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Asset Failure: Why Risk it?

Fri, 04/27/2012 - 6:40am
MIKE SCHMIDT, Associate Editor, Manufacturing Business Technology

It’s no real secret that companies that fail to store data necessary to support asset integrity management in a secure and accessible enterprise system are exposing themselves to greater enterprise risk. But what seems unclear to some manufacturing executives is how significant an issue this is, and what exactly should be done about it.

Do you think your manufacturing enterprise has a good handle on asset management? It’s possible, but there’s a pretty decent chance that isn’t the case.

A recent study conducted by IFS North America and independent research-based consulting firm Mint Jutras found that asset integrity management is still an unrealized opportunity for many middle-market and large manufacturers today. Furthermore, the study revealed that EAM and CMMS solutions are not widely adopted today and other applications, such as spreadsheets, still play a significant role in tracking requirements.

It’s no real secret that companies that fail to store data necessary to support asset integrity management in a secure and accessible enterprise system are exposing themselves to greater enterprise risk. But what seems unclear to some manufacturing executives is how significant an issue this is, and what exactly should be done about it.

“I really don’t know what the delay is, except you have to think a lot of the executives have a lot of experience running their companies, and frankly I don’t think they understand the true value,” says Patrick Zirnhelt, IFS North America Director for Asset Management.

“I think they think they are getting all the information they need, when in reality they don’t have the basis for it,” he adds.

In many cases manufacturers have started to recognize the capabilities of solutions such as ERP, CRM, EAM, and CMMS. However, actually investing in these tools is far less prevalent. According to the survey, only 37% of respondents currently have EAM/CMMS solutions in place. In addition, 49% do not use applications to manage documents about their assets.

IFS

So it’s not that manufacturers don’t have some measures to track asset integrity in place. They do. But those measures may not provide the proper information, the right amount of information, or even something as simple and basic as the most accurate information. Furthermore, manufacturers may not be able to validate that information or even determine its origin.

“Executives have been getting by with seeing this information, or seeing some sort of information, but not questioning how valid it is,” says Zirnhelt.

“And ultimately they are responsible for it,” he continues. “They can’t hide behind anybody.”

Being responsible can mean many things, including having a risk mitigation or asset integrity management plan in place. According to the survey, 58% of respondents reported that their company has developed such a plan. However, one of the most puzzling survey findings cited that 28% of respondents stated they don’t know if their company has a risk mitigation or asset integrity management plan.

Zirnhelt states that this lack of knowledge could be a result of a number of different factors, including lack of communication, disparate systems, or the presence of an inadequate or incomplete plan. These factors can lead to a number of significant issues for manufacturers, most notably additional cost.

“If you’re not managing assets properly, you don’t know what the cost of those assets are and (what the cost is) to repair those assets,” he says. “That creates a big risk to an organization.”

IFS 2

This has put pressure on manufacturers to seriously address risk mitigation and asset integrity management and move beyond the traditional ways of dealing with business data. Young, tech-savvy employees are flooding the manufacturing industry today, and some are wondering why their employers are using archaic systems or Excel spreadsheets to provide them with critical business data. On the other side, many executives are starting to realize it is time to get serious about potentially investing in an integrated enterprise system or collecting business data in a more efficient manner due to all the risk that is associated with not having access to it.

And it’s that risk that is only going to lead to more pressure in the coming years, says Zirnhelt.

“The pressure’s been there, but my impression is that executives, in an average sense, don’t appreciate it,” he continues. “It has just taken them a long time to appreciate the severity of it.”

IFS is develops, supplies, and implements IFS Applications, a component-based extended ERP suite built on SOA technology. IFS focus on agile businesses where any of four core processes are strategic: Service & asset management, manufacturing, supply chain, and project.

For more information, please visit 
www.ifsworld.com.

 

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