New-generation enterprise resource planning (ERP) solutions with their focus on lifecycle management take ERP beyond purely supporting a company`s core processes by providing a lifecycle perspective on the three main aspects of business: physical and human assets, products and customers.
This includes unique, integrated lifecycle management, enabling companies to share knowledge and gain real-time access to information and processes across the entire company.
The need for capital asset lifecycle management is intensifying as manufacturers are expected, with fewer resources, to produce more products of higher quality and with increased knowledge content.
Paul Whalley, MD, IFS South Africa
There are currently several best-of-breed solutions addressing the areas of asset lifecycle management (ALM), or enterprise asset management (EAM) as it is often referred to, product lifecycle management (PLM) and service lifecycle management (SLM). But as enterprise-wide integration is key to effectiveness in this field, extended ERP solutions, especially those based on component-based open architectures, are making a strong claim to meeting lifecycle management needs because of the advanced functionality they are delivering and ease of integration.
The need for capital asset lifecycle management is intensifying as manufacturers are expected, with fewer resources, to produce more products of higher quality and with increased knowledge content. Survival demands reducing costs. Capital assets are becoming the target of these efforts.
Staggering investments
Investments in capital assets are staggering, particularly in process industries such as petrochemicals, chemicals, metals, and pulp and paper sectors. And while the nature of assets may differ in discrete manufacturing such as automobiles, semiconductors, aerospace and electronics, they are typically no less asset-intensive and asset management is no less important.
It has becomes essential to optimise the acquisition, maintenance and disposal of these assets with even minimal improvements promising massive payback.
Most manufacturers, however, lack the comprehensive information pertaining to such capital assets, especially in an integrated and easily accessible format, to make valid decisions regarding postponing asset purchases or eliminating capital assets. It becomes a gamble.
ALM includes all the stages of a plant`s lifecycle from design and build, through go-live and operation, maintenance to decommissioning and scrapping.
By using a common reference for any object in the plant, an ALM solution ensures that data is entered in only one system, but is accessible from others. Such information flow is key. Optimising processes and activities via an ERP is fine, but the next step has to be an integrated information ALM system connecting all departments and disciplines within a company, making them an integrated unit focused on the company`s strategic and operative processes, increasing plant availability, maximising productivity and lowering lifecycle costs.
Most plant information is created initially within new construction and rebuilding projects with information collected from both internal and external sources in the design phase. The data is then transferred automatically to the maintenance and administration systems without needing to be re-written or modified.
Supporting the entire process from the project phase, through design, to purchasing, assembly and going live enables shorter lead times, faster start-ups, and a more efficient use of internal and external personnel in new construction or rebuilding projects.
An ALM or EAM is designed to improve the company`s operational and maintenance procedures, both immediately and in the long-term. Industry standards, such as ABB`s AIP, which enables the standardised integration of automation systems and business applications, are key. Seamless integration between automation systems and business applications optimises production and offers more efficient control of maintenance and manufacturing process.
Condition-based maintenance is facilitated, lowering the number of work orders without losing plant security by basing preventative maintenance work orders on real-time information. The result is less work, but at the right time. Money is saved and profits increase because of higher plant availability.
Achieving balance
The material procurement process is also a decisive factor for achieving a balance between low costs and high availability. With continuous handling of all technical and commercial information, scheduled work and experience from the plant, an ALM creates efficient functions for purchasing and inventory.
Profitability is often related to plant availability. Functionality is therefore required to measure disruptions, define them and then relate them to causes such as maintenance problems, lack of competence, or design faults. Based on this analysis, "improvement groups" representing all parts of the organisation can collaborate to make recommendations for better solutions.
By closely linking operations and maintenance and the human resources functionality, an ALM ensures more efficient competence management of long-term organisational planning at all levels. The system also needs to include procedures for planning succession, including development programmes for replacements for key employees at various levels and in different departments.
Document management functionality ensures that as soon as they are created, documents and document lists can be directly linked to different plant objects, eg maintenance activities, preventive maintenance schedules or purchase orders. This makes it easy to access them quickly in all the company`s business processes.
A good ALM system is also characterised by the ease with which it is available to different user groups with widely divergent needs and demands. Web-enablement and portal technologies are ideal tools. Via the Web, maintenance and service technicians can access job lists, final reports and fault reports, and graphically navigate through plant diagrams.
The bottom line is that improvements can be made at plant level, in the form of savings and increased production. Fewer breakdowns, increased capacity use, more efficient purchasing routines, lower total costs of ownership and better use of human resources.
In major industrial facilities, exploiting this potential can entail dramatic changes. In fact, a rule of thumb states that a company in the process industry with an old information structure will increase its annual profitability by about R100 0000 per employee - not a bad return in anyone`s books.
Next month, I will look at the benefits of product lifecycle management.
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