Asset analysis: The forgotten ROI from your CMMS

It’s one thing to use CMMS to manage everyday work orders and preventive maintenance schedules of assets/equipment.


It’s one thing to use CMMS to manage everyday work orders and preventive maintenance schedules of assets/equipment. CMMS can also help better plan for capital expenditures as upcoming budget cycles approach.

That’s where asset life cycle analysis (ALCA) comes into play. ACLA is a macro approach to examining critical data for all assets to help grade each asset and make informed “replace vs. repair” decisions. An “A” is the top grade and an “F” is failing, just like in school.

By capturing day-to-day operation information for predictive maintenance, work orders, and other sources, and crunching the data using ALCA, CMMS users are also better equipped to differentiate good vendors from bad and evaluate PM effectiveness, which contributes to a better ROI.

Consider the following example:

The general manager of a recycling plant asks her directors to submit capital budgets by month end closing. The director of operations starts filling a spreadsheet with equipment he projects will need to be replaced primarily due to the age of each asset. He enters air conditioning unit two because it’s the oldest AC in the building. But identifying equipment that may be taking up more repair time is harder to track and requires more research.

Under the same scenario, the director of operations uses ALCA to grade equipment in question. A boiler unit that has been in use for only 5 years regularly fails because of short-term overheating. However, the antique AC unit on the roof has had only routine maintenance repairs despite its age, and can go another year without replacement.

Using ACLA, key performance indicators derived from PM and WO processing, labor, outsourcing repairs, and other data can help shift capital spending from replacing older assets to replacing frequently malfunctioning assets that incur heavy repair costs. And the director submits a budget that saves significantly on capital expenditures.

ACLA typically “grades” maintained equipment on three critical factors: age, frequency of failure, and rising/falling costs factors. The AC, although 8 years past its expected life, shows a steady or even decreasing frequency of failure, with a steady or decreasing maintenance cost. The boiler unit, although newer, shows more frequent failures and high maintenance costs.

Asset evaluation (including possible replacement) based on age alone is not a fair assessment. By taking into account frequency of failure as well as associated maintenance costs, selecting the most critical assets to replace or repair is much more reliable. With people and dollar resources so precious in today’s world, ALCA can make for a quick ROI in an area often overlooked when implementing a CMMS solution.

No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2015 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
Safety for 18 years, warehouse maintenance tips, Ethernet and the IIoT, GAMS 2016 recap
2016 Engineering Leaders Under 40; Future vision: Where is manufacturing headed?; Electrical distribution, redefined
Strategic outsourcing delivers efficiency; Sleeve bearing clearance; Causes of water hammer; Improve air quality; Maintenance safety; GAMS preview
SCADA at the junction, Managing risk through maintenance, Moving at the speed of data
Safety at every angle, Big Data's impact on operations, bridging the skills gap
The digital oilfield: Utilizing Big Data can yield big savings; Virtualization a real solution; Tracking SIS performance
Applying network redundancy; Overcoming loop tuning challenges; PID control and networks
Driving motor efficiency; Preventing arc flash in mission critical facilities; Integrating alternative power and existing electrical systems
Package boilers; Natural gas infrared heating; Thermal treasure; Standby generation; Natural gas supports green efforts

Annual Salary Survey

Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.

Read more: 2015 Salary Survey

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
This article collection contains several articles on the vital role of plant safety and offers advice on best practices.
This article collection contains several articles on the Industrial Internet of Things (IIoT) and how it is transforming manufacturing.
This article collection contains several articles on strategic maintenance and understanding all the parts of your plant.
click me