Firms in resource-intensive industries such as utilities, manufacturing, and transportation, need to be able to optimize assets while minimizing capital expenditures. Savvy companies are utilizing asset lifecycle management (ALM) applications, such as Oracle E-Business Suite, to maintain all data related to acquiring, operating, and retiring enterprise assets. Such applications help firms to monitor the performance and health of assets in an efficient and proactive way. Learn how Alcoa, the aluminum giant with 130,000 employees and manufacturing facilities in 39 countries, is benefiting from a comprehensive enterprise asset management (EAM) strategy that leverages a single source of EAM data to share information across applications. Alcoa uses Oracle Enterprise Asset Management to more closely match its maintenance strategy to production requirements. Cabot Electronics Corporation, a leading developer of sophisticated polishing compounds, also depends on Oracle Enterprise Asset Management for improved asset management. The company reports that the application has been a critical tool for performing and documenting preventive maintenance activities. In addition, Cabot Electronics has improved record keeping and achieved impressive cost savings with its EAM strategy.

As Published In November 2006

The Asset Lifecycle
By David Baum

Information systems should control every aspect of the asset lifecycle.

In resource-intensive industries such as manufacturing, transportation, and utilities, effective use of assets can mean the difference between profit and loss, compliance and noncompliance, and leading the market and falling behind. Companies in these industries operate a broad range of asset types, including warehouse facilities, vehicle fleets, process control equipment, packaging facilities, and treatment plants. To make the most of these assets and minimize capital expenditures, they need information systems that control every aspect of the asset lifecycle, from procurement through retirement.

Once asset information is properly collected and stored, enterprise applications such as Oracle E-Business Suite monitor the health and performance of those assets. Commonly called asset lifecycle management (ALM) applications, these applications maintain all information related to acquiring, specifying, operating, and retiring enterprise assets, making them available to all pertinent users throughout the enterprise.

Snapshots Alcoa www.alcoa.com Location: Pittsburgh, Pennsylvania Alcoa's aluminum products and components are used worldwide in aircraft, automobiles, beverage cans, buildings, chemicals, and sports and recreation gear. Alcoa produces a wide variety of industrial and consumer branded products such as Alcoa wheels, Reynolds Wrap aluminum foil, and Baco household wraps. Number of employees: 130,000 Annual revenue: US$23 billion Oracle products and services: Oracle E-Business Suite, including Advanced Supply Chain Planning, Configurator, Discrete Manufacturing, Enterprise Asset Management, Financials, Human Resources, iProcurement, iRecruitment, Order Management, Process Manufacturing, Project Costing, Training Administration, Tutor; Oracle Discoverer; Oracle Warehouse Builder; Oracle University; Oracle Consulting Services Cabot Microelectronics www.cabotcmp.com Location: Pittsburgh, Pennsylvania Cabot Microelectronics is the world's leading supplier of chemical mechanical planarization slurries used in semiconductor and data storage manufacturing. The company operates in China, France, Germany, Japan, Singapore, South Korea, Taiwan, the U.K., and the U.S. Number of employees: 650 Annual revenue: US$270 million Oracle products and services: Oracle E-Business Suite, including Applications Outsourcing, Demand Planning, Financials, Financials Intelligence, iProcurement, Order Management, Process Manufacturing, Project Costing, Purchasing, Purchasing Intelligence, Sales Analyzer

"Ultimately, the information itself becomes part of the asset, a library of data governed by a series of workflows and triggers on that data," explains Stephen Slade, director of applications and marketing for Oracle's service and maintenance product line. "The ERP [enterprise resource planning] system then knows what action to take at any particular time regarding maintenance, inspection, or any type of service protocol, so companies can take charge of asset management activities."

According to Slade, although most companies have been capturing asset information for decades, they have not been making optimal use of the data. It's often a simple problem of visibility: Maintenance histories, for example, are typically tracked in isolated spreadsheets managed by asset operators and unavailable to the rest of the enterprise. This isolation makes it difficult for a purchasing manager to plan and budget, or for a compliance officer to respond to a quality-control audit.

"There are a lot of vital assets sitting around, but without coherent information governing their maintenance, operating conditions, and use, it is difficult to know precisely which assets are in place, let alone how to plan, forecast, or budget for capital improvements," says Slade.

Getting It Together

Today, asset management experts are focused on centralizing information, adopting standard business processes, and understanding asset conditions in a more cohesive way.

"Companies with significant investments in fixed, physical, and capital assets can no longer rely on outdated systems and processes to procure, maintain, repair, refurbish, and dispose of those assets," says Mark Vigoroso, chief research officer and service director for service chain management at Aberdeen Group. "The asset manager's job is to ensure that the value generated from these assets exceeds the investments made in them."

The solution, Vigoroso believes, is a holistic asset management strategy that drives improvements in automation—optimizing performance of plants and equipment while reducing unplanned downtime and unneeded maintenance. This approach demands a single source of asset data to support the collection, normalization, and dissemination of asset-related information. "The goal of asset management is to reduce total lifecycle costs while delivering a higher return on fixed assets to shareholders," he adds. "Only when resources and knowledge are shared across departments can this be fully achieved."

Leveraging a Common Platform

Industrial manufacturers pursue many of these same objectives under the auspices of the Lean manufacturing model. Consider Alcoa, where managers are rolling out a comprehensive enterprise asset management (EAM) strategy that encompasses everything from aluminum smelters and extruders to power plants, refineries, and rolling mills. With 130,000 employees, US$23 billion in revenue, and facilities in 39 countries, Alcoa relies on highly advanced information systems to maintain operational efficiency. As part of its Lean initiative, the aluminum giant is leveraging a single source of EAM data to share information across applications.

"We wanted to get to one common platform to launch maintenance activities," recalls Albert Cooksey, Jr., former project manager for Alcoa's EAM project, now serving as director of asset management at Q1 Technologies.

Alcoa's EAM strategy emerged in 2000, when the company automated several key business functions with a global implementation of Oracle E-Business Suite. In the process, the company delivered a common data model to support consistent business processes at hundreds of facilities. Now, business applications based on a single, integrated source of data could help eliminate excess in several areas of the enterprise—reducing part inventories; promoting environmental, health, and safety policies; simplifying production and maintenance; and improving efficiency of contracted services.

Today, Oracle Enterprise Asset Management enables Alcoa to more closely map its maintenance strategy to its production requirements. Many of Alcoa's asset requirements—from engineering design and recommended maintenance to utilization-based requirements—are now being traced and coordinated from a single location.

So far, Alcoa has implemented Oracle Enterprise Asset Management at more than 40 of its production facilities. Once fully deployed, the software will encompass more than 100 manufacturing sites. According to Cooksey, this single view of assets maximizes asset utilization and eliminates outdated systems. Having a common asset management platform makes it easier to share positive results as well as to pinpoint liabilities or inadequacies. For example, if one plant has a stellar maintenance record with light cranes, other plants can view that record online to learn from the experience. Similarly, if a technician needs a part for a crane that is no longer available, that person can look at the database to find out which other facilities might have one on hand.

"Oracle Enterprise Asset Management not only enables more-efficient inventory sharing and utilization but also encourages the exchange of best practices," he says.

Working Overtime

In highly competitive markets, companies want machinery operating at 100 percent capacity. Airplanes need to be in the sky, trucks on the road, and equipment working around the clock. Achieving this level of productivity involves continually collecting information about the condition of each asset and proper analysis to plan for preventive maintenance and predict problems before they occur.

"Collecting data isn't the hard part—it's knowing which data represents actionable information," Vigoroso suggests. "For example, which event or data point should trigger a workflow based on a deviation from normal performance, whether that means contacting an operator, ordering a replacement part, scheduling a service call, or routing work in process to another production line?"

Some companies are finding answers to these questions by embedding intelligence within the assets themselves. Everything from elevators to backhoes now contains embedded diagnostics and network IP addresses that allow a manufacturer or service depot to remotely monitor, maintain, and track the asset throughout its lifecycle. For example, unit sensors can transmit temperature or pressure settings along with critical vibration and noise parameters, indicating the impending failure of a belt or a bearing.

Firms with sensitive equipment even set up closed-circuit video cameras to keep an eye on important assets and install motion detectors to alert security personnel if a trespasser or an animal violates a designated perimeter zone. "As long as the asset is functioning within normal tolerances, everything is fine," Slade explains. "But as soon as a designated threshold is exceeded—whether it be temperature, air pressure, vibration, or a parameter falling out of range—an alert can trigger immediate investigation and create a service order if needed."

In some instances, the responsibility for monitoring and maintaining assets is shifting to the manufacturers and suppliers of those assets. For example, hospital equipment for doing CAT scans and MRIs is typically maintained by the vendor rather than by hospital personnel. Aberdeen uses the term "service management" to reflect this shift of responsibility to OEMs—a new service paradigm in which systems are designed to sense, detect, analyze, and respond to changes in real time. "Bringing all of this data about operations, intrusion, and malfunctions into one place becomes the cornerstone for today's modern EAM operations," Vigoroso says.

Beating the Auditors

Keeping assets running smoothly depends on many types of data, including assets service records detailing who did the work, which parts were procured, and how much they cost. This implies links among many business processes—including human resources; customer relationship management; and backbone financial systems for invoicing, cash flow, and requisitioning.

Achieving Asset Health and Fitness Aberdeen Group recognizes four levels of maturity on the road to holistic asset management: Level 1: Reactive maintenance is a break-fix strategy generally reserved for non-mission-critical and simple equipment. The philosophy is that until a piece of equipment actually breaks, there is no need to work on it. Level 2: Preventive maintenance is a strategy used by companies that are trying to stay one step ahead of breakdowns; typically it involves mission-critical, complex, or higher-capacity equipment. The goal is to actively schedule times to do maintenance work and inspect for problems before a failure occurs. Level 3: Predictive maintenance is all about anticipating problems before they occur. Its first priority is to prevent breakdowns and work stoppages by analyzing operating conditions such as vibration sensors, quality degradation, and the constant monitoring of runtimes, which are typically compared with reference models. Level 4: Holistic asset management encompasses the previous concepts and applies each in an effort to continuously optimize, improve, and evolve the asset management processes. Source: The Asset Management Benchmark Report (Aberdeen Group, April 2006)

Establishing these links is especially valuable for responding to audits and meeting regulatory requirements. Assets must be monitored and regulated for health and safety, insurance, taxation, and other reasons. Auditors often want to know who last maintained or inspected an asset as well as view incident records, work orders, parts certification documents, and other critical information.

"Having all this information in one place makes it much easier to access it when you need it," says Slade. "That's why EAM systems enforce common data elements, common processes, and consistent naming conventions, which goes a long way toward simplifying corporate governance. This is critical information for performing future service requests, not to mention for understanding lifecycle performance trends."

In some cases, customers initiate audits of their suppliers for quality-control reasons. Such was the case for Cabot Microelectronics Corporation (CMC), a leading developer of sophisticated polishing compounds. Quality is essential to CMC's customers—primarily large semiconductor manufacturing companies that make microprocessors and other computerized components. Recurring audits motivated the manufacturing company to implement a computerized maintenance management system. Managers at the Aurora, Illinois-based company wanted to minimize reactive maintenance, improve their ability to track repair histories, correlate equipment failures with product quality, and get a handle on rising maintenance costs. They asked Oracle for help with the job.

"Oracle Enterprise Asset Management has been an invaluable tool for performing and documenting our PM [preventive maintenance] activities," says John G. Allen, a systems specialist at CMC. "Since Oracle Enterprise Asset Management was installed and we improved our processes, we have never failed an audit, and the auditors have been visibly impressed with the vast improvements."

As part of its implementation, CMC rebuilt its PM process from the ground up. The team automated reactive maintenance procedures, streamlining the process of identifying problems and initiating work orders. The team physically inspected every piece of equipment it wanted to track and entered detailed repair histories into the system. Then new PM procedures were implemented at three plants at CMC's Aurora, Illinois, campus, establishing PM frequencies to optimize annual workload. "We scrapped every PM we had and rebuilt everything," says Allen. "This included a criticality analysis of all of our equipment based on safety, quality, production, impact, costs, and other factors."

With help from Oracle Consulting and its partner the Signum Group, the team implemented the new EAM system in two plants and two labs in four months. Since then, CMC's audit results have improved fourfold.

"Having the system generate PMs allowed us to improve our record keeping dramatically," says Allen. "Instead of having a number of disparate processes managed in spreadsheets, we now have one cohesive system that gives us a global view of our assets and a single point of contact for all audits. If a customer has questions concerning quality, we can easily demonstrate the preventive maintenance actions we've taken on any piece of equipment."

There have been measurable cost savings associated with the effort as well. "By analyzing the EAM data, we determined we were spending US$300,000 to $400,000 per year on component maintenance," adds Allen. "Since then we have seen a savings of $175,000 per year by minimizing failures through proactive preventive maintenance."

Integration and Linkages

The Oracle Enterprise Asset Management system is improving communication throughout CMC's business, by integrating the physical and financial aspects of asset management and improving collaboration between project and service operations. It's also connecting with the company's other key information systems. "Part of the reason we chose Oracle's computerized maintenance management system was the integration factor," confirms Allen. "We utilize Oracle E-Business Suite throughout our operation, so Oracle Enterprise Asset Management is a good fit within our infrastructure."

For More Information Oracle Enterprise Asset Management Solutions for Industrial Manufacturing

Having an integrated view of assets involves scrutinizing all areas of enterprise spending and then tracing the connections among information systems. For example, individuals must be certified to conduct safety release valve and fire extinguisher inspections. An Oracle human resources database could include records of when inspectors' certifications expire. The system might also include links to the original work orders, task activities, costs, spare parts, and expenses, so they can be charged back to a general ledger account or invoiced to a customer.

"To be truly efficient with asset management, you should be able to trace a work order through the accounts payable system, see a direct link to the purchase order, verify the certification of a contractor or employee, and confirm the payment record—all within the same information chain," Slade explains. "That's the beauty of an integrated system."

Introspection and Analysis

After all this data is captured in a unified database, real-time analytics can be introduced to improve visibility for line workers and managers. Reporting and business intelligence tools allow authorized users to review asset conditions or initiate workflow without leaving their offices. When this information comes together in an actionable way, assets can work in harmony and managers can move toward proactive asset management rather than reactive firefighting.

Cooksey says, "Oracle Enterprise Asset Management gives you a detailed view of what's happening with your assets, from both a predictive-maintenance perspective and a parts and inventory perspective. Seamless integration behind the scenes—that's the biggest benefit of running the Oracle software."