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How ready are your manufacturing facilities for the expected increases in manufacturing production orders and capacity forecast for 2011? Confidence is so high that revenues for 2011 are expected to increase by 5% and capital expenditures to increase 14.5%. In addition, 71% of purchasing and executives expect to spend on tools for better asset and maintenance management.

Other items of note from the Dec 2010, report from the Institute for Supply Management include capacity changes and utilization forecasts, a minor increase in labor and benefit expenses and the principal means to achieving an increase in production capacity.

Why Manufacturing is Important

Contrary to popular belief that all of our manufacturing is done in SE Asia, manufacturing in the USA accounts for:

  • Employment of almost 12 million people or 9% of the American workforce.
  • Adding $1.6 trillion annually to the US economy
  • 19% of the World’s manufacturing output.

Some industries are expecting higher growth than others but the signs are there of a small to moderate economic recovery. Coincidently, non-manufacturing facilities are also expecting slight increases in production, capacity and revenues.

The difficulties of the deep recession we are mired in have finally led executives to realize that asset and maintenance management need to be taken to a whole new level of visibility.

Supply Chain Optimization

As part of the ISM report, industry executives were asked how they would increase supply chain optimization. The results strongly pointed in favor of increased asset management attention for both manufacturing and non-manufacturing segments. The most popular responses included:

Top 5 Executive Responses for Manufacturing Optimization

  1. Improved inventory/asset management
  2. Cost reduction
  3. Supplier development/better metrics
  4. Supplier consolidation
  5. Better risk management
Top 5 Executive Responses for Non-Manufacturing Optimization
  1. Process improvement
  2. Enhancement and leverage of technology
  3. Product rationalization
  4. Supplier management/consolidation
  5. Strategic cost management

Clearly, there is recognition that all assets need to be managed from the planning stage through asset retirement. The common thread between the two lists is a need to understand where the bottlenecks and pains are and then find a way to lower asset lifecycle TCO to impact the bottom line.

Although there are numerous definitions of supply change management, the following definition captures a good top level perspective.

“The design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally.”

Source: Wikipedia, Definition of Supply Chain Management

This need for change is not just for supply chain management, it is a need for manufacturing organizations as a whole. Those organizations that do not pay greater attention to their internal asset and maintenance operations run the risk of failing to survive a continued recession period and put themselves at risk for the next economic downturn.

Whether you are restarting existing manufacturing plants, increasing capacity or building a new facility, it is critical that your operations install or start with the proper asset management software to sustain efficient operations over the long term.

EAM and CMMS Asset Management Tools

There a number of software solutions that can help manage labor costs, inventory management, asset care and predictive maintenance technologies such as a CMMS. However, when assets must be managed from planning to replacement including vendor management, document control and capital budgeting with an Enterprise Asset Management (EAM) system becomes a better fit.

EAM software combines the work order lifecycle management tools of a CMMS solution with long term planning tools. It does this by:

EAM Increases Value
  • Recording all vendor documents such as contracts, blueprints, warranties, service costs and performance notes. This allows facility or supply chain managers to track vendor performance, spot vendor redundancy and consolidate where applicable.
  • Creating a database of all historical work order lifecycle maintenance. Management reports then enhance facility management decisions to identify causes and solutions for reducing downtime, unplanned asset maintenance enabling for better long term capital budgeting.
  • Modern EAM handheld technologies are used to increase efficiencies in virtually all aspects of asset care. By eliminating manual or paper processes are more efficient and costs are reduced.

If your manufacturing operations are planning on investing in asset management, process improvement or other costs reductions changes, an EAM software solution is a good place to start.