A Guide to Creating Physical Asset Hierarchy – A Systems Approach 

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“Effective maintenance management does not happen by chance—it happens by design.”

Have you ever wondered why some companies excel in maintenance while others constantly struggle with inefficiencies? The answer often lies in their foundation. A well-structured asset hierarchy is a fundamental building block that helps build a solid maintenance foundation.

What is Asset Hierarchy?

An asset hierarchy is a structured framework for organizing physical assets within a system or facility. It classifies assets in a logical order, typically moving from broad systems down to individual components, ensuring efficient maintenance, inventory management, and operational oversight.

Example:
In a manufacturing plant, the highest level of the hierarchy is the facility itself. Within the facility, individual production lines are classified as systems. Each system consists of major equipment, such as conveyors, augers, and mixers, along with subsystems like filtration, heating/cooling, and fluid transfer systems. Complex equipment and subsystems can be further divided into sub-equipment and smaller components, including motors, belts, bearings, and sensors.

A Systems Approach

One of the most critical—and often overlooked—steps in creating an asset hierarchy is ensuring that every asset is tied to physical drawings that represent the system, or area it belongs to. Not all drawings are equal, and it is important to recognize their varying functions.

Different types of drawings provide different information to end users. Some indicate general locations, while others define functional relationships between equipment. You’ve heard the saying, “A picture is worth a thousand words.” In maintenance, having access to the right drawings is priceless.

To effectively manage assets, you need three key pieces of information:

1. What it is – Identifying the asset itself.
2. Where it is – Locating it within the facility or geographic area.
3. What it does – Understanding its functional role in the system.

Describing these aspects in words can be challenging—not only to document but also to interpret. Drawings provide a universal visual language, removing ambiguity and ensuring staff can quickly and accurately understand asset details

To ensure a complete asset hierarchy and registry, the physical drawing should serve as the parent document (or “system”) for all assets within it. Assets should be tied to drawings in the following order of applicability:

1. Piping & Instrumentation Diagrams (P&IDs) or Electrical Drawings

These define process flows and electrical connections. Assets associated with these drawings include:

• Pumps, valves, centrifuges, tanks, etc.
• Electrical subsystems confined to specific pieces of equipment

Note: For systems distributed across a site or geographic area, both a P&ID/Electrical Drawing and a site layout or map should be included to ensure ease of use.

2. Equipment Flow Diagrams

These illustrate how materials or fluids move through a system.

• Think of these as P&IDs for product conveyance systems – e.g., conveyors, augers, shakers, etc.

3. Area Layouts

These provide spatial organization and positioning of assets located in a specific area but not part of a typical inline system or product flow.

• Examples include general area fans, HVAC units, catwalks, battery charging stations, truck scales, truck docks, typical storage locations (e.g., ladders, walk-behinds), and stationary shop equipment (e.g., mills, lathes, metal brakes, drill presses, saws).

4. Maps

Maps offer broader location context within a facility, site, or geographic region.

• Useful for identifying business locations, buildings, or utilities that span large areas.

This approach minimizes the risk of missing equipment and promotes logical asset organization. The hierarchy should follow a system-first, location-second structure— grouping assets based on their functional interactions before considering physical location.

Why Is This Important?

A well-structured asset hierarchy, supported by drawings, provides significant benefits across multiple areas of maintenance and operations:

1. Trainability – Structuring assets around system drawings inherently educates users on the system’s organization and functionality making onboarding and troubleshooting more efficient.
2. Document Organization – Linking assets to a parent drawing provides a logical place to store the drawing(s), ensuring easy access.
   • Drawings that are actively used promote system expertise and are more likely to be regularly updated.
3. Configuration Management – Managing a system or individual asset requires benchmarking against its original design. Drawings serve as the foundation for this benchmark.
   • When modifications occur, always update the drawings and archive previous versions to maintain a revision history
4. Inventory Management – Maintaining inventory is a complex task, especially trying to keep it up to date and determining which equipment specific inventory items belong to.
   • Drawings should be used to create and manage the bill of materials (BOM) for each asset. If uncertainty arises about an inventory item’s necessity, BOMs and drawings provide a fast and reliable reference.
   • Drawings also help periodically audit BOMs, removing unnecessary clutter and identifying like parts across inventory.
5. Risk Mitigation – A well-structured hierarchy supported by drawings ensures visibility of the assets and how they interact with one another. This increases the chance all assets will be identified, properly documented and assigned a maintenance strategy—reducing business risk and improving overall availability.

“If you can’t identify an asset – its purpose and location – you cannot manage it effectively.”

Failing to tie assets to drawings often results in fragmented hierarchy, leading to missing assets and maintenance blind spots. Since the hierarchy forms the foundation of your ERP (Enterprise Resource Planning) or CMMS (Computerized Maintenance Management System), any asset missing from the hierarchy likely lacks: 

• A maintenance plan
• Documentation
• Spare parts
• Maintenance records
• A clear failure consequence

Missed equipment is essentially a ticking time bomb – inevitably leading to unexpected costs, downtime, and operational inefficiencies.

Granularity: Striking the Right Balance for Efficiency

“The devil is in the details”

To maximize system efficiency, we must carefully determine the appropriate level of granularity in our asset hierarchy and how we intend to use it. Every additional data point increases the labor required to maintain the system and can introduce unnecessary complexity for the end user. Therefore, extra details must serve a clear purpose. 

The goal is to structure the hierarchy in a way that:

• Supports effective asset and maintenance strategy development and implementation. 
  • If we are going to write a maintenance strategy that covers pumps, we better be able to pull up the list of pumps we are planning to apply it to – otherwise, it will be extremely difficult to implement. 
• Keeps preventive maintenance (PM) routines, documentation, and bill of materials (BOMs)/inventory manageable.
  • Identifying and grouping similar equipment is key to reducing the administrative workload associated with developing maintenance routines and determining necessary insurance and maintenance spares.
  • Techniques such as Failure Modes and Effects Analysis (FMEA) and Reliability-Centered Maintenance (RCM) are often recommended for identifying these needs, but they can become impractical when dealing with hundreds or thousands of assets. These methods require significant time and effort and should be applied where they provide the greatest economic benefit. The initial focus should be to ensure that basic care PMs are applied to equipment i.e. is it tight, properly lubricated, free from damage?
  • In cases where identical equipment (same make and model) operates under similar conditions, maintenance documentation, BOMs, and PM routines can often be replicated across units, reducing duplication of work.

To reiterate, a properly detailed hierarchy leverages similarities among equipment, reducing the administrative workload for maintenance activities and inventory and data management. However, the ideal level of detail varies by site.

Comparing Hierarchy Granularity Needs: Company A vs. Company B

Consider the difference between two companies:

• Company A operates a small shop with one dust collector and woodworking tools. For their needs, listing the dust collector as a standalone asset may be sufficient.
• Company B runs a larger facility with multiple dust collectors, fans, augers, conveyors, and related equipment. Instead of treating each dust collector as a single asset, they classify them as systems with sub-equipment such as:
  • Fan
  • Filter bank
  • Rotary valve
  • Auger

By structuring their hierarchy at a deeper level, Company B reduces duplication of effort in developing maintenance routines and managing inventory. Meanwhile, Company A benefits from a simpler classification, ensuring efficiency without unnecessary complexity.

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A hierarchy strategically designed around supporting drawings should strike the right balance between detail and efficiency, ensuring assets are documented at a level that supports management without overcomplicating use.

The ultimate goal is to create a structure which:

• Improves trainability by intuitively linking equipment to its system or area.
• Enhances user-friendliness and data accessibility for all users.
• Respects the effort required to maintain data and minimizes administrative burdens where possible.
• Provides enough detail to effectively support asset management and maintenance strategies.
• Supports configuration and document management activities.
• Optimizes inventory management, reducing inefficiencies and ensuring proper stock tracking.

A well-planned hierarchy ensures operational clarity, maintenance efficiency, and long-term sustainability – allowing organizations to scale without sacrificing structure.

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