James Davis Page 1

THE BUSINESS PROCESSES OF SAM

The business processes required to implement Strategic Asset Management (SAM).
James W. Davis, PE, Vice President
Strategic Asset Management Inc
Voice: 610-861-7472 E-mail: jdavis@samicorp.com
INTRODUCTION
In the last few years many companies have begun to realize the importance of Strategic Asset Management (SAM) as an enterprise
strategy that, properly implemented, will improve financial performance. Typical results of an effective Strategic Plan for Asset
Management include a 20% - 50% reduction in maintenance cost accompanied by a 15% - 20% increase in real capacity, with no
capital investment in production equipment. The tangible results include a significant increase in profitability accompanied by a
dramatic reduction in unit cost. One of the key concepts required for successful development and implementation of SAM is the
concept of Business Processes. The SAM Business Processes are used to define and measure the means by which we implement
the best practices that lead to significant, sustainable financial performance improvement.
The Business Processes of SAM are cross-functional as shown in Figure 1. This means that developing and implementing SAM
requires the involvement of key individuals fromProduction, Engineering, Logistics and Senior Management as well as Maintenance.
Many so-called Maintenance Improvement programs have failed to achieve sustainable results when we have failed to recognize this
critical aspect.
The processes typically break-down at the intersections between the various stovepipe organizations. These organizations often are
focused on strategies and objectives that are conflicting and competitive in nature. The operations organization is so intent on
running that they push the maintenance organization to make quick fixes rather than to effect appropriate, lasting repairs.
Engineering is tasked with reducing capital expense and controlling construction time rather than considering reliability, availability,
maintainability (RAM) and life cycle costs when designing and constructing new facilities. Procurement is rewarded for acquiring
parts and materials at least cost, often resultingin substandard items that have a negative impact on overall cost.
The Vice President of Southern Area Manufacturing for Saudi ARAMCO admonished me that, in our plant, the Production and
Maintenance organizations were too friendly. In his words we were In bed together. He viewed this as an unhealthy relationship
and said that he believed there must be a certain level of animosity between these two groups in order for Operations to push
Maintenance to meet their needs. Our performance record eventually proved that the old dinosaur was wrong, but we took a lot
of heat for awhile.
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Asset Management Processes" Asset Management Processes"
Figure 1: Business Processes of SAM
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Studies have shown that among industrial companies in North America:
The average Maintenance wrench time (hands-on work) is less than 30%.
The typical level of Preventable Maintenance (repairs that could have been avoide by better process) is approximately
70%
The norm for Asset Utilization (level of on spec production) is averaging 65%.
These issues point to the need for designing appropriate integrated Business Processes to insure that we manage our critical assets
to the optimum capability.
WHAT IS SAM
SAM is an aggressive vision of the future and a related three to five year operational strategy. Key roles are identified and
defined in each element of the strategy. Performance standards are established for critical Business Processes. Key performance
indicators (KPIs) and standard definitions are in place and used for decision making. An effective change management plan is
developed and documented. An integrated set of Business processes is designed and implemented to establish a standard of
performance including a plan for achieving the standard and realizing benefits.
The Strategy is a cross functional tool that identifies roles and expectations for all elements of the Asset Management
Processes. It becomes a prioritizing device that causes us to attack first things first. It enables us to develop a thrust of
commonality across the enterprise.
In a recently published paper titled The Future of Asset Management Brad Peterson, President of SAMI, stated, This article
explores a broader vision for asset management than has been previously articulated and brands this vision Strategic Asset
Management (SAM). Based on successful experience with our clients, SAM is an integrated set of processes that systematically
derive the highest value from plant assets, through a consistent philosophy, plans and objectives, and cooperative involvement by
everyone in the plant. SAM represents a higher level of performance than is currently practiced or even recognized by the
manufacturing community today.
Any useful model to guide action will have several characteristics:
Simplicity: All of the greatest ideas are simple in concept. If not kept simple, they are not fully understood or
remembered, and fail as guiding principles.
Intuitive: Readers should be able to understand the underlying principles without guidance.
Utility: The model should work consistently in application.
Completeness: All necessary elements of success should be contained.
Our experience with the SAM model indicates these criteria are met. However, you as the reader will need to make your own
judgments.
We will explore the SAM Model and its applications in detail in a subsequent paper.
Figure 2: The SAM Model
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WHY CONSIDER DESIGNED PROCESSES
An associate, Dr. Carol Vesier, once said to me, Business Processes always exist. However, in most cases, management doesnt
know what they are. We came to refer to these as Virtual Processes. They are in use throughout your facilities, usually in
several varying versions, but they are not well defined and often create issues and conflicts. Employees are free to adjust them or
even create new ones as required to do their assignments as they understand them.
A good example of a Virtual Process occurs when Employee Joe has a problem with his computer but is unable to get support
from the IT Department for whatever reason. Joe happens to know that Brenda, another Maintenance Employee is good with
PCs, so he gives her a call and she comes over to solve his problem. After all, they have to get t heir jobs done in spite of
management.

Mark Buchanan said in an article in The New Scientist, employees muck up or ignore about one out of every four or five
commands that come down from their bosses - its a universal principle.
This implies that a Senior Vice President can expect employees on the shop floor to implement about 25% - 30% of his
standards. The graphic in Figure 3 shows how it works.
The typical plant environment in the absence of well-defined, integrated processes goes something like; Business is triggered by
a need. >> Something happens (transfer of information) >> Work is accomplished by someone >> Some Procedure is followed
>> Informal network business process occurs (Who can help?) >> Results are evaluated >>>>>>>>> Good, bad, redo, try
something else. The result is inefficiency at best and impending disaster at worst.
In the absence of well-engineered business processes, employees are going to create their own in order to get through the day.
Unfortunately, their limited view of the landscape often causes these ad hoc processes to be inadequate and even detrimental to
the overall mission.
A managing system where the core business processes are left to the imagination of employees frequently becomes a quid pro
quo arrangement. Favors are traded and results are heavily dependant on the popularity and relationships of the employee.
Because the Business Processes of SAM are nearly always cross-functional as is depicted in Figure 1, process failures often occur
due to conflicting priorities and adversarial relationships between the various organizations.


Figure 3: Employee Implementation of Standards
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BUSINESS PROCESS CONCEPTS
In order to have effective business processes, The Six Sigma Way by Peter Pande tells us that we need to understand the
components or characteristics required for defining a business process. The following diagram depicts these requirements.

The SIPOC model is defined as:
Supplier - the person or group providing key information, materials, or other resource to the process
Input - the thing provided
Process - the set of steps that transforms - and ideally, adds value to - the Input
Output - the final product of the process
Customer - the person, group, or process that receives the output
Process Measures and Service Requirements
These consist of:
A work flow diagram that models the process and identifies roles for each step in the process, and identifies interfaces
to other processes
Definitions of the roles and terms used in the process model
Measures or performance indicators to measure the process
Definition of the inputs / suppliers and
Clear specification of output and service requirements
In managing your business processes it is important to avoid the mushroom syndrome and to keep the customers informed. As
an example, insure that the operations or production management dont feel like Maintenance Work Orders fall into a Black
Hole once they are initiated. Establish effective reporting systems that provide the information needed to inform and inspire
confidence in the customer of your Business Processes.
Some examples in the Asset Healthcare arena might include:
Work order backlog management
Equipment with defects
Service Requirements:
What are the standards for how we interact
with & treat customers?
Output Requirements:
What features or
characteristics of our final
product or service are key to
customer satisfaction?
Customers
Outputs Inputs
Process
Suppliers
Customer
Interface
Figure 4: SIPOC Model
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PM/PdM completion
Clearly list the expected results from each process and identify quality requirements and specifications. Specify delivery and
turnover procedures for the customer of each process. Create and use measures to manage process output quality
Some examples in Asset Healthcare and Logistics management may include::
Turnover completed repairs to production
Accept new MRO equipment, parts, materials
BUSINESS PROCESSES VS. BEST PRACTICES
In many so-called Maintenance Excellence and other programs such as TPM and Lean Manufacturing, proponents focus on
implementing best practices. This approach almost invariably fails to achieve dramatic improvements that are sustainable in the
company culture. Best practices focus on the what we should be doing while Business Processes define how we will do our
critical work.
The Core Business Processes
There are nine Core or high level Business Processes that are addressed in SAM. The following section provides an overview
paragraph and two or three examples of each of these. Table 1 provides a partial list of the database that we have developed and
used in implementing business processes in several industries
The author has provided a detailed example of the Maintenance Work Management Process at Appendix I.
Strategic Management
Strategic Management processes define the way in which we establish and communicate the future of the company involving
stakeholders at all levels within the organization.
Strategy development and planning process
Goal setting and tracking process
Results measurement and process validation process
Information Management
Information Management incorporates all of the processes and tools that are used to store and retrieve information that is used to
support decision making based on hard data.
Repair tracking and reporting process
Informations systems evaluation and selection process
Reliability Management
Equipment Criticality 4.1.1 Assigning Equipment Criticality
4.1.2 Revising Equipment Criticality
Equipment Taxonomy
Equipment Maintenance
Strategies
4.3.1 Maintenance Strategy
4.3.2 Create Corporate Generic Maintenance
Strategies
4.3.3 Revising Corporate Generic Maintenance
Strategies
4.3.4 Applying a Maintenance Strategy to an
Equipment Unit
4.3.5 Revising a Maintenance Strategy to an
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Equipment Unit
Standard Repair Procedures 4.4.1 Standard Maintenance Repair Plans
Acceptance Testing 4.5.1 Identifying Special Acceptance Testing
Equipment Condition
Monitoring
4.6.1 Condition Monitoring
4.6.2 Define Condition Monitoring Tools for
Equipment
Failure Analysis and Response 4.7.0 Failure Analysis Core Process
4.7.1 Historical Data Analysis
4.7.2 Basic Failure Analysis
4.7.3 Advanced Failure Analysis
4.7.4 Implement Corrective Actions
Total Equipment Ownership
Cost
4.8.1 Life Cycle Costing.vsd
4.8.2 Applying Selection Criteria for Purchasing
New Equipment
Parts Management and
Inventory Control
4.9.1 Parts Management
4.9.2 Reviewing Part Historical Data
4.9.3 Implement Vendor Stocking Programs
Resource Management
Applying Criticality 5.1.1 Applying Equipment Criticality
Work Management (Reactive
Maintenance)
5.2.0 Reactive Maintenance Core Process
5.2.1 Execute Emergency Work
5.2.2 Identify Contingency Work
Work Management (Planning,
Scheduling and Executing
Work)
5.3.0 Maintenance Work Core Process
5.3.1 Identify Work
5.3.2 Plan Work
5.3.3 Schedule Work
5.3.4 Execute Work
5.3.5 Execute PM/PdM Work
5.3.6 Document Work
5.3.7 Backlog Management
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5.3.8 Record Event Info Needed for Failure
Analysis

Shutdown Management 5.5.0 Maintenance Shutdown Core Practice
5.5.1 Develop Shutdown Scope of Work
5.5.2 Create Preliminary Shutdown Schedule
Table 1
Organization Management
Organization Management involves establishing the Asset Management process management organization and defining the roles
of personnel involved in working with the reliability and maintenance business processes in all organizations. It defines our
Managing System business processes.
Managing cross-functional processes process management organization
Defining roles and responsibilities for processes
Capacity and Capital Management
Capacity Management processes address the methods by which we acquire or dispose capacity and manage capital investment. It
includes all of the aspects of incorporating reliability, maintainability, and operability into the design and installation of new
systems and equipment or modifications to existing.
Reliability, Availability, Maintainability assessment of systems and equipment
Life cycle cost assessment
Capital equipment procurement data for reliability
Production Management
Production Management includes all of the processes necessary for establishing and maintaining proper process controls as well
as those required for day to day management of the production process. This process includes critica l equipment operating
procedures, quality management, environmental compliance, and more.
Process quality assurance management
Critical equipment start-up and shutdown-processes
Environmental compliance assurance process
Resource Management
Resource Management includes all of the planning and supervision activities that go in to allocating manpower, materials, tools
and contractors to the accomplishment of the day to day function of the manufacturing site.
Daily work management
Major work and capital projects
Contractor and contract labor management
Reliability Management
Reliability Management involves the work processes and activities that focus on ensuring and enhancing reliability of the plants
production assets, the manufacturing equipment. It includes proactive activities like preventive and predictive maintenance and
analysis activities and record keeping.
Creating and implementing maintenance strategies
Equipment failure analysis and corrective action
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Preventive and predictive maintenance processes and follow-up
Logistics Management
Logistics Management includes all of the planning and day to day management processes the manufacturing reliability mission
and objectives. Storehouse management, procurement of supplies and parts, and vendor management are all elements of
Logistics Management.
Vendor evaluation and consolidation
Crtical spare parts management
Material quality assurance
Change Management
Change Management includes all of the work processes and activities required for communicating the SAM objectives to the
workforce, to motivate them to take ownership of the SAM, to achieve success, and to maintain state of the art work processes.
Craft reliability reward process
SAM Key Performance Indicator tracking and results management
SAM communication process
Appendix one contains a sample set of Business Processes for the function of managing maintenance work. As an interesting
exercise, see if you can identify the following characteristics for each process:
Supplier
Inputs
Process As given.
Outputs
Customer
KPI
As you can see, it is not always easy to identify the specific characteristics for a given process. In my next article, we will
address the Value Proposition for SAM.

References:
Title Author Copyright Publisher
The Future of Asset Management S Bradley Peterson 2003 Strategic Asset
Management, Inc.
Improving Profitability Through Reliability Carol Vesier, PhD 2001 RonaMax
The Six Sigma Way Peter Pande et al 2000 McGraw-Hill
Uptime: Strategies for Excellence John Dixon Campbell 1995 Productivity Press
Article Mark Buchanan 1997 The New Scientist
APPENDIX I - SAMPLE BUSINESS PROCESS WORK MANAGEMENT
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5.3.0 Maintenance Work Core Process
Rev: 4 Date: 02/20/02
Backlog
Management
Process - 5.3.7
Identify Work
Process - 5.3.1
Plan Work
Process - 5.3.2
Schedule Work
Process - 5.3.3
Execute Work
Process - 5.3.4
Document Work
Process - 5.3.6
Execute PM/ PdM
Work
Process - 5.3.5

APPENDIX I - SAMPLE BUSINESS PROCESS WORK MANAGEMENT
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Identify Work Item Create Work Request
Anyone
5.3.1.1
Select Work Priority
Anyone
5.3.1.2
Is this an emergency?
Create Work Order
Maintenance Planner
5.3.1.5
Is design change required?
Capture Minimum Event
Data
Maintenance Planner
5.3.1.6
Plan Work
Process - 5.3.2
5.3.1 Identify Work
Rev: 4
Identify as Design Change
Maintenance Planner
5.3.1.7
Reactive
Maintenance Process
Process - 5.2.0
Is this a failure event?
Review Work Request
Maintenance Planner
5.3.1.4
Review Work Request
Shift Superintendent
5.3.1.3
Is this an emergency?
Design Change
Process
Process -
YES
YES
NO
NO
YES
NO
YES
Date: 02/20/02
APPENDIX I - SAMPLE BUSINESS PROCESS WORK MANAGEMENT
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5.3.2 Plan Work
Rev: 4
Identify Work
Process - 5.3.1
Is archived plan available?
Define & Sequence Job
Tasks
Maintenance Planner
5.3.2.4
Define Resource
Requirements
Maintenance Planner
5.3.2.5
Review Job Plan
Maintenance Planner
5.3.2.2
Is plan complete?
Assemble Work Package
Maintenance Planner
5.3.2.8
Schedule Work
Process - 5.3.3
Revise Job Plan
Maintenance Planner
5.3.2.3
Is material available?
Initiate Procurement
Maintenance Planner
5.3.2.6
YES
YES
NO
Obtain Materials
Buyer
5.3.2.7
Sort Work Orders By
Priority
Maintenance Planner
5.3.2.1
YES
NO
Date: 02/20/02
NO
APPENDIX I - SAMPLE BUSINESS PROCESS WORK MANAGEMENT
James Davis Page 4
Sort Planned Work Orders
by Priority
Maintenance Scheduler
5.3.3.1
Compare Available
Resources With
Requirements
Maintenance Scheduler
5.3.3.2
Create Job Schedule
Maintenance Scheduler
5.3.3.3
Review Job Schedule
Planning & Scheduling
Team
5.3.3.4
Did the schedule change?
Issue Job Schedule
Maintenance Scheduler
5.3.3.8
Execute Work
Process - 5.3.4
5.3.3 Schedule Work
Rev: 4
Review Planned Backlog
Planning & Scheduling
Team
5.3.3.5
Expedite resources? Expedite Resources
Maintenance Planner
5.3.3.7
Revise Job Schedule
Maintenance Scheduler
5.3.3.6
YES
YES
NO
NO
Plan Work
Process - 5.3.2
Date: 02/20/02
Identify Contingency
Work
Process - 5.2.2
APPENDIX I - SAMPLE BUSINESS PROCESS WORK MANAGEMENT
James Davis Page 5
Schedule Work
Process - 5.3.3
Review Work Package
Maintenance Supervisor
5.3.4.1
Receive Parts and
Materials
Craft Person
5.3.4.4
Obtain Work Permits
Craft Person
5.3.4.6
Lock Out/Tag Out Work
Area
Craft Person
5.3.4.7
Execute Work
Craft Person
5.3.4.8
Release to Operations
Craft Person
5.3.4.9
Document Work
Process - 5.3.6
5.3.4 Execute Work
Rev: 4
Verify Resources
Maintenance Supervisor
5.3.4.2
Assign Personnel
Maintenance Supervisor
5.3.4.3
Send parts or core back
to warehouse?
Conduct Site Visit
Craft Person
5.3.4.5
New defects? Should it be fixed now?
Fix It
Craft Person
5.3.4.11
Return Parts To
Warehouse
Craft Person
5.3.4.10
Identify Work
Process - 5.3.1
YES
YES
NO
Date: 02/20/02
Execute Emergency
Work
Process - 5.2.1
YES
NO
NO
APPENDIX I - SAMPLE BUSINESS PROCESS WORK MANAGEMENT
James Davis Page 6
Schedule Work
Process - 5.3.3
Review PM/ PdM Work
Order
PM/ PdM Supervisor
5.3.5.1
Receive Equipment and or
Tools
PM/ PdM Person
5.3.5.4
Execute Work
PM/ PdM Person
5.3.5.5
Document Work
Process - 5.3.6
5.3.5 Execute PM/PdM
Rev: 4
Verify Resources
PM/ PdM Supervisor
5.3.5.2
Assign Personnel
PM/ PdM Supervisor
5.3.5.3
New defects? NO
Should it be fixed now?
YES
Obtain Resources
Craft Person
5.3.5.7
NO
NO
Clean/ Store Equipment
and or Tools
PM/ PdM Person
5.3.5.6
YES
Identify Work
Process - 5.3.1
Fix It
Craft Person
5.3.5.8
Date: 02/20/02
APPENDIX I - SAMPLE BUSINESS PROCESS WORK MANAGEMENT
James Davis Page 7
Execute Work
Process - 5.3.4
Should work package be
archived?
Archive Work Package
Maintenance Planner
5.3.6.1
Document Maintenance
History
Maintenance Planner
5.3.6.3
Close Work Order
Maintenance Planner
5.3.6.4
Mark-up Work Package
Craft Person
5.3.6.5
Update Work Package
Maintenance Planner
5.3.6.6
Was RCFA single event
trigger reached?
Record Event
Information Needed
for Failure Analysis
Process - 5.3.8
END
YES
YES
NO
Was work package
adequate?
YES
NO
Identify Work Performed
Craft Person
5.3.6.2
NO
5.3.6 Document Work
Rev: 4 Date: 02/20/02
APPENDIX I - SAMPLE BUSINESS PROCESS WORK MANAGEMENT
James Davis Page 8
Begin Analysis
Prepare Backlog
Exception Reports
Backlog Auditor
5.3.7.2
Review Backlog and
Reports
Backlog Management
Team
5.3.7.3
Prepare Backlog Aging
Reports
Backlog Auditor
5.3.7.1
Valid Work Order? Priority Appropriate? Ready to be Scheduled?
Obtain Necessary
Resources
Maintenance Planner
5.3.7.6
Cancel the Work Order
Backlog Auditor
5.3.7.4
YES YES
Adjust the Priority
Backlog Auditor
5.3.7.5
Schedule Work
Process - 5.3.3
NO
5.3.7 Backlog Management
Rev: 1
YES
End
End
Date: 02/20/02
NO
APPENDIX I - SAMPLE BUSINESS PROCESS WORK MANAGEMENT
James Davis Page 9
Document Work
Process - 5.3.5
Notify Reliability
Engineer
Area Supervisor
5.3.8.1
Classify Work
Notification as RCFA
Event
Area Supervisor
5.3.8.2
Document Additional
Data on Template/
Checklist
Craft Person
5.3.8.3
Validate that Appropriate
RCFA Data is Captured
Reliability Engineer
5.3.8.4
Advanced Failure
Analysis
Process - 4.7.3
5.3..8 Record Event Information Needed
for Failure Analysis
Rev: 0
APPENDIX I - SAMPLE BUSINESS PROCESS WORK MANAGEMENT
James Davis Page 10

Hugh R. Smith, P.Eng, PMP
Principal
R-Tech Technology Inc.
4319 Valencia Avenue
North Vancouver, BC
Canada
V7N 4A7
(604) 728-0473

Hugh is a Mechanical Engineer (University of Alberta, 1987) and spent 10 years with the Cominco / Agrium family of
companies working in Operations and Maintenance. In his final years with Agrium, he was the business lead for a
project to reengineer maintenance and operating processes, implement RCM, and implement SAP Plant Maintenance
across all of Agriums operations. For the last seven years, Hugh has worked as a management consultant initially
with Cap Gemini Ernst and Young, and more recently with his own consulting company helping various clients with
major projects to reengineer operations, maintenance, and work management processes and implement supporting
applications. He continues to use tools such as the Deviant Cost Model to help clients develop appropriate
maintenance strategies, and most recently has worked with distribution utilities to apply the cost model and risk-based
maintenance techniques to distributed asset bases. Hugh has written and delivered highly acclaimed courses on
maintenance methods, and has written and presented numerous articles on related subjects.