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Engage to Empower: A QAD Strategy for Reducing Enterprise Costs QAD EAM (Enterprise Asset Management) Steve Pitsos, Director, EAM Product Management Engage to Empower Manufacturing Company’s Challenges Companies are driven to find ways to: – Increase production output – Improve product quality – Reduce cost Plant Operations is responsible for a company’s most critical assets, its production equipment. Reliable equipment will: – Maximize production performance – Minimize scrap / rework – Lower cost • Costs 4X more to repair broken equipment than to maintain it QAD Proprietary Engage to Empower How QAD EAM Supports Manufacturing QAD EAM is responsible for the management of the manufacturing assets including; – The design, construction and commissioning – Operations and maintenance (preventive and repairs) – Capital replacement / upgrade of equipment Asset Lifecycle Management Maximum Utilization at Lowest Cost Goal of Asset Lifecycle Management Uptime Analysis / Breakdowns Failure Analysis / Production Impact QAD Proprietary Cost Analysis / Capital Forecasting Engage to Empower Extending the Value of Your QAD Investment Most companies simply ‘check-the-box’ if they have a CMMS/EAM solution in-house – The tool satisfies a compliance requirement • Sarbanes-Oxley (Finance & Accounting Controls) • CFR 21 Part 11 (Life Sciences) • TS (Automotive) • Customer Tooling (demonstrated care of their assets through audits) • ISO (customer driven PM program) • OSHA (Risk Management) QAD Proprietary Engage to Empower Extending the Value of Your QAD Investment Does your company have an EAM strategy? – If production asset reliability and availability is vital to your business, you need an asset care strategy! • 350,000 manufacturing facilities in the US • MRO spend in the United States is nearly $150B • 40% of this is reactive and unplanned (if a company is reactive, so will your spend be) – If sustainability is vital and important to your business, you need an asset care strategy! • Commercial energy cost is nearly $400B – 38% Manufacturing / 32% Transportation / 30% Buildings The success of an asset-intensive company, and ultimately the bottom line, is dependent on the effectiveness of it’s maintenance strategy. KnowledgeStorm – Sept 2007 QAD Proprietary Engage to Empower Extending the Value of Your QAD Investment Leading companies are implementing EAM strategies for: – Implementing Production Asset Reliability as a competitive advantage – Comprehensive alignment and management of MRO inventories across the enterprise – Reduction in MRO spending across the enterprise to improve cash flow and bottom line performance – Introduction of sustainability into the manufacturing process to: • drive energy costs down • reduce carbon emissions • replace hazardous production chemicals with ‘green’ chemicals It’s an Attitude: “Asset Care” versus “Asset Repair” QAD Proprietary Engage to Empower How We Do It Plant Operations How do you do it now? QAD Proprietary Engage to Empower Business Challenges The current economic downturn requires asset intensive industries to get the maximum value out of the company’s existing assets. Aberdeen Group, November 2008 QAD Proprietary 8 Engage to Empower Business Challenges Project Controls (Accounting) – No visibility to what projects will actually costs verses budget – Reports are maintained through spreadsheets, which are labor intensive, time-consuming, out-of-date and inaccurate – Inability to control spending Plant Maintenance – 90% of maintenance activities are fixing broken equipment – Repair maintenance cost 4X more than planned maintenance – Only 50% Overall Equipment Effectiveness (OEE) MRO – 30% of MRO inventory is obsolete – 25% of purchases are incorrect or unnecessary – Expensive spare parts cannot be shared between plants QAD Proprietary Engage to Empower QAD Solution - EAM QAD Proprietary Project Controls (Accounting) – Budget spending control – Project work breakdown structure – Tracks internal and external expenditures Production Assets and Facility Maintenance − Schedules preventive and predictive maintenance − Tracks internal and external costs associated with repairs − Integrates production into the maintenance process MRO − Electronic requisitions workflow tied to department budget − Automatic stock replenishment based on stocking levels and demand − Track slow moving and obsolete inventory Engage to Empower Enterprise Asset Management QAD EAM & QAD ERP Compared QAD Proprietary Engage to Empower ERP Manufacturing Components MRP / Material Releases Production Planning Bill-of-Material Planning Production Work Order Bill-of-materials Operator Instructions QAD Proprietary Machine & Labor Scheduling Finished Goods Cost tracked to: Components Finish Goods COGS Engage to Empower EAM Maintenance & Tooling Components Stock Replenishment Maintenance Planning Bill-of-Material Planning Maintenance/ Tooling Work Order Bill-of-materials Operator Instructions QAD Proprietary Machine & Labor Scheduling Work Order Complete / Release to Production Cost tracked To: Asset or Tool for Lifecycle Analysis Engage to Empower EAM Seeks Granular Visibility Maintenance, Engineering & Tooling Performance Capital Project Budget Against Spend Performance Leveraged Purchasing Performance QAD Proprietary Engage to Empower Enterprise Asset Management Value & Benefits QAD Proprietary Engage to Empower EAM Value & Benefits to Your Company Value: Consistent equipment reliability and streamlined operations processes ensure production can meet sales requirements at all times. Benefits: – Increase revenues • Capital Projects: Well-run projects come in on time and on budget, so revenue objectives can be met • Plant Maintenance: Reduced equipment downtime increases production yield QAD Proprietary Engage to Empower EAM Value & Benefits to Your Company Benefits: – Improve margins • Plant Maintenance: Efficient equipment reduces scrap and rework lowering the cost of goods sold – Lower Costs • Plant Maintenance: Improved maintenance planning results in lower repair costs and longer equipment life • MRO Inventory & Purchasing: Well-managed MRO supply chain means purchasing-related costs decrease & inventory levels are right-sized QAD Proprietary Engage to Empower Enterprise Asset Management QAD EAM .Net Product The Next Frontier: March 2009 Early Adopter Release (v12) QAD Proprietary Engage to Empower Solution Review: QAD EAM Integrating Project Engineering, Plant Maintenance and MRO into single solution QAD Proprietary Engage to Empower Solution Review: QAD EAM Scheduling PM’s based on actual production results in more reliable equipment EAM reports on the effectiveness of each PM QAD Proprietary Engage to Empower Solution Review: QAD EAM Reduce inventory through EAM’s consignment capabilities • Track inventory stock outs • Identify and eliminate slow moving inventory QAD Proprietary Engage to Empower Solution Review: QAD EAM • Control spending through electronic approval • Visibility into current budget data • Approval via PDA QAD Proprietary Engage to Empower Enterprise Asset Management Conclusion & Final Thoughts QAD Proprietary Engage to Empower Conclusion and Final Thoughts QAD Proprietary Review your company’s Asset Reliability Strategy and set a new course for cost reduction and asset performance improvement initiatives – Maintenance & Tooling – MRO / Indirect Purchasing – MRO / Indirect Inventory – Project Accounting (CapEx and OpEx) Align ERP and EAM initiatives with a common focus on production operations – Make asset reliability a factor in production planning, scheduling, and execution – Development common communication channels between production, maintenance & engineering departments – Leverage standardization of maintenance practices, inventory management and purchasing Engage to Empower Conclusion and Final Thoughts QAD Proprietary Your Mission & Challenge: ‘Asset Care’ versus ‘Asset Repair’ Strategy – It a Choice! Are you in the business of caring for your production assets or simply repairing your assets when they fail? – Empower yourself to take the next important steps in developing an EAM strategy within your organization as a competitive advantage – Empower your organization to execute with success! In Your Role, you are the Commander of your company ship! – During revenue growth periods, an EAM tool is a weapon for increasing capacity and gross profit margins – During business downturn periods, an EAM solution is a weapon for cost containment, managing & controlling spend & improving operating cash flow Engage to Empower Enterprise Asset Management Questions Steve Pitsos, Director – QAD EAM Product Management • Email: [email protected] • Phone: 678-463-0759 QAD Proprietary