Reduce Costs with MRO Data Cleansing

Article extract from Reliable Plant newsletter;
http://reliableplant.com/Read/29360/mro-data-cleansing

As competition and technology continue to evolve in today’s industrial and manufacturing industries, companies are faced with the ever-increasing challenge of reducing costs and improving efficiency while maintaining production quality. These manufacturing companies often have multiple sites spread across large geographic regions, each with thousands of maintenance, repair and operations (MRO) spare parts on hand to keep operations running. In such large organizations, several different employees enter items into various enterprise asset management (EAM) systems at each site, with little or no standard guidelines, and often in multiple languages. Over time, this lack of standardization causes materials data to become inconsistent and inaccurate, resulting in many negative effects that can be felt throughout all units of the business.

The most common effects caused by corrupt materials data include:

• Unidentifiable items
• Excess inventory
• Duplication
• False stock-outs
• Equipment downtime
• Inefficient part searches
• Increased maverick purchases (direct buys)
• Limited benefits from EAM systems

These inefficiencies can cost companies significant time and money, while preventing them from making critical data-driven decisions.

The Data-Cleansing Process

In order to transform corrupt data into consistent quality data, a data-cleansing process must be implemented to create one common corporate catalog that can be maintained throughout the entire organization.

While the data-cleansing process may appear very simple in nature, it requires a very unique and specialized set of software, people and procedures. Some data-cleansing companies pride themselves on efficiency and speed through the use of automated software, but in reality, there is no software application that can accurately cleanse mass data files without human intervention. The data-cleansing process is actually much more detailed, and for the most accurate results, requires the use of automated software applications combined with the involvement of cleansing specialists to ensure consistency, accuracy and efficiency.   

To illustrate the data-cleansing process from start to finish, it has been broken down into nine steps. While every project is different based on specific customer requirements, these nine steps cover the standard procedures involved in every data-cleansing project.  

Step 1 – Segregate and Standardize the Manufacturer Name and Part Number

Using automated software, the manufacturer name and part number are extracted and segregated from the unstructured free text description. Once segregated, the manufacturer name and part number are corrected and standardized, ensuring each unique manufacturer name and part number maintains one consistent structure throughout the entire database.

Step 2 – Assign Noun-Modifier and Required Attributes

Following the segregation and standardization of manufacturer names and part numbers, a noun-modifier dictionary is used to assign the correct identifier and descriptive properties for each item. As illustrated below, using the noun-modifier dictionary, each item is assigned a noun-modifier pair, where the noun is the primary identifier and the modifier is the secondary identifier. Each noun-modifier pair also contains on average five to seven associated attributes, which further describe the characteristics of that item.

Step 3 – Populate Attributes

After standardizing and populating information provided in the customer’s raw description, the remaining attributes are populated using internal and external tools such as the master parts library, which contains millions of pre-standardized items. An online research tool assists in the search and collection of additional part information. Using these powerful tools, item descriptions are accurately and efficiently enhanced with information retrieved directly from manufacturer catalogs.

Step 4 – Assign Classification Codes

Once all items have been correctly described by a noun, modifier and corresponding attributes, they can be assigned customer-specified classification codes. The classification codes are typically used for commodity segmentation, spend analysis and other custom reports, enabling companies to leverage purchases and gain insight for improved procurement-related efficiencies.

Step 5 – Identify Duplicate Items

After cleansing and classification is complete, duplicate items within the database are identified by direct duplicate (same manufacturer name and part number) or by form-fit-function (different manufacturer name and part number but identical according to type, size and material). Once duplicates have been identified, they are assigned one common corporate part number, descriptions are duplicated to appear identical throughout the database, and the items are flagged for customer review.

Step 6 – Quality-Control Review

Due to the emphasis on quality and consistency, the next step involves a final human review of all items, typically conducted by an assigned project leader or dedicated quality-control person. The quality-control process ensures that every item follows proper format and nomenclature according to pre-defined customer standards, while verifying that enhanced descriptions are correct, accurate and complete.

Step 7 – Send Review List to Customer

On average, 10 percent of the materials database is usually found to be review items, meaning items lacking critical information for accurate part identification such as manufacturer name or part number. During the data-cleansing process, these items are flagged and compiled into a customer review list. The review list is returned to the customer, who must then physically locate the item within the storeroom and record the necessary part information to be added into the material master.

Step 8 – Format Data to Customer ERP System

Once the missing information has been collected for all review items and the entire cleansed database has been approved by quality control, it is deemed complete and transferred to the IT department. At this stage, IT specialists format the data to the customer-specified enterprise resource planning (ERP) system and extract it into a return file. The formatting stage is critical to achieving the desired end result, as every ERP system has its own unique layout, headers and field limitations.

Step 9 – Return Cleansed File

Once the entire data file has been cleansed, standardized, enhanced, de-duplicated, reviewed and formatted to the customer’s ERP system, it is electronically delivered to the customer. At this time, the data can now be uploaded directly to the customer’s ERP system.

The Results

Esthetically, the results of data cleansing are obvious, as the data now clearly maintains one consistent format and nomenclature throughout the entire organization while containing enhanced information for improved part identification. However, the real benefits are those that may not be as visually obvious but present the greatest return on investment. The most valuable benefits are those that come from the ability to identify and remove excess, obsolete and duplicate items while improving the ability to quickly search and locate parts when time is of the essence and minimizing equipment downtime is crucial. Key benefits include:

1. Cost reduction

• Identification of excess-active and obsolete inventory
• Identification and elimination of duplicate items
• Reduction of equipment downtime
• Reduction of maverick purchases
• Reduction of expedited part orders

2. Improved maintenance efficiency

• Efficient part searches

3. Maximum ERP/EAM benefits

• Improved reporting capabilities  

From a long-term perspective, quality materials data is the key to maintaining operation costs and efficiencies. This process does not end once the data-cleansing project is complete. Maintaining ongoing data quality requires a strict set of catalog management procedures to ensure accuracy and consistency as new items are added and existing items are modified or suspended. Most data-cleansing companies offer some type of catalog management software or service for customers to maintain the quality of their cleansed catalog. However, unless the customer is able to dedicate an internal resource to manage the catalog, outsourcing this activity to the experts who originally cleansed the database will always deliver the best results.

About the Author

Jocelyn Facciotti is the marketing manager at I.M.A. Ltd., a company specializing in MRO data cleansing and related services. For more information, visit www.imaltd.com or contact info@imaltd.com.

3 Important Benefits of CMMS

Article extract from ReliablePlant newsletter:
http://www.reliableplant.com/Read/29878/3-cmms-benefits

Companies need many things in order to run properly, including cash flow, a well-oiled marketing and sales staff, and a good production team. One element that businesses, especially manufacturing companies, often overlook is management and maintenance software. That's where computerized maintenance management system (CMMS) and enterprise asset management (EAM) software comes in. These programs can help your organization run smoothly and save money. Following are some of the most important benefits of CMMS.

Increased Productivity

Good CMMS software not only will enable you to schedule preventive maintenance but also let you see instructions for a specific job, what is needed for the job and whether you have the parts on hand to complete the job. A CMMS should also be able to show other pertinent information including service histories, warranties, etc. In addition, some software packages offer extra features, such as the ability to configure and manage reports and key performance indicators for presentations. Most CMMS software on the market includes mobile data capability. This allows you to connect to the cloud for easy sharing and access from wherever you are for enhanced flexibility.

Longer Equipment Life

No matter what kind of equipment or assets you have, they will require some sort of maintenance. Performing routine and preventive maintenance will help your equipment last longer and save you money in the long run. Regularly scheduled maintenance not only will result in longer equipment life but also fewer equipment purchases and replacements. CMMS software can lead to a decrease in unplanned repair costs by enabling you to see the repairs made to a component during its lifetime so you can decide if it should be replaced.

Less Downtime

When a machine breaks down, downtime usually occurs while the machine is waiting to be fixed. This downtime can be even longer if all the parts required to fix the machine are not on hand. With CMMS software, you are alerted when parts need to be ordered before a machine breaks down so downtime is reduced. Being able to schedule and plan day-to-day maintenance also makes it easier on the maintenance team.

With the possibility of achieving less downtime, longer equipment life and increased productivity, CMMS can be a great investment for organizations looking to become more cost-effective and efficient. With all of these benefits, why wouldn't you want CMMS to help run your company? 

About the Author

Brett Chesney writes about the tech industry, CMMS and startups. He also occasionally writes for AssetPoint, which provides CMMS and its innovative TabWare software. In his free time, Brett talks about Crossfit and researches new technologies entirely too much. 

Getting Better Returns from EAM Software

Article extract from ReliablePlant newsletter:
http://www.reliableplant.com/Read/29299/eam-software-returns

Nobody implements enterprise asset management (EAM) software without an idea of what return they expect on the investment, but too often either due to the selection of inadequate software, subpar implementation or poorly articulated goals, EAM software projects do not deliver a measurable return.

This article will examine a few of the specific ways that EAM software can deliver that sought-after return on investment (ROI) so you can plan your selection and implementation around these deliverables. These five tips should help you take advantage of the cost savings and revenue-enhancement features EAM has to offer while avoiding the pitfalls associated with an overly complex or problematic implementation.

Reduced Maintenance Inventory

As is the case with other types of enterprise software, including enterprise resource planning, inventory reduction is a key area where EAM can deliver a return. Maintenance inventory is just like any other type of inventory. A balance must be struck between excess inventory that ties up capital and outages and downtime that result when a part, consumable or subassembly is required but not available.

Maintenance inventory can be a real challenge to master because in most industrial environments some parts require a long lead-time and cannot be obtained on short notice. That heat exchanger, compressor or motor may be very specific to your individual piece of equipment. So during software selection and implementation, very close attention should be paid to purchasing functionality. Is the purchasing functionality robust enough for advanced and proactive inventory planning and management?

For organizations with multiple locations, special attention should be paid to the extent that inventory can be optimized through standardized part identification and intersite planning. Oftentimes, different locations have different part-naming nomenclatures. Consider the challenge presented a plant manager by a high-value part like a motor that must be stocked at a level of about 0.2. He needs to stock at least one, but if numerous locations around a region require the same part, that one motor could be shared across locations, saving money and preventing unnecessary downtime.

So it should be no secret that inventory reduction is one way the right EAM software can deliver a measurable ROI to your organization.

Manage Cash with Contract Management

Potentially reducing cash tied up in parts is one way the EAM can deliver an ROI, but real-time cash management in general ought to be a top priority. Even when an asset is delivering a positive return in the intermediate term, business still operates on a month-by-month, quarter-by-quarter basis. Real-time information on what it costs to operate a plant or a portfolio of plant assets allows an executive to manage the present rather than adjust for the past.

A significant portion of the variable cost of maintenance operations consists of the cost of contracts for supporting services and materials. EAM ought to take this into consideration and offer integrated contract management. Cash outlays necessary under each contract will be planned as the contract is finalized so cash-flow decisions can be made accordingly.

Some EAM packages allow you to open portals to suppliers like engineering firms and maintenance contractors. As you plan maintenance work for the weeks ahead, if your contractors have visibility of your plans through your EAM system, they can be informed of the upcoming work, schedule their people and ensure that they have the right tools and materials available. This also reduces the amount of time necessary to manage those outside contractors by phone and email.

The lifecycle of a contract with a supplier should be encompassed entirely within the EAM application, starting with the call for bids on the project, acceptance of the bid and then the projected cash outlays and associated work performed by the contractor. This has benefits far beyond cash and contract management.

This also means you save the time involved in entering the record of that work back into the EAM, enterprises resources planning (ERP) or computerized maintenance management (CMMS) software. Moreover, that real-time data could allow for more efficient use of the asset, as in the resumption of a production schedule immediately after a contractor finishes work.

It can also give management notification of when various milestones in a contracted project are completed – milestones that may constitute liquidity events when the contractor is paid. The ability to track these liquidity events is crucial from a cash-management standpoint and contributes to ROI.

Asset Integrity Management and Permitting

EAM can drive cost and risk reduction by acting as a centralized location for all asset data over the entire asset lifecycle. Most managers instinctively know that an as-designed drawing of an asset is different from the as-built drawing. Similarly, the as-maintained drawing will be different from the as-built version. Changes are made during maintenance, refits, lifecycle extensions and repairs just as they are made during construction, and those changes need to be reflected in the asset management system.

An EAM software application should ideally be used to support asset design and construction, enabling the asset data to flow directly into the systems that will be used to sustain, maintain and operate the asset. This approach, known as “Design, Operate, Maintain,” really involves a single asset management system that supports the asset over its entire lifecycle.

The contract-management tools referred to in the section above have a role in true cradle-to-grave support because they ensure that the same enterprise system and data set is used regardless of who is making alterations to the asset.

EAM software must also include integrated permit and incident tracking. For a typical maintenance technician, this level of integration expedites the work that needs to be done and pulls information directly from the EAM system that is necessary to complete a formal work permit. Many EAM applications might not have such a tightly integrated permitting process, forcing technicians to take the time to use a separate system and creating a silo of data that is not reflected in your enterprise application. 

Furthermore, someone may forget to get that permit and go into an enclosed area where there may have been a gas leak that was already reported. Eliminating death and disfigurement is certainly one more way EAM software can deliver ROI.

Leverage Integrated Document Management

In order to truly manage the asset lifecycle and maximize value realized from that tremendous capital investment, it is critical to have all of your asset data in a single repository. EAM software needs to have integrated document management so as assets are set up in the system, all of the relevant CAD drawings, contracts, maintenance schedules, testing reports and other documents are stored in a central repository. These individual documents must also be linked to the asset object in the EAM system.

Embedded document management with hooks into 3-D CAD drawings allows EAM to be the true central repository for asset data. Courtesy IFS North America

In a perfect EAM world, as process manufacturing equipment, oil and gas drilling equipment or other assets are commissioned, managers would be able to take the CAD serialized assets from the builder and pull them directly into their own EAM and document management system. Some EAM packages may be able to import the asset data but lack the hooks into CAD and 3-D CAD systems necessary to fully build those assets out into the system. 

This allows the EAM application to be the repository for all asset information over the asset lifecycle. Without that CAD integration, there is still a separate silo for a lot of key asset data that will hamper visibility and decision-making. This really is not in the true spirit of asset lifecycle management, which would keep all asset information together in an organized asset structure.

So apart from ensuring adequate asset integrity management and compliance measures are in place, integrated document management delivers an ROI by reducing the time it takes to find, manage and update documents relating to the asset.

Ease of Implementation and Usability Affect ROI

Fighting human nature is never a smart business strategy, and technicians and other front-line employees will not use a system that is confusing or presents functional barriers to their individual jobs. Therefore, ease of use is critical for an EAM software package. In addition, there is no way anyone can use a system until it has been implemented, so EAM software products that have a history of lengthy or failed implementations are to be avoided.

In many manufacturing environments, EAM software is a secondary or tertiary priority. There is an interest in increasing uptime and efficiency, but in industries like the chemical industry, nuclear power or oil and gas, it is a top priority because you cannot operate assets in a mission-critical environment without absolute control over asset integrity. In these industries, tracking maintenance work is not just about cost or even maximizing asset profitability. You need to be able to mitigate risks by preventing asset failures that could cost lives or cause environmental impacts. Maintenance is critical, and ensuring that the system used to manage and record maintenance work is just as critical.

If EAM software is too convoluted and byzantine, maintenance technicians will not use it, which will present challenges as you will not have visibility into the state of the asset and may not complete essential scheduled maintenance projects. Even a manufacturer in a standard manufacturing environment will realize that an opportunity for ROI is lost if the software that has been licensed and implemented is not broadly used.

EAM deployed across mobile apps can increase real-time visibility of asset integrity and technician productivity. It can also make for more efficient maintenance routes. Courtesy IFS North America

One way to increase ROI through usability is to deploy EAM functionality across mobile devices like tablets or through native apps for smartphones. This will allow technicians to update the system in real time, increasing visibility and reducing time spent at a terminal at the end of a shift.

Opportunity for ROI is also increased, and that return can be realized sooner through an EAM application that allows a phased approach to implementation. There are mission-critical elements like work orders, document management to track the specifications of the asset as it is maintained and inventory that can be implemented immediately, allowing safe asset operation. Once that functionality is familiar and absorbed by the operation, additional functionality including permitting, health and safety and even full-blown reliability centered maintenance (RCM) functionality can be implemented. 

So it becomes clear that implementation and usability are both potential barriers to realizing ROI on an EAM software investment.

Conclusion

EAM can provide real and measurable cost savings and competitive advantages for companies that select the right set of applications and plan their implementations intelligently. In general, an implementation of EAM software that addresses more of the business functions that support the asset (contract management, inventory, document management and even human resources and finance) will offer a greater return than can be achieved by simply addressing maintenance needs. Care must also be taken to plan the implementation in such a way that it minimizes business disruption and leaves end users with a system they can use comfortably and capably.
About the Author
Patrick Zirnhelt is the director of sales for asset-intensive industries for IFS North America. He has more than 17 years of experience working with enterprise systems, which includes software development, implementation and sales. He is a professional engineer who holds a master’s degree in business administration, specializing in management information systems, from the York University Schulich School of Business in Toronto and a bachelor’s degree in mechanical engineering from Queens University in Kingston, Ontario. For information about IFS’ EAM offering, visit www.ifsworld.com/en-na/solutions/enterprise-asset-management-software/.

About the Author

Patrick Zirnhelt

Patrick Zirnhelt is the director of sales for asset-intensive industries for IFS North America. He has more than16 years of experience working with enterprise systems, which includes software ... Read More

Strategies for Inventory Optimization

Article extract from Reliable Plant newsletter:
http://www.reliableplant.com/Read/29885/inventory-optimization-strategies

Inventory management and procurement compliance often present a difficult challenge for any manufacturing organization, regardless of how strict and disciplined it may be. While many procurement teams feel they have effectively leveraged spending through preferred supplier negotiations and strategic purchasing processes, the reality is that they have only hit the tip of the iceberg. The main factor that holds many organizations back is data quality or lack thereof. Some parts, and their associated description, radiate with accuracy and attribute information. Unfortunately, this only represents about 10 percent of the items in a given database. More realistic are items that barely have a part number or any type of description that would allow the preferred supplier to accurately provide a replacement part.

Without clean data, there is a good chance that the agreement, which was originally negotiated with the preferred supplier, doesn't accurately represent the organization's true spending. In most cases, the majority of companies can't tell definitively what they bought, who they bought it from and how much they bought it for in the past week, let alone the past 12 months.

Progression Model

Implementing a successful inventory optimization program involves several phases, none of which can be completed effectively without first having quality data. The following cost-savings progression model illustrates the critical tasks necessary to achieve maximum success.

Data Cleansing

Let's face it; manufacturing companies specialize in producing finished goods, not in cleaning data. Perhaps this is why their data has become so corrupt in the first place. In any case, it is always best to leave this task to the subject-matter experts who specialize in the field of material and vendor master data cleansing.

Prior to project commencement, a standard operating procedure will be developed to clearly articulate the naming convention, abbreviations, policies and formatting requirements that will be used to consistently structure data throughout the organization moving forward. Next, legacy data will be cleansed, standardized, enhanced and validated to provide an item master that is consistent among product groups while containing accurate and attribute-rich descriptions.

Once clean, the data will be formatted to meet the specific configuration requirements of the chosen enterprise asset management (EAM)/computerized maintenance management system (CMMS), including field type, character limitation and data arrangement. During the cleansing process, potential duplicate records will be identified at both the local (plant) and corporate level. The newly cleansed item master will provide detailed visibility and reporting at the stock keeping unit (SKU) level.

In addition, data cleansing and classification will enable items to be segmented into common product groups or commodities. On average, a typical item master houses 30 percent original equipment manufacturer (OEM) items versus 70 percent standard maintenance, repair and operations (MRO) items. From there, these two categories are broken down into seven or more parent product groups, as shown below. These common categories can be further segmented into subcategories and analyzed throughout the item and spending analysis phases.

Catalog Management

Immediately upon completion of a data-cleansing project, a catalog-management strategy must be implemented to maintain ongoing consistency, integrity and sustainability of the item master. The catalog-management task can be performed manually by internal resources, using automated software or through a third-party service provider. Regardless of which method is chosen, a data governance team must be formed in order to restrict enterprise resource planning (ERP) access and create a corporate internal workflow for requesting additions, modifications, extensions and suspensions to the item master.

During the catalog-management process, all item master updates and entries will be standardized and formatted according to the standard operating procedure, which was developed during the initial data-cleansing project. An effective catalog-management strategy will therefore maintain consistency and accuracy while preventing future duplication within the corporate item master moving forward.

Item Analysis

Now that you've implemented a data-cleansing project and finally have quality data to work with, the inventory optimization process can begin. The first phase dives deep into the transactional history of each data record to segment items into three distinct usage categories. Those categories are defined as follows:

• Required Active – Items that have been purchased and/or issued at least once during the analysis period and do not have an on-hand quantity that exceeds the recommended maximum stocking level
• Excess Active – Items that have been purchased and/or issued at least once during the analysis period and have an on-hand quantity that exceeds the recommended maximum stocking level
• Inactive – Items that have not been purchased and/or issued during the analysis period, which must further be identified as critical spares, obsolete or slow-moving

Of the total on-hand inventory, industry standards suggest that required active items represent 25 to 30 percent, excess active items represent 10 to 20 percent, and inactive items represent 50 to 60 percent. The excess active category represents a safe inventory reduction opportunity with immediate cash-flow generation potential, which can often be used to fund the initial data-cleansing project and build a solid business case for finance.

Stock Level Optimization

With excess inventory now identified through item analysis, the stock level optimization process can begin. After all, the last thing you want at this stage is to continue overstocking inventory due to inaccurate and outdated minimum/maximum or reorder-point/reorder-quantity (ROP/ROQ) levels. Using a complex formula, which considers variables such as criticality, issue quantity, issue frequency, average lead time, etc., optimal minimum/maximum levels can be calculated to minimize on-hand inventory while safeguarding against future stock outs and unplanned equipment downtime.

In the example above, the blue-shaded fields represent existing inventory values, while the red- and gray-shaded fields represent calculated values. Based on the existing inventory information and client requirements, it was determined that the average lead time for this particular bearing sample was 3.5 days, and the new minimum/maximum level was to be adjusted to 2 and 4. Using the new minimum/maximum values, it was calculated that four of the eight current on-hand items were actually required, while the remaining four represented excess stock.

To take inventory safeguarding one step further, a stock status report can be performed to identify part availability and lead time at the preferred vendor's local branch, regional branch and corporate distribution center.

Inventory Disposition

So it's time to generate some cash flow and free up valuable warehouse space that is currently occupied by excess and obsolete inventory. There are several strategies for disposing of inventory based on timeline, desired payback and available resources. Here are a few of the common disposition strategies that produce quick success and great returns:

• Vendor buy-backs
• Third-party liquidation
• Auction
• Corporate internal redeployment/depletion
• E-commerce (eBay, Amazon, etc.)

Of the above-mentioned strategies, third-party liquidation often provides the quickest and easiest success for companies, as it requires few resources, payment is immediate, and inventory is removed from the site within a short period of time. The downfall to this strategy is that it may not provide the payback for which you were hoping. In many cases, third-party liquidation will deliver 10 to 30 cents on the dollar, which for some organizations is simply a bonus just to get the unused inventory off their shelves. However, if you're looking for larger returns, you may want to consider an e-commerce solution or discuss vendor buy-back opportunities when negotiating your next supply contract.

Spending Analysis

Perhaps one of the most critical phases in the overall inventory optimization program, a spending analysis is performed to identify how much money is being spent, with whom it is being spent and on what it is being spent. With a consistently cleansed item master now enabling detailed visibility at the SKU level, the results of a spending analysis can be quite eye-opening for the procurement team. It is often at this point that procurement managers realize they have only leveraged a portion of their actual spending while missing out on several cost -savings opportunities along the way. Based on vendor name, last price paid, issue frequency, issue quantity and additional analytics, a successful spending analysis should reveal the following statistics:

• Total number of vendors
• Number of vendors per product group
• Dollars spent per vendor
• Dollars spent per product group
• Dollars spent with preferred vendor(s)
• Maverick purchases
• OEM purchases
• Price variances between OEM and MRO items
• Price variances through a preferred vendor
• Price variance between preferred and non-preferred vendors

No matter how staggering the results may be, these data-driven statistics will become the foundation for leveraging spending and achieving cost savings during the strategic sourcing and negotiation phase of the procurement process.

Strategic Sourcing

Now we're getting down to the fun part, strategic sourcing and negotiating. It's often surprising just how many companies have never tendered their MRO spending or have only focused on a small portion of it, especially considering the competitive nature of the industrial distribution space and multitude of cost-savings opportunities that are available. With accurate spending analysis reports now available at your fingertips, it's time to create an RFx to identify and select the best-suited vendor(s).

Once again, the RFx process can be performed by internal resources or through a third-party service provider. In either case, be sure to leverage your spending analysis reports and provide a quality market basket to obtain the most accurate product quote. Keep in mind that price isn't the only factor to consider during an RFx. While it may be one of the most heavily weighted components of your RFx, other factors such as lead time, availability, terms and conditions, guaranteed cost savings, and special incentives should also be taken into great consideration. Remember, if you have important requirements that are non-negotiable, make them known to bidders and don't just ask — demand them. The better you outline your requirements within the RFx, the more likely capable bidders are to meet them.

Once you've narrowed it down to a short list of vendors, the real negotiations begin. Be creative with the things you want, firm with the things you need and know when it's time to walk away. Chances are you'll be entering into a long-term contract, so it is important that the final agreement be mutually beneficial to all parties.

Compliance

Compliance is the last remaining piece of the puzzle to ensure ongoing procurement success and maximum operational efficiency. Traditionally, strategic sourcing and compliance has been based on preferred vendor programs and lenient purchasing procedures, which as we know, were driven by poor data. Too often buyers disregard preferred vendor programs with no repercussions just so they can buy from the local supplier with whom they have an existing relationship. Nowadays, as competition becomes stronger, budgets continue to shrink and technology advancements are a daily occurrence, companies must tighten up their processes to ensure that every dollar is spent wisely. How you ask? The answer is in this article, yet everything you've read thus far means nothing if it is not enforced down to the finest detail and end users do not comply with the cost-savings programs that have been negotiated.

Let's be honest, there's no point in establishing a preferred vendor program if you're not going to honor the contract. The key is not only to enforce compliance at a high product group level through the preferred vendor, but also down to the individual SKU level (by manufacturer). With outsourcing and contract work now trending throughout industry, third-party procurement companies are often a great solution to manage purchasing and compliance. If you choose to use internal resources, you may want to consider a software solution, which will force users to purchase only from preferred vendors.

Of course, there are exceptions such as catastrophic breakdowns and part unavailability through the preferred vendor, in which case the user must specify a reason as to why the part is being purchased from a non-preferred vendor. If nothing else, this process instills ownership and accountability, as end users are aware that upper management is monitoring their purchasing habits.

Moral of the Story

To summarize, achieving cost savings is not a quick, single step task. It is an ongoing process that requires a number of phases, beginning with data quality. Whether you choose to perform the above-mentioned tasks internally or through a third-party service provider, the process and cost-savings opportunities remain the same. For your organization, the best option may be to perform a select group of tasks internally for which you have adequate resources and expertise. As for the remaining tasks, build a relationship with a third-party service provider who specializes in the field and is flexible to meet all of your business requirements and objectives. Every company specializes in something, and for most that something isn't data cleansing or inventory optimization. Stop spinning your tires. Stick to your specialty and let the subject-matter experts perform theirs. It's a win-win situation in the end, which will see you achieve your cost-savings and procurement objectives within a much more reasonable timeline and scope.

How to Modernize Maintenance Processes

Article extract from ReliablePlant newsletter:
http://www.reliableplant.com/Read/29240/cmms-iso-certification

It's one thing to claim customer satisfaction in marketing literature and Web content. It's another to achieve it by precisely measuring customer specifications and winning ISO 9000 certification.

Midland Metal Products (MMP) designs and fabricates permanent advertising display fixtures using sheet metal, wire and tubing for a vast array of consumer goods and products. As a fourth-generation supplier, MMP noticed that many of its processes had simply grown with the business. While going through certification audits, it became clear that the company needed to modernize its maintenance management process. Part of that certification process was to implement a computerized maintenance management system (CMMS).

Measurements Count

Because MMP builds advertising displays for ad agencies that serve hundreds of consumer retail brands, it receives specifications from ad agencies to fabricate displays from scratch.

"Because we do custom displays, we're bringing to life fabrications that haven't existed before," said B.J. McDonald, MMP's co-owner and facility director. "Erroneous measures can ruin the display. Therefore, our measuring tools have to give precise measurements."

To meet ISO standards, all 242 of MMP's measuring tools — from tape measurers to micrometers — must be calibrated precisely to the customer's measurement parameters.  

"The ISO 9001-2008 certification helped us look at our production system and come up with a precise process to do this one thing perfectly all the time – from the moment you get the customer order to the end product the customer receives," McDonald explained.

Because of the close tolerances for MMP's custom products, calibrating measurement devices was a major issue. 

"As part of our certification, ISO auditors looked at whether our measurement devices could fail," McDonald said. "Bigfoot CMMS helped us win ISO certification."

Before MMP installed its CMMS, the company had no way to adequately track or maintain any of its measurement devices. Today, MMP uses CMMS to schedule preventive maintenance (PM) for every measurement device used in the plant.

In addition, by employing CMMS to issue daily PMs, MMP shows ISO auditors and customers that the company is working within the tolerances of its market. According to ISO standards, each device must have a certificate of calibration to get the designation. This is one area where the company simply cannot miss a PM.

Maintenance Matters

MMP not only uses CMMS for measurement devices but also for its entire plant. Within its 110,000-square-foot facility, there are 138 pieces of production machinery equipment, such as turret presses, laser cutters, press brakes and resistance welders. This also includes a total of 2,100 assets from air and power tools to facility equipment, stationary power tools, personal-protection equipment, material handling and even janitorial supplies. However, of the 165 employees, only three are on its maintenance staff. Before CMMS was implemented, McDonald described the maintenance process as "a verbal and casual method of maintenance, responding to the loudest shout."

"We had no time to put a preventive maintenance program in place," he noted. "That also meant noncritical repairs sometimes got fixed before critical requests that were truly important to the operation. So downtime was a problem, too."

While implementing the two programs seemed like a big task, the initial prep work was worth it.

"The ISO preparation can seem, at times, as if it's adding complexity, but the end result is a streamlined system with increased efficiency across the board," McDonald added. "We get a similar result from our Bigfoot CMMS system. We had to asset-number every piece of equipment we use, down to tape measurers and air-conditioning units. Anything that needs maintenance, replacement, inspection, cleaning and calibration now has maintenance scheduled on Bigfoot CMMS."

MMP also uses CMMS for work orders, repair requests and PM scheduling. Its team generates about 2,400 work orders for PMs a year. This has allowed the company to reduce unforeseen repairs to about 20 percent of its previous workload.

PM Efficiencies Boost Uptime

With 15 seats to serve each department and a hierarchy of requestors, MMP has eliminated interruptions from ad-hoc requests. Now, the maintenance staff is more efficient.

"Once the PM calendar was set up, we were able to increase maintenance department productivity by being better able to distribute PMs more evenly," McDonald said.

The CMMS prioritizes high-value machine PMs so MMP can stay ahead of breakdowns. This is where the biggest improvement has been seen.

"With our PM program, we now average 99.6 percent uptime on our production equipment," McDonald noted.

Streamline Your Maintenance Operation for Optimum Performance

Article extract from ReliaPlant newsletter:
http://www.reliableplant.com/Read/28975/streamline-maintenance-operation

If your backlog is piling up or you feel like you don’t have enough resources in terms of labor and parts, it may be time to work toward lean maintenance.

Lean maintenance is the application of lean philosophies, methods, tools and techniques to maintenance functions. It has the fundamental goals of eliminating waste associated with labor, inventory, procedures and techniques, resulting in improved productivity and reduced costs.

Lean maintenance does not imply a slash and dash approach to cutting costs and jobs. This common method will not reduce waste or lower costs. Instead, lean maintenance philosophy decreases costs by getting rid of waste that can be defined as “anything that doesn’t add value to the maintenance process or service.”

Following are a few areas where wastefulness and sluggishness can crop up in the maintenance department.

Overproduction

Overproduction in the maintenance environment means doing any work that does not add value. Examples include performing preventive and predictive maintenance tasks more often than is necessary and redoing jobs that were not done correctly the first time.

Waiting

Areas of waste in this category include maintenance personnel waiting for equipment availability, job assignments, tools, parts, instructions, other crafts, permit approval, etc. Waiting is not a value-added activity and should be eliminated or reduced as much as possible.

Transportation

Unnecessary travel is the result of ineffective planning and scheduling. This could involve a trip to the maintenance shop to get technical information or to the storeroom for parts and tools. Poorly designed preventive maintenance (PM) routes are also a major contributor.

Process Waste

When performing a breakdown repair, maintenance personnel are typically under a lot of pressure to fix the equipment as quickly as possible and often are not given enough time to fix the equipment properly. This results in a poor repair and a recurring problem. Properly performed repairs can eliminate this process waste.

Most organizations now use some sort of computerized maintenance management system (CMMS) or enterprise asset management (EAM). Process waste also occurs when inefficiencies exist in these systems. For example, a poorly designed system may call for multiple entries of the same data, or a material requisitioning process could require redundant approvals.

Defects

In maintenance, a defect can be defined as leaving an asset in an unreliable condition. There are many causes of defects in the maintenance environment. Defects due to poor workmanship arise from insufficient training, inadequate/outdated procedures and not having the proper tools to do the job.

Spare Parts Inventory

Most storerooms contain a significant amount of obsolete inventory. This ties up capital and consumes management resources. It can easily amount to 10 to 20 percent of annual inventory dollars. Keep in mind that excess inventory is not obsolete but is inventory maintained at unnecessarily high levels. Excess inventory also ties up capital and consumes management resources. In addition, inadequate PM programs cause equipment failures, which in turn results in the need for more parts (consuming working capital) and downtime.

A CMMS/EAM can monitor and control a spare parts inventory. It will keep track of inventory items, vendor performance, parts receipts, issues and returns. In addition, a CMMS/EAM can automate the parts purchasing process. Vendor managed and stocked inventory can also drastically reduce the parts quantity in the storeroom and save money.

While breakdowns and failures are never planned, they can cause the loss of productivity and money. Finding the root cause of a failure provides an organization with a solvable problem. Once the root cause is identified, a fix can be developed and implemented, preventing a recurring failure situation.

About the Author

Kris Bagadia is the president of PEAK Industrial Solutions in Brookfield, Wis. A longtime consultant and educator, he can be reached by e-mail at krisb@peakis.com or viawww.cmmsmadeeasy.com.

About the Author

Kris Bagadia

Kris Bagadia is the founder and president of PEAK Industrial Solutions. He has experience in all facets of the maintenance management process and has stayed at the forefront of CMMS/EAM technology ... Read More