Integrating EAM Transcription

Full notes on reducing risk and enhancing performance in manufacturing setting through a integrated enterprise asset management system.

By Plant Engineering Staff November 27, 2007

October 25, 2007,
“Integrating EAM”

Bob Vavra, editor, Plant Engineering
Brian Dunks, Senior Product Manager for Lawson Software

BV: Hi my name is Bob Vavra, editor of Plant Engineering magazine and I will be you moderator for today’s discussion on reducing risk and enhancing performance in manufacturing setting through a integrated enterprise asset management system. Asset intensive organization need to focus on reducing the risk of equipment or plant failure while also increasing the return on asset investment by maximizing asset availability and operational capacity. Many leading organizations have adopted techniques such as reliability centered maintenance or RCM which allow them to compare the cost of failure with the cost of prevention to determine the optimum maintenance strategy for each of their critical assets.will bring substantial direct cost savings as well as indirect savings to lower insurance premiums and improve relations between regulators and auditors because of reducing risk. Brian Bunks, senior product manager for Lawson Software, is a guest this morning to discuss the trends and opportunitiesin EAM. And now here is Brian Dunks, senior product manager for Lawson Software.


BD: Computerized maintenance management systems, CMMS, and enterprise asset management systems, EAM, have changed little conceptually in 25 years, unlike their operational cousins the enterprise resource planning packages, which have undergone several significant changes and continue to receive a lot of attention. CMMS and EAM systems have extended their scope without mobile solutions, links to conditioning monitoring and expert packages. Still today insufficient attention is given to extending the core functionality to take real advantage of the EAM system’s potential. Not just the maintenance functions within your business, but for the entire business itself. This webcast will demonstrate how the core functions of the modern CMMS or EAM system can be developed to teach the maintenance team to an effective maintenance strategy for key assets.


This maintenance strategy using information from received across the business, using an integrated approach. All too often, EAM systems help you manage your maintenance business, but don’t help you stand back and figure out better ways to implement a better maintenance strategy. Doing the right maintenance at the right time. Us as engineers, we often congratulate ourselves after the inspection when we say there is no problem. You must be do the right maintenance. Isn’t this a sign that we are doing too much maintenance; shouldn’t an inspection find something wrong every time? We should find them at their early stages before they cause operational, safety and environmental problems or secondary damage. This concept of hit rate is used by leading organizations to identify the effectiveness of their maintenance strategy.


Not just in volume faults, but in minimizing wasted labor and utilizing resources. Things at the forefront of executive’s minds are sustainable asset management has to be more than a dream.


We shall explore functionality that will allow and integrated EAM solution will help create an effective maintenance strategy. One built on experience and the other on actual operational history. Systematically we will see the critical assets are identified, how their failure possibilities can be realized, so that we can understand the impact of these failures on the business. This webcast will continue to consider how the maintenance strategy can be cost justified against the cost of failure. Something few engineers can easily consider today. This presentation will also consider how the variant although the advanced MRP process called, SRP service required planning, can be used to drive powerful asset focused approach, take this maintenace strategy, and provide benefits across the entire business including to the inventory, procurement, financial teams. Finally, this webcast will consider the potential for organizations who get their maintenance strategy in order and take it to the next level to create a single combined production plan to bring both the EAM and ERP solutions together in an integrated approach.


We often see an ineffective asset management strategy, just like downtime and lost production but if we look below the water line, there are significant impacts across the entire business and further.


It can effect the quality of products were producing, or increase the amount of work in progress. It can affect our customers by giving us late deliveries, lost business or penalty payments. It can re duce the safety of equipment or give it non-compliance with legal requirements. The equipment will have a lower equipment lifetime; we would have to replace it earlier than expected. The costs within the maintenance function can also increase through spare parts usage or expensive procurement costs. Of course, what we should be looking for is a maintenance strategy, which is effective that gives us high availability and reliability for the key assets. Reversing out all the issues, we saw with the ineffective maintenance strategy.


Over the years, organizations create their maintenance strategies by using several different techniques. A calm warning from the planning manager, the supervisor often creates the maintenance strategy based on their view alone, or experience wit the equipment. It might not include all the reliability type techniques. You can of course can follow the manufacturer recommendations; well we don’t all check our tire pressure everyday and the factory recommendations can lead to maintenance to being carried out too frequently leading to higher costs and potential failures. We can carry out regular overhauls, but they can introduce new types of failures.


In this simple example, we might decide to do an overhaul on the equipment every two years, because the sealing rings are the part that fails most frequently. While, all the other items are lasting 3 or 4 years or longer.


By doing the overhaul were introducing the infant mortality, where the likelihood of failure of certain components in the early days, especially with electronic components, we might do the overhaul here, but the motor coil might fail earlier.


We could of course also operate at room to failure strategy, which might be appropriate for certain types of assets, but not for key operational equipment. Therefore, what we really need is a solution that allows us to develop an effective maintenance strategy through the right maintenance techniques, applied in the right fashion, by the right people in the organization, to make sure we repeat at the right interval and also that they are very cost effective.


In a traditional non-integrated world, the maintenance strategy is developed separately from the CMMS or EAM system. It’s often developed using techniques by using RCM, reliability centered maintenance. Using this approach, we would often use paper work systems or specialized products to identify the key equipment we need to maintenance and see how that equipment can fail and what are the consequences of the fail itself. At this point do you start to develop the tasks to avoid those failures. This information is manually keyed into our CMMS and EAM system, which we would, then preventative maintenance strategy.


Using an integrated approach, we could develop the strategy and operate it within the same solution. This approach offers benefits to other areas of the business in terms of skilled planning, parts and procurement and budgeting. This integrated approach provides automated analysis to help us define how effective the strategy could be and improve it in the future.


Let’s take a systematic approach and see how can use an integrated solution to create an effective maintenance strategy. The first thing you would need to do is identify the critical assets. You may have thousands of assets in the facility, but you need to focus on the critical ones that can have a significant effect on your business.


It should be possible for you to design criticality selection system around your business. In this example, were identifying the criticality of the equipment based on its impact when it fails, on the environment, production, quality and safety. You should go further and identify what classifications identify the true impact of the failure of this equipment. To use defined grading system should allow us to identify the exact nature of criticality.


The criticality decision should be stored against the asset. You should also allow certain search criteria to identify those critical assets very easily. So we have now identified the critical assets we need to focus on.


The next stage is to see how those assets can fail and only then can you really develop an effective task to avoid the failure in the future. The failure information can be gathered by several sources, particularly useful to the trained engineers and operators of the assets themselves. A good EAM system will help you in this area by automatically building failing structures up based on actual problems you have had in the plant and record it within the solution. In a simple example, you can identify a major failure for this particular piece of equipment, including total failure, low pressure, leaking and noises. You should then be able to take each failure and break it down to a greater level of detail. In this example, low pressure can be caused by leakages; valves placed improperly, product problems, blockages and damaged impellers. A good CMMS or EAM system should help you further by helping you identify how frequently these problems arise. In this case called, the mean time between failure or MTBF. In this example, we have also identified the primary cause of the problem. In this case, the damaged impeller has failed in the past due to corrosion problems with foreign objects trapping in there, chemical and in this case general wear. Only at this level do you get sufficient information to build an effective maintenance strategy.


This slide shows how the failure information has been linked to the asset to itself and we will be building up this picture as we move forward in this presentation.


Now we know what the critical assets are how they can fail, next thing we have to understand is the consequence of the asset actually failing. An asset that fails and has a consequence on safety or the environment could have a very different maintenance strategy for an identical asset failing, which might be under a machine and has no important consequence.


In this example, were using the traditional reliability centered maintenance using a question and answer question to identify the equipment failure of a particular piece of equipment. You might ask if the failure is a hidden failure or is it evident to the operator during their normal duties. Based on the response, then ask another question and then you will identify the type of maintenance strategy that we should be using to avoid the particular failure were analyzing.


Building on the picture, we saw earlier, we have now linked the consequence analysis to the failures we had earlier. We should make sure the consequence analysis system you use could be configured to suit your particular industry.


The next stage is task development to avoid the failure. We do it at this stage because we have enough information to create a successful maintenance strategy based on what failures we’ve identified based on the criticality of the equipment and the consequence of those failures.


You should be sure to make sure the EAM system provides all the functionality you need to correctly configure your tasks or preventative maintenance. It should provide you with full functionality to describe in detail on how to carry out the inspection or task, what spare parts you need, what tools you need and what skills and purchase requirements you have. It is also very useful to link drawings and documents to the task as well. They should also provide scheduling facilities as well, not just calendar time, but also meter based maintenance that includes running hours and equipment usage.


The building up on maintenance strategy further, you can now see we have linked the preventive task to the failures. Also, notice we have linked the corrective task as well. It is not a perfect world, should the failure happen in the future, the corrective task allows us to identify how we should fix the problem. The corrective task can identify all requirements as well including task activities spare parts, tools and so forth. Allowing us to fix it in the shortest possible time.


Having created a maintenance strategy, many companies just activate the strategy and just begin to use, the advanced integrated system should provide you with information that will justify whether that activity is worth doing. It could be that actually carrying out the cost of the preventive activity is actually more expensive than the failure itself. The next example you can see is the solution is calculated the preventive cost vs. the failure cost. Information that is invulnerable to justify whether it worth doing this activity or not.


In this example, you can the total cost of failure has been calculated based on the downtime, downtime cost, cost of repair, and it also takes into account the mean time between failure. The cost of prevention takes into account the cost of doing each service, which includes labor materials and takes into account the frequency as well. In this example, the service is carried out four times within the mean time between failures.


Having developed and cost justified our strategy, the next stage is to seek approval and activate the strategy itself. This can be carried out by printing out the information and sending out in internal mail. An electronic solution makes it much easier. In this example we have identify many mangers across the business, maybe from QA, safety, operations, who need to approve the strategy before its activated. If they don’t approve it in the designed period, we can send out reminders. When the last approver has been through the process, the maintenance strategy is automatically activated.


Of course our strategies should provide benefits to the maintenance team, but to other areas of business as well, inventory, procurement and financial teams. To do this effectively, our solution needs to calculate and simulate the future requirements in those areas so we can provide maximum business information.


These calculations and simulations have been available in the materials required planning for many years. They allow us to set up the process with products and building materials and they bring in demand from customers, existing inventory levels and future sales forecasts. This information is brought into MRP engines and then calculate what for example what manufacturing proposal need to be created, what resources, spares, tools, purchase, budget requirements are need for the particular plan.


This process is not too dissimilar to the maintenance field, where we have in our process the equipment the maintenance strategy we have created. In terms of the demand, we obviously have non-scheduled maintenance, we have manual forecast, which is how we think the equipment will be used. We also have operational forecast from the manufacturing team s well. We also need to bring in the actual use of the equipment. We can then pull the information into a service required planning engine based on all the MRP processing. This will generate all the work requests and all the requirements, including re sources, parts, tools, procurement, and budget needs. The SRP engine should be able to calculate the future demands not just months ahead, but potentially years ahead.


Let’s look at the requirements around long-term labor and skills planning first.


Our SRP engine will be able to calculate what inspections to do and it will calculate far into the future. Of course, associated with these inspections will be a number of requirements for different skills or different types of resource, based on the calculations, it can then calculate on a daily, monthly, yearly basis as far as you need to when those resources will be required. It can then display those requirements graphically, to identify, if we have overloads or under loads. This may give us the opportunity or source it through some contract labor. This information will help justify the need for additional permanent engineers as well. We should be able to third party products, such as Microsoft project, to visualize the same information.


Our maintenance strategy should provide our inventory of storage personnel with more information to base their planning. We could provide them with long-term parts demands so they can negotiate better discounts with their suppliers or possibly better stocking methods, such as call off orders or consignment stocking.


The labor and skills panning the service requirements planning engine could use our information in the maintenance strategy to calculate what preventive maintenance or services are required well into the future. As with labor, we require spare parts and components as well. The solution will calculate as far forward into the future as you want to as the spare parts demands. In this example the SRPE has calculated all the parts requirements for the next year from a supplier. Our inventory and procurement teams can sit down with the supplier and negotiate better discounts or stocking methods.


Our SRPE will help with our long-term budgeting as well. As with the previous examples, the SRPE will calculate the future maintenance demands and associating with it will be the need to spend on particular account codes and structures. In this example, the solution is calculated for a cost center structure, for that we need to spend each period. This is based on our future maintenance strategy.


Of course once the strategy is in place, how do you know its actually being effective. How do you know you are still not getting failures the strategy is designed to avoid?


One way is to look at the statistics as the CMMS or EAM provide them, looking at them, you should identify particular trends and identify problems that are occurring that shouldn’t have occurred. This takes time and experience.


Another way is to use a fully integrated approach where the solution analyzes all the feedback from the work order solution looking for trends where there has been failure that shouldn’t have happened, because the maintenance strategy is in place to avoid it. This ultimately provides you with a closed loop maintenance strategy that can continually improve to avoid the failures.


Of course, once you have an effective maintenance strategy in place, you can start to consider planning your maintenance and production together. This type of solution should not only allow the planning of maintenance and manufacturing orders, but it should give you advanced functionality. For example, when you have statutory maintenance work, it should allow you to prioritize it, maybe over certain production orders, it should allow you to plan material requirements for manufacturing, but also material requirements such as spare parts and tools used for maintenance as well. This type of integrated approach should help you with the allocation of engineers and technicians as well.


In this simple example, you can see how the maintenance resources and our production or operational resources can be planned at the same time. This type of advanced solution, allows you to simulate and run what if scenarios. This type of solution also allows us to think about utilization and load and both maintenance and production personnel as well.


In summary, this integrated approach provides us with a maintenance strategy gives us better equipment, reliability, availability and tremendous benefits across our business to our inventory, procurement, financial and a HR teams as well.


BV: Thanks Brian, that’s an outstanding presentation and it will be valuable for our viewers and everybody at We have questions coming in from our audience; there’s an opportunity to ask questions of Brian on your module. Brian I wanted to start with this maintenance planning strategy issue because we have done a study at Plant Engineering and talked to plant engineers and we asked what their prevailing maintenance strategy was on the plant floor, right now 60% of our readers tells us they don’t have one. I guess the place to start is why is this becoming such a critical issue on the suppliers side and yet a lot of manufacturers have avoided getting involved in a full blown maintenance strategy of any kind on their plant floor beyond break fix.

BD: Thanks very much. We do an annual survey our results are similar to your own. Where many companies are saying that preventative maintenance is so important, reliability is so important, but the reality of it is that they are doing little maintenance at all. I think particularly around manufacturing environment it’s always been let’s do preventative maintenance to improve the reliability and availability of the equipment from an operational perspective. I think more and more irrespective of the industry being heavily driven to safety issues towards green issues. So I think preventive maintenance is forcing to move down a route to improve the environment the machine is running in. I think it’s a traditional approach of just doing preventative maintenance for the sake of operational failures is changing now and they have to think about safety and the environment.


BV: I want to go back to one of the slides that you put up, the cost of failure vs. the cost of prevention. This is an interesting concept; it requires you on the front end to have done some sort of analysis. Very often, the cost of failure is the cost of prevention. You wait until it breaks and go in and fix it. This gives you at least to analyze which of these two strategies would be the most effective.

BD: Absolutely, I spent many years helping engineers implement techniques like our CMMS. One of the biggest issues we found was how do we justify doing this strategy is actually effective. Some times, we will have come up with a particular strategy, which would cost money, and particularly when it was some form of design out, how would you justify that. Really, what the solution is to enable the engineering teams to hold their head up high and the accounts folks and say were not only engineers thinking about the maintenance strategy, but we can prove to you that this is cost effective to do this. Likewise, there is probably a lot of companies that carry out quite a lot of maintenance that they could really just leave and let the equipment run to failure because it has no operational effect and certainly no safety or environmental effect. It highlights both sides of the coin, t hose inspections that they are doing that maybe they shouldn’t be doing. On the other hand, it’s really justifying why they should be doing quite significant preventative maintenance to make the plant more efficient.


BV: We have some questions coming in. Kirk from Goss International, How many years does it take to build a failure structure?

BD: That’s a really good question. When we move into projects with solutions like this, this is always a difficult area. Because, to develop an effective strategy you need information, if you have no real information about the equipment and its history and how it can fail. It is very difficult. What we do in our solution for companies is they run the solution for six months to a year and the solution itself will automatically build up this failure hierarchy and of course the equipment you are regularly working on will build up much quicker, but that the equipment that’s failing the most anyway. Typically, after 6 or 12 months you can start to look at the information or solutions they are providing you with and add on to it the knowledge that the technicians the operators have to really start building quite a comprehensive failure structure. IN a realistic environment, you’d be looking at six months for the solution to build it up. But of course you could go at any time if you have a lot of history already, you can build it up yourself and move on to develop a failure structure.

BV: We have a few questions on data capture and whether the best data comes from real time collection or historian and the process of getting the data from machine assets. Is there a preference, is there sometimes when one is better than the other, or take a longer view at your equipment?

BD: I think typically, when we move into a failure structure and collecting the information to start with, often history is the most useful. Hopefully recent history so you can actually start to build up this failure information. Real time information we use a lot particularly, once the strategy is in place. For example, we use real time information to identify faults are occurring on the machine from scatter systems from PLC systems and we got a number of big manufacturing companies who have linked this solution directly into their complex machines. When those machines detect using their own internal diagnostics their potential failure, they automatically trigger work requests so they technicians can be on stand by and fix them. Likewise, another type of information that is useful is run time information, which a lot of companies pick up electronically and drop straight into the system in a open interface. What this means is rather than just running their maintenance strategy on calendar time, it will automatically change the strategy based on the run time of the equipment or the usage of the equipment so the strategy is much more accurate.

BV: Bill Bromley from Accenture asks, have you leveraged any accelerators for bringing a system up to effective levels, EPRI component failure templates, something like that?

BD: We haven’t so far but were working with a couple customers who are in the early stages of implementing these systems. One thing I will add is that although I demonstrated many stages in developing these strategies, customers do not have to do through every stage. It may be for example that they may have identified the critical equipment, so that is the stage they well miss. It might be that other areas of that strategy diagram are not important to them so we can just drop them out. But we are working with customers like that and maybe areas that we should move into in a future date. We have not so far.

BV: Dell from Transalta asks compare asset based maintenance and reliability center based maintenance since both of them are based on expert knowledge, how do you look at the two and give us your thoughts on that?

BD: I have to be honest; my specialty is been around the reliability version rather than the asset version, so I hate to put a view without a good background.

BV: Very good, Calvin asks what is the correct preventative vs. corrective maintenance ratio for field equipment, earth moving equipment, we talk about the manufacturing setting as fixed equipment, can you do these things the same way?

BD: Field equipment could be approached in the same way, again I’m not a vastly experienced on the field equipment side, but from my knowledge there’s probably a few types of equipment that you’d look at, but you’d have a lot more information about them. Again, I would hate to quote on an area that I’m not familiar with.

BV: I won’t use the name or the company, but we hear this from our readers a great deal. I have asked to maintain staff levels without overtime, aging equipment and increased production. So the challenge in all of that seems to be finding the correct data and making informed decisions as we said earlier about what to fix when, whether to fix it, whether its cost effective to run to failure or do preventative maintenance program. On top of that are some of things you talked about in terms of scheduling your operations, maintenance, and I think this an issue that is overlooked a great deal.

BD: I think in the beginning of the presentation we talked about hit rate that is a interesting question that major companies are moving into, the idea that as engineers we often waste a lot of time and we go out and do inspections and we find nothing. When in fact we should be trying to identify a maintenance strategy that allows us to find a fault, but in the early stages every time we come to do a inspection that gives us a hit.


The more and more we can move to hit rate and finding the effective strategy the less time we waste and the engineers we have nowadays and everybody is getting head count cuts, skills cuts, we need to have an effective maintenance strategy. So that those engineers we do have, can focus on the right maintenance at the right time. I think this type of solution really helps us justify to do this maintenance strategy, this is the future requirement we have for skills, for people and it will clearly identify that if take the decision if we have any more heads in the organization, then we need to start bringing in some skilled sub contractors and so forth. At least the maintenance strategies are identifying this for us in the future.

BV: I brought back the slide about the ineffective asset maintenance strategies, simply to talk about this in a much larger context. We hear the tip of the iceberg, accurately depicted here downtime and lost production,. There are so many other drivers for organizations where there are some small costs and big costs that aren’t seen in a bottom line enterprise sense. That talk about some of the things that get at the problem of maintenance as a strategy as opposed to something that happens when things break. I think this is a good example of how there are a lot of hidden costs out there and how systems like EAM are going to bring into the forefront.

BD: I think it makes it so clear that those companies that see the maintenance function as simply avoiding downtime and many companies see the maintenance function as merely costs and there is no investment there. When you look below the water, and you look at lost orders, that can be huge, how do you put a price on non-compliance for statutory legislation, it


BV: We have talked about in the October issue of Plant Engineering; we talk about the cost of safety and the benefit of safety. Some examples of companies have made an investment tin safety and that helps convince the workers that they are interested in more than simply profits, losses and production issues, but rather they are interested in the individual workers. That gives you an entree to be able to tackle some of those larger issues. Safety is a huge issue in the marketplace, because those costs do not exist until they occur and when they do as you pointed out they are quite large. I think the other thing we wanted to focus on here at the end is the idea of getting this information in the hands of plant managers and plant engineers, but how do you empower or how do you convince folks that they should be empowered to act on this data. How should they take this up the enterprise into the perhaps to the vice president of manufacturing or the CFO or the CIO’s office and say “Hey we think we have an opportunity to provide some better data for us, so we can better manage these issues better than we are doing now”. Do you find its one sell to be able to say hey we got a system for you and the other is to say yes and you need to take this information up your management chain.

BD: That is a tough decision. We find that most levels that include technicians and manager level are absolutely convinced on this type of approach, but once you move up the ladder to the VP level it’s difficult to justify, but what we do find is the concept of a solution of offering benefits across the business. This opens people’s eyes and traditionally any form of maintenance implementation, it’s often seen as a local implementation that the engineers are dealing with the maintenance departments running the project. As soon as you start to bring in the financial folks, particularly they say “Look guys we can give you quite an accurate budget of what we intend to spend next year or further”.e senior management.

BV: Absolutely, to me one of the most important parts of EAM, is enterprise. It’s not a single solution for a single department for a corner of the organization it’s really looking at an enterprise in a broad way from the sea level offices to the plant floor and more importantly, gathering that datadifferences and the things you look at in other ERP programs?

BD: One of the big differences in when we develop the solution we did not want to develop an EAM system, which was just another part of an ERP package, which was just providing a ticking box. When we sold the system, we actually wanted to provide a best of breed EAM system, which happened to be fully integrated into an ERP package as well. And I think when you approach it from that direction, you have to start providing, when you are literally selling against best of breed products, you have to provide all of the best of breed solutions as well. That’s why RCM are part of a core solution is very important, but on the other side it can’t just be a stand alone best of breed solution it has to be fully integrated, again as you say to give you the enterprise part of that. By integration, it has to tightly integrated so that other areas of the business really do get benefits. So were not just providing a list of spare parts to the inventory folks, were giving them long-term simulations of really what we need and the same thing with the procurement groups as well. It really has to start as a development project from the ground up, rather than just being an add on to the part of ERP package.

BV: Brian I want to thank you for your presentation, Brian Dunks from Lawson Software. The webcast today will be made available in our archive and viewing at starting next week. You can find more information from this webcast in the December issue of Plant Engineering engineer and we invite you to find more information about the changing role of the plant engineer study that will be appearing in Plant Engineering’s 60th anniversary issue in November. I’d like to thank our sponsor Lawson, if you have any more questions, put more questions in the module here on the website and we will get to them offline, on behalf of Plant Engineering magazine and Lawson Software, I’m Bob Vavra, editor Plant Engineering, have a very nice day.