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Intentia EAM Survey Shows Inadequate Maintenance Strategies Costing Businesses Millions

  • 19 January, 2005 11:51

<p>Reluctance to spend on preventive maintenance leaves one of the few remaining, direct influencers on the bottom line untapped, Intentia says.</p>
<p>Australia/New Zealand – January 2005. Intentia has released findings from its 2004 global enterprise asset management (EAM) benchmarking survey. The results suggest that inadequate maintenance strategies are resulting in unnecessary losses and missed profit opportunities for organizations.</p>
<p>The survey investigated maintenance practices within businesses such as the power, infrastructure and utilities, manufacturing, food and beverage, and pharmaceutical sectors.</p>
<p>Intentia believes the findings generally suggest a troubling disparity between the views businesses hold about the value of preventive maintenance and the actual commitment of sufficient resources or budget to these needs. As a result, Intentia believes that many businesses are failing to take advantage of what could be one of the few remaining truly untapped business benefit areas that can directly impact bottom line performance.</p>
<p>The benchmarking results of the survey show that for those businesses still asking whether preventive maintenance is worth the cost and effort, the real question now becomes how can they afford not to invest in preventive maintenance?</p>
<p>Over 85 percent of survey respondents agreed that preventive maintenance increases production and operations capacity, with almost two-thirds reporting that their preventive maintenance gave them a competitive advantage in their market. However, the proportion of actual spending committed to maintenance by the majority of organizations (from the total cost of operations) is less than 10 percent—with almost two-thirds allocating less than half of their maintenance budgets for preventive works.</p>
<p>Yet more than half of the respondents indicated that their individual annual production losses due to plant equipment failure could be anything up to USD 50,000. Even more troubling are those businesses that are counting their cost of lost production in the millions. Almost seven percent of survey respondents reported average annual lost production costs in excess of USD 1 million.</p>
<p>Intentia believes even these figures are understated since many organizations do not fully consider the true cost of downtime, which can include scrap, lost customers, higher unit costs, and additional labor and utility overheads.</p>
<p>“These days, businesses are under increased pressure to deliver more for less, with reduced resources and budgets. Yet areas such as preventive maintenance, criticality analysis and diagnostic management are still some of the few operational areas left that offer true improvement potential, and ultimately impact a company’s profitability,” says Brian Dunks, EAM industry solutions director at Intentia.</p>
<p>“For many businesses, a planned maintenance strategy is critical to reducing the risk of equipment failure and downtime, meeting industry safety requirements, and ensuring business continuity and plant availability in order to maximize productivity and, ultimately, profitability,” he says.</p>
<p>Intentia also believes that when an unavoidable breakdown does occur, particularly if it impacts more than 50 percent of a plant, it is imperative that organizations are in a position to react quickly to minimize the impact of the stoppage.</p>
<p>“Additionally, increasing the availability of equipment can also have an impact along the entire supply chain, such as enabling an operations group to complete customer orders on time to cost specifications, thus enhancing production and service levels,” Dunks concludes.</p>
<p>Prevention or Cure?
Intentia believes a key problem is that many businesses still hold the perspective that maintenance is a cost rather than an investment in their business.</p>
<p>“Though viewing equipment failure, or even wear and tear, as a profitability inhibitor, some organizations still either find themselves working in a ‘fix-it-when-broken’ mode and have not yet moved into a more preventive approach, or in some cases are yet to be convinced of the extent of value a preventive maintenance plan offers,” Dunks explains.</p>
<p>“A ‘corrective’ strategy is not necessarily a negative thing. In fact, some businesses, such as power and utilities organizations, indicated a high reliance on redundancy systems as a backup rather than total reliance on preventive maintenance,” he says.</p>
<p>However, for those operating in conditions where lean organizations are dominant, or where safety and continuity is paramount (such as pharmaceutical/chemical businesses and facilities/infrastructure organizations), businesses need to understand the potential savings a simple preventive maintenance strategy can provide.</p>
<p>Key Inhibitors to Change
· Management Support
Poor comprehension of maintenance problems by other line managers is a growing problem, with an almost 8 percent increase in this view over the previous year’s survey. This trend was particularly prevalent across larger organizations.</p>
<p>“Advanced maintenance techniques such as reliability centered maintenance (RCM) and the value they bring are not earning enough support from broader management or recognition of the return on investment they offer,” Dunks says.</p>
<p>“However, the responsibility does not lie solely with the broader management team. It is time for maintenance departments to become more proactive in communicating some of the benefits of modern maintenance management techniques,” he says.</p>
<p>· Funding Issues
Lack of funding is also shown to be an inhibitor with 20 percent of respondents in each case indicating it as a major issue.</p>
<p>Poor capital purchasing decisions were also cited as a contributing factor in getting changes to maintenance practices in place.</p>
<p>“These trends emphasize the need for ROI calculations for EAM, and for maintenance managers to better sell the end-game benefits to the decision makers in their organizations,” Dunks says.</p>
<p>· Staff Shortages
Shortage of staff resources were cited by some to be an issue, though this was more prevalent across European operations with 18.6 percent highlighting this compared to 12 percent in Australasia.</p>
<p>Customers that currently benefit from Intentia’s EAM solution include Zeochem, Astra Tech AB, Busco Sugar Milling Company, Tnuva, Pronova Biocare, Bluescope Steel, Dublin Port, IKEA, Nissan North America and Japan, LKAB, Francais de Mecanique and Stanwell Corporation Limited.</p>
<p>ENDS</p>
<p>About the Survey</p>
<p>In 2003, Intentia set out to create the first global enterprise asset management survey. Now in its second year, the survey is continuing to provide maintenance professionals with the only guide to help benchmark and judge their performance on key maintenance and asset management issues.</p>
<p>In all, the survey investigated maintenance practices within a number of industry sectors that included food and beverage, pharmaceutical and chemical, general manufacturing, facilities and infrastructure, and power generation and utilities.</p>
<p>About Intentia
Intentia is the only global enterprise solutions provider 100 percent dedicated to bringing software applications and consulting services to companies whose core processes involve manufacturing, distribution and maintenance—what we call the “make, move and maintain” market.</p>
<p>- 100 percent of our resources are committed to this market.
- 100 percent of our software is designed for this market.
- 100 percent of our experience is in serving this market.</p>
<p>Intentia customers are typically medium to large organizations. They require the reliability, experience and security of a substantial supplier with the flexibility and specialist knowledge of their industries and processes.</p>
<p>Intentia solutions are built from the ground up with the specific needs of these customers in mind, and the ability to grow and change easily with their businesses. They simplify complex processes, anticipate customer demands and deliver added value in both the short and long term—making them the intelligent choice.</p>
<p>Intentia has over 20 years of experience in serving more than 3,400 customers in some 40 countries around the world. Our business solutions currently comprise enterprise management, supplier relationship management, customer relationship management, supply chain management, value chain collaboration, enterprise performance management and workplace management.</p>
<p>Intentia is a public company traded on the Stockholm Stock Exchange (XSSE) under the symbol INT B. Visit Intentia’s Web site at www.intentia.com</p>
<p>Intentia—The Intelligent Choice</p>
<p>Media Inquiries:
Lannette Cox
PR Manager
Intentia Australia &amp; New Zealand
+62 1 8437 5803
lannette.cox@intentia.com.au</p>

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