Industry Trends: Make APM Part of Your ORM Program

By Dan Miklovic, Principal Analyst, LNS Research

Looking at today’s regulatory environment and increasing shareholder activism in the marketplace, it’s clear that Operational Risk Management (ORM) is becoming a critical skill for many manufacturing and asset-intensive businesses. The costs associated with events like environmental violations or safety incidents—and their related potential fines and penalties—can be significant. The need to avoid accidents is becoming a prime business objective.

Today’s economic environment has also emboldened shareholders to hold management more accountable, not just for environmental incidents, but also for the failure to operate the business with what would be considered reasonable parameters. This could take the form of loss of business, claims for failure to deliver products or failure to regularly meet quality specifications. All can result in potential litigation from shareholders. In turn, managers are reacting by more effectively assessing and managing risks associated with their business.

APM—a powerful ORM tool

“Healthy assets are the foundation of a healthy business” is an axiom our organization uses to categorize the value Asset Performance Management (APM) brings to a business. Our research shows that enterprises that have invested in strong APM programs and moved beyond reactive or break-fix maintenance to deploy more advanced tools like Condition Based Maintenance (CBM) or even Reliability Centered Maintenance (RCM) experience far fewer process upsets.

More important, asset failures are always among the top three causes of accidents that result in either safety issues or pollution releases. Additionally, equipment that is poorly maintained invariably produces products of lower quality because it lacks the ability to maintain tolerances. The frequent start-stop cycles often associated with poorly maintained equipment mean less time operating at steady state, where quality is best maintained. Finally, it should be apparent that out-of-service equipment can impact production volumes, which can lead to myriad issues with customers.

Applying APM by itself will improve reliability and, consequently, reduce risk—but this is not the same as managing risk. To really leverage APM in your ORM program, you need to implement predictive analytics to gauge the consequences of each potential maintenance scenario. When you collect RCM data and use it to judge the impact of deferring maintenance to meet a production commitment, you are performing risk-management and not just risk-reduction. Likewise, when you use those same tools to assess the likelihood of failure that could lead to an accident, and then base maintenance priorities on that information, you are proactively practicing ORM.

Leveraging APM in ORM efforts

While migrating from reactive to preventive or predictive maintenance, or even CBM, can reduce an operation’s risk, it is the investment in RCM tools and predictive analytics that will allow you to truly make APM part of your ORM program.

That means you need to identify assets that have high risk, and then use predictive analytics to assess the risks associated with potential maintenance actions. Fortunately, with today’s variety of affordable Cloud-based solutions, virtually any organization can easily make APM part of its ORM program. MT

editor@maintenancetechnology.com