Alerting all assets

Companies wishing to make the most out of what they own first need to identify their assets. Asset management solutions, whether bought individually or as part of an enterprise resource planning applications can help to this.

  • E-Mail
By  Vijaya Cherian Published  September 28, 2003

I|~||~||~|Tough economic conditions and a need to squeeze additional value from existing resources are forcing enterprises to bring greater discipline to their business processes. Not only do managers have to do more with less, but they are required to implement stringent cost cutting measures, take a closer look at balance sheets and bring a greater level of order and accountability to their operations.

Key to this drive is the identification of assets; whether they are fleets of trucks, oil rigs, manufacturing lines or PCs. After all, management cannot wring more from less, or develop strategies to maximise yields, unless they know first what they have and whether or not it is working as required.

"It is only rational to expect companies to keep track of their equipment and undertake periodic preventive maintenance so that it doesn't break down suddenly," says Oliver Schulz, sales & marketing manager for MRO Software Middle East.

"If a manufacturing company's production line is down for one hour, for instance, it costs them tens of thousands, or maybe even millions of dollars for every lost hour of production. In most cases, by keeping track of things and doing regular maintenance this can be avoided," he adds.

One way of keeping track of a company's inventory, reminding users about periodic maintenance, showing warranties and recording the history of an asset through its entire lifecycle is through the deployment of an asset management solution. According to Gartner Group, solutions that facilitate asset management can lower total cost of ownership (TCO) by 15-20%, while also reducing cost per asset by as much as 30% in the first year and between 5% and 10% annually in following years.

Such savings are propelling asset management software companies into the limelight and encouraging enterprise resource planning (ERP) vendors to develop and include asset management modules in their integrated suites. Furthermore, the potential savings these solutions can deliver are encouraging local users to deploy them.

Pepsico Beverage International, for instance, has implemented an asset management solution at all of its local bottling plants. While the plants in Lebanon, Jordan, Saudi Arabia and Egypt have opted for a Datastream solution, Dubai Refreshments Company plans to utilise the asset management module in its Oracle ERP application. Both solutions help the bottlers manage their plant and fleet operations more effectively, while also facilitating better spare part tracking and preventative maintenance.

"Typically, you are talking about no less than 10,000 spare parts in plants," says Bassim Rizk, capabilities director for Pepsico Beverage International. "So if you are always looking at the spare parts as one group, you are never going to be able to improve your physical inventory, and how much money you are putting on hold," he explains.

The use of asset management software has also enabled the bottlers to follow a standard naming convention and classification for their equipment. Equipment is, therefore, classified and a standard nomenclature applies to each spare part, which makes it easy to track and acquire if a plant does not have it in stock. "This is a pre-requisite to the implementation of asset management for us," says Rizk.

||**||II|~||~||~|Pepsi's bottlers are not the only local companies to invest in asset management solutions. For instance, Emarat has enhanced the management of its maintenance activities by deploying MRO Software's asset management solution, Maximo.

Deployed in just four months by eSolutions, the software allows Emarat's users to directly notify contractors of maintenance activities without having to route requests through Emarat's maintenance division. Such shortening of the supply chain has enabled Emarat to maximise the availability of its assets, accelerate response times, improve planning, cut operational costs and reduce administrative work.

"With Maximo our job is now more about monitoring the maintenance than routing work requests because we have a clear and short channel of communication. This allows us to spend more time planning and communicating these plans to the users," says Arif Al Mulhairy, maintenance manager at Emarat.

"This means that in a filling station, for example, staff will be aware of when a contractor is going to come and calibrate their tanks. They can then make their own plans to work this into their schedules," he adds.

Yamama Saudi Cement Company has also opted to deploy Maximo's software to handle its inventory, maintenance and purchasing. As none of the operation's systems were automated to begin with, the project has included the re-engineering of business processes and, as a result, has taken a little longer than the four month Emarat
implementation. However, the first phase has just gone live and, according to Ahmad Abdul Fatah, head of maintenance at Yamama Cement, the second phase will be completed soon.

Whether users should opt for a standalone solution or utilise asset management modules within larger ERP packages is open to debate. Pepsico's Rizk, however, suggests that the former offers local companies more flexibility due to the number of assets they are likely to have, while also costing significantly less.

"We looked for an affordable solution and at the same time we looked for a solution that would provide us with future growth, so that if we wanted to move to an ERP environment, where everything is linked to everything else, we could," Rizk explains.

"Also, should it [the asset management solution] be unsuccessful the total cost would not be so bad... and if it works, in less than three months, you can get back three times whatever you spent on the tool," he adds.

||**||III|~||~||~|Although the likes of Pepsi, Emarat and Yamama have already adopted asset management solutions, they are the exceptions rather than the rule within the local market. Most organisations continue to operate without effectively managing what they own.

"Larger corporations have begun to migrate from level one, which we call chaos, where nobody knows what is owned. They are in a reactive mode, where they have begun to use spreadsheets or home made databases on a departmental level," explains Hans Dill, marketing manager, Remedy Northern Europe, Middle East & Africa.

"However, this is still far from the ideal level five, where assets really begin to create value," he adds.

To get to level five, businesses must be proactive and have a good overview of their asset lifecycle, which includes the whole process of acquiring an asset, installing it, moving it, changing it and in the end, disposing of it. The company must also build an understanding of what type of services it wants to deliver and tie these services to its assets.

Furthermore, Dill suggests that the shift to customer centric services requires a change in the way asset maintenance is prioritised. For instance, in a traditional business environment, if all the monitors in a company go down, the vice president would be given priority and his/her system would be set right first. However, it might be the receptionist who answers customer calls and needs to resume their service most urgently.

"This will not be recognised by a majority of the companies nowadays," says Dill. "But if the company's assets are tied to customer services, the help desk will be able to figure out which employee requires support the most and give it to them first," he adds.

Using asset management solutions in this manner moves them from mere inventory control, maintenance and material management software to true enterprise asset and performance management solutions. In fact, it makes them what aficionados of such solutions are calling 'productive maintenance.'

"End users want to know how they can increase their productivity through maintenance. So the in-phrase is productive maintenance," confirms Rizk.

However, to ensure that simple asset management evolves to productive maintenance, IT managers have to make sure that they have the right commitment levels from the CEOs and finance managers that have ordered the belt tightening in the first place.

According to Pepsico's Rizk, this commitment can help ensure a 20 or 30% success rate, irrelevant of other factors. "Commitment is a major problem. People are not used to working with systems and having stringent requirements. However, the management must ensure that this work gets done on time," he says.

In fact, Arun Majumdar, executive vice president of local Datastream distributor, Intertec Systems, believes organisations in the Middle East should go one step further than simply garnering support from senior management. Instead, he argues that local companies should appoint a specific employee from within the organisation to ensure the assets required to keep it operating do just that.

"Companies have a CIO, a CEO and a CFO, so they should have a CAO [chief asset officer] to manage the machines that are responsible for keeping the business running," Majumdar says.

"On average, the maintenance of a system amounts to 5 to 10% of a company's revenue. So the total amount spent is a phenomenal amount. Surely this makes it worth having the right people and the right tools in place?"||**||

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code