Asset Management
Entropy Part 2 – Economics
In part 1 I introduced a simple 3 legged stool model: design, maintenance and operations being it’s 3 legs. It can deliver high performance at low cost and risk – i.e.: high productivity. It is important to keep the legs balanced and indeed intact! Doing so requires a bit of investment. In thermodynamic terms we need to put some energy into the system to keep the entropy from growing. That energy is an investment in maintenance and the payoff comes in the form of steady, predictable revenues with a high margin for profit. Those words should be music to accountants’ ears. Read more “Entropy Part 2 – Economics”
Your job is to improve reliability and you have a plan. It focuses on bad-actors, having the right data, cleaning up some parts data that is known to be causing delays in work execution, a bit of training in reliability methods and your adding engineers. You are certainly on the right track with your plan and the actions you will take should indeed make some improvement. But are you on the right track?
If you can’t sell all you can produce, then reducing costs is often the only way to improve margins, but that simplistic accounting perspective is not always the case. Cost control is often thought to be key to attaining profitability but it the case of maintenance it can get you into trouble. Cost control can have a big opportunity cost if you don’t take advantage of the opportunities you have. Consider that what you might really want is greater value – more for less, no just less. 
In 2014, at an IMEC conference organized by the University of Toronto, Art Rice of Maintenance Technology Magazine said that in many cases “Lean is a form of Anorexia”. He was right then, and he is still right today.
