Asset resource Planning (ARP) (cont.)

In manufacturing industries the requirements of the asset base, human resources and raw materials requirements are driven by the production plan to an acceptable level of accuracy. This in turn is based on an acceptably accurate market projection.

In asset-intensive companies the production plan is restricted by the reasonable assumptions about availability of the asset base. It is this required availability, not the production plan per se, that then drives the requirements of human and inventory resources.

Although simplistic at this stage, this is the fundamental difference between these two dominant industry models and is the key reason why efficiency techniques based on exact resource schedules are not suitable for sustainable improvement within asset intensive companies.

As we begin to analyze this further it becomes obvious that this is driving an entirely different operational model. One that requires very specific management techniques if we are going to increase the efficiency of it substantially.

Unique attributes of asset intensive industries include the following:

A requirement to hold inventory based on probability, not on certainty. This is a defining attribute of these industry types and one of the reasons why Just-in-Time applications within these industries can sometimes increase indirect costs.

Asset-intensive industries require Just-in-Caseinventory management. That is, management of inventory that is keyed to the likelihood of failure of the physical asset base. This is a very complex area and one that has a range of implications.

One of the impacts of this is on supply chain management. Projects within this area are, rightly, focused on the question of how we buy. There are undoubtedly a lot of potential gains to be made through a project of this nature. However, within asset intensive industries the key to the game is understanding why we buy. Again this relates to the probability of failure, but it also relates to the routine workload for each calendar period.

The key driver of the type and the levels of assets that we require is the performance levels required, and the actions required to maintain a given level of reliability.

This is the same for other areas such as the scheduling and forecasting of human resources, specialist services, or contractor requirements. Most of which are tied, either directly or indirectly, to the likelihood of failure.

For companies that need to improve efficiency this can be a complex task, and one requiring a comprehensive whole-of-life viewpoint of the physical asset base.

Some key areas of focus are:

• Definition of the baseline levels of routine maintenance fror a given level of performance and risk
• definition of the baseline allowable levels of corrective maintenance for a given level of performance and risk
• Development of the spares management policies based on the requirements of the asset base, the lead time of the spares, and the cost effectiveness trade off calculations once the costs of ownership can be determined
• Use this to fuel the supply chain optimization, rather than the other way around
• And then begin to work on the planning horizons and on ensuring that all work within each horizon is as accurate is it is able to be, and that the work of each horizon is executed as efficiently as it is able to be.

Daryl...