Why do you need them, what are they used for, how should they be set up?

Scott Stukel, CMRP, Asset Management and Reliability Lead –

When most companies implement an EAM tool, like Maximo, they struggle with the fundamental development of their asset hierarchy. Often their structure is fragmented, incomplete, and does not allow the maintenance crews to logically find or organize their assets. This prevents the company from collecting and rolling up cost, performance, and other business-essential information.

The Location hierarchy is where asset management begins. It serves as the structural relationship of physical and functional placeholders necessary to logically organize assets. It is the heart of implementing Asset Management Best Practices as well as being the backbone of standards such as ISO-55001, which calls out Asset Registry and Asset Organization as two foundational elements. No two location hierarchies are the same. It is critical to develop a structure that meets the needs of the organization and implement asset & data management processes to support the ever-changing hierarchy. Asset Registry and Asset Organization are the core of Tier 1 of Advanced Asset Management best practice. It should be given the energy necessary to get it right before you jump into any of the others.

The word “hierarchy” is often used for both the Location Hierarchy and the Equipment (or asset) Hierarchy. It is important to understand that there are distinct differences. Both Locations and Assets play their part in effective asset management. For modern asset management in Maximo, the term “asset hierarchy” should be used to describe the physical and functional fundamentally parent-child relationship of nodes built within the Location application whereas physical equipment becomes the mostly flat Asset Registry which is managed in the Assets application. Assets can have sub-assemblies but should not be linked more than two or three levels and definitely not entirely from highest to lowest level to model the enterprise.

The main benefits of development of a physical & functional based Location hierarchy are as follows:

• To provide a means of finding assets to add to work orders and use for other EAM/Maximo functions;
• To provide the ability to track lifecycle costs for functional nodes where assets reside, also to allow costs to roll-up to any level in the structure;
• To enable use of other technologies such as GIS/GPS, process functional modelling, BIM;
• To facilitate functional organization of systems, subsystems, assemblies to simplify reporting, reliability/RCM analysis, and asset management continuous improvement;
• To store key values such as GL Account, Priority, and Failure Codes for the functional location. Assets may require different cost accounts or other information depending on where they fall within the function of a system or systems. Entering this static data once on the location record enables coding to work orders when assets in that location are applied to them, thus minimizing typing by the end-user and extra time required to change that data on assets when assets are moved to another operating system/location;
• To facilitate organizing and grouping of nodes within a location – which could be used to represent geographic, functional, or plant/operating systems;
• To enable companies to leverage EAM/Maximo rotating asset capabilities. Since a location is “fixed in space” within the hierarchy structure it will always have cost and work history tied to it. Since assets can be removed/returned with a new asset installed in its place, it is desirable to both maintain the integrity of all costs and history. This allows a functional location, for all assets that have ever been installed in it while allowing assets to carry their asset-specific costs and history with them to other locations. This concept is critical to assets which are ‘rotating,’ or ‘move around’ from one location/system to another location (repair location, storeroom, salvage, etc.).

Implementing a well thought out and well-constructed location hierarchy (and asset registry) is the first and the most important step in building an effective asset management program. A well-designed location hierarchy helps the requestor find, group, and track/report on systems and assets. The asset registry itself, structured into a functional location hierarchy, is the fundamental building block for asset management.

It is important to remember that the “end-game” is not the hierarchy itself. Business goals for improved asset reliability, worker safety, uptime and work force productivity are common desired states. If the location hierarchy and asset registry are not properly implemented, the benefits of using Maximo for effective Asset Management will most likely not be realized. Therefore, the location hierarchy is the first and most important step in the path.