Transform your operations with asset hierarchy best practices
In order to understand why effective asset management is crucial for manufacturers, it helps to understand a key principle: you can’t fully unlock the value of information until it’s properly organized. Let’s explore asset hierarchy best practices, and why they can make all the difference for your company.
Why organized data and assets drive smarter manufacturing decisions
Take a library, for example; it’s only useful if the books are arranged and managed according to a system that lets you find exactly the right book. Similarly, a website becomes usable only when its content is organized in a way that helps you navigate through it efficiently.
The same principle applies to organizing physical assets—they must also be guided by clear informational understanding. Being able to locate components and tools quickly when a repair is needed is essential.
Businesses have access to overwhelming amounts of data these days, but the power of that data isn’t realized until it’s centralized, organized and structured. The data should be accessible on demand and analyzed by sophisticated tools that can provide valuable, actionable insights.
This is especially true when it comes to manufacturing assets. Creating an efficient informational framework that properly names assets and categorizes them according to their characteristics and relationships to each other can realize a wide variety of benefits—better and more timely maintenance, more efficient and cost-effective procurement, better collaboration among team members and ultimately, smarter and more strategic decision-making.
What is asset hierarchy?
An asset hierarchy categorizes and organizes an organization’s physical assets based on various relationships and operates within a structured framework. It uses a top-down, multi-level system where parent assets represent a complete system or unit made up of multiple components or subassemblies. Child assets, in turn, are the individual components or subassemblies that belong to or depend on a parent asset.
Asset hierarchies are essential for maintenance teams to organize assets and to easily identify and prioritize components, repair tasks, preventative maintenance and other measures needed to keep assets and systems in optimal working order.
Creating efficient asset hierarchies pays off
All of the factors below lead us to the importance of creating and maintaining a well-defined asset hierarchy (sometimes also known as a technical object hierarchy) for your business. Some of the most transformative benefits for creating and fine-tuning the right asset hierarchy for your needs include:
Efficient data access
When your data is clean, well-organized and centralized according to a well-planned hierarchy, in a system that includes a computerized maintenance management system (CMMS), that means every team member has access to the information they need when they need it. That not only reduces delays—it also helps eliminate errors and poor decision-making due to wrong or outdated info.
Improved teamwork
Making sure all team members are on the same page informationally, with access to the same data in real time, enables and encourages seamless collaboration while removing the kind of conflicts or cross-purposes that can arise due to lack of informational alignment. That, combined with the boosts in accuracy and speedy availability of data noted above, can translate into major boosts in productivity and efficiency.
Superior data analysis
Centralizing and organizing asset data with an optimal hierarchy in place makes it possible to apply the full power of machine learning to analyze and surface valuable insights. This data helps to identify the components that your production relies on.
Smarter decision-making
Better analysis leads to better understanding, which almost always leads to better and more rewarding decisions. With the right asset hierarchy defined within an efficient CMMS, you’ll have a better understanding of everything from which assets are going to need maintenance soonest to what needs to be purchased next—enabling you to see further down the road, set achievable goals and plan more effectively for the future.
Better cost management
Controlling your costs and improving your margins start with a clear understanding of where your costs are being incurred, plus identifying ways to reduce or eliminate wasteful and unnecessary expenditures. A well-defined asset hierarchy can help you zero in on those insights.
Ultimately, a good asset hierarchy can help avoid tangible real-world consequences, such as equipment downtime, inventory stockouts and ceding ground to competitors.
Five best practices for creating an optimal asset hierarchy
To ensure your asset hierarchy is set up to function smoothly and efficiently, follow these principles:
- Define the hierarchy
The single most important first step is to correctly identify the levels and categories that make the most sense for your business. Whether you’re looking at equipment, buildings, vehicles, inventory or IT assets, everything needs to go into the right bucket. And within those categories, you’ll need to create subcategories that supply more specificity (e.g. the type of facility or equipment).
- Name assets consistently
The second step is creating clear and consistent naming conventions, allowing your system to properly classify and retrieve information as needed, avoiding any confusion. Creating names that incorporate key bits of data like the category, location, part number and other relevant characteristics, helps ensure unique identifiers. It’s beneficial to use standardized data fields and asset classifications (such as part numbers, location codes) per ISO 14224, which will improve consistency across assets and aid in analysis. Using a CMMS can help in this process, by having team members choose names and codes from a specified list in order to enforce standardization.
- Understand asset relationships
Achieving the proper informational structure depends on correctly understanding the hierarchical relationships between different assets, such as parent-child relationships, and then encoding those understandings into your asset hierarchy. Your hierarchy may recognize that particular parts belong to particular kinds of equipment, and particular equipment belongs to specific facilities, etc. Having those relationships in place makes it possible to make better predictions and allocate resources more effectively.
- Maximize teamwork
Getting the best possible asset hierarchy in place requires a thorough understanding of how every stakeholder in your organization uses and shares data. For optimum results, seek input from team members at all levels and integrate team members from all corners of your operation (such as finance and quality control). This cross-functional approach aligns with ISO’s emphasis on viewing assets as contributors to organizational value across functions, and will help ensure assets are named and organized in a useful way—and that all pertinent data is included. This will also help create a teamwide feeling of investment in the system, which will help promote adoption and better collaboration. In addition to meetings and workshops during the setup process, ongoing post-launch training will be valuable as well.
- Tap into the power of CMMS
The value of using a well-calibrated CMMS as part of your system can’t be overstated; it’s the key to helping you track, analyze and visualize your data as well as the insights you’ll surface. The right CMMS will facilitate and remove friction from the process of inputting, organizing and reporting on your data, with features that automate and simplify tasks.
How CB can help create or refine your asset hierarchy
We bring all these critical elements together to help you get the most out of good asset management practices. Through assessments, education and strategic implementation, we provide the expertise and tools you need to build and maintain effective asset hierarchies, boosting your maintenance and operational efficiency.
Strategic guidance and education
CB focuses on educating your teams to help understand the importance of the asset hierarchy within asset management. This includes best practices—specifically highlighting how critical it is to organize assets to improve maintenance and procurement. CB provides knowledge around the parent-child relationship structure, emphasizing how critical components and subsystems can fit into this framework.
Ensuring industry standards
CB helps businesses align their asset hierarchy strategies within recognized industry standards such as ISO 55000 and ISO 14224. Helping organizations follow best practices in structuring their assets pays dividends in terms of more efficient management and ultimately, better data insights and strategic decision-making.
MRO solutions and services
Our MRO (maintenance, repair and operations) Solutions division provides comprehensive services to assess whether to repair or replace a piece of equipment, along with the current and future state of a company’s asset management practices. This includes creating a roadmap for improvements, such as asset hierarchy, which is a foundational aspect of efficient maintenance management. The initial assessment offers a business case and ROI projections to help customers see the value of implementing structured asset hierarchies.
Customization
Different organizations have different informational needs, so CB tailors the asset hierarchy to the unique naming conventions and operations of each client. That means taking the time to study and listen to the client’s individual needs, processes, and goals. We recognize that different industries (such as oil and gas, or manufacturing) require specific approaches to asset organization and customization based on operational priorities.
Inventory and criticality integration
Data becomes most effective when it’s linked intelligently within a larger structure, especially when done with a systematic risk-based approach. Adding guidelines for assessing asset criticality based on failure consequences and frequency can help prioritize assets according to risk, which is a core part of ISO 55000.
CB connects the asset hierarchy with inventory management and equipment audits (such as Conveyor Belt Audits), helping companies not only organize their equipment, but also link their hierarchy with procurement processes and inventory optimization. This helps make sure that companies can focus on the components and systems that impact operational performance the most.
Use of CMMS
We’ve discussed the value and rewards of using a CMMS to properly create and maintain your asset hierarchy. We are experts at implementing the asset hierarchies in CMMS using standardized practices to enable better management of maintenance schedules and tracking performance, including for critical power transmission parts.
Ready to implement asset hierarchy best practices and elevate your operations?
Contact us to learn more about how we can help you unlock value by optimizing your approach to asset management.
