The dollars-and-cents of a CMMS

Installing a good CMMS can have a profound impact on your maintenance operations – and your bottom line.

04/19/2012



Installing a good computerized maintenance management system (CMMS) can have a profound impact on your maintenance operations – and your bottom line.

Sure, the software can streamline work order processing, purchase order generation, and the creation of preventive maintenance tasks. But most organizations on the fence about implementing a CMMS solution are really more concerned about the dollars-and-cents.

How much does implementation cost – and how much money can the software save? If the return on investment (ROI) isn’t there, chances are the budget won’t be, either. As nice as it is to have “streamlined” operations or “optimized” maintenance tasks, companies are usually built to generate profit, not convenience.

Which is to say that CMMS solutions exist because they save companies money, not just because they make life easier. The question of what sort of ROI you can expect on a new CMMS implementation depends on your existing maintenance practices, your range of assets, the amount of downtime you encounter, and other considerations unique.

With all the moving parts in your maintenance operations, how can you calculate a realistic CMMS ROI? MicroMain recently published a white paper describing the ROI formula and how to arrive at a tangible dollar amount.

Let’s explore some of the principals behind this CMMS ROI calculation – and discuss whether it makes sense to obtain one for your organization.


Time is money


When it comes to business, time really does translate into money. Labor hours have a calculable cost. So when a CMMS provides functionality of convenience – such as automated purchase orders, or streamlined work order generation –what it’s really providing is a cost savings.

Let’s explore a real world example. One of your technicians has been issued a work order to repair a furnace in a location across town. A comprehensive CMMS solution (such as MicroMain Maintenance Management) can let you attach an inspection to this work order so that your technician can accomplish multiple jobs in one fell swoop. That way, when your technician returns from the off-site location, he’s not only repaired the furnace—he’s replaced the filters and cleaned the blower assembly.

This might have been two (or more) separate trips , but your CMMS keeps you updated on what maintenance needs to occur—and when—so that you can achieve maximum productivity.

Note that reducing labor hours doesn’t necessarily mean a reduced staff. It means having the freedom to reassign your existing staff to other tasks in order to improve production standards, increase customer satisfaction, or ramp up production to start making more money. 


Your assets on the line


Chances are, if you showed up to work tomorrow and your fixed assets had magically disappeared—your machinery, your fleets, your equipment—your business would probably be somewhat hindered.

Your assets are critical to your business. They are your business. Keeping them operating at peak efficiency is one of the most basic objectives of your maintenance staff.

CMMS software can help. Effective preventive maintenance scheduling reduces downtime, which directly correlates to a reduction in losses. When your maintenance floor shuts down, oftentimes so does your company’s ability to generate revenue. How much  would it cost your company if one of your most important assets broke down because of insufficient preventive maintenance?

A CMMS can also extend your asset’s lifespans. And again, this has an associated cost. If each HVAC unit costs $10,000 (including installation) and the manufacturer estimates a 10 year lifecycle, that assets annual purchase cost is $1,000. So if the HVAC needs to be replaced after 9 years because it hasn’t received proper preventive maintenance, that’s a $1,000 loss for your company. CMMS systems can create real savings by helping to slow down asset depreciation.

Moreover, if HVAC units are no longer operating at peak efficiency, you’re going to be paying higher utility costs.

These sorts of potential savings should all be taken into account when obtaining a projected CMMS ROI. How much unscheduled downtime do you experience? How much potential do you have for extending the lifespans of your assets?


Does a CMMS fit your company?


From a costs perspective, the decision to implement a CMMS—or replace your existing CMMS with a solution better-equipped to meet your company’s needs—can have tremendous implications. Obtaining a CMMS ROI is an excellent way to justify the purchase internally, and is also a good opportunity to take a hard look at your current maintenance inefficiencies.

How much time could you save automatically generating purchase orders with a CMMS? How much productivity gains could a CMMS provide? How well-optimized are your existing inventory management processes?



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...
World-class maintenance: The three keys to success - Deploy people, process and technology; 2016 Lubrication Guide; Why hydraulic systems get hot
Your leaks start here: Take a disciplined approach with your hydraulic system; U.S. presence at Hannover Messe a rousing success
Hannover Messe 2016: Taking hold of the future - Partner Country status spotlights U.S. manufacturing; Honoring manufacturing excellence: The 2015 Product of the Year Winners
The digital oilfield: Utilizing Big Data can yield big savings; Virtualization a real solution; Tracking SIS performance
Getting to the bottom of subsea repairs: Older pipelines need more attention, and operators need a repair strategy; OTC preview; Offshore production difficult - and crucial
Digital oilfields: Integrated HMI/SCADA systems enable smarter data acquisition; Real-world impact of simulation; Electric actuator technology prospers in production fields
Improving flowmeter calibration; Selecting flowmeters for natural gas; Case study: Streamlining assembly systems using PC-based control; CLPM: Improving process efficiency, throughput
Putting COPS into context; Designing medium-voltage electrical systems; Planning and designing resilient, efficient data centers; The nine steps of designing generator fuel systems
Warehouse winter comfort: The HTHV solution; Cooling with natural gas; Plastics industry booming

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 that compressed air plays in manufacturing plants.
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