ARC Advisory Group and Plant Services magazine recently conducted a survey meant to yield a better perspective on trends in enterprise asset management (EAM) in industrial facilities. In this column, we'll spotlight insights gained on specific opportunities for users to achieve improvements via predictive maintenance and the use of mobile devices and inventory management solutions. In addition, we'll explore strategies for taking EAM systems from reactive record-keeping tools to proactive planning and execution systems.
Survey approach and responses
ARC designed and hosted the Web survey, which solicited participants via emails from Plant Services and ARC. All respondents received the final survey report.
Between December 2014 and January 2015, we received 141 valid responses that subsequently were used in the analysis. Fifty-eight percent of the respondents have roles in maintenance, with the remaining in engineering or management. Nearly half of respondents represented North America; the rest were evenly distributed across the rest of the world. For industries, the asset-intensive chemical, petrochemical, oil and gas, and military sectors were well-represented. There was strong interest from food and beverage, too – that industry accounted for 13.5% of responses. It's likely that FDA regulations are starting to affect maintenance practices in that industry.
EAM business drivers
Respondents rated the business drivers for EAM as uptime, asset longevity, cost control, and safety and quality. These goals all relate to C-suite metrics in companies' annual report.
- More uptime helps production meet its schedules. This directly affects revenue and customer satisfaction.
- Improved asset longevity allows a company to retain cash. Conserving cash affects the financial ratios used to gauge the value of a company’s stock.
- Better cost control within maintenance positively affects P&L statements, particularly in asset-intensive industries where maintenance is a significant cost
- Safety improvements help reduce risk, which is evaluated in the annual report.
Often, maintenance managers lament the lack of management attention to and the inability to obtain funding for improving an EAM/FSM application. Like everyone else, C-suite executives respond to metrics. Develop a business case that connects the high-level maintenance goals to the P&L statement and balance sheet. As we’ll see in the responses to selected questions, good maintenance improves revenue, costs, and margin while lowering risk.
Prevent lost alerts and unplanned downtime
How is predictive maintenance (PdM) integrated with EAM systems?
Because users deploy multiple methods, the total responses in the chart add up to more than 100%.
ARC has learned (too often) of instances where a failure occurs just as the PdM system predicted it would. Why wasn’t the failure prevented? The chart on this page provides some insight. Reliability and maintenance groups often operate in separate silos with little cross-communication. Without a business process for managing an impending failure that the PdM system has identified, the impending failure gets lost, with no action taken by maintenance.
IT can be our friend. Business process automation between the PdM and EAM systems closes the communications gap. Verified alerts in the PdM system can automatically generate a work order in the EAM system for the maintenance planner to schedule.
Mobility facilitates EAM system integrity
Which mobile devices do technicians use for processing work orders?
Surprisingly, with nearly everyone carrying a mobile device in their pockets, paper remains the most common “mobile device” for technicians. With paper, data entry occurs in batches - and often at the end of a shift when technicians have other things to do and accuracy suffers. With a real mobile device, a technician can process a work order as part of the workflow while performing other tasks, improving data accuracy and timeliness.
Mobility solutions can provide technicians with work order information, asset history, spare parts inventory, repair instructions, location, travel directions, maps, and more. Mobility extends asset management business processes to the point of action, creating opportunities to optimize business processes.
When the underlying data is both accurate and timely, people learn to trust the EAM system. It moves from a faulty record of past activity to a proactive planning and management tool.
Inventory optimization for fewer stock-outs
How do you manage MRO inventory?
Unfortunately, just one-third of respondents employ basic MRO inventory management practices. MRO materials are often expensed at the time of purchase. As a result, the inventory has no value on the balance sheet, becomes hidden financially, and evades management attention. With the common inclination to have more spare parts on hand “just in case,” this leads to excessive inventory. Common problems include duplicate part numbers and old reorder points. Despite the amount of inventory, difficulty finding parts and rising stock-outs continue. Since a stock-out extends a downtime incident, it negatively affects uptime; the key performance indicator for maintenance.
Companies that have neglected inventory management usually have huge opportunities to reduce MRO materials spend and inventory. The low percentage in this chart points to a broad opportunity for inventory optimization to increase uptime and reduce materials expenditures and inventory.
Based on the survey results from 141 qualified respondents and other ARC research and analysis, we recommend the following actions for owner-operators:
- When proposing projects to improve EAM and maintenance systems, use a business case that connects the high-level maintenance goals with the P&L statement and balance sheet.
- Automate the business process so validated alerts in the PdM system automatically generate a work order in the EAM system for the maintenance planner to schedule.
- Adopt mobile devices and solutions for technicians to use to improve data accuracy and enable the EAM system to become a trusted, proactive planning and management tool.
- Deploy basic inventory management practices; specifically rationalize duplicate part numbers and update the reorder points.
Move from the EAM being a historical reporting tool to a proactive planning and execution management system to reduce downtime and improve asset longevity.
Founded in 1986, ARC Advisory Group is the leading technology research and advisory firm for industry and infrastructure. Our coverage of technology and trends extends from business systems to product and asset lifecycle management, supply chain management, operations management, energy optimization, industrial internet of things (IoT) and automation systems. Our analysts and consultants have the industry knowledge and the first-hand experience to help our clients find the best answers to the complex business issues facing organizations today. ARC Advisory Group helps clients evaluate and select the best technology solutions to match their needs.