5 biggest asset management issues that can cost manufacturers a fortune

Asset management is a key part of any manufacturing plant’s operations. Assets at a manufacturing facility include physical objects like machines, production lines, products, and the buildings that house them.

Managing these physical assets requires and affects human resources, financial assets, and informational assets which makes it an integral part of plant management. The importance of asset management in achieving manufacturing goals cannot be overstated.

Manufacturing asset management involves multiple decision-making duties related to asset use, capital investment in assets, sale of assets, maintenance schedules, and managing inventory.

Good asset management improves asset utilization and ensures better maintenance - which has a positive effect on the entire plant. At the same time, when a plant faces asset management issues, it can cost the manufacturer large sums of money and work hours. These are the five biggest asset management issues that can end up costing you a fortune.

Lost assets

Large manufacturing facilities have a large number of assets. The operations depend on all these assets being at the right places at the right time. When an asset is lost in-between operations, it can kick off a chain reaction that can disrupt a part of the production system or even the whole plant depending upon the lost asset.

Lost assets cost a company in multiple ways. The work hours and resources spent on recovering an asset, and in some cases replacing them, add up when assets are lost regularly. The biggest cost is incurred when production is affected. Prolonged delays in production cost in monetary terms; even more importantly, they may affect a manufacturer’s reputation when they happen often.

With increasing competition and the adoption of Industry 4.0 technologies, having a smarter asset management system is a necessity. Smart factories require reliable asset tracking to perform at the highest efficiency. A modern Enterprise Asset Management system can improve asset tracking for faster recovery and reduce the number of lost assets.

Maintenance scheduling

Manufacturing plants rely on assets to keep production running at high rates in order to achieve production goals. For a long time, the primary management that assets required was maintenance, and it is still an important part of modern asset management.

Assets, especially machines, require regular maintenance to avoid breakages and failures. When there are issues with maintenance scheduling, machines work at lower efficiencies, face increased wear, and are at a higher risk of failure.

When the machines work at lower efficiency, the cost of production shoots up and manufacturing goals become difficult to meet. The wear reduces the life of machines - which means a lower return on investment in the long term.

The biggest issue might be the failure or breakage of a machine which can grind production to a halt, costing large amounts of money in lost production hours.

Maintenance scheduling has improved over the years through integration with other aspects of asset management. A smart EAM software improves maintenance scheduling through the use of real-time data from machines and integrated systems.

This is called predictive maintenance, and it reduces downtime considerably, saving time and resources.

Unreliable data

Industry 4.0 relies on data from all parts of the manufacturing systems to improve production. Big data analytics requires reliable data to provide solutions for production issues, including predictive maintenance, asset use, investment, and disinvestment. Poor asset management can generate unreliable data that can end up affecting the decision-making processes negatively.

The decisions made about assets affect production as well as the financials of the company. To make sure the decisions reflect the needs of the plant, all systems need to produce reliable data.

Moving to a better asset management system that captures data and combines it for real-time analysis can improve the reliability of data and help improve the decision-making process. Decisions made with more accurate data and streamlined analytics can save huge amounts of money.

Employee safety

Safety standards in the manufacturing industry are always getting stricter and meeting them can be difficult if all assets are not well-managed. The increasing adoption of smart manufacturing has also increased the need for the safety of people working around new technologies.

An asset management system that isn’t up to modern safety standards can cause issues around new technologies and prove ineffective in managing these assets effectively.

All plants take the safety of people seriously and assign high priority to it. When new assets are added to the production system, the effect on the safety of people has to be assessed, as the two are in direct contact with each other on the floor.

Based on the assessments, new SOPs, guidelines, and safety equipment can be introduced to ensure the safety of human resources. Investment in asset management always pays back in terms of worker safety.

Production flexibility

Production flexibility is a vital part of today’s manufacturing landscape. Plants that can’t operate efficiently at different rates, and adapt to changes in the design, become less competitive.

Asset management plays an important role in providing plant production flexibility. If the asset management system isn’t efficient, production might become vulnerable to changes and fail to perform well when the conditions are different.

Losing production flexibility due to asset management can have long-term negative effects on production cost and competitiveness. When assets are managed efficiently, they can be used at the required capacity, based on demand fluctuations, without losing efficiency.

Conclusion

Asset management has been gaining more and more focus from the manufacturing industry in recent years. In the current competitive market, no manufacturer can afford losses due to poor asset management. Keeping up with the times, manufacturers around the world are investing in better EAM to optimize their production systems. The potential costs of issues caused by poor asset management are usually higher than the investment required for a better system.

- The author, Eric Whitley, has 30 years of experience in the manufacturing sector, and is also an expert in lean and smart manufacturing practices and technologies. Over the years, Eric has worked with all sectors of industry including Food, Timber, Construction, Chemical, and Automotive to name a few. Currently, he works for Nevada-based smart factory experts Leading2Lean.

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