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What Is the ROI on a Modern Industrial Maintenance Software?

The post What Is the ROI on a Modern Industrial Maintenance Software? first appeared on the ISA Interchange blog site.

This guest blog post was written by Bryan Christiansen, founder and CEO at Limble CMMS. Limble is a mobile first, modern computerized maintenance management system application, designed to help managers organize, automate and streamline their maintenance operations.

These days, manufacturers need to run their physical assets – especially high-capital ones – at optimal efficiency. They must do this to remain competitive in a market that demands quality despite rising manufacturing costs and stricter regulations.

Under such conditions, the maintenance managers in charge can relate with the challenge of getting funds approved for a modern maintenance software, especially since they are often under pressure to reduce existing operating costs. Usually, the difference between approval and denial will depend on their ability to prove the value such software would add to the organization’s operations and bottom line.

Reduction In Downtime

One of the most important KPIs manufactures struggle with is reducing asset downtime. Downtime takes an equipment out of use and, depending on how mission-critical such an asset it, every minute it is unavailable contributes to production delays and revenue loss.

If not properly managed, downtime alone can disrupt the entire operational output of a plant for days or even weeks at a time, bringing the entire production line to a grinding halt.

But, even in situations where some downtime is inevitable, maintenance software will reduce idle time while improving asset reliability.

This is possible because a CMMS allows the maintenance team preempt failure, plan ahead, and respond faster. It helps eliminate much of the guesswork and inefficiency of monitoring machinery manually.

How to Calculate ROI

Now, let’s see a simple example for determining the ROI pertaining to downtime by comparing two different manufacturing plants. Plant “A” uses maintenance software while plant “B” still monitors maintenance manually.

Plant B has a packing machine that contributes $150 per hour to the bottom line. But, this machine breaks down, the maintenance team is caught unaware, and the resources are not immediately available to repair it. The result is 8 days of downtime.

Cost to Fix for Plant B is: $150 x 24 x 8 = $28,800

Whereas, Plant A has the same type of machine delivering the same results, but they monitor this asset using a maintenance software that cost $5,000. They are prepared for the breakdown and downtime lasts 1 day.

Cost to Fix for Plant A is: $150 x 24 x 1 = $3,600

We can calculate ROI using the formula: ROI = Net Profit / Total Investment * 100%

In this case, (Plant B’s loss – Plant A’s loss) – Software Cost / Software Cost *100%

(28,800 – 3,600) – 5,000 / 5000 *100% = 404% ROI

Planned Maintenance Compliance

Another common challenge large businesses have is monitoring maintenance operations across different departments and multiple locations. In such cases, they can make things easier and save costs by using more of a planned rather than a reactive maintenance strategy.

To put this in better perspective, let’s look at the report by Plant Engineering.

Source: Plant Engineering

Among several parameters measured, reactive maintenance performed woefully compared to other maintenance strategies. For instance, in preventing asset failure, planned maintenance scored 64% compared to a poor 3 percent using reactive maintenance.

Using CMMS puts an organization in a better position to run an efficient and proactive maintenance plan. In fact, it’s ability to run planned maintenance functions almost seamlessly is one of the major attractions to using modern maintenance software.

However, even the best techniques and software are really only as good as the people that will implement them. So, it’s not uncommon to find that after implementing a planned maintenance schedule, monitoring the plan and enforcing compliance becomes a new set of problems.

If the proper systems are not in place to track and measure each technician’s accountability for maintenance tasks assigned to them, it’s only a matter of time before the process is abandoned.

Fortunately, most modern maintenance software available today empowers users to easily monitor planned maintenance tasks no matter how large the company’s operations are. One way of achieving this is by generating reports to check compliance with:

  • Scheduled maintenance tasks.
  • On time delivery of work orders.
  • Safety standards for specific jobs.

Such reports help to detect where there are inefficiencies so as to quickly correct them.

Improved Inventory Management

The most common problems manufacturers face with inventory management include:

  • Prolonged downtime due to unavailable parts.
  • Relying on spreadsheets to manage inventory.
  • Establishing reorder levels.
  • Holding excessive inventory.
  • Estimating the cost of required spare parts on an ongoing basis.
  • Updating and estimating the value of stock on hand in real time.
  • Increased costs associated with stockout.
  • Emergency order charges.

Rather than having to contend with the above problems, imagine having a centralized system that automates the process of ordering and managing inventory and spare parts.

In particular, two outstanding areas that CMMS users will get the best ROI with regards to inventory management are reduction of downtime (since spare parts are readily available) and significant reduction or elimination of the costs from overstocking.

Better Document Management

Manufacturers can expect to generate and store a wide range of documents from every unit in the company. Whenever staff have to find information, the document handling system already in place will determine how quickly they can get what is needed and return to work.

For those that still rely on physical records, the amount of paper generated can be staggering. Add to that the time lost searching for missing or misplaced documents.

A study by SearchYourCloud shows that, on average, employees may have to search for a document up to eight times before finding the information they need. Hence, organizations that still rely on archaic filing systems stand to lose a chunk of every workday.

And that’s not the full picture yet.

Some paper handling costs that companies fail to track but that can quickly add up include the assets and space required for storing physical files, cost of destroyed records (through flooding, theft, or fire), the cost of supplies, etc.

Let’s take the maintenance unit for example. The documents generated will contain information about safety reports, audits, work orders, inspection records, equipment history, vendor details, and so on. Many of these reports can date back for decades depending on how long the business has been in operation. In the worst-case scenarios, whole rooms have to be devoted to storing paper files alone.

On the other hand, a modern maintenance software will streamline this process and allow the same maintenance unit capture data, store it, duplicate it, and send it to whoever needs it all with a few clicks. Even better, technicians and anyone else looking for information can access the database from remote locations by using internet-enabled devices.

Energy Consumption Savings

Last but not least among the common KPIs for determining the ROI on maintenance software is energy consumption.

Businesses commonly find that energy consumption is their highest overhead costs after human resources. Interestingly, reducing energy consumption is possible and it is a indirect benefit of using a CMMS.

From lighting to HVAC and other high energy consuming systems, maintenance software supported with sensory equipment allows its users to asses and record the condition of their assets before they deteriorate and begin to drain energy. In essence, a CMMS that can read the incoming data from condition monitoring sensors, enables you to implement condition-based maintenance.

Going back to the example of Plant “A” and “B” mentioned earlier, we can demonstrate how maintenance software saves on energy cost for running HVAC systems.

Plant B uses time-based maintenance for its HVAC system and replaces worn parts according to the frequency dictated by the schedule. Of course, that increases the possibility of unnecessary replacements.

Plant A uses condition-based maintenance for its HVAC. The software raises alerts for repairs/replacement based on data derived from vibration, refrigerant, and oil analysis. This way, Plant A is able to save up to 20 percent of its annual HVAC costs.

Although the upfront costs of a maintenance software may seem higher than continuing with a manual maintenance plan, the ROI will be realized continually for many years ahead.

About the Author
Bryan Christiansen is the founder and CEO at Limble CMMS. Limble is a modern, easy to use mobile CMMS software that takes the stress and chaos out of maintenance by helping managers organize, automate, and streamline their maintenance operations.

Connect with Bryan

Source: ISA News