Reliable delivery on time, every time, without breakdowns in the process, supported by good service and minimal stock-keeping - sound like a textbook notion rather than reality? It`s the influence effective asset management has on the supply chain, where the management of plant assets is integrated into the logistical planning process to achieve optimal performance and better bottom line returns.
Asset management controls the performance of machinery and other plants, ensuring 100% availability, 24x7. Efficiency in asset management is non-negotiable. The supply chain is critically impacted if components of the business are not operating optimally.
The ability of a business to perform at its peak relies on thorough knowledge of its integral workings.
Adriaan Scheeres, CEO, Pragma Holdings.
The ability of a business to perform at its peak relies on thorough knowledge of its integral workings. What assets the business owns or manages, where those assets are, what they are responsible for, how well they are performing, what they cost to run, the process involved in keeping those assets operating at optimal efficiency, how this infrastructure is helping to fulfil the business mission - these are all crucial questions every business owner and manager should be asking on a daily basis.
No supply chain can operate optimally if the assets used in the conversion of raw materials and manufacture of product are not being managed effectively. Asset performance management provides the means of understanding the performance of an entire plant over a 24-hour period, enabling an in-depth knowledge of the performance and availability of the machinery used in the production process.
The first step
The supply chain planning process starts with an analysis of the finished product. The achievement of finished goods relies on a manufacturing plan, which needs to be optimised in terms of the assets utilised and the speed and efficiency of manufacture. Step one would be to examine how much raw material is needed to feed the manufacturing plan.
The manufacturing plan is a vital element of machine performance planning and the asset management portfolio. Effective manufacturing execution systems (MES) provide the link between shop-floor control systems and the supply chain planning process, ensuring consistent bottom line returns.
In factories where asset management is key, machines run at a high availability and efficiency rate in line with the just-in-time philosophy of manufacture. The supply of raw material in these plants depends entirely on demand - materials are ordered for each production run, so at any one time there is never unused surplus stock.
A common problem in supply chain management is the difficulty of tracking raw materials through the production process. Once the materials enter the manufacturing process, they disappear out of the information system into the "information shadow". Only when in its finished form is the product again traceable. Effective asset management provides the ability to track and trace the materials throughout the manufacturing process, removing the shadow and making available extensive information on the progress of the production order.
Port problems
A good example illustrating the breakdown in efficiency that results from poor supply chain management is SA`s ports. Durban`s container terminal may be the biggest and busiest in the Southern Hemisphere, but it has experienced a congestion backlog that may be costing the country millions. Rather than adopting the preventative approach of managing the performance of the assets so crucial to the efficient running of the harbours, such as cranes, terminal gantries and straddle-carriers for lifting containers, management has a reactive approach. These assets are expected to perform without effective maintenance until, inevitably, they break down. The result is congestion and bottlenecks.
The repercussions of poor supply chain management and bad planning prove costly - cargo delayed at port must be accounted for; ships often have to be diverted to other harbours to offload, resulting in added pressure on other ports and the additional costs of time at sea, several days` travel and delayed delivery. Often machinery is replaced rather than maintained.
Asset management optimises the entire supply chain and its processes. As much as 60% of the manufacturing planning process can be influenced by some physical asset breaking down, leading to unplanned costs, delays and bottlenecks in the supply chain. Unless assets are allowed to perform at optimal level at all times to keep processing cycles alive, businesses cannot expect to deliver profitably.
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