CMMSand EAM06

Aryana Group - IPAMC 2006
CMMS (Computerized Maintenance Management Systems)
and
EAMs (Enterprise Asset Management systems)

Ben Stevens
OMDEC Inc
Ben@omdec.com
www.ipamc.org
Ben Stevens, OMDEC – “CMMS and EAMs” 1
Today’s Agenda
• Definition and Structure of CMMS/EAM

• Benefits and Values
• How to achieve the payback benefit
• Cost control with CMMS
www.ipamc.org
CMMS/EAM – ERP
Work
Maintenance =
Management
Materials
Inventory + Purchasing = Management
Work Materials = CMMS

Management + Management
+ Asset + Inter- =
CMMS EAM
Management Plant
HR+ + Manufact- =
EAM + ERP
Finance uring
www.ipamc.org
What is EAM?
A powerful software tool …..
that still requires People to make the improvements
Materials Best
Work Equipment Labour Contractors
and Tools Practices
Request
Maintenance Analyse Collect

PM Plan Data Data
Work History
Equipment History
Breakdown Work Schedule and Complete
Order Issue WO Work
Check Labour
Check Contractor Availability
Availability Check Equipment Issue Picklist, Trigger Purchase
Check Tools Issue Materials Requisition
Availability
Availability Materials Trigger Purchase
Check Materials www.ipamc.org
Receipt
Ben Stevens, OMDEC – “CMMS and EAMs”
Availability Order
4
Objectives of CMMS/EAM
• Probably the best single tool to drive
maintenance improvement:
– Organize how we do maintenance
– Track what we have done
– Provide the basis for analysis
– Prompt maintenance improvement
– Drive maintenance cost control
– Store our knowledge history of maintenance
www.ipamc.org
Is a CMMS / EAM for you?
1 More than about 500 assets
2 Pressure to increase reliability, reduce downtime
3 Belief that you need to do more PM and CBM
4 Breakdowns happen too frequently and are too expensive
5 Work is interrupted or delayed due to missing parts
6 Pressure to reduce the cash tied up in parts
7 Current Reports about Maintenance are not very useful
8 Want to continuously improve Maintenance
9 Management will invest in a long term improvement plan
10 Pressure to increase Maintenance Effectiveness and reduce costs
Score 10 each if this matches your situation, down to 0 if it is
not relevant. Total =
Anything above about 50% means you are probably a good
candidate for a CMMS www.ipamc.org
Today’s Agenda

www.ipamc.org
Here’s a CMMS Value Test – score 5 if you are
perfect; down to 0 for the reverse
1 All critical equipments are in the system
2 All critical spares are in the system
3 All the data is accurate and reliable
4 All non-critical equipment and parts should be in the
system
5 70+% of your work is done against PM WO’s
6 All PM’s are reviewed annually for relevance and
accuracy
7 All corrective work is done from WO’s
8 All breakdown work is recorded on templated WO’s
9 WO’s collect data on material and hours used, equipment
condition and failure causes
10 All WO’s make sense (according to the technician)
www.ipamc.org
Part 2 of the CMMS Value Test – score 5 if you
are perfect; down to 0 for the reverse
11 95+% of your work is scheduled
12 Parts pick-lists are prepared automatically from WO’s
13 Parts replenishment is driven by automatic ordering
14 Overdue WO’s are reviewed weekly
15 All breakdowns are scrutinized to update the PM program
16 The system prompts regular ABC counts
17 Reports are useful and accurate
18 The system ties into your performance management system
19 The system prompts maintenance improvement
Someone is specifically responsible for generating more
20 value from the system
Total www.ipamc.org
How did you make out?
100
90
80
70 Innocence
60 Awareness
50 Understanding
40 Competence
30 Excellence
20 I don’t believe you
10
0
Score
www.ipamc.org
Most benefits result from .....
• Improved equipment performance (reliability,

uptime, life cycle cost)
• Productivity improvement
– tradesmen - engineers
– supervisors - stores keepers
– buyers - managers
– Contractors
• Lower Spares Inventory cash investment
• Cost savings for Direct Purchases though lower
Spares prices
www.ipamc.org
Paybacks
O Paybacks will vary according to the current state of

your plant and its maintenance practices
O The numbers we will use to-day are typical rules of

thumb, and are based on introducing an initial CMMS
or the upgrade of neglected system
www.ipamc.org
Paybacks from Equipment
O improved Maintenance program means...

O More effective Preventive & Predictive Maintenance
Q fewer breakdowns, (more uptime)
Q faster mean time to repair (more uptime again)
Q smoother running equipment (higher
productivity)
Q longer productive life for equipment...
Q higher quality product
2 - 5% increase in uptime
www.ipamc.org
Paybacks from Manpower Effectiveness (1)
O improved work order processing means less wait time,
more wrench time for trades,
O integration of materials planning means less wait, pick
or search time at stores

O better data identifies repair time anomalies which
improves training effectiveness

O Unplanned work costs 1.5 - 3 times more than planned
work
Manpower productivity up 10 - 25%

www.ipamc.org
Paybacks from Manpower Effectiveness (2)
O Better planning and better resource scheduling

means reduced overtime
O And reduced sub-contract cost
Overtime down 10 - 50%
Contractor costs down 25 - 50%
www.ipamc.org
Paybacks from Materials
O job plans show what materials are needed and when

O this causes better buying decisions
O fewer rush orders
O reduces overstocking
O stock the RIGHT item at the RIGHT time
5-10% of Inventory Value

5-10% of Materials Cost per
Work Order
www.ipamc.org
Paybacks from lower administration costs
O Automating documentation (work orders, templ;ated
job plans, work requests, materials requisitions,
materials issue slips, purchase requisitions……)
O Integration with collateral systems (document

management, contract management, CBM
O Moving to paperless……
Divert 50+% of admin effort to useful work

www.ipamc.org
Are the savings reasonable?
O AT Kearney/Industry Week Feb 1990:
Q 28% increase in maintenance productivity

Q 20% decrease in equipment downtime
Q 20% decrease in maintenance materials costs
Q 18% decrease in maintenance stores values
www.ipamc.org
Are the savings reasonable? (2)
O Plastics Plant:
Q 75% reduction in stores value

Q 65% reduction in downtime in 24-hour a day operations
Q 25% increase in maintenance manpower productivity
Q 90% reduction in maintenance overtime
over a three year period
www.ipamc.org
Benefits to Clients
Maintenance Average
1. Increased Planned Maintenance +
decreased unplanned maintenance 78%
2. Less Waiting Time 29%
3. Increased Productivity 29%
4. Reduced Emergency Work 31%
5. Less Overtime 22%
6. Decreased Backlog 34%
7. Less Contract Labour 26%
8. Reduced Staffing 14%
www.ipamc.org
Benefits to Clients
Stores and Purchasing Average
1. Fewer Emergency Reorders 33%

2. Reduce Stock-Outs 29%
3. Greater Inventory Turnover 37%
4. Reduced Inventory Value 21%
5. Fewer Line Items Kept 12%
6. Improved Vendor Pricing 13%
7. Lower Stores Staffing Costs 14%
www.ipamc.org
Today’s Agenda

www.ipamc.org
Warning….
• Most benefits statements are not much more
useful than promises of magic
So we
have to
dig much
deeper
www.ipamc.org
This should be your starting point
Monthly and Annual 1. Regular Maintenance

Spending on: 2. PM’s
3. Emergency Repairs
4. Special projects
Equipment Labour Materials Contract Tools Total $ Comments
$ $ $ $
#5 winder Another breakdown last month!
- Regular 15,250 12,440 Nil 300 27,990 Should be solved by the major
- PM’s 3,240 4,500 nil nil 7,740 refurb
- Emergency 5,200 4,500 nil Nil 9,700
- Special 3,500 2,550 45,000 Nil 51,050
Total 27,190 23,990 45,000 300 96,480
Hot Press
Indirect and
Overhead
Total
www.ipamc.org
The Payback Process
Benefits Payback Benefits

Definition Quantification Commitment
Benefits Payback Payback

Delivery Measurement Realization
Planning
www.ipamc.org
General Procedure
• Identify the sources of the benefits
• Convert the benefits into paybacks
• Quantify the paybacks
• Prioritise them
• Assign accountability and authority to
achieve them
• Measure the paybacks
• Publish the results
• Reward successes
www.ipamc.org
Benefits
Definition
Benefits
• Start with the Project Objectives:
• “To acquire and implement a CMMS which will:

– improve maintenance effectiveness
– prompt better material management
– provide better information
– increase equipment uptime”
• Question… Did the project objectives specify numbers

--- if not, that’s a good reason for not getting the
payback.
www.ipamc.org
Benefits
Definition
For each objective….
• Define the key benefits
improve maintenance effectiveness
More PM’s Lower Contractor

Costs
Fewer
Better manpower breakdowns Quicker
planning Repairs
www.ipamc.org
Payback
Quantification
Payback chart….
• For each benefit, create a Payback Chart,
asking the questions:
– Can we measure the improvement?
– Can the improvement be translated into $.
• If so, fine
• If not, subdivide and redefine the benefit
www.ipamc.org
Payback
Quantification
Example….
Benefit Measure? Translate into $?
Yes:
1. Reduced manpower
Quicker Yes: per job saves $X
Repairs Mean time to Repair 2. Increased Uptime
= increased Production
= $YY extra Revenue
www.ipamc.org
Payback
Quantification
Example….
Benefit Measure? Translate into $?
Better manpower No:

planning
Less scheduled Idle Yes:

Time 1. Reduce labour
= less overtime Yes: Costs - save $X
Hours Overtime 2. Reduce contractor
Costs - save $Y
www.ipamc.org
Payback
Quantification
For each benefit…..

Benefit KPI Original Target Payback
value Value
Fewer MTBF 500 hours 650 hours 4 repair jobs
breakdowns per year x
$12,000
% 80% 86% 6% x 6400

Availability hours x
$17,000 per
hour
Use the cost statement as the basis for these calculations.

www.ipamc.org
This should be your starting point
Monthly and Annual 1. Regular Maintenance

Spending on: 2. PM’s
3. Emergency Repairs
4. Special projects
Equipment Labour Materials Contract Tools Total $ Comments
$ $ $ $
#5 winder Another breakdown last month!
- Regular 15,250 12,440 Nil 300 27,990 Should be solved by the major
- PM’s 3,240 4,500 nil nil 7,740 refurb
- Emergency 5,200 4,500 nil Nil 9,700
- Special 3,500 2,550 45,000 Nil 51,050
Total 27,190 23,990 45,000 300 96,480
Hot Press
Indirect and
Overhead
Total
www.ipamc.org
Benefits
Commitment
Prioritise the benefits
A1 S1 S5 S2 P4 C1 S4 A3 C4
O1
HIGH O7 O2 IN1 M1 IN4 O8 IN3 F1
A5 S
A4 O11 C2 IN2 Strategy
A6
O3 C8
P1 T1 T2 S3 P2 C7 C6 C5 Organization &
P5
O Change
R2 Management
T7 M5 O10 T5 M4 IN5 C3
O4 R1
O14 T Tactics
MED M3 IN7 IN6 F2
O5 IN8 O13 T6
P7 Planning &
O12 P
Benefit
T4 P6
F3
Scheduling
T3 M2 O9 T9
C9 P3 P8 P9 M Measures
A2 T8
Materials
IN
Management
LOW C Systems (CMMS)
O6
Reliability
R
TPM &
A Autonomous
Maintenance
F Processes
LOW MED HIGH

Difficulty to Implement www.ipamc.org
The Payback Process
Benefits Payback Benefits

Definition Quantification Commitment
Payback
Benefits Payback
Realization
Delivery Measurement
Planning
www.ipamc.org
Paybacks
Realization
Planning
For each major benefit …..Prepare an Action Plan
What has to be done • Milestones

Who is involved • Timing
Any training • Materials
Any process redesign • Measurements
Tools needed • Tasks
Progress Monitoring • Resources
Rewards • Feedback
www.ipamc.org
Benefits
Measurement
• Must be
– quantifiable
– relevant
– Reliable, consistent
– repeatable
– simple to understand
– simple to collect
– Easy to display
www.ipamc.org
Benefits
Delivery
1. Set the measurements up as a regular weekly/monthly work

order
2. Review them at the weekly Mtce mtg
3. Make sure the responsible person knows it
4. AND has the authority to make it happen
5. Reward success
6. Provide feedback to the Project Champion
www.ipamc.org
Today’s Agenda

www.ipamc.org
So how do we get going????
– Cost Control with CMMS?EAM
– Understand your company’s current cost process

• Capital cost
• Operating cost
– Materials
– Labour
– Contractor
– Tools
– Special projects
– Build a Plan
– Measure, Analyse and Feedback
– Make it a part of your on-going process
www.ipamc.org
A dozen Cost Reduction Quick Fixes
using EAM
1. Equipment 6. Scheduling
2. Materials 7. PM/CBM Compliance
3. Jobs and Tasks 8. Performance
4. Data Integrity Management
5. Planned Work 9. Procurement
www.ipamc.org
1. Equipment - Quick fix.
• Breakdowns force you into reactive maintenance
• Most breakdowns occur on a small group of equipment
• Use the EAM to select the frequent failure equipment

• Define the Failure Costs for each key equipment
• Hit the bad actors with an improvement plan built into
EAM
• Use EAM to measure OEE (Overall Equipment

Effectiveness and track critical failures
• Build EAM tasks to prevent critical failures
• Track the monthly failure costs of your key equipment
www.ipamc.org
2. Materials - Quick Fix
Define materials costs: - purchase costs, total inventory value,
Inventory carrying costs, expediting costs, picking and delivery
costs to the job-site, costs of poor service levels.
In EAM: On the Job:

Standardise names Sell/junk the obsoletes
Standardise numbering Rationalise warehouses
system Rationalise storage locations
Eliminate Duplicates Issue picklists from EAM direct
Consolidate Vendors to stores
Identify obsoletes Do kit-ups based on planned
Re-order based on EOQ’s work orders from EAM
and delivery times Deliver to work site
www.ipamc.org
Track theBen
monthly total costs
Stevens, OMDEC ofand
– “CMMS your materials
EAMs” 43
3- Jobs and tasks - Quick Fix
Understand how CMMS calculates Labour costs
Track labour costs monthly by equipment or system,
and by type of work
Understand your cost relationship between PdM, PM and Corrective
• Make sure all PM’s are in EAM
• Review current PM’s (improve? expand? consolidate? delay?
streamline? eliminate?)
• Use EAM scheduler to dedicate staff to PM’s
• Review all work orders on closure as they are entered into
EAM (convert to PM’s? work description? Materials list?
Failure codes? Priority? Time required? Materials available?
Template it? )
• Schedule in EAM by area, by craft, by equipment hierarchy
• Use EAM to examine contractors – can we replace inhouse
• Can PdM replace PM and Corrrective?
www.ipamc.org
Track labour costsBen Stevens, OMDEC
monthly – “CMMS
for major and EAMs”
systems and types of work44
4- Data Integrity – Quick Fix
• Objectives
– Collecting the most accurate cost data possible
– Structuring data for consistency
– Make it easy to collect and enter
– Validate accuracy when closing work orders
• How EAM can support these objectives:

– Security restrictions as appropriate for your processes
– Use of pick lists
– Customized data entry forms
– Automatic data collection (from sensors, wireless scanners)
Bad data is worse than no data

www.ipamc.org
5- Planned Work – Quick Fix
Planned work typically costs 1/3 to 1/10 as much as unplanned work
• Objectives
– 90+% of work should be planned (especially emergency
repairs)
– Never plan the same job twice

– Build planning into the maintenance process
– Measure planning effectiveness
– Use standard job templates and safety plans whenever
possible
– Choose a similar job and modify it
– Track the amount of Planned work monthly
www.ipamc.org
6- Effective Scheduling – Quick Fix
Understand and measure the cost of poor scheduling
of labour, contractors, materials and tools
• Objectives
– Allocate labour to Work Orders in the order of WO
priority
– Allocate materials to the highest priority jobs
– Work within the constraints of labour and material
availability, equipment availability, etc.
– Flag critical equipment, critical jobs and critical spares
– Use priorities to set work order and backlog sequence
– Use capacity scheduling tools
– Use the labour skill-sets tools
– Use automatic assignments in CMMS www.ipamc.org
7- PM/CbM Compliance – Quick Fix
Understand the added value of PM/PdM
Understand how often they are NOT performed properly
• Objectives
– Perform PM/CbM tasks on time
– Execute tasks completely and consistently
– Do it right first time
– PM/CbM tracked within the overall work order backlog
– Standard Job Plans define work requirements
– Review WO’s on closure
– Track rework (same job on same equipment within X days)
– Set up performance measures and use EAM to track results
www.ipamc.org
8- Performance Measurement – Quick Fix
• Objectives
– Measure the performance of your processes
– Make the measurements meaningful at all points in the
organization
– Simple to calculate, simple to display

– Source of data for performance measurement
– Automatic reports and graphs
– Create regular WO’s to cover collection and analysis
www.ipamc.org
9 - Procurement – Quick Fix
Measure the cost of poor procurement – late materials,
poor quality “cheap” materials, wrong materials
• Objectives
– Smarter Buying
– Cheaper Buying
– Just-in-time Buying
– Vendor analysis
– Delivery times
– Pricing Agreements
– Vendor consolidation
– Spend time thinking and improving rather than
pushing paper www.ipamc.org
Using EAM to
improve
Maintenance Cost The longer term: 1
Performance
• Manage time-based and meter-

based PM
PM/CbM
• Trigger Condition-based work
orders
Long-term • Plan long-term maintenance

Asset and upgrade requirements
Planning
• Record results of root-cause

Reliability failure analysis
Engineering • Analyze failure histories
• Manage labour requirements

Workforce
Planning • Forecast Skills shortages
www.ipamc.org
Using EAM to
improve
The longer term: 2
Maintenance Cost
Performance
Integrated • Integrate supply chain for forecasting and

Procurement meeting materials and services needs
and Materials
Mgmt • Optimize supply decisions based on
historical and projected usage
• Decrease planning times by using

Work Planning
the ‘library’ of job plans
• Plan ahead for safety and
environmental permits
Life-Cycle • Track costs by component or system,

Cost and by type of cost
Analysis
• Analyze costs for use in management
decisions (e.g., repair vs. replace,
purchasing, budgeting) www.ipamc.org
Summary
• 1. The CMMS tool is just that – a tool

• 2. It will work for you if….
– You select the right objectives and targets
– Define the job correctly
– Break it down into its component parts
– Use the tool skilfully
– Measure and track the benefits
– Analyse and feedback the results
– Reward success
www.ipamc.org
Thank you for your attention
• Any questions….
• >>> email me ---- ben@ omdec.com
www.ipamc.org

CMMSand EAM06

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Aryana Group - IPAMC 2006

CMMS (Computerized Maintenance Management Systems)

EAMs (Enterprise Asset Management systems)

• Definition and Structure of CMMS/EAM

Work Materials = CMMS

Maintenance Analyse Collect

• Definition and Structure of CMMS/EAM

• Improved equipment performance (reliability,

O Paybacks will vary according to the current state of

O The numbers we will use to-day are typical rules of

O improved Maintenance program means...

or search time at stores

improves training effectiveness

Manpower productivity up 10 - 25%

O Better planning and better resource scheduling

Overtime down 10 - 50%

Contractor costs down 25 - 50%

O job plans show what materials are needed and when

O fewer rush orders

O stock the RIGHT item at the RIGHT time

5-10% of Inventory Value

O Integration with collateral systems (document

Divert 50+% of admin effort to useful work

O AT Kearney/Industry Week Feb 1990:

Q 28% increase in maintenance productivity

Q 75% reduction in stores value

over a three year period

Stores and Purchasing Average

1. Fewer Emergency Reorders 33%

• Definition and Structure of CMMS/EAM

Monthly and Annual 1. Regular Maintenance

Benefits Payback Benefits

Benefits Payback Payback

• “To acquire and implement a CMMS which will:

• Question… Did the project objectives specify numbers

improve maintenance effectiveness

More PM’s Lower Contractor

• If not, subdivide and redefine the benefit

Better manpower No:

Less scheduled Idle Yes:

For each benefit…..

% 80% 86% 6% x 6400

Use the cost statement as the basis for these calculations.

Monthly and Annual 1. Regular Maintenance

LOW C Systems (CMMS)

LOW MED HIGH

Benefits Payback Benefits

For each major benefit …..Prepare an Action Plan

 What has to be done • Milestones

1. Set the measurements up as a regular weekly/monthly work

2. Review them at the weekly Mtce mtg

3. Make sure the responsible person knows it

4. AND has the authority to make it happen

6. Provide feedback to the Project Champion

• Definition and Structure of CMMS/EAM

– Understand your company’s current cost process

• Use the EAM to select the frequent failure equipment

• Use EAM to measure OEE (Overall Equipment

In EAM: On the Job:

• How EAM can support these objectives:

Bad data is worse than no data

• How EAM can support these objectives:

• How EAM can support these objectives:

What has to be done • Milestones