White Paper : Enabling CMMS to Drive Change and Cut Costs Companywide
Maintenance, Technology and Organizational Efficiency
The austere economic environment of the past decade has put significant pressure on budgets, forcing managers to make difficult choices that often impact long-term operational efficiency and cost projections in order to achieve short-term gains.
At ManagerPlus, we see the way that these pressures affect the decisions of maintenance departments in every industry, and we recognize the costs that those decisions can incur six months or a year down the road. Fleet managers extend replacement lifecycles to push off new acquisitions, leading to an increase in unscheduled maintenance for high-mileage assets. Manufacturers see bloated carrying costs because cumbersome inventory systems prevent adequate forecasting. Mining operations are drained of productivity because of unscheduled downtime for critical equipment that missed regular preventive maintenance.
Managers in all industries are cornered into these types of decisions (and their consequences) every day. The remedy is to offer managers the ability to harness and analyze important data from their day-to-day operations. Below we will explore three of the most common opportunities that companies have to glean real savings through increased visibility into their data from their maintenance and inventory systems and using it to drive forward-thinking decisions.
Those companies that are able to mine data from their operations and gain a more accurate picture of key departments and processes will be the ones that are able to eliminate waste, lower carrying costs and gain the competitive advantages of financial agility. With a clear view of the data representing critical systems, managers can reduce the impact that budgetary pressures have by distributing their resources more efficiently and making choices that have fewer unintended consequences down the road.
Retiring Paper-Based Maintenance Systems
The trend of moving away from analog business systems is nothing new, but the availability to small and medium size businesses of automated solutions for maintenance and asset tracking is an industry shift that has accelerated the trend. For many organizations, the cost savings and business intelligence value are significant.
+ The Problem
The lack of automation in paper-based mainte- nance tracking and tasking systems makes it nearly impossible to evaluate in much detail where your resources are being spent. Even spreadsheet-based systems with customized macros are a poor solution at best and don’t offer much in the way of flexibility or reporting options. In essence, much of what they do still requires a lot of manual handling.
A paper-based system allows too much human error to creep into every aspect of maintenance management. Prioritization of tasks is haphazard and inconsistent, relying entirely on the judgment of one or two single managers and often lacking a birds-eye view of where labor and resources are distributed. Paper work orders often lack detail as well, with multiple copies maintained that give little visibility to the real labor costs associated with individual tasks.
Tracking maintenance of a particular piece of equipment or a certain facility is cumbersome to assemble from a file of multiple work orders, and context within a replacement lifecycle is often lacking. It’s much more time-consuming and laborious for a manger to gain insight into how much an asset costs to maintain, leaving the decision to retire an asset versus continue maintenance a rather opaque one.
Total cost of ownership is usually unknown in a manual tracking system, too, often with no way to easily reconcile a solid book of record for auditing, safety and compliance.
Digitize all work orders and histories to make them searchable and easy to view as a collection so that staff can see the history of an individual asset, the timeline of completion for a particular task or even the full distribution of labor resources across your entire organization. Automate your maintenance request processing and make electronic work orders and request forms available online to both customers and employees.
Replacing legacy systems piecemeal with one-off solutions is not guaranteed to result in a more time-efficient, searchable system. A comprehensive solution for work order management like ManagerPlus Enterprise maintenance software covers maintenance operations end-to-end, tracking work order history, monitoring the distribution of labor resources, logging relevant asset data and even allowing mobile access for crew members working offsite. Our relational database allows you to view all of the data related to your maintenance operation, allowing you to view an accurate model of your real-world maintenance operation and see how data points relate to one another rather than just one point in a spreadsheet. Harnessing your data in this way allows you to see trends and track your operation over time. That kind of business intelligence backs your purchasing plans, hiring decisions and your overall operational strategy with hard data instead of intuition.
Organizations that successfully implement a CMMS to replace inefficient analog systems see rapid changes in their organization from a management standpoint. Having that data reliably recorded and available ripples throughout a company in positive ways:
+ Faster Turnaround: Timelines can be reduced significantly when work orders and inventory requests are all digitized. Deer Valley Resort (a long-time ManagerPlus partner) achieved just those kinds of results with our Enterprise solution. What used to take days now gets accomplished in hours, freeing up personnel to focus their energy more efficiently.
+ Better Intelligence: When your records are distributed in paper files or manually-maintained spreadsheets, a birds-eye view of your maintenance department can be difficult to achieve. With an automated system, you can develop monthly or quarterly reports instantly, which gives you the vision you need to take action to address inefficiencies and push accountability throughout the company.
+ Reduced Costs: When you know exactly where your work crews are and can prioritize maintenance tasks properly, you’re making the best possible use of resources. This allows you to cut waste out of the system and ensure that you only hire when absolutely necessary.
The actual savings and operational efficiencies achieved differ between organizations, but these benefits are all the result of an organizational vision and system of accountability that are simply hard or impossible to achieve using a paper-based maintenance solution or one that is distributed across multiple non-integrated systems.
Minimizing Equipment Downtime Through Data-Driven Management
Maintenance stands out both for the size of operational budgets it consumes and the potential savings present when maintenance scheduling is properly managed. Clearly digitizing maintenance records and procedures can help, but only insofar that it enables policies that lead to more efficient use of labor and resources and a reduction in one of the most costly problems for maintenance managers: equipment downtime.
+ The Problem:
Extended downtime for any piece of equipment drains away its lifetime value, dragging down productivity for your entire operation and shrinking your bottom line with every hour that the asset is not in productive use.
Opportunity costs for equipment down because of an unscheduled or catastrophic repair extend not just to the productivity lost, but to foregone business, impaired customer relations and the increased cost of backup or replacement equipment that must be held to maintain service levels. Unscheduled corrective maintenance can ripple through an entire supply chain and delay service. The costs that reverberate through an entire organization can be hard to quantify.
Real World Costs of Failed Maintenance
High-profile examples of costly maintenance failures abound. Human error in a significant maintenance procedure for a Washington ferry caused vital components inside the vessel’s engine to melt, resulting in a $3 million catastrophic repair and months of unscheduled downtime.
An investigation determined that there were no checklists or procedures for the work performed, and the crew didn’t properly prepare the ferry’s electronics for the involved procedure. Had they used a maintenance system with automated procedures attached to the task, the Washington State Department of Transportation (WSDOT) might have saved taxpayers millions of dollars and the ferry would have returned to service as scheduled.
Failing to calculate the full cost of downtime can lead to poor decisions company-wide. One concerning trend among commercial fleets is the extending of vehicle lifecycles to achieve savings in the short term. Over the last five years, drop- ping resale values, rising fuel prices and economic pressures have pushed fleet managers to stretch the lifecycle of older vehicles. It’s no surprise that maintenance costs rose in 2009 due to the higher cost of tire replacement, oil changes and a rise in corrective repair rates, not to mention the addi- tional downtime and labor costs associated with such repairs.The older an asset gets, the higher the incidence of catastrophic equipment failures (often not budgeted for) and the higher likelihood that the asset will be out of warranty. Preventive maintenance for high-mileage vehicles can be closely managed, but there is no escaping a rise in downtime and repair costs with an aging fleet.
This principle holds true for assets in all industries, highlighting the importance of having a birds-eye view of the entire lifecycle of each asset and class of assets.
Reducing downtime starts with collecting the data that can give your organization that birds-eye view over time of the entire life of major equipment. That tracking means recording corrective repairs and catastrophic failures and mapping them against existing preventive maintenance schedules and lifecycles.
Once you have running data on average downtime, you can begin to infer the costs of lost productivity, preventable corrective repairs and total lifecycle maintenance costs for each asset class. With that kind of view of costs across an organization, managers can make substantive decisions to adjust maintenance scheduling, optimize replacement timelines and flag troublesome equipment before it leads to excessive downtime.
A good example of how data analysis can impact maintenance downtime comes from the aviation industry. Boeing’s internal statistical analysis of downtime for aircraft analyzes fleet performance to help optimize maintenance frequency for aircraft and minimize costly unscheduled maintenance, which can ripple throughout a fleet’s complex flight schedule.
The company actually makes determinations to move up scheduled maintenance tasks for certain models based on their data analysis. By cutting the interval between their maintenance tasks by 10%, they achieved fewer instances of unscheduled maintenance and lowered the overall downtime for affected aircraft. This result runs against the impulse to stretch out maintenance intervals to push up asset utilization rates, indicating that smarter maintenance really does translate into less downtime overall.
Productivity gains from reduced downtime for Boeing’s customers, who run fleets ranging from hundreds to thousands of aircraft worldwide, can mean massive cost savings with just a change in scheduling. Unless you have the data to prove the value gained from these types of operational changes, any adjustment to maintenance intervals or shortening of lifecycles is really just done on conjecture and intuition. It’s the decisions that data collection enables that bring the real payoff.
Eliminating Wasteful Inventory Patterns
Inventory is so often an operational nexus (and bottleneck) for many organizations. But since inventory is viewed conceptually as simply a product on the shelf, the carrying costs for maintaining that inventory go unexamined, especially when things like equipment downtime and labor costs seem so much more active and urgent. But inefficient inventory management can be a hidden cost that merely requires attention to achieve significant savings.
The costs of carrying inventory include the capital costs for taking on the inventory, costs to store those parts and supplies, insurance premiums and inventory risk costs associated with the seasonality, possibility of expiration, potential damage, or theft. Many of those non-capital costs are not tracked by traditional accounting systems. And haphazard or uninformed ordering merely inflates those costs needlessly. Inventory forecasting that is not data-driven (or not forecast at all) leads to surpluses and shortages, the latter resulting in expensive rush orders for crucial parts and materials, maintenance delays that increase downtime and subsequent delays in production. Poor inventory management drives costs throughout the organizational structure.
Real-time inventory levels can be achieved more effectively through an asset tracking system that helps streamline inventory consumption and equipment check-in/check-out. The ManagerPlus Bar Coding Module enables fast, accurate data collection for the Purchasing and Inventory modules. Automating inventory intake and auditing in this way can significantly reduce handling time by staff, and it helps maintain an up-to-the-minute record of what parts, tools and materials are on hand, which are currently being utilized and who is using them. Inefficiencies follow certain patterns, surpluses cluster around the same inventory items, and shortages tend to occur at similar times on similar items. Capturing comprehensive data points for your inventory can help you identify those patterns, visualize them and then make changes.
A real-time awareness of inventory allows a company to respond to variances in demand for various items. Studies of inventory carrying costs have noted that businesses can achieve reductions of up to 25% using a demand-based approach. One multi-billion dollar packaging manufacturer switched to a demand-based inventory management system and achieved a $500,000 annual savings in transport costs. And even with lower inventory in their supply chain, the same company improved its fill rates from around 97.7% to 98.5%. They developed a rolling inventory forecast that improved their ordering accuracy from 55% to 75%. The new inventory analysis even allowed them to identify products with volatile demand and eliminate them from production or substitute with high-volume alternatives. Another example comes from a case study involving a leading cosmetics firm that implemented inventory management systems as part of their forecasting overhaul and saw inventory accuracy rise to 95% within just 2 months. They also reduced inventory levels across their supply chain, cut carrying costs and ensured fresher stock for their customers.
Marking the inefficiencies that naturally creep into operations at the inventory level help you make decisions that will cut unnecessary carrying costs, take advantage of otherwise foregone revenue and eliminate inventory bottlenecks that affect other departments.
Conclusion: Opportunities for Change
The climate that businesses are operating in only seems to move in one direction, that of greater cost-efficiency. Achieving that efficiency is not merely a competitive edge; in many sectors it is a requirement for remaining in business and a barrier to entry for all competitors who would try to get by without taking a long, hard look at every piece of their operation. There are significant opportunities for companies who are able to harvest data from their equipment, their facilities and their personnel in a way that offers a clearer picture of their operations and the effects of even seemingly minor business decisions.
Implementing an automated maintenance management system that can act as the nerve center for sensing the state of your equipment, inventory levels and the replacement lifecycles that govern the life of so much of your organization can give you the insight you needto make impactful decisions and find savings in ways that simply were not possible before. The entities that are able to internalize the big data that represents both their operations and
market trends at large will gain the ability to scale efficient policies and practices, maintain more equipment with less administrative overhead and prioritize even diverse budgetary goals. Those that cannot incorporate that kind of awareness will struggle to compete with those who can, and those left standing will be leaner, smarter and more prepared to survive in an increasingly global marketplace.
With over 20 years of experience in the asset management business, ManagerPlus has a proven track record of providing flexible solutions that empower companies in asset-intensive industries to drastically reduce the costs of operation while radically increasing overall return on investment. Schedule a live demonstration or to learn how ManagerPlus products can help with your preventive maintenance needs.
ManagerPlus Solutions, LLC
9350 South 150 East Suite 650
Sandy, UT 84070