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Manufacturers: Manage Equipment Assets for Increased Savings, Productivity

Posted by Concannon Miller on Tue, May 29, 2018

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engineering people manofacturing industry with big modern computer mashinesAs manufacturers look for every opportunity to cut costs, one important area to address is equipment downtime. A breakdown, even for just an hour, reverberates through the manufacturing process.

It can slow or halt production, leave employees idle and play havoc with just-in-time delivery schedules.

If you're like some manufacturers, your approach to equipment maintenance and repairs is reactive: "If it ain't broke, don't fix it." In contrast, top manufacturers use enterprise asset management and perform predictive maintenance 70 percent of the time on average. In return, they average 96 percent machine availability.

Basic asset management involves electronic gathering and interpreting of data for the purpose of keeping plants humming. It includes making an inventory of all property and equipment, monitoring its use, logging and analyzing maintenance and repairs, setting up maintenance schedules to prevent breakdowns, forecasting when to replace parts and keeping contracts, warranties and service agreements.

READ MORE: The R&D Tax Credit: Tax Reform Boosts This Manufacturing Tax Benefit

Having a sound asset management system is like having a crystal ball. You'll know a machine's performance well enough to predict when to schedule maintenance. By doing so, you can prevent a breakdown or detect signs that parts are wearing out before they actually go.

Here's how one plant cut dependence on equipment redundancies:

By shutting down some redundant equipment, downtime dropped to 90 hours a quarter from 400 hours. Downtime that affected manufacturing dropped to two hours a quarter from 30 hours. In addition, the ratio of unscheduled to scheduled repairs has been reversed. Whereas unscheduled work once comprised 80 percent of all work orders, it now comprises less than 13 percent.

Beyond the operational savings and productivity gains from asset management, a well-planned system also guides life cycle decisions, such as whether to repeatedly repair a piece of equipment, overhaul it or replace it. You'll have solid evidence in terms of the equipment's performance and repair history, and you can develop a procurement strategy based on data and an analysis of products, suppliers and the marketplace.

Unfortunately, that crystal ball has been out of reach for many manufacturers, primarily due to the heavy initial investment of capital and labor required. Another deterrent has been the difficulty of building an integrated system out of a smorgasbord of specialized software products from multiple providers. It is nearly impossible to find a provider that offers a total package.

These issues are being addressed by software manufacturers, which should make asset management more accessible. For example, at least one vendor of plant automation software is offering modular, scalable systems so that you can begin modestly by monitoring one critical piece of equipment and add modules as your budget allows. In addition, the system is based on an open standard, which gives you flexibility to add compatible products from other software providers.

Contact us for other suggestions for putting an asset management program into place. Two members of our Manufacturing Team are Lean Six Sigma certified and can offer tips on improving efficiencies and reducing costs. Contact us for more information.

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Topics: Manufacturing

Concannon Miller’s unique, holistic and intimate approach to financial health sets us apart from smaller CPA firms with more limited resources as well as mega firms where mid-sized clients struggle for attention. Contact us here to talk about improving your business.

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