Marriage of ERP and EAM/CMMS: means better business decisions
Asset-intensive companies have long recognized that a good Enterprise Asset Management system produces significant cost savings that go directly to the bottom line. Unlike Computerized Maintenance Management Systems, a narrower application, which maintains plant and equipment and analyzes and reports on maintenance, EAM has a broad focus, which includes financial, inventory and workforce manage...
Asset-intensive companies have long recognized that a good Enterprise Asset Management system produces significant cost savings that go directly to the bottom line. Unlike Computerized Maintenance Management Systems, a narrower application, which maintains plant and equipment and analyzes and reports on maintenance, EAM has a broad focus, which includes financial, inventory and workforce management. Since these functions are also covered by ERP software, certain inefficiencies arise when EAM and ERP are operated as standalone systems without the ability to share information. Remedying these inefficiencies calls for the marriage of EAM and ERP systems.
With the introduction of best practices such as reliability-centered maintenance (RCM) and total productive maintenance (TPM), the maintenance function receives more attention within enterprises than in the past and has been elevated above the role of an expense department. However, as long as maintenance remains isolated by virtue of separate EAM/CMMS software, management is missing a critical section of the big picture its ERP system aims to present. Only a central, integrated EAM/ERP platform permits a complete view of the entire organization's key metrics for a comprehensive business performance perspective.
This expanded bird's-eye-view not only encompasses planning, manufacturing, sales, procurement, inventory, finance and human resources, but also maintenance performance metrics and opportunities for improvement. Maintenance is thus subsumed under overall corporate strategy so that resources can be focused more accurately to enhance opportunity and reduce risk and cost.
Without an integrated ERP/EAM/CMMS system, asset-intensive organizations are also missing out on benefits such as the following:
Sharing of information. Particularly with the advent of TPM, the trend for maintenance has been to expand out of the maintenance department by having employees on the production line perform simple maintenance tasks. As the lines between production and maintenance become blurred, efficiencies can be gained by sharing intelligence on employee skills and schedules and by providing a single point of entry for time reporting.
Greater purchasing power and better spending control. Integration of ERP with asset management allows better control over purchasing processes (negotiation, decision-making, electronic ordering, spending control) and helps standardize and minimize spare parts inventories.
Production efficiencies. An integrated system makes it easier to view production schedules to determine the best time to take an asset off line, for example for preventive maintenance.
Analysis of equipment failure. An integrated system facilitates the consideration of equipment downtime in the analysis of supply chain efficiency and in its impact on quality and order fulfillment. Following repair, ramp-up costs can be easily analyzed.
A single system - fewer headaches. IT departments prefer the simpler and more cost-effective implementation and upgrades, as well as the single source of support of an integrated system.
More capabilities. Cutting-edge integrated systems provide a more comprehensive suite of capabilities, such as robust resource planning and, for global organizations, multi-currency, multi-language, multi-site capabilities.
Independently, ERP and CMMS/EAM have brought significant benefits to manufacturers and distributors for over two decades. For example, CMMS and EAM have optimized inventory levels across plants and improved throughput at lower production costs by reducing equipment downtime and performing preventive maintenance. ERP, on the other hand, has made real-time, cross-functional data available on line and provided efficient single entry of information. Once the two systems are integrated, however, the efficiencies gained will far exceed the benefits of two disparate systems.
About two years ago, GFI Solutions, a Montreal, Canada-based consulting firm that provides integration and management of IT business solutions, implemented an integrated ERP/EAM system for Interquisa Canada s.e.c., a petrochemical company with annual revenues of over $500 million. "With over 40 percent of Interquisa's staff dedicated to asset management, the company's primary concern was with EAM," said Richard Fontaine, GFI's Vice President of Operations. "However, as a 24/7 industry, Interquisa also knew that it needed a comprehensive solution that went beyond EAM to integrate the full scope of the organization's functions."
In the two years since Interquisa began managing all of its business processes with the integrated system, optimization of asset management has not only decreased costs, but also led to greater efficiency in planning, procurement and production with significant increases in productivity and revenues.
"While in many cases, new software requires the addition of staff to load and manage data, Interquisa exceeded its productivity goals without increasing its workforce," Fontaine said. "Integration of EAM and ERP allowed it to maintain its lean operating structure, which was critical for them. Of course, any future upgrades and modifications will be straightforward with a single integrated system."
What is the best approach to integration? Much of the buzz today is about best-of-breed EAM providers attempting to interface to ERP systems (sometimes via third-party tools) and about ERP niche players beefing up their maintenance packages. While it is possible for robust, up-to-date ERP and EAM software to coexist, most older legacy ERP systems and some best-of-breed EAM systems were not designed to integrate with other enterprise software packages or point solutions. Even if the integration appears to be successful initially, problems may arise later in attempting to upgrade one or the other of the previously independent systems.
Therefore, the most robust and cost-effective solution is a fully integrated ERP and EAM package that matches the functionality and capabilities available from niche or best-of-breed players. Provided such an integrated package has a service-based component architecture, the implementation of its modules may be approached in phases, allowing companies to deploy core functionality immediately and then easily add components to suit their changing business needs. However, beware of relegating the maintenance portion to a secondary, Phase Two position.
Here is why. First, if maintenance personnel are not involved in the selection of the system, it may lead to the purchase of software with a less than robust maintenance component, or it may be more difficult to get the maintenance department's buy-in during implementation. Further, if the implementation of the maintenance component is delayed too long, the maintenance department may purchase a standalone package in the meantime, complicating future attempts at integration.
One of the benefits of ERP/EAM integration is that it enforces standardization of systems, data and business practices across the entire organization. Senior sponsorship and clear communication of the value expected from the integrated system will facilitate the standardization process and ensure buy-in from maintenance and manufacturing functions accustomed to operating more autonomously in the past.
Beyond ERP and EAM
Asset-intensive companies can achieve the greatest benefits to the bottom line by taking the integration of ERP and EAM software one step further to total lifecycle management, a concept that was envisioned in the early days of the first ERP and CMMS systems but has only recently become a reality. Total lifecycle management recognizes that all aspects of the enterprise-from maintenance to manufacturing to customer service-are intertwined. For example, when companies build new facilities because they are in growth mode or just replacing older factories, they collect a great deal of information on assets and equipment in the process of designing plants and determining their needs.
Integrated into the EAM space, that information becomes invaluable in planning for the purchase of manufacturing components and the employment and training of new human resources. With this new visibility, maintenance can get a head start on bringing new facilities on line quickly and enabling a smooth transition. All of this has an impact on customer satisfaction and loyalty.
To remain competitive, management must be able to make business decisions that maximize profitability throughout three critical lifecycles: customers, products and assets. This total lifecycle perspective requires a completely integrated information system that provides both a high-level view of the enterprise and the ability to zoom in and gather real-time data as needed on processes across the entire enterprise.
<table ID = 'id3008408-0-table' CELLSPACING = '0' CELLPADDING = '2' WIDTH = '100%' BORDER = '0'><tbody ID = 'id3003043-0-tbody'><tr ID = 'id3001708-0-tr'><td ID = 'id3001719-0-td' CLASS = 'table' STYLE = 'background-color: #EEEEEE'> Author Information </td></tr><tr ID = 'id3008829-3-tr'><td ID = 'id3019761-3-td' CLASS = 'table'> Mary Wylde is a business solutions consultant with IFS. Based on open, component-based technology, IFS industry-focused software solutions are optimized for ERP, EAM and MRO (maintenance, repair and overhaul) to provide faster payback, reduced risk and freedom of choice. For further information, visit </td></tr></tbody></table>
What to look for in an integrated ERP/EAM system
As asset-intensive companies are striving to become leaner, more profitable and more agile, an integrated ERP/EAM system can provide the requisite instant access to real-time information about plant and equipment in the context of the entire enterprise. In selecting the best possible software, a prudent decision depends on thoughtful investigation in the following areas:
Verify the vendor's expertise and tenure in the business.
Consult industry analysts' opinions of the vendor and its product.
Ascertain the vendor's support of the manufacturer's vertical industries from both the maintenance and the ERP perspective.
Research the customer base, industry experience, speed of installation and successful outcomes. How flexible is the vendor in phasing in components?
Inquire into the vendor's track record of providing support following the installation.
For companies expanding globally, verify that the vendor can provide global support in terms of both functionality (e.g., multi-currency and multi-language) and international infrastructure.