Top Asset Lifecycle Management: Driving Profit in a Budget Constraint Environment
Welcome to today’s Webinar:
Top Asset Lifecycle Management: Driving
Profit in a Budget Constraint Environment
Please join us for the following upcoming Aberdeen Group Webinar:
August 19, 2010
Achieving Environment, Health and Safety (EH&S) in Today’s Plant
Top Asset Lifecycle Management: Driving Profit in a Budget Constraint Environment
Joining us today:
Daniel Konstantinovsky,
Product Marketing Manager,
ABB
Mehul Shah,
Research Analyst,
The Aberdeen Group
Paul Studebaker,
CMRP, Editor in Chief,
Plant Services Magazine
Top Asset Lifecycle Management: Driving Profit in a Budget Constraint Environment
Daniel Konstantinovsky
Product Marketing Manager
ABB
May 20, 2010. Dan Konstantinovsky, ABB Reliability Services North America
Reliability Excellence Drives Bestin-Class Performance
How ABB is organized
Power
Products
Power
Systems
Discrete
Automation
and Motion
Low Voltage
Products
Process
Automation
Services
$11.2 billion
33,500
employees
$6.5 billion
16,000
employees
$5.4 billion
18,000
employees
$4.1 billion
19,000
employees
$7.8 billion
28,000
employees
$4.2 billion
12,500
employees
(pro-forma)
2009 revenues (US$; pro-forma figures for automation divisions)

ABB’s portfolio covers:


Electricals, automation,
controls and instrumentation
for power generation and
industrial processes
Power transmission

Distribution solutions

Low-voltage products

Robots and robot systems
Life cycle
services,
reliability
services &
consulting
services
ABB Confidential and Proprietary Information
What is Reliability?
Definition
1
Reliability ‘by the book’=R(t)=
e
t
MTBF
Meaningful definition:
Overall
Equipment = Availability
In other words, we tie $ directly
Effectiveness
X
Performance
X
Rate
Quality
Rate
ABB Confidential and Proprietary Information
Why reliability?
Operational Excellence is biggest profit contributor
Company Profit
Operational
Excellence
Operational Excellence
is biggest controllable
contributor to sustainable
profit.
Reliability Excellence
Operational Excellence needs a reliable foundation:
 People
 Processes
 Tools
 Metrics
ABB Confidential and Proprietary Information
Influence of OEE on earning power
Planned
hours
8 760
Max prod/h
Theoretical
prod/year
438 000
Actual
prod/year
263 019
Contribution
margin/year
50
OEE
Performance
85.7%
Quality yield
Price/unit
0.600
Variable
cost/unit
0.416
Prices in kUSD
65 755
60.0 %
Availability
77.0%
The earning power of a
plant under
some assumptions:
Contribution
margin/unit
0.250
Profit
11 286
Direct
maintenance
Fixed
costs
costs/year
54 469
9 469
Depreciation Fixed assets
15 000
150 000
91.0%
Other fixed costs
30 000
NOWC
15 781
Revenues Profitability
157 811
7.15 %
ROCE
Capital turn 6.81%
Revenues over rate
157 811
0.95
Capital
employed
165 781
Higher OEE substantially increases earning power
Planned
hours
8 760
Max prod/h
Theoretical
prod/year
438 000
OEE increase of
10% gives $9.3M
in increased profit
Actual
prod/year
306 697
Contribution
margin/year
76 674
50
OEE
70.0 %
Availability
83.0 %
Price/unit
0.600
Performance
91.7 %
Variable
cost/unit
0.350
Contribution
margin/unit
0.250
Profit
20 633
Direct
Fixed
maintenance
costs
costs/year
11 041
56 041
Depreciation Fixed assets
15 000
150 000
Quality yield
92.0 %
Other fixed costs
30 000
Prices in kUSD
NOWC
18 402
Revenues Profitability
184 018
11.21 %
ROCE
Capital turn 12.25 %
Revenues over rate
184 018
1.09
Capital
employed
168 402
Same earning either requires price increase...
Planned
hours
8 760
Max prod/h
Theoretical
prod/year
438 000
Same earning power
can be achieved by a
6.2 % price increase...
Actual
prod/year
263 019
Contribution
margin/year
75 486
50
OEE
60.0 %
Availability
77.0 %
Price/unit
0.637
Performance
85.7 %
Variable
cost/unit
0.350
Contribution
margin/unit
0.287
Profit
20 434
Direct
maintenance
Fixed
costs
costs/year
10 053
55 053
Depreciation Fixed assets
15 000
150 000
Quality yield
91.0 %
Other fixed costs
30 000
Prices in kUSD
NOWC
16 754
Revenues Profitability
167 543
12.20 %
ROCE
Capital turn 12.25 %
Revenues over rate
167 543
1.00
Capital
employed
166 754
...or reduction in maintenance costs of 95%!
Planned
hours
8 760
Max prod/h
100
Theoretical
prod/year
438 000
Performance
85.7 %
Price/unit
0.600
Variable
cost/unit
0.350
Actual
prod/year
263 019
Contribution
margin/year
65 755
OEE
60.0 %
Availability
77.0 %
… or by reduction
of maintenance costs
by >95 % !
Contribution
margin/unit
0.250
Direct
maintenance
costs
442
Profit
20 313
Fixed
costs/year
45 442
Depreciation Fixed assets
15 000
150 000
Quality yield
91.0 %
Other fixed costs
30 000
Prices in kUSD
NOWC
15 781
Revenues Profitability
157 811
12.87 %
ROCE
Capital turn 12.25 %
Revenues over rate
157 811
0.95
Capital
employed
165 781
Top Asset Lifecycle Management: Driving Profit in a Budget Constraint Environment
Mehul Shah
Research Analyst
The Aberdeen Group
Asset Lifecycle
Management:
Driving Profit in a Budget Constraint Environment
May 20th, 2010
Mehul Shah
Research Analyst
Agenda
Introduction
 Research Methodology
 Survey Demographics
 Making the Best-in-Class
 P.A.C.E. (Pressures, Actions, Capabilities,
Enablers)
 Recommendation
 Questions

14
Aberdeen Manufacturing Research At a Glance
•Over 60,000 Newsletter Subscribers
•Library of Research Topics – Over 200
published documents
•2,500+ MFG Executives Surveyed in 2008
•In-depth Manufacturing Research Calendar
•Over 15,000 Report Downloads Yearly
15
A Few of Our (More Than 25) Advisors
The Research Advisory
Council provides the
Strategic Service
Management Practice with
ongoing guidance around
research direction and topic
selection on topics that
address the most pressing
issues facing Service
Executives globally.
Comprised of CSO’s and
other senior service
executives across multiple
industry sectors, the council
serves as an invaluable
resource for end-user
market validation.
Vice President, General
Dynamics
Vice President Supply Chain,
Becton Dickson
President Global Supply Chain,
Schwann Food Company
Vice President Global Supply Chain,
Celgene Corporation
Vice President, Conagra
Director Strategic Initiatives,
Pfizer
Vice President Continuous
Improvement, La-Z-Boy
Vice President, Ditch Witch
16
Our Research Methodology




5,000+ Executives
surveyed
10,000 + data points
collected per study
12 Benchmark
Reports planned for
2010
Library of 15,000
benchmark survey
responses and
200,000 data points
17
Aberdeen’s Methodology
End-User Investigation: PACE Framework
Pressures:
External and internal forces that impact an organization’s
market position, competitiveness, or business operations.
Actions:
The strategic approaches that an organization takes in
response to industry pressures.
C
The business competencies (organization, process, etc…)
apabilities: required to execute corporate strategy.
Enablers:
The key technology solutions required to support the
organization’s business practices.
18
Aberdeen Maturity Class Framework
Best-in-Class
Selected Performance
Criteria (KPI)
- Top 20%
Asset Downtime
OEE
Total
Respondents:
Industry
Average
- Middle 50%
Laggard
- Bottom 30%
Maintenance Cost Reductions
Maintenance Budget Change
Respondents are scored
individually across KPI
19
Aberdeen Maturity Class Framework
Best-in-Class
Selected Performance
Criteria (KPI)
- Top 20%
Time-to-Action/Decision
Asset Downtime
Employee
Productivity
OEE
Total
Respondents:
Industry
Average
- Middle 50%
Laggard
- Bottom 30%
Reduction of Risk
(i.e.
Litigation)
Maintenance
Cost
Reductions
Respondents are scored
individually across KPI

What are Best-in-Class
companies doing differently?
Pressures:
External forces that impact an organization’s market position,
competitiveness, or business operations.

What pitfalls are they
avoiding?
Actions:
The strategic approaches that an organization takes in
response to industry pressures.

Why are they achieving
greater success?
business competencies (organization, process, etc…)
Capabilities: The
required to execute corporate strategy.

What technologies and
services are enabling them to
succeed?
Enablers:
The key technology solutions required to support the
organization’s business practices.
20
~ 145 Qualified Survey Respondents

Size:




31% Small (Rev. < $50 million)
33% Mid-size (Rev. $50 million ~ $500 million)
36% Large (Rev. > $500 million)
Headquarters:



60% North America
26% EMEA
13% Asia-PAC
21
Seniority Represented
Information Technology
18%
Reliability Engineer
12%
Maintenance Supervisor / Manager
9%
Manufacturing
9%
Business Process Management
2%
23%
7%
10%
CxO
Vice President
8%
Senior Management
Marketing
7%
11%
6%
5%
Finance
Procurement
4%
Maintenance Engineer / Planner
4%
Customer Service
3%
Logistics/Supply Chain
3%
0%
5%
Director
Manager
Staff
Other
41%
10%
15%
20%
22
Decisions for Asset Lifecycle Management
Asset reliability and maintenance
81%
New asset procurement
65%
Spare parts management
64%
Asset repair / refurbish / overhaul
60%
Training and certification
52%
Asset commissioning
47%
Asset decommissioning
41%
Safety - Employee and Asset
36%
Environment and energy management
0%
32%
25%
50%
75%
100%
Survey Question: Please describe which of the following decisions you influence?
23
Industries Represented
High Technology and Electronics
Telecommunication Services
11%
16%
Utilities
Industrial Equipment Manufacturing and Products
7%
2%
Automotive
Aerospace & Defense
2%
Chemicals
7%
4%
Metal Products and Mining
Food/Beverage
4%
6%
Energy
Public Sector
5%
6%
5%
5%
5%
5%
5%
5%
Water / Waste Water
Consumer Goods
Oil and Gas
Engineering Services
Pharmaceutical Manufacturing
Other
24
Maturity of ALM Programs
50%
36%
38%
25%
16%
11%
0%
Yes, a formal
process
Yes, an informal
or ad hoc process
No, planning to
No, planning to
institute a formal
institute an
process within the informal or ad hoc
next 12 months process within the
next 12 months
25
Top Pressures driving companies to focus
resources on asset management
Maximize Return on Assets
71%
Need to delay CAPEX in the current economic
environment
43%
24%
Respond to aging infrastructure
Regulatory Compliance
21%
Adhere to corporate sustainability Initiatives
Minimize health and safety related incidents
20%
8%
All Respondents
7%
Respond to attrition in workforce
0%
25%
50%
75%
100%
26
Defining Best-In-Class Performance
Definition of Maturity Class
Best-in-Class:
Top 20% of aggregate performance
scorers
Industry Average:
Middle 50%
of aggregate performance scorers
Laggard:
Bottom 30%
of aggregate performance scorers
Mean Class Performance

2% Asset Downtime

92% OEE (Overall Equipment Efficiency)

-14% Maintenance Cost Change
-8%
Maintenance Budget Change

5% Asset Downtime

84% OEE (Overall Equipment Efficiency)

-3% Maintenance Cost Change
-1%
Maintenance Budget Change

17% Asset Downtime

68% OEE (Overall Equipment Efficiency)

4% Maintenance Cost Change

4% Maintenance Budget Change
27
Strategic Actions
Improve visibility into complete asset lifecycle to
improve decision making
45%
Establish collaboration across functional
departments
45%
Synchronize asset performance with corporate
performance objectives
35%
Establish a risk based approach to be predictive
towards asset management strategies
27%
Equip operations and maintenance employees
with real-time visibility into asset condition
24%
0%
25%
All Respondents
50%
28
Competitive Framework –
Process Capabilities
Best-in-Class
Average
Laggards
Asset management decisions are based on a risk based approach
44%
Process
34%
32%
Dynamically updated asset management processes across the
enterprise as new best practices are developed.
38%
34%
20%
Process established to understand the criticality of asset to determine
the most effective maintenance approach
56%
44%
24%
Source: Aberdeen Group, June 2009
29
Competitive Framework –
Organization Management Capabilities
Best-in-Class
Average
Laggards
Executive ownership and sponsorship for asset management strategies
across the enterprise
60%
53%
29%
Established cross-functional team to foster collaboration across
production, maintenance, finance, engineering and corporate groups
Organization
44%
26%
14%
Established Centers of Excellence for capturing and promoting best
practices for asset management across the enterprise
53%
26%
20%
Social networking tools used to drive collaboration among current as
well as past employees
25%
17%
0%
Source: Aberdeen Group, June 2009
30
Competitive Framework –
Knowledge Management Capabilities
Best-in-Class
Average
Laggards
Centralized knowledge warehouse to store asset data from different
plants
44%
Knowledge
Management
32%
19%
On-demand asset lifecycle information easily accessible by employees
40%
32%
15%
Failure data is used to perform root cause analysis to understand the
impact and the probability of equipment failures
44%
36%
30%
Source: Aberdeen Group, June 2009
31
Asset Information
91%
Asset Location
73%
Maintenance Schedule
64%
Spare Parts Inventory
Asset value
61%
Asset Condition / Status
61%
Equipment Vendors
51%
Asset Utilization
47%
Asset Lifecycle Expectation
All Respondents
33%
0%
25%
50%
75%
100%
32
Competitive Framework –
Performance Management Capabilities
Best-in-Class
Average
Laggards
Asset Performance metrics are linked to financial metrics
Performance
Management
38%
34%
33%
Asset Performance can be compared across plants
38%
34%
33%
Source: Aberdeen Group, June 2009
33
Key Performance Indictors (KPI)
Total Maintenance Cost
66% 81%
63%
MTBF
49%
44%
Revenue Growth
25%
44%
Cost of Downtime
Asset
Reliability
63%
59%
31%
MTBR
Profitability
38%
32%
ROA
38%
34%
LTA
0%
50%
100%
Best-in-Class
56%
46%
50%
37%
0%
50%
100%
Others
34
Energy and Carbon Management
Best-in-Class
Average
Laggards
Energy management integrated with the overall asset management strategy
33%
Sustainability
14%
14%
Maintenance schedules and alerts are based on asset condition and energy
efficiency
33%
22%
10%
Carbon emission levels are regularly collected and monitored
53%
34%
29%
35
Percentage of Respondents
Criteria for Purchasing New Asset /
Equipment
100%
80%
94%
78%
75%
75%
63%
60%
58%
63%
50%
38%
34%
40%
27%
22%
20%
25%
19%
0%
Asset
reliability
Cost of asset
Asset
Availability of
Energy
maintenance functionality spare parts requirement
Best-in-Class
New product
Introduction
(NPI)
Learning
curve
Others
36
80%
67%
57%
40%
40%
EAM Adoption
0%
Best-in-Class
Industry Average
EAM Integrated with ERP
Percentage of Respondents
Percentage of Respondents
Competitive Framework – Technology
Capabilities Enterprise Asset Management
Laggards
50%
30%
28%
25%
14%
0%
Best-in-Class
Industry Average
Laggards
n= 114
Source: Aberdeen Group, June 2009
37
Technology Enablers
Percentage of Respondents
80%
73% 71%
67%
67%
67%
61%
60%
40%
50%
35%
53%
53%
56%
46%
47%
40%
37%
34%
25%
16%
20%
35%
21%
11%
0%
Alerts and
Alarm
Management
Asset
Dashboard
Master Data
Management
Best-in-Class
Workflows
Asset Analytics
Industry Average
Laggards
Wireless
Risk
Management
n= 114
Source: Aberdeen Group, June 2009
38
Recommendation: Laggard to Average
Establish executive focus for asset
management.
 Break down departmental silos and
establish cross-functional teams to enable
collaboration.
 Focus on understanding the criticality of
assets based on past and current asset
data.

39
Recommendation: Average to Best-in-Class
Improve visibility into complete asset
lifecycle.
 Consider energy requirements while
making asset buying decisions.
 Invest in an Enterprise Asset Management
(EAM) system.

40
Recommendation: Best-in-Class
Synchronize asset performance to
corporate performance.
 Enable real-time visibility into asset
conditions by investing in wireless
solutions.
 Establish Integration between EAM and
ERP systems.

41
Thank You
Contact Information
Phone: 617.854.5212
Mehul.Shah@Aberdeen.com
Top Asset Lifecycle Management: Driving Profit in a Budget Constraint Environment
Daniel Konstantinovsky
Product Marketing Manager
ABB
ABB uses reliability as a lever to increase OEE and
drive best-in-class performance.
ABB Reliability Services portfolio:

Enterprise Asset Management Services

Reliability Consulting

ABB Full Service®
ABB Confidential and Proprietary Information
Enterprise Asset Management Services
Enterprise Asset
Management
(EAM) Services
EAM Implementation
EAM Hosting
Database Development
PM30®
Maximo Services
PM30Plus®
SAP Services
MaximoPlus® & Other
EAM Services help instill a reliable foundation and enable
customers to get the most out of CMMS/EAM investments.
ABB Confidential and Proprietary Information
EAM Implementation results in Centocor, a division of
Johnson & Johnson

Challenge: Develop a validated, integrated and paperless Computerized
Maintenance Management System using SAP

Solution: SAP EAM Services

Customer quote: “The results of this partnership are world-class business
processes and a complete systems solution that will deliver equipment reliability and
cost savings to the business for years to come. But these are not the only signs of
success. The partnership with ABB has left us with a workforce that now has the
system and reliability engineering knowledge to take our program to the next level
on our journey toward world-class reliability.” Felix Velez, Director of Maintenance
Operations

Results: SAP-related savings that have paid for the $3.2
less than two years
million investment in
ABB Confidential and Proprietary Information
Reliability Consulting provides a path to success
Total Plant Reliability®
People
Process
Vision & Mission
Mtce. Work Mgmt.
Critical Equipment Ranking
Org. Structure
Failure Investigation
Basic PM
Roles & Responsibilities
Standardization
PdM/Cond. Monitoring
Teamwork
Materials Mgmt.
CMMS/Data Mgmt.
Operator Driven Reliability
T/A or S/D Mgmt.
Life Cycle Costing
Multi-skilling
Contractor Mgmt.
Risk Based Inspection
Performance Mgmt.
Mgmt. of Change
Reliability Centered Mtce.
Customer
Education/Training
Design for Reliability
RAM Modeling
• OEE
Asset Management
Prevention
Empowerment
Best Practice
Working
Tools/Methods
Partially Working
Measurement
Financial
• Mtce $ as % RAV
Internal Business Process
• PM Compliance
Learning & Growth
• Training Hrs/Emp.
Reliability Scorecard
Not Working/Absent
Reliability Consulting benchmarks customers to identify strengths,
recognize improvement opportunities and deliver actionable roadmap
ABB Confidential and Proprietary Information
Major cost reduction at NA Southeast Chemical Plant
“Forming a partnership with ABB, we have achieved improved production
performance and lower maintenance costs. Our results are a continuing and
sustainable process that will pay lasting dividends.”
Maintenance Manager, Southeast Chemical Plant
ABB Confidential and Proprietary Information
ABB Full Service®
ABB Full Service® is a long-term maintenance
collaboration in the form of a performance-based win/win
partnership between ABB and the customer.
ABB assumes full responsibility of design, execution and
management of client maintenance, including full
responsibility of:
 All maintenance personnel
 All maintenance related activities
 All maintenance equipment & facilities
 Management of maintenance subcontractors
 Management of spare parts and inventory
ABB Confidential and Proprietary Information
ABB Full Service® increases productivity and reduces
costs at Compañía Mega S.A.
Ye
ar
4
Maintained 99.6%
availability
Planned maintenance
80%
75%
70%
Ye
ar
3

90%
85%
Ye
ar
2
Increase of 12.6% for
OEE in just the first
year of the
agreement
95%
Ye
ar
1

Planned maintenance
el
in
e
Year-over-year
reduction in total
maintenance costs
by 1.6-2.0%
Ba
s

ABB Confidential and Proprietary Information
Interested in learning more?

Call: 877-234-6756

Email: reliability.services@us.abb.com

Visit: www.abb.com
As a token of appreciation for attending this
webcast, ABB will send you the latest issue of
ABB Review, the esteemed global technical
journal produced by ABB Research and
Development. This issue features
developments in the fields of maintenance
and reliability.
Contact us today to get your copy.
ABB Confidential and Proprietary Information
© ABB Group
March 19, 2016 | Slide 52
Top Asset Lifecycle Management: Driving Profit in a Budget Constraint Environment
Questions for our Panel?
Daniel Konstantinovsky ,
Product Marketing Manager,
ABB
Webinar Sponsored by:
Mehul Shah,
Research Analyst,
The Aberdeen Group
Top Asset Lifecycle Management: Driving Profit in a Budget Constraint Environment
Thank you for attending today’s Webinar!
Look for an email from us with a link to download
the entire Presentation from today’s event.
Please join us for the following upcoming Aberdeen Group Webinar:
August 19, 2010
Achieving Environment, Health and Safety (EH&S) in Today’s Plant