Maximizing Lifetime Value with Asset Performance Management

Asset-intensive industries like manufacturing, logistics, oil and gas, and construction depend on the availability, reliability, and efficiency of heavy machinery, specialized equipment, transport vehicles, production facilities, and critical infrastructure for their day-to-day operations. But how can companies make sure they are getting the most our of these investments? Asset Performance Management (APM) is the comprehensive strategy that most industries use to optimize the performance, functionality, and output of their assets.

Why Asset Performance Management (APM) is important

Organizations in asset-heavy industries rely on their physical assets for productivity, operations continuity, and quality control. That is why they spend an enormous amount of money on procurement, utilization, and maintenance to protect thost assets. There are strong practical and financial imperatives for developing a program that improves the protection, preservation, and productivity of assets.

This is where a fully developed APM strategy becomes valuable. It provides a framework for:

Ensuring assets operate at peak efficiency
Lowering the cost of asset maintenance and utilization
Reducing the risk of equipment failure
Preventing unplanned downtime
Maximizing the ROI on your physical assets across their lifespan.

Businesses rely on a number of interconnected systems, tools, and technology to achieve these outcomes such as IoT-enabled sensors, advanced data analytics, condition monitoring devices, and enterprise asset management (EAM) systems. In the guide that follows, we’ll provide an overview of Asset Performance Management, identify the key components of APM, explore the benefits of having a sound APM strategy in place, and offer tips for implementing an effective APM program.

What is Asset Performance Management (APM)?

Asset Performance Management (APM) is a holistic asset management strategy that combines specific processes, technologies, and best practices in order to maximize the value of your assets across their entire lifecycle, from procurement to discharge. An effective APM will combine traditional asset management priorities such as maintenance, downtime and failure mitigation, and optimized performance with broader organizational goals such as cost management, operational efficiency, and sustainability.

Most organizations that implement APM strategies do so with an array of sophisticated tech-enabled solutions to optimize efficiency, improve performance, and prolong the life of their equipment. Many of these solutions are used to facilitate an approach called predictive maintenance.

Predictive maintenance and Asset Performance Management

Predictive maintenance is an approach to asset management that leverages an analysis of historical data, real-time performance data, and environmental conditions to help predict potential failures so that maintenance can be performed to help avoid those failures. Using equipment performance patterns to determine when upkeep is needed helps improve the precision of maintenance plans, ensuring that maintenance is done when needed, but not more than needed, to minimize and prevent equipment failure.

Tools commonly used in predictive APM strategies include:

IoT (Internet of Things) devices
Condition-monitoring sensors
Advanced data analytics
Machine learning (ML) algorithms
Enterprise Asset Management (EAM) platforms
Computerized Maintenance Management Systems (CMMS)

Key objectives of APM

Your Asset Performance Management strategy should begin by clearly defining what you hope to get out of it. Because APM is holistic in nature and impacts all parts of an asset’s operation, these objectives will serve to form a strategy that addresses its full lifecycle and aligns with broader business goals.

Therefore, an effective APM framework will seek to:

Minimize unplanned downtime by reducing unexpected breakdowns and the costs associated with repairs, lost production, and operational disruption.
Extend asset life through a combination of continuous monitoring and proactive maintenance strategies, including predictive and preventive maintenance.
Maximize return on investment (ROI) by offsetting the impact of wear and tear, reducing the frequency of emergency repairs, increasing uptime, and delaying the need for replacement of major components or pieces of equipment.
Ensure peak performance by reducing equipment energy consumption, avoiding materials waste, and minimizing defective output to increase operational efficiency.
Improve safety and compliance by ensuring that equipment is used and maintained in compliance with safety regulations and internal standard operating procedures.

APM and Overall Equipment Effectiveness (OEE)

Taken together, the objectives you design your APM strategy to achieve will also contribute to the ultimate goal of APM, which is increased Overall Equipment Effectiveness (OEE). OEE is a metric used to measure how effectively each asset is used during its operational lifespan by considering three key aspects of performance: availability, performance, and quality. Read more about OEE here.

The shift from reactive to proactive maintenance

APM is rooted in proactive maintenance. Proactive maintenance strategies like preventive and predictive maintenance stand in contrast to reactive maintenance. While they all have their place in a well-rounded asset maintenance program, it is important to apply them thoughtfully to achieve the right balance in your APM.

Reactive maintenance is a methodology in which maintenance tasks are only triggered after equipment malfunctions or fails. While the upfront costs and burden of labor associated with reactive maintenance are low, the long term costs typically prove to offset any initial savings.

Reactive maintenance strategies often result in more frequent and more severe equipment failures as well as more costly repairs and prolonged downtime. And as always, downtime carries a number of additional costs including lost production, missed delivery deadlines, expedited shipping rates, and diminished customer satisfaction.

Preventive maintenance (PM), is when maintenance teams deploy routine checks, scheduled equipment inspections, planned part replacements, seasonal cleaning and more to prevent failures or performance issues. Preventive maintenance strategies use time or usage-based triggers to initiate maintenance activities. This approach has proven to be an effective strategy for reducing costs, minimizing downtime, and lengthening the lifecycle of your equipment. It is popular because, while the upfront time investment is more than with a reactive approach, the time and money needed to put it in place is relatively minimal.

Predictive maintenance (PdM) builds on the benefits of preventive maintenance by infusing it with real-time condition-based monitoring data and analysis. With the incorporation of predictive maintenance tools like IoT devices, condition-monitoring sensors, and machine-learning algorithms, maintenance teams can get even more precise with their maintenance planning, Continuous monitoring, while it requires more software, data, and technological infrastructure, makes it possible to meet compliance standards with fewer physical inspections and expands dramatically on the amount and quality data that can be used to inform decision making.

When used effectively and in tandem, a combination of all three methods will help your organization maximize the benefits of an effective APM.

Benefits of an effective APM

Organizations that adopt comprehensive APM strategies realize several key benefits, including:

Reduced unplanned downtime, with IoT-based condition monitoring and advanced analytics detecting early signs of wear or potential failure, and initiating corrective maintenance efforts
Lower maintenance costs through on-time corrective repairs, and a consequent reduction of both costly failure-driven repairs and tasks that might qualify as “over-maintenance”
Improved asset longevity through more precise diagnostics, early identification of performance issues, and timely corrective action
Improved safety and compliance, with the ability to track performance metrics and detect issues early helping businesses ensure they meet industry regulations, environmental regulations, and safety standards, as well as minimize the associated legal liability and financial penalties
Enhanced decision making, with better data and more in-depth analysis contributing to better informed asset investments, production strategies, equipment utilization rates, and more

Measuring asset performance with key metrics and KPIs

In addition to the advanced predictive technology highlighted throughout this guide, an effective APM strategy must also provide a framework for benchmarking, measuring, tracking, and analyzing your program’s progress toward key objectives like minimizing downtime, reducing maintenance costs, and improving equipment lifespan.

This is why it’s important to choose relevant metrics and track these key performance indicators (KPIs) after implementing your APM. The following are some of the more commonly used KPIs in Asset Performance Management.

Mean Time Between Failures (MTBF), measures the average time between asset failures, with a higher MTBF indicating greater asset reliability, and a lower MTBF suggesting more frequent failures in a given period of time.
Mean Time to Repair (MTTR) tracks the average time taken to restore an asset to full operation after a failure, with a lower MTTR indicating a well-trained maintenance team with efficient repair processes, and a higher MTTR indicating longer delays in addressing equipment failures, prolonged downtime, and the need for greater process efficiency.
Overall Equipment Effectiveness (OEE) is a comprehensive metric that measures asset utilization by combining three factors: asset availability, performance, and quality, with a high OEE score indicating that assets are not only available but also running efficiently and producing quality outputs, and a lower OEE indicating that factors like frequent downtime, inefficient operation, and inconsistent quality assurance may be cutting into the maximum potential of your equipment.
Work Order Completion Rate tracks the percentage of work orders that are completed on time, with a high completion rate demonstrating that your maintenance team is distributing labor resources effectively and meeting its responsibilities on time, and a low completion rate suggesting process inefficiencies or resource constraints.
Asset Utilization Rate measures how much of an asset’s maximum potential capacity is being used, with low utilization rates suggesting inefficiencies, underuse, or a misalignment between assets and production goals.

How to implement an Asset Performance Management Strategy

In addition to choosing the right technology, the likely success of your APM program will be improved with a couple of proven best practices. Below, we offer step by step instructions for getting the most out of your APM implementation.

Identify the critical assets that have the most significant impact on your business operations, conduct a risk-based assessment of your equipment, and prioritize predictive maintenance strategies for those assets that are most prone to failure or which represent the biggest threat of disrupting your operations.
Implement condition monitoring with IoT sensors in order to track various parameters, such as temperature, vibration, pressure, and fluid levels, in real-time.
Integrate IoT data with workflows, typically with the support of operational platforms such as your Computerized Maintenance Management System (CMMS) or Enterprise Asset Management (EAM) platform. These software solutions can provide a centralized platform for collecting, storing, and analyzing data from a wide variety of sources. In addition, well-selected CMMS and EAM platforms can help your business more effectively track asset health, generate work orders, schedule preventive maintenance tasks, and produce audit trails to ensure compliance.
Leverage advanced predictive analytics to detect patterns in equipment performance parameters such as vibration, temperature, and pressure; to identify anomalies, in these patterns; and to make better-informed decisions about when and how to service equipment.
Build a balanced maintenance strategy, one that advances the holistic goals of APM by bringing together predictive, preventive and corrective maintenance strategies and procedures.
Incorporate maintenance innovations including rapidly advancing AI and Machine Learning algorithms for continuous analysis of asset data and performance patterns; cloud-based platforms and mobile apps for easy data sharing across departments and locations; augmented reality, which can assist technicians in performing maintenance tasks by overlaying digital information on physical assets; and more.