, especially during their operational lifecycle phase.


Industrial Asset Management vs. Maintenance Management


ISO 55000 defines Asset Management as the "coordinated activity of an organization to obtain value from assets," a concept that entails a broad scope and the emergence of a new discipline. Maintenance Management, on the other hand, is concerned with planning, programming, and controlling activities necessary to preserve the functional integrity and performance of physical production systems.


Traditionally, maintenance departments have carried out repairs, inspections, and condition monitoring for physical assets. However, an expanded focus on operational reliability management has gradually caused functional disconnection between these departments and corporate top management. This shift necessitates a reevaluation of how asset management fits into the organizational structure of businesses.


The Organizational Paradox


The organizational paradox emerges when operational reliability, a facet of asset management, resides at a lower hierarchical level within the organization. This paradox calls for a reexamination of organizational aspects, such as the expanding responsibilities of maintenance departments and the strategic importance of industrial asset management across its lifecycle.


Industrial Assets Custodianship


Just as financial assets have well-established systems of custodianship, the management of industrial assets requires its own framework. To ensure responsible custodianship, it is imperative to go beyond a list of failure modes and causes. Custodians must also address:

  • Asset Function Descriptions

  • Asset Performance Descriptions

  • Descriptions of Functional Failures

  • Descriptions of Failure Modes/Causes for Each Functional Failure

  • Consequences and Risk Assessment for Each Failure Mode/Cause

  • Selection of Mitigation Strategies

  • Execution of Strategies with Precision

  • Performance Monitoring through KPIs and Scorecards

  • Periodic Strategy Audits

  • Control over Asset-Related Information Systems

These responsibilities encompass a broad scope, making it clear that transferring them entirely to maintenance departments may not be optimal. These departments, already burdened with their own complex and essential responsibilities, are primarily focused on asset repair, ensuring the continuous operation of the value chain.


In light of this, it's essential to recognize that addressing the organizational paradox requires a fresh perspective. It isn't a reflection on the technical and managerial capacity of engineers and technicians, who often shoulder some asset management duties. Instead, it calls for a rethink of how this new discipline can integrate into corporate leadership.


A New Vision for Asset Management


Given the broad scope and importance of industrial asset management, the article underscores the need to reconsider organizational charts. Here are some recommendations for addressing the paradox:

  1. Inception of a New Organization: Companies should consider establishing a new organization at the top management level, dedicated to the management of industrial assets, thus resolving the organizational paradox.

  2. Review and Realignment: Maintenance departments should engage in open dialogue with top management to address the additional responsibilities they bear, ensuring they don't pose undue risks to the business.

  3. Cultural Change: To better understand the challenges and responsibilities of industrial asset management, it's time for companies to adopt a new organizational paradigm.

This article serves as a clarion call for organizations to recognize the strategic importance of industrial asset management and to address the organizational paradox, ensuring a secure and efficient operational environment while meeting the expectations of all stakeholders.


Conclusion


In a rapidly evolving business landscape, industrial asset management is a cornerstone for success. Companies must confront the organizational paradox that limits its potential by reevaluating the hierarchical structure of asset management and taking the necessary steps to align this critical discipline with corporate leadership. The future of industrial asset management is inextricably linked to an organization's ability to adapt, innovate, and prioritize operational reliability, and you can be a vital part of this transformation.


Your insights, comments, and suggestions are essential in shaping the future of asset management and ensuring its rightful place at the heart of business strategy


The conceptual organizational redesign required, as well as the rationale for its adoption, will be further discussed in more details a separate article.


Establishing a new organizational paradigm for managing industrial assets is a new building still under construction. You can be a significant part of this construction.


Your comments and suggestions are welcome!


Thanks



333 views0 comments

Recent Posts

See All
bottom of page