From MRO to Project Management Optimize Your Manufacturing

From MRO to Project Management Optimize Your Manufacturing Equipment With EAM Nancy Majure EAM Specialist, QAD Inc

Optimize Your Manufacturing Equipment with EAM Safe Harbor Statement The following is intended to outline QAD’s general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, functional capabilities, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functional capabilities described for QAD’s products remains at the sole discretion of QAD. 2

Optimize Your Manufacturing Equipment with EAM Presentation Agenda • Getting started with optimization • How Enterprise Asset Management (EAM) supports the Effective Enterprise • EAM functional areas - Project controls - Indirect (MRO) inventory & purchasing - Maintenance • Using EAM to optimize equipment utilization 3

Optimize Your Manufacturing Equipment with EAM Overview • QAD’s EAM solution supports the Effective Enterprise by: - Optimizing your asset utilization - Delivering a complete suite that supports all phases of the equipment life-cycle - Incorporating best practice processes - Enabling and promoting greater asset utilization - Aligning asset performance with strategic goals 4

Optimize Your Manufacturing Equipment with EAM Getting Started 5

Optimize Your Manufacturing Equipment with EAM Getting Started • • • Understand “equipment life-cycle” Know your current status Know why you should care Understand Return on Investment Define your strategic goals 6

Optimize Your Manufacturing Equipment with EAM Equipment Life Cycle Acquisition Phase: budget controls, acquisition cost, reliability & maintain-ability EAM Project Controls Construct 20% of life cycle costs Design Commission Equipment & Asset Life-Cycle Retire / Replace 80% of life cycle costs Operate Maintain Operation Phase: maintenance, cost of ownership EAM Asset Management 7

Optimize Your Manufacturing Equipment with EAM Know Your Current Status CM 100% >85% PM Best Practices Reactive World Class <15% PM CM 0% Stage 1 Run to failure No records Stage 2 PM Critical Assets (Cal) No CM recorded Functional Area Stage 3 PM Program (Cal) Some CM recorded Stage 4 PM (Cal & DUOM) All CM recorded Stage 5 PMs and Pd. Ms All CM recorded Estimated Stage Project Controls Purchasing Processes Inventory Controls Plant Maintenance 8

Optimize Your Manufacturing Equipment with EAM Know Why You Should Care Benchmarks Very Basic Reactive 2 Maintenance Program 2 Best World Practice 1 Class 1 Production Breakdown Losses 25%-30% 15%-20% 5%-12% 1%-2% Maintenance Cost as % of RAV* 25%-30% 15%-20% 3%-9% 2. 5%-3. 5% MRO Cost as % of RAV* 15%-20% 10%-12% 2%-4% 0. 25%-0. 75% *RAV = Replacement Asset Value 1 – Maintenance and Reliability Best Practices, Ramesh Gulati 2 – Author’s estimated percentages 9

Optimize Your Manufacturing Equipment with EAM Know Why You Should Care Example: QMI Manufacturing - RAV = $10, 000 - Annual Sales = $100, 000 Benchmarks Very Reactive 2 Basic Maintenance Program 2 Best Practice 1 World Class 1 Production Breakdown Losses $25 - $30 mil $15 - $20 mil $5 mil - $12 mil $1 mil - $2 mil Maint Cost as % of RAV* $2. 5 – $3 mil $1. 5 – $2 mil $300 k - $900 k $250 k - $350 k MRO Cost as % of RAV* $1. 5 - $2 mil $1 - $1. 2 mil $200 k - $400 k $25 k - $35 k *RAV = Replacement Asset Value 1 – Maintenance and Reliability Best Practices, Ramesh Gulati 2 – Author’s estimated percentages 10

Optimize Your Manufacturing Equipment with EAM Return on Investment • 50% of companies experience payback in less than 12 months • Typical savings: - Reduction in maintenance expense 10% to 30% Increase in production yield 3% to 5% Reduced maintenance downtime 20% to 40% Reduced scrap / rework 5% to 10% Reduction in annual purchases 5% to 15% Improved labor utilization 10% to 30% Increased equipment service life 2 years 11

Optimize Your Manufacturing Equipment with EAM Define Your Strategic Goals • Goals should - Align EAM business processes - Leverage single source EAM system - Support equipment peak efficiency • Measures for performance should - Be easy to measure - Drive the desired results - Be difficult to manipulate 12

Optimize Your Manufacturing Equipment with EAM How EAM Supports Effective Enterprise 13

Optimize Your Manufacturing Equipment with EAM Align With a Single System Project controls Indirect inventory processes Equipment efficiency Indirect purchasing processes Maintenance processes 14

Optimize Your Manufacturing Equipment with EAM New in EAM 12. 6 to Support Single System • Usability improvements - Rationalization of data entry - Reorganized screens • Interface enhancements - Fixed asset integration - MSW/PSW exposure to EAM work orders - SCP integration • Revision history 15

Optimize Your Manufacturing Equipment with EAM Usability – Reorganized Screens • More logical data grouping • Improved data entry flow 16

Optimize Your Manufacturing Equipment with EAM Interfaces – Fixed Assets Interface • Capitalize new asset • Utilize actual spend from - Project level, or - Job level 17

Optimize Your Manufacturing Equipment with EAM Interfaces – MSW/PSW • Exposes EAM WO’s to scheduling • Provides production visibility to required equipment downtime 18

Optimize Your Manufacturing Equipment with EAM Interfaces – Supply Chain Portal • Export RFQ’s to Supply Chain Portal • Import responses for purchasing 19

Optimize Your Manufacturing Equipment with EAM Revision History • Supports compliance • Provides detailed traceability 20

Optimize Your Manufacturing Equipment with EAM and Project Controls 21

Optimize Your Manufacturing Equipment with EAM What is Project Control? • “Birthplace of Assets” • Budgetary control PLUS. . . • Design - Reliability (measured by MTBF) - Maintainability (measured by MTTR) • Construction - Standardized spares - Accessibility • Commission - FMEA RCM BOM Maintenance plan 22

Optimize Your Manufacturing Equipment with EAM Types of Projects Managed in EAM • Capital - Profit enhancements - Increase capacity - Replacement • Expense - Annual rebuilds - Marketing / legal / etc. • Customer Funded Key characteristic: results in new asset(s) Key characteristic: no assets created Key characteristic: customer owns asset - Progressive billing - Very common in automotive verticals 23

Optimize Your Manufacturing Equipment with EAM and Equipment Optimization Project controls Indirect inventory processes Equipment efficiency Utilize EAM to • Control budget • Improve design • Track real-time financials • Manage customer funding • Capitalize assets • Commission to operations Indirect purchasing processes Maintenance processes 24

Optimize Your Manufacturing Equipment with EAM NEW in EAM v 12. 6 Projects • • Project allocations Fixed asset cross reference Enhanced cost analysis Analysis by activity 25

Optimize Your Manufacturing Equipment with EAM Project Allocations Project Level Job Level 26

Optimize Your Manufacturing Equipment with EAM Fixed Asset Cross Reference 27

Optimize Your Manufacturing Equipment with EAM Enhanced Cost Analysis 28

Optimize Your Manufacturing Equipment with EAM Analysis by Activity Code 29

Optimize Your Manufacturing Equipment with EAM and Indirect Inventory / Purchasing 30

Optimize Your Manufacturing Equipment with EAM Indirect (MRO) Inventory and Purchasing • “MRO” – maintenance repair operations • Repair parts plus. . . - Internally fabricated parts Supplies Consigned / vendor-managed Free-issue / company catalog • Goal is to ensure right parts are available - At the right time At the right price In the right quantity To sustain availability of plant assets 31

Optimize Your Manufacturing Equipment with EAM Indirect (MRO) Best Practices • • • Utilize full EAM solution Leverage buying power Utilize EOQ analysis to right-size inventory Secure inventory Improve physical layout Automate stock replenishment Free buyers for more strategic activities Know where parts are used Standardize parts Understand difference in Indirect 32

Optimize Your Manufacturing Equipment with EAM and Equipment Optimization Project controls Indirect inventory processes Equipment efficiency Utilize EAM to • Authorize • Control • Link to indirect • Analyze • Improve Indirect purchasing processes Maintenance processes 33

Optimize Your Manufacturing Equipment with EAM and Equipment Optimization Utilize EAM to • Control • Right-size • Standardize • Analyze • Automate Indirect inventory processes Project controls Equipment efficiency Indirect purchasing processes Maintenance processes 34

Optimize Your Manufacturing Equipment with EAM NEW in EAM v 12. 6 Inventory/Purchasing • • • Blanket orders Redesigned quotes Improved purchasing workflow Intrastat support Physical inventory by location 35

Optimize Your Manufacturing Equipment with EAM Blanket Orders 36

Optimize Your Manufacturing Equipment with EAM Redesigned Quote Module 37

Optimize Your Manufacturing Equipment with EAM Improved Purchasing Workflow • “Previously authorized” concept • Additional controls - Modifications to ordered POs - Rerouting visibility - Status alignment with ERP 38

Optimize Your Manufacturing Equipment with EAM Intrastat Support 39

Optimize Your Manufacturing Equipment with EAM Functional Area: Maintenance 40

Optimize Your Manufacturing Equipment with EAM What is Asset Maintenance? • Preventive AND corrective maintenance • Effective maintenance drives: - Increased output with the same assets Reduced need for capital replacement Reduced maintenance cost per unit Reduced total cost per unit Improved performance (cost, productivity, and safety) Increased competitiveness Increased market share 41

Optimize Your Manufacturing Equipment with EAM Maintenance Best Practices • • • Record all work – PM and CM Collect all costs to the asset and task level Plan work Schedule work Improve PM program - Predictive / condition-based - Technology to detect potential failure - FMEA and RCM activities • Empower resources • Change culture 42

Optimize Your Manufacturing Equipment with EAM and Equipment Optimization Project controls Indirect inventory processes Utilize EAM to • PM & CM • Measure • Analyze • Improve Equipment efficiency Indirect purchasing processes Maintenance processes 43

Optimize Your Manufacturing Equipment with EAM NEW in EAM v 12. 6 Maintenance • Equipment mapping to ERP • Production line mapping to ERP • New/improved reporting 44

Optimize Your Manufacturing Equipment with EAM Equipment Mapping to ERP • Supports MSW/PSW interface • Another step towards production driven maintenance 45

Optimize Your Manufacturing Equipment with EAM Production Line Mapping to ERP • Supports MSW/PSW interface • Another step towards production driven maintenance 46

Optimize Your Manufacturing Equipment with EAM New/Improved Reporting • Incorporates “Transaction Date” ranges • Retrofitted back to 12. 4. 2. 3 47

Optimize Your Manufacturing Equipment with EAM Conclusion and Next Steps 48

Optimize Your Manufacturing Equipment with EAM How Do I Optimize Equipment? • Think “Effective Enterprise” where all business processes are - aligned, - working at peak efficiency, and - delivering the strategic goals of the organization • Specifically - Align EAM processes Maximize EAM as a “single system” Utilize EAM to measure results Continuously improve 49

Optimize Your Manufacturing Equipment with EAM and Equipment Optimization Utilize EAM to • Align indirect processes • Work at peak efficiency • Deliver on strategic goals Indirect inventory processes Project controls Equipment efficiency Indirect purchasing processes Maintenance processes 50

Optimize Your Manufacturing Equipment with EAM Next Steps • Stop by the Solutions Expo • Schedule a demonstration • Schedule free “EAM Operational Excellence Workshop” • Register for “EAM v 12 Making the Switch to. NET” class May 30 – 31 in Santa Barbara 51

Optimize Your Manufacturing Equipment with EAM Questions & Answers Nancy Majure EAM Specialist, QAD Inc nnm@qad. com Kate Fenello EAM Product Manager khf@qad. com 52

www. qad. com © QAD Inc 2012 53