Optimizing Equipment Lifecycle Enterprise Asset Management Optimizing Your

Optimizing Equipment Lifecycle: Enterprise Asset Management Optimizing Your Equipment’s Life Cycle Bo Hagler – Director, R&D, QAD Nancy Majure – Director EAM N. A. , QAD

Optimizing Equipment Lifecycle: Enterprise Asset Management 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

Optimizing Equipment Lifecycle: Enterprise Asset Management Why Focus on Asset Reliability As much as 50% of capital investment in new equipment is made to compensate for the under−performance of existing equipment. • Reputation • Customer satisfaction • Repeat business • Competitive advantage 3

Optimizing Equipment Lifecycle: Enterprise Asset Management What is Equipment Life Cycle? Construct Commission Design Equipment & Asset Life-Cycle Operate Retire / Replace Maintain 4

Optimizing Equipment Lifecycle: Enterprise Asset Management Why Optimize Equipment Life Cycle? • Cost savings - Reduction in maintenance expense 10% to 30% • Areas of savings - Increase in production yield Reduced maintenance downtime Reduced scrap / rework Reduction in annual purchases Improved labor utilization Increased equipment service life 3% to 5% 20% to 40% 5% to 15% 10% to 30% 2 years 5

Optimizing Equipment Lifecycle: Enterprise Asset Management How QAD EAM Assists • Project controls • Asset management - Plant maintenance - MRO / spares inventory - MRO purchasing EAM Project Controls Construct Commission Design Equipment & Asset Life-Cycle Retire / Replace Operate Maintain EAM Asset Management 6

Optimizing Equipment Lifecycle: Enterprise Asset Management Project Engineering Challenges • • AP recorded, spreadsheets Last updated? Purchase costs only? Internal labor? Internal materials? Subcontractor services? True acquisition cost? 7

Optimizing Equipment Lifecycle: Enterprise Asset Management EAM Project Controls: Key Capabilities • Spending control - • • Electronic workflow approval Spending alert notification Provide segregation of duties Project work breakdown structure Customer projects - Customer reimbursements - Scheduled supplier payments - Margin EAM Project Controls Construct Commission Design Equipment & Asset Life-Cycle Retire / Replace Operate Maintain EAM Asset Management 8

Optimizing Equipment Lifecycle: Enterprise Asset Management EAM Project Controls: Roadmap • Manufacturing - Inventory master Work order costs BOM EAM Project Controls • Service and support management Construct Commission Design Equipment & Asset Life-Cycle Retire / Replace Operate Maintain EAM Asset Management 9

Optimizing Equipment Lifecycle: Enterprise Asset Management Typical Asset Management Challenges • Overall equipment effectiveness (OEE) - Global average is 55% • Average unplanned / reactive work is 55% - World class is <10% • Operating environment - 40% of failures are a result of operator error • Production losses due to breakdowns - Average range 5% to 10% • Average overtime is 10% to 20% 10

Optimizing Equipment Lifecycle: Enterprise Asset Management EAM Plant Maintenance: Key Capabilities • • • Supports preventative maintenance (PM) / PDM PM’s triggered based on actual production Analyze repair costs for labor, material and contractor expenses Measure mean time between failure (MTBF) Breakdown alerts via email or page EAM Project Controls Construct Commission Design Equipment & Asset Life-Cycle Retire / Replace Operate Maintain EAM Asset Management 11

Optimizing Equipment Lifecycle: Enterprise Asset Management EAM Plant Maintenance: Roadmap • Share scheduling information with production scheduler - • MSW/PSW Graphical EAM work order scheduling - Visibility into equipment availability from production EAM Project Controls Construct Commission Design Equipment & Asset Life-Cycle Retire / Replace Operate Maintain EAM Asset Management 12

Optimizing Equipment Lifecycle: Enterprise Asset Management Typical MRO Environment • • Annual MRO purchases can equal 1% to 5% of revenue In most cases, MRO is expensed at receipt Unnecessary or incorrect purchases can range from 10% to 25% As much as 30% of MRO inventory is obsolete 13

Optimizing Equipment Lifecycle: Enterprise Asset Management EAM MRO: Key Capabilities • • Manage company catalog for MRO items Automatic stock replenish Supplier price schedules Consignment inventory Transfer parts across plants Request for quote (RFQ) Requisition approval workflow EAM Project Controls Construct Commission Design Equipment & Asset Life-Cycle Retire / Replace Operate Maintain EAM Asset Management 14

Optimizing Equipment Lifecycle: Enterprise Asset Management EAM MRO: Roadmap • Share RFQ with suppliers via SC Portal • Contract purchasing EAM Project Controls Construct Commission Design Equipment & Asset Life-Cycle Retire / Replace Operate Maintain EAM Asset Management 15

Optimizing Equipment Lifecycle: Enterprise Asset Management EAM: Business Intelligence • Make better decisions • Support “intentional” decision making - from preparation - to decision making - to implementation • Manage by Fact • Improve shareholder value 16

Optimizing Equipment Lifecycle: Enterprise Asset Management EAM Roadmap: Business Intelligence • An out-of-the-box, performance management tool that instantly transforms transactional data from EAM into visually-depicted trends. 17

Optimizing Equipment Lifecycle: Enterprise Asset Management EAM Roadmap: Business Intelligence • Start with a high-level KPI 18

Optimizing Equipment Lifecycle: Enterprise Asset Management EAM Roadmap: Business Intelligence • Drill-down to further detail 19

Optimizing Equipment Lifecycle: Enterprise Asset Management EAM Roadmap: Business Intelligence • Drill-down to further detail 20

Optimizing Equipment Lifecycle: Enterprise Asset Management EAM Roadmap: Business Intelligence • • Data can also be analyzed through cubes September release will include mobile device access to QAD BI data 21

Optimizing Equipment Lifecycle: Enterprise Asset Management EAM Roadmap: Business Intelligence Projects MRO inventory • • Cash flow forecast Expenditure analysis Budget summary Indirect purchasing • • • Inventory turns Slow moving inventory Inventory value trends Stock out analysis Spending analysis Financials Spending by equipment • • • Purchases by vendor Purchases by commodity Operational expense cash flow Actual vs. Budget Top cost center by % of budget Rush orders Late receipts 22

Optimizing Equipment Lifecycle: Enterprise Asset Management EAM Roadmap: Business Intelligence Maintenance (by period) • Top equipment by cost and by MTBF • Top equipment failures • Top reason by downtime • Planned vs. Unplanned work orders • Planned vs. unplanned labor hours • PM vs. CM work orders • Work order count by priority • Equipment availability • Total maintenance cost • Service request count • Work order backlog ― Count ― Labor hours ― Average days open • PM compliance 23

Optimizing Equipment Lifecycle: Enterprise Asset Management QAD EAM Status • March 2011: general available (GA) • Supported versions - 2007 SE through 2010 SE - 2007 EE through 2011 EE 24

Optimizing Equipment Lifecycle: Enterprise Asset Management Review • Project controls - Bring projects in on-time and within budget - Control excessive spending • Plant maintenance - Increase equipment efficiency - Lower cost of repairs • MRO inventory and purchasing - Right-sizing inventory lowering obsolete items - Minimize stock-out thereby limited equipment downtime - Eliminate unnecessary purchases 25

Optimizing Equipment Lifecycle: Enterprise Asset Management Metrics Affected Process Benefit Manage PM • Production • Scrap Value yield / rework • Equipment service life Manage labor resources • Labor utilization Manage uptime • Maintenance • Production Optimize inventory downtime • +10 • -20 to 20% to 50% • +10 to 25% • -20 to 50% yield • +10 value - availability, common across plants • -20 to 30% • -30 to 50% • -10 to 20% • Inventory • Stock-outs purchases to 20% Manage spend • Annual Officially source items • Approved suppliers, best price • - Control project costs • Manage costs within budget • Save 5 to 10% services 26

Optimizing Equipment Lifecycle: Enterprise Asset Management Next Steps • Get involved in customer advisory groups • Stop by the EXPO for a demo • Ask your account manager for an EAM Q−Scan 27

Optimizing Equipment Lifecycle: Enterprise Asset Management Questions & Answers • Bo Hagler bgh@qad. com • Nancy Majure nnm@qad. com 28

www. qad. com © QAD Inc 29