Focusing on Reliability to Increase an Organization's Value

Published: 2020

By Soumik Das, dss+

The world abounds with uncertainties due to changing country policies, trade wars, pandemic outbreaks, climate change and catastrophic events, to name a few. Other uncertainties exist at the organization level, where people make mistakes, machines break, and systems and processes adjust slowly to the dynamic business environment. Together, these can contribute to significant unreliability in operations for businesses.

However, some industries - such as hospitals, pharmaceuticals, nuclear power plants, and air traffic controls - are well adapted to high levels of risk. For them, errors can have disastrous implications, yet they operate nearly error-free. From an operational perspective, these are highly reliable, sustainable businesses because they focus not only on safety but also have a distinct approach to reliability.

False Assumptions Cause Companies to Overlook Opportunities
For most organizations, the word “reliability” is frequently associated with maintenance or the condition of physical assets. Even those who view reliability as an organization-wide pursuit tend to confine it to those definitions. What’s more, many see reliability as a means to an end, rather than a goal in itself.

Though slowing growth, disruptive new technologies and other sources of uncertainty often spur businesses to accelerate their performance while reducing risk of failures and keeping costs down, there are demonstrable advantages to embracing reliability as a core objective.

Today there are real-world examples demonstrating how an organization’s lack of communication and governance combined with poor or delayed decision making, has contributed to avoidable failures resulting in loss of life as well as loss of revenue. Such events are unmistakable reminders of the significance of the robust practices, transparent communication and accountability that are the foundation of a Reliability Centered Organization.

A company in any industry sector that expands its vision of reliability to encompass people and processes across all functions can unlock tremendous value. While the impact may not be as apparent or immediate as on the manufacturing floor, when people across the entire organization stopsimply reacting and start proactively behaving reliably—even in the face of a deviation from normal operations—risk declines and operational discipline improves, leading to a cascade of positive effects.

The Reliability Centered Organization—Not a Means to an End, but an End in Itself
Reliability is often considered the steps along a journey that need to be taken to achieve higher quality or financial objectives. However, our experience indicates that striving to become a Reliability Centered Organization as an end goal has a direct impact on sustainability and delivers significant, consistent value. Apart from relentless focus on a failure-free environment, Reliability Centered Organizations can achieve the following as natural consequences:

  • Increased ROI
  • Greater Profitability
  • Highly Motivated Teams
  • Enhanced Resilience
  • Competitive Advantages
  • Stronger Brand Benefits

With continued commitment and practice, reliability becomes more sustainable and establishes the key link connecting employee engagement and the ongoing drive to improve business performance.

A Practical Framework for Creating a Reliability Centered Organization
Leadership is key to embedding the idea of becoming a Reliability Centered Organization into the company’s core. Once everyone— from top management to entry- level employees—views processes and systems through the reliability lens, there will be a shift toward an aspirational culture, as well as a mindset that acknowledges the importance of every participant in the company’s success.

A Proven Approach to Establishing a Reliability Centered Organization
dss+ has developed a proven approach for establishing a Reliability Centered Organization that comprehensively covers key building blocks for a successful outcome.

Critical Elements for Establishing a Reliability Centered Organization
Value is realized by driving reliability through effective governance and managed processes across the organization. This includes technical aspects such as assets, operations and supply chain, as well as organization design and capabilities, effective leadership, and a sustainable culture. Key considerations include:

Reliability Policies
Becoming a Reliability Centered Organization begins with top management. To this end, organizations need to define concise reliability policies that will drive principles, standards, procedures and guiding instructions. These policies must be easily understood by all employees and must come from the highest levels of management to convey credibility, legitimacy and constancy of purpose.

Organization Structure and Type
The appropriate organizational structure, as well as identifying where accountability lies, is critical in establishing a Reliability Centered Organization. Various structures can be suitable depending upon an organization’s unique challenges and characteristics, geographic coverage, products and services.

Performance Metrics and Key Skills
Another important factor is to identify and define metrics for measuring success. Rather than simply pushing to reduce costs, which can lead to erratic behavior, the aim of a Reliability Centered Organization should be to minimize the risk of failure and grow a reliability-driven culture. Apart from expected business and technical skills, a Reliability Centered Organization devotes significant focus to skills related to communication, problem solving and leadership.

Measuring key performance indicators for both people- and process-based efforts may be less straightforward than for equipment and systems, but is no less important—especially because the consequences and impact may not be as immediately evident. Metrics such as hours spent for rework, training hours completed, what percentage of work is planned, how many meetings involve cross- functional teams and so on, can shed light on areas that need improvement.

These efforts can be enabled through digital technology such as Internet of Things (IoT), Artificial Intelligence (AI), Machine Learning (ML) or others. However, it’s important to understand technology must be consciously applied in a structured manner and augmented with the right processes, systems and competencies to deliver significant value to business.

Any organization can test these practices by defining a pilot area, auditing processes and systems for opportunities, and developing a strategy for broader organization-wide implementation. Approaches and learnings can be standardized and replicated across the organization, building in proper governance to ensure that each new department and unit aligns with the company’s high-level reliability goals.

Reliability—A Clear Priority
The current business environment, with its complex supply chains, variety of assets and technologies, multifold business interdependencies, competitive pressures, and financial, public and statutory compliance requirements is especially challenging. It is important for every organization to realize that robust, reliability-centered processes and practices, clear roles and responsibilities, and accountability, all aligned with company goals and objectives and enabled by talent management and competency development, are critical for reliable, safe and sustainable operations.