Asset Life-cycle Management
Another buzzword - but what does it mean?
The 2000 Survey by CFO Enterprise's Research Service showed that 70%
of CFOs thought their company's management of Fixed Assets was "inefficient
and erratic". The problem was not defined properly so no-one could
react. Let's summarize the issues:
- Maximize assets to increase reliability + maximize spares to reduce
wait time versus the financial costs
- Assets, stores and production equipment are managed for Operations
priorities
- Short term production targets usually dominate longer term operating
effectiveness and financial returns
- Finance perspective is rarely understood - their requirement is to
"cut costs"
- Pressure for greater equipment reliability at lower maintenance costs
- Minimize capital cost of new equipment
- Measuring the value of an asset's contribution to corporate financial
goals
- Confusion about how to optimize asset management
- No easy way to share data across the enterprise
Sounds familiar? And all in a period of declining maintenance budgets.
Asset life-cycle management prompts us to look equally closely at the
four main elements of an asset's life - acquire, control, manage, dispose.
Within each of these there are a series of specific activities - each
of which can be greatly assisted by adroit use of your CMMS.
Phase 1 - Acquire
- Standardized parts selection
- Consolidated buys
- Vendor selection based on reliability of equipment, parts and
vendor
- Eliminate duplicate buying
- Automated buying
- Concentrate on Buyer value adds
- Reduce expediting
Phase 2 - Control
- Verify location for Audit and Tax
- Show if available for transfer within the company
- Track movements
- Service history and spares consumption
- Failure rates
- Warranty repairs
- Rotable spares management
- Shipments and returns
Phase 3 - Manage
- Optimize Inventory levels
- Optimize Inventory locations
- Planned versus breakdown maintenance
- Equipment repair versus planned downtime
- In-house versus contract labour
- Demand driven purchasing versus emergency buys
- Maximize MRO Operational effectiveness
Phase 4 - Dispose
- Locate and identify surplus/obsolete assets
- Locate and identify surplus/obsolete spares
- Internal transfer/auction
- External sale or auction
- Disposal
- Cash recovery
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So how do we get started?
- Understand the concepts and the pay-offs
- Set priorities and targets
- Define who is accountable for success
- Give them the tools and make the resources available
- Prepare a detailed execution plan - who does what and when
- Drive it via your EAM/CMMS (use work orders to make things happen)
- Install tracking and feedback process to measure performance
- Reward the winners
And what is the pay-off?
Reductions in:
- spares inventory
- surplus and obsolete equipment
- cost of equipment audits
- labour to replenish inventory
- labour cost to receive equipment
- lost or "missing" equipment
- overtime
- materials cost per work order
Increases in:
- cash realized from disposals
- space not taken up with garbage
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