Return on Investment

1
Return on Investment

• Measuring the MAXIMO ROI

2
Net Results Doing Business In

• Africa
• Europe
• Middle East
• North America
• South America
• United Kingdom

3
Net Results Doing Business With

• Aerospace
• Automotive
• Consumer Products
• Electric, Water and Gas Utilities
• Facilities Management
• Food Beverage
• Government Military
• Industrial Distribution
• Oil and Gas Production and Refining
• Specialty Chemical
• Telecommunications

4
Why Invest in Information Technology

• Better Information
• improved decision making
• Improved Service
• process information faster - 24x7
• Increased Productivity
• do more in less time
• Competitive Advantage
• our customers prefer us!

5
Why MAXIMO?

• Why did you or would you buy MAXIMO?
• Here is what we hear?
• We need a system
• Needed to issue and track work orders
• We dont know what we are spending and where we
  are spending it
• Wanted to replace our old system
• Cant get any support from IT on our legacy
  system
• What do you mean Why MAXIMO?

6
Ultimately what are we trying to do?

• Revenue ?
• Costs ?
• Risk ?

7
MAXIMO Impact Areas

• Salable Capacity ? Revenue
• Labor ? Costs
• Materials ? Costs
• Asset Life ? Costs
• Risk ? Revenue Costs
• Opportunity Costs Revenue Costs

8
MAXIMO Impact on Operating Statements
() Increase, () Decrease, () Depends, (0) No
Definable Effect
9
Wisdom

• Knowledge of your current practices is GOOD.
• Knowledge of What you should or could be doing is
  GREAT.
• Knowledge of How to do What you need to do is
  VALUABLE.
• Doing it is PRICELESS!

10
More Wisdom

• Knowing how much you spent last year is GOOD.
• Knowing what you are going to spend next year is
  GREAT.
• Knowing the cost drivers is VALUABLE.
• Positively impacting the cost drivers is
  PRICELESS!

11
Next Year I will need

• _____ electricians.
• to conduct _____ amount of planned maintenance
  activities
• _____ money for MRO materials.
• _____ money for maintenance services.
• to replace _____ assets because of their
  projected cost of operations.

12
The Strategic MRO Imperative
Activity v. Asset Management

• Asset Management
• I will need 8 electricians because of expected
  asset demands
• I will conduct 7,500 planned maintenance tasks
  based on inspection results and analysis.
• I will spend 1.8 million based on MRO material
  consumption pattern, and inventory objectives.
• I will spend 500,000 based on smart planning and
  contractor management strategies
• I will spend 8 of my book asset value based or
  1.6 million based on improved asset management

• Activity Management
• I will need 10 electricians because I have 10 on
  staff.
• I will conduct 10,000 planned maintenance tasks
  according to my schedule.
• I will spend 2.5 million on MRO supplies based
  on last years buying practices and results.
• I will spend 750,000 in outside maintenance
  services per a general service agreement.
• I will spend 10 of my book asset value or 2
  Million in capital improvements.

1,600,000
13
MRO Softwares Value Impact Assessment

• The VIA uses a systematic approach to extracting
  the value proposition of MAXIMO and Associated
  Technology.
• Discovery Meeting
• Pre-Assessment Activities
• On-site Assessment
• Report Generation and Presentation

14
Demand Supply Compression (DSC) Goal To
achieve the absolute economic advantage in the
marketplace.
Technology Interventions
Total Cost of Operations

Continuous Improvement


0
time
Future Perfect
15
Value Impact Assessment

• The VIA follows the Strategic MRO, powered by
  DSC Guiding Principles.
• Define the Value Stream
• Connect the Asset to the Value Stream
• Connect Demand to the Asset
• Connect Supply to Demand
• Compress Demand Supply Connections

16
Define the Value Stream
U
N
I
T
Of
V
A
L
U
E

• Your company creates value. For example
• Water Company
• Automotive Manufacturer
• Mobile Telecommunications
• Military Base Operations
• Truck Load Freight Company
• Chemical Company
• Your MAXIMO and Associated Technology
  Investments must advance the value creation of
  your organization. Period!

17
Connect the Asset to the Value Stream
U
N
I
T
Of
V
A
L
U
E
Asset Lifecycle
Types of Assets
MAXIMO Value

• Plan
• Design
• Build
• Acquire
• Install
• Use
• Maintain Repair
• Overhaul
• Dispose

• Plan
• Design
• Build
• Acquire
• Install
• Use
• Maintain Repair
• Overhaul
• Dispose

• Asset Criticality Classes
• Asset Profiles
• Asset Portfolio Management
• Tracking Indirect Costs per Asset
• Labor
• Material
• Special Equipment
• Integrated to Accounting systems enables full
  financial planning

18
Connect the Asset to the Value Stream
U
N
I
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Of
V
A
L
U
E
Asset Lifecycle
Types of Assets
MAXIMO Value

• Plan
• Design
• Build
• Acquire
• Install
• Use
• Maintain Repair
• Overhaul
• Dispose

• Asset Performance Forecasting and Tracking
• Availability Analysis
• Drives Supply Response
• Overall Equipment Effectiveness
• Supports TPM, RCM, ZBM initiatives
• Early Equipment Management

19
MAXIMO ROI
Di
Disposal

• In Connecting the Asset to the Value Stream we
  start by estimating the Total Cost of Ownership
  for an Asset.
• Knowledge of TCO and Availability Requirements is
  used to support target costing programs.
• The goal is to drive down possession costs.
• 10 TCO reduction for the asset in question.
• Lots of Assets to go!

Di
Po
Po
Possession
TCO
Ac
Ac
Acquisition
Pu
Pu
Purchase Price
A to VS
VS
20
Connect Demand to the Asset
U
N
I
T
Of
V
A
L
U
E
Asset Lifecycle
Asset Demands
MAXIMO Value

• Plan
• Design
• Build
• Acquire
• Install
• Use
• Maintain Repair
• Overhaul
• Dispose

• Failure Modes
• Safety/Env.
• Availability
• Quality
• Performance
• Cost
• MTTR Expectations v. Actual
• Reliability Analysis
• Real Time FMEA

• All Failures Not Equal
• Asset Availability Requirements
• Frequency of Demand
• Sporadic vs. Chronic

21
Connect Demand to the Asset
U
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T
Of
V
A
L
U
E
Asset Lifecycle
Asset Demands
MAXIMO Value

• Plan
• Design
• Build
• Acquire
• Install
• Use
• Maintain Repair
• Overhaul
• Dispose

• Demand Criticality Classification (ranking
  System)
• Real Time Performance Tracking
• CBM
• SCADA, DCS
• OEE

• Proactive Demand vs. Reactive Demand
• Goal is to Extend Demand Lead Time for PM and CM

22
MAXIMO ROI
Earnings
Di
Ea

• In connecting demand to the asset we attempt to
  increase Reliability to increase Availability
  (capacity), resulting in increased Earnings
  Potential
• Increased Reliability reduces cost of maintenance
  labor and MRO supplies.

Di
Disposal
Po
Di
Po
Po
Possession
TCO
Ac
Ac
Ac
Acquisition
Pu
Pu
Pu
Purchase Price
A to VS
VS
D to A
23
Connect Supply to Demand - Labor
U
N
I
T
Of
V
A
L
U
E
Asset Lifecycle
Supply - Labor
MAXIMO Value

• Plan
• Design
• Build
• Acquire
• Install
• Use
• Maintain Repair
• Overhaul
• Dispose

• Matching Labor with Demand
• Location Hierarchies
• Crew Locations
• Repair Shops
• Matching Labor with Demand
• Job Plans
• Craft Designations

• Labor Positioning
• To Asset
• To Labor
• Labor Skills
• Multi-skilling
• Autonomous Maintenance

24
Connect Supply to Demand - Labor
U
N
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T
Of
V
A
L
U
E
Asset Lifecycle
Supply - Labor
MAXIMO Value

• Plan
• Design
• Build
• Acquire
• Install
• Use
• Maintain Repair
• Overhaul
• Dispose

• Mobile Communications
• Smart Planning
• Asset Criticality
• Demand Criticality
• Geographic Density
• Skill Density
• Opportunity Maintenance
• Contractor Management

• Labor Communications
• Real time
• Prioritization of Work
• Contractor Services

25
Connect Supply to Demand - Materials
U
N
I
T
Of
V
A
L
U
E
Asset Lifecycle
Supply - Materials
MAXIMO Value

• Plan
• Design
• Build
• Acquire
• Install
• Use
• Maintain Repair
• Overhaul
• Dispose

• Warranty, Repair and rotating equipment tracking
• Inventory Availability Analysis
• Consumption Based ROP, ROQ

• Consumables, Spares, and Repairs Strategy
• Stock v. Non-Stock
• Inventory Optimization

26
Connect Supply to Demand - Materials
U
N
I
T
Of
V
A
L
U
E
Asset Lifecycle
Supply - Materials
MAXIMO Value

• Plan
• Design
• Build
• Acquire
• Install
• Use
• Maintain Repair
• Overhaul
• Dispose

• Stocking Locations and Materials tied to Asset
  and availability requirements
• IT Asset Management
• Three way match initiates AP transaction

• Smart Storeroom
• IT Assets
• Smart Payment

27
Connect Supply to Demand - Materials
U
N
I
T
Of
V
A
L
U
E
Asset Lifecycle
Supply - Materials
MAXIMO Value

• Plan
• Design
• Build
• Acquire
• Install
• Use
• Maintain Repair
• Overhaul
• Dispose

• Spend Analysis data through Asset Catalog
• Online Commerce Services
• Catalog Management
• Workflow

• Strategic Sourcing
• Supply Transparency
• Order Fulfillment
• Decentralized Sourcing

28
Connect Supply to Demand
U
N
I
T
Of
V
A
L
U
E
Asset Lifecycle
Asset Value
MAXIMO Value

• Plan
• Design
• Build
• Acquire
• Install
• Use
• Maintain Repair
• Overhaul
• Dispose

• Asset Portfolio data
• Replacement value
• Indirect Costs
• Safety/ Environmental findings
• OEE Tracking
• Connect to asset register in accounting system

• Condition Assessment
• Asset Disposal

29
MAXIMO ROI
Earnings
Di
Ea
Ea

• In connecting supply to demand we attempt to
  reduce the TCO components associated with Labor
  and Materials
• Increased Earnings through improved availability
• Reduced labor through improved scheduling
• Material costs reduction through standardization,
  price reductions, reduction in consumption,
  reduction in minimum stock levels

Di
Po
Di
Disposal
Po
Po
Di
Po
Possession
TCO
Ac
Ac
Ac
Acquisition
Ac
Pu
Pu
Pu
Pu
Purchase Price
A to VS
VS
D to A
S to D
30
Compress Demand Supply Connections
U
N
I
T
Of
V
A
L
U
E
Asset Lifecycle
DSC Guiding Principles
MAXIMO Value

• Plan
• Design
• Build
• Acquire
• Install
• Use
• Maintain Repair
• Overhaul
• Dispose

• Asset Lifecycle Management
• Work Management
• MRO Supply Chain Management
• Better Information
• Improved Service
• Increased Productivity
• Competitive Advantage

• Define the Value Stream
• Connect Assets to the Value Stream
• Connect Demand to the Asset
• Connect Supply to Demand Labor Materials
• Compress Demand Supply Connections

31
High Level Practical Paths Forward
Materials
Labor
Salable Capacity
CAPEX
1
2
3
5
RISK
4
Opportunity Costs
Opportunity Costs
Opportunity Costs
Opportunity Costs
6
6
6
6
32
Develop Detailed PPF - Materials
33
Common Findings

• Salable Capacity / Mission Capacity
• 1 - 5 increase in Salable Capacity if
  preventable downtime would have occurred.
• Labor
• 10-20 reduction in maintenance labor straight
  time and overtime through improved scheduling
  techniques, failure reduction, integration with
  materials planning, and a formal contractor
  management process.
• 5-50 reduction in production labor overtime due
  to improved maintenance practices.
• Materials
• 25 to 75 reduction in inventory investment
  through improved stocking and replenishment
  practices.
• 5 to 50 reduction in production related scrap
  and rework due to improved maintenance practices.

34
Reasons Not to Trust ROI Results

• Based on Industry Benchmarks versus true
  understanding of existing processes.
• Assessor not grounded in reality
• engineering practices
• maintenance practices
• purchasing practices
• distribution practices
• Lack of understanding of better and best
  practices and their applicability to your
  operations.
• Unclear Adoption Strategy and Rates
• Slicing and dicing People without understanding
  true nature of their efforts
• Unable to distinguish role of technology from
  process changes or leadership decisions.

35
KitBa CAB Inc.
36
KitBa CABs Value Stream

• The KitBa CAB plant is a stock production
  operation with 2001 sales estimated at 60
  million.
• The current product lifecycle is estimated at 10
  years, before a significant model change is
  experienced.
• All product sales are through distributors, thus
  KitBa CAB manufactures and ships to distributor
  stock.
• The current distribution channel structure does
  not require the KitBa CAB operations to produce
  and deliver stock cabinets to specific consumer
  orders.

37
KitBa CABs Stated Objectives

• Want to standardize asset management strategies
  and practices
• Want to develop a KitBa CAB Asset Management
  System that is deployable and certifiable
• Want to standardize on supporting technology,
  i.e., CMMS EAM?
• Implement Autonomous Maintenance where it makes
  sense
• Integrate Asset Management Strategy with Lean/6
  Sigma efforts
• Share maintenance best practices
• Lower cost of operations in response to market
  price pressures
• Improve manufacturing performance
• Have spent considerable money on new assets want
  to do a better job at maintaining them.
• Want to leverage MRO spend
• Want to eventually connect to supply chain using
  e-commerce technology

38
What to Do? Practical Path Forward

• MAXIMO technology uniquely aligns with Lean
  Enterprise and Six Sigma Initiatives.
• Guiding Principles
• Future Perfect Objectives
• Lead Time Reduction
• Elimination of Waste and Non-Value Adding
  activities
• Cost Reduction
• Quality Improvement
• Variation Reduction Asset Performance

39
KitBa CAB Plant, Property, Equipment
The fixed asset turnover ratio, based on an
estimated 60 million in sales, is
60,000,000/10,194,694 5.88. The industry
ratio for NAICS code 337 Furniture Related
Product Mfg is 3.69. This would suggest that
KitBa CAB is producing value using less invested
cost in its assets, and/or that its assets are
older than the average of the industry.
40
KitBa CAB Asset Cost Tracking
41
KitBa CAB - Practical Path Forward

• Defining Critical Assets
• Managing Asset Profiles and Portfolios
• Applying Asset Standards
• Doing it right the first time, every time!

42
KitBa CABs Equipment Downtime WO Statistics
43
KitBa CABs Practical Path Forward

• Demand Criticality Classification
• Failure Codes and Diagnostic Information
• Location and Asset-based Failure Analysis
• TPM, ZBM, RCM
• Formal Asset Condition Assessment Process
• Early Equipment Management

44
KitBa Cab Work Order Process Results

• In FY02, KitBa CAB conducted 2,911 scheduled work
  orders, of which 1,737 were completed on time
  for a performance level of 59.7.

45
KitBa CABs Practical Path Forward

• Proactive v. Reactive Strategy Management
• Smart Planning and Scheduling
• Work Order Analysis
• Mobile Technology
• Maintenance Practice Compliance
• Technician Skill Development

46
KitBa CAB Materials
47
KitBa Cabs Practical Path Forward

• Strategic Sourcing
• Smart Storeroom Management
• Smart Inventory Management
• Requisition Purchase Order Process
• Warranty Tracking
• Payment Process

48
Practical Paths Forward KitBa CAB
49
PPF Phases for KitBa CAB
50
And the results are!
Five Plant MAXIMO Proposal
51
MRO Software
SAMM Strategic Asset Management Methodologies
Services
52
Strategic MRO, powered by DSC

• Contact your MRO Software Service Provider or
• Contact us at
• www.netresultsgroup.com
• Email
• netresults_at_netresultsgroup.com
• RichMac_at_netresultsgroup.com
• Phone
• 1 502.228.5519

www.productivityinc.com