No technical jargon, just a simple but long explanation of what EAM is and how it works for organizations. Therefore, we will start with a brief description of the reasons why Enterprise Asset Management (EAM) enters the operational picture and then describe the who, how, when, where and finally a summary of what is EAM.
Why EAM is Needed
Every organization occupying a facility of some sort is made up of people and physical assets. In the process of conducting daily operations equipment (assets) are used and will eventually require maintenance, repair or replacement.
Whether it is an automobile, HVAC unit or a rooftop, it is in the best interest of every organization to get the most from their assets by making sure their maintenance care is planned from purchase to replacement.
Taking care of equipment is easy right? The answer is, it depends on a number of variables. Some of these variables are:
7 Variables Affecting Asset and Maintenance Management
- The type of business an organization is in. Some industries are very asset intensive, the more dependent an organization is on their physical assets the greater the need for better asset management.
- The size of the organization. The size of the organization often determines the size of their maintenance staff as well as their capabilities. In addition, an organization with multiple facilities has different needs than smaller one facility operation.
- The skill sets available to take care of maintenance, repairs and replacements. Asset and maintenance managers must adjust maintenance scheduling based upon the skill levels of their staff. This variable has been of growing significance in many industries due to an aging workforce whose skills and experience may be lost upon retirement.
- Training. As technology changes so must the skills needed to maintain assets. Without continual training, assets may not be cared for properly and new tools such an EAM system will not be utilized as hoped for.
- The degree of proactive versus reactive maintenance being performed. Organizations with too much reactive maintenance (fire-fighting) have less flexibility to address new problems or conduct proactive tasks such as inspections. The result is that reactive organizations have difficulty keeping up with the work that needs to be done.
- How automated the work management process is. Paper or spreadsheet based asset and maintenance management are inherently inefficient. The greater the inefficiency, the more challenging is to track asset locations, condition and work history.
- The ability of an organization to incorporate long-term asset management from the planning process thru asset retirement. Organizations that do not do this often apply a Band-Aid approach to maintenance due to cash flow concerns. Ultimately, this always costs more money in the long-term.
Although these variables do not cover all issues, they are representative of many. The need to address these issues is why EAM is needed.
Who Needs EAM
EAM can be implemented in virtually any organization or industry. This because implementing an EAM system has a very tangible impact on the bottom line. Any company, facility or government entity that has the following problems should consider moving toward an EAM solution. Typical indicators of an organization in need of EAM software programs include but are not limited to:
10 Common Causes for EAM Implementation
- A growing or out of control backlog of work orders. A tale-tell sign of reactive maintenance out of control.
- The existence of manual or paper based tracking systems. As previously stated it is not possible to remain competitive in the long-term using obsolete technology.
- Excessive overtime related to emergency repairs and asset replacement. Work is unplanned reducing the flexibility of maintenance staff to handle during normal working hours.
- Having idled assets waiting for maintenance or repairs. Downtime = loss production = lost revenue, no other explanation needed.
- Facilities where energy costs account for more than 20% of operating costs. Poorly maintained assets require more energy to produce the same results (for example: HVAC) or allow energy (water, power, fuels etc.) to be wasted through leaks, faulty valves, poor combustion and so on.
- Unplanned capital budget expenditures. This is when an asset has failed before its expected useful lifecycle has been met. Poor capital planning as a financial planning killer.
- Organizations facing a skilled labor shortage. The average of skilled maintenance staff in this country is over 50 and the majority of engineers are expected to retire in the next ten years. For example;
- Poor document and contract management. Searching for documents, copying or fruitlessly trying to find lost documents can be a significant cost to organizations.
- Being in an industry where the use of rugged handheld devices makes more sense than using paper for data accuracy, efficiency and tracking purposes.
- A geographically spread out organization with multiple facilities needing a standardization of operating procedures (SOPs).
“Harley-Davidson, an American icon has 4500 main floor workers whose average age is 55 years old.”
Source: Joel Leonard, SkillTV
Organizations facing a similar challenge need to make sure that existing knowledge is not lost with an engineer’s retirement.
As previously pointed out, every organization and industry is different with its own unique needs. Therefore the EAM solution may be different (customized) and should never be purchased from a box.
How does EAM Work
An EAM works by creating a framework for organizing assets in a hierarchical form. Once asset detail is entered, EAM structure enables asset managers to always know where their assets are, have an accurate description of each asset and be able to link/attach documents such as photos, vendor contracts, blueprints, training materials or any document that can be scanned.
Setting up the asset detail sets the stage for automating work management tasks such as preventive maintenance, inspections, rounds, work orders and work requests thus eliminating most if not all manual work management processes.
By computerizing the work order lifecycle, the CMMS component of an EAM is able to schedule maintenance and repairs. Scheduling work increases efficiency and helps reduce the amount of reactive maintenance giving maintenance management the tool needed to take back proactive control of operations.
Once work is completed, the results are recorded by the EAM software. EAM reports can be generated to determine or help establish:
- Recurring maintenance issues on individual or related assets. The problems may be design issues, use issues, wear and tear or training issues.
- EAM training opportunities. EAM work orders can be examined to identify which staff needs additional training. For example, if one person takes twice as long to complete a task as another person, there might be a training opportunity.
- Standard operating procedures. Collected work history can also be used to see what works well and set maintenance standards for facilities. As the data collection grows, an asset’s work history can be used for predictive technologies as well as normal preventive maintenance scheduling.
- When assets that need to be replaced. Reviews of work history may indicate that the cost versus benefit of repairing an asset is negative. The CapEx (capital budget forecast) report can be used to identify which assets need replacement and when.
- Which vendor contracts are redundant and can be consolidated.
In addition, the collection and storage of work history also creates a knowledge database on each asset and how to best maintain them. This can be used to retain the knowledge of retiring staff and then used to train new employees.
The most important aspect is that asset and maintenance managers must enforce the proper completion of work orders with enough detail to identify problems. As with any other system, the value of the output is only as good as the input.
When is EAM Used
EAM is not just a tool used to track assets and improve maintenance operations. Implementing an EAM system is a commitment throughout an organization to optimize the management of all physical assets as well as increase the visibility of asset management.
With that said, EAM can be implemented at any point in time as there are both short-term and long-term benefits. Because EAM can be scaled, it makes good financial sense to implement EAM software programs as early as possible.
To ensure a successful EAM system implementation, senior management must ensure good change management techniques are applied.
Where is EAM Used
EAM cab be used by virtually all industries or facilities. Government prisons, municipalities, amusement parks, hospitals, hotels, sports stadiums, wastewater plants, energy, universities, schools, manufacturing and ports are just a few industries making use of EAM systems.
Some industries have additional regulations or government requirements to meet. In addition, some industries are very sensitive to equipment downtime. Therefore, it is important to look for an EAM system that can be customized and incorporate a wide range of predictive technologies.
What is EAM
This brings us back to the original question of What is EAM? Enterprise asset management is not the same as asset management because It refers to the management of assets to the benefit of the organization as a whole and not limited to a specific area such as a department, location or division. It includes the entire process from initial planning, designed use, installation, training, operations, maintenance and eventual retirement/replacement.
“By managing assets across the facility, organizations can improve utilization and performance, reduce capital costs, reduce asset-related operating costs, extend asset life and subsequently improve ROA (return on assets).”
Simply put, EAM enables any organization to significantly reduce operating costs by managing their physical assets with tools that maximizing their useful lifecycle as well as securing the know-how of an organization.
Tell us the pains that your organization is facing. If you enjoyed this article you may also want to read:
- What is Better Asset and Maintenance Management?
- 5 Signs Your EAM System Is Not Set Up Correctly
- 12 Reasons Raising Children is Just Like Using an EAM
Did you like What is EAM?
Every share you make allows us to write more great stuff for you:
- It's how we prove that it's worth blogging to our bosses. Researching and writing takes serious time.
- I happen to get a free lunch for every post with 10 shares... I really like free lunch.
- The whole office gets free lunch for every post with 100 shares.
- I also like seeing our stuff on the internet. You have to admit it's really cool.