MRO Master Data Management for Enhanced Maintenance Performance

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1 MRO Master Data Management for Enhanced Maintenance Performance

2 MRO Master Data Management for enhanced Maintenance Performance Global organizations today face a variety of challenges arising from several sources and with time, the nature, scope and size of these challenges change and increase. Unpredictable and volatile economic conditions in recent times have pushed companies on back foot. Organizations are increasingly focussing on cost-saving and cost-cutting measures to maintain their revenues and safeguard their bottom-line. Most business enterprises typically align their sustainability efforts towards direct materials, capital spending, product design, production efficiencies, sales and marketing, tight process control, information technology, and supply-chain management both for inbound flows of direct materials and outbound flows of finished goods to end customers, often neglecting the savings potential from the MRO or indirect supply chain. With a lot of areas with high priorities vying for attention, the MRO lifecycle has been languishing in the background. But with the savings from direct materials supply chain squeezed till the last drop, companies are starting to take a hard look at their MRO supply chain and the associated processes and efficiencies as the economic conditions continue to fluctuate and the challenges mount. MRO assets form the crux of the indirect supply chain and play a vital role in the production and maintenance lifecycles. Maintenance is one of the core functions of every asset intensive industry and as assets become increasingly complex and the dependency on them increases, it is important for organizations to have a strong hold over their maintenance processes and run an efficient, continuous manufacturing or service operation. It has largely evolved from being reactive and corrective to planned and preventive. The storeroom for MRO operations plays a crucial role; parts and materials must be available in the in the correct quantities at all times and should be easily located to increase the efficiency of the maintenance operations, costs have to be managed effectively, repairs and preventive maintenance has to be performed at the right times, and unscheduled and unforeseen equipment downtime should be kept to an absolute minimum. In order to realize these goals, the MRO storeroom and the associated processes need to have standard operating procedures in place that govern all aspects, right from purchasing to the point of utilization. With the advent of IT as a major stakeholder in the operations of organizations and the increased reliance of the companies on their data assets, the success of most maintenance processes predicate upon the IT infrastructure in place. Maintenance management systems have thus formed an integral part of every organization's maintenance scenario, aiming to help maintenance workers do their jobs more effectively and enable the management to make informed maintenance decisions. These systems were introduced initially as a means to control and manage costs in a manufacturing machinery maintenance setting. However, over the past several years, organizations from many industries have Unpredictable and volatile economic conditions in recent times have pushed companies on back foot. Organizations are increasingly focussing on costsaving and costcutting measures to maintain their revenues and safeguard their bottom-line. MRO assets form the crux of the indirect supply chain and play a vital role in the production and maintenance lifecycles. Maintenance

3 realized that this software can be highly beneficial in every type of industrial maintenance setting. Maintenance management systems (Eg: CMMS/EAM) are designed to automate standardized processes, collect historical information from every source of the organization and provide the ability to navigate through and analyze huge volumes of MRO data. The systems are utilized by many maintenance groups within many facilities, especially the ones with different types of equipment requiring maintenance. They maintain computer databases of information about the organization's maintenance operations and produce status reports and documents giving details or summaries of maintenance activities for effective reporting. They also deliver maintenance intelligence capabilities for facility managers, technicians and business management and provide historical, current and predictive views of maintenance operations. This facilitates web-based reporting, analysis and dashboards, graphical scenario-planning, maintenance performance management, predictive analytics and mobile solutions for up-todate information on the status and progress of work. With focus on maintenance process management, preventive maintenance, asset and inventory management and safety, they make the job of facility management and the teams a lot easier. While conventional maintenance management systems have helped organizations deal with their maintenance problems to a large extent, they still are usually well below their ideal potential when it comes to delivering benefits and realizing savings from their implementations. As with IT systems in many cases, this inherent inefficiency points to one single root cause, the one asset that maintenance systems depend upon data. The bulk of the MRO data that exists in the maintenance systems is largely unclassified, incorrect, inaccurate or outdated. Having never before controlled nor managed their MRO item masters, most companies' source data is to put it bluntly a mess. MRO data goes through several stages after the point of creation, being used, managed, maintained and modified by a wide range of sources across the organization. With no consistency or established standards in the way the MRO data is created or maintained, the problems with the quality of MRO master data usually start at the point of creation and continue to persist in all the later stages. The same MRO data that is stored in the maintenance system is accessed and utilized by multiple facilities and divisions across the enterprise and is replicated in their respective systems. The inefficiency that arises due to the bad MRO data permeates through to all the dependant systems, affecting their performance and diminishing the value that they deliver. The key areas that maintenance systems focus on preventive maintenance, asset and inventory management, safety and compliance take a hit leading to unwanted losses in the form of costly equipment downtimes and lost revenue generation opportunities that create a burden on the organization and the bottom-line. The MRO data inaccuracy also While these systems have helped organizations deal with their maintenance problems to a large extent, they still are usually well below their ideal potential when it comes to delivering benefits and realizing savings from their implementations. The bulk of the MRO data that exists in the maintenance systems is largely unclassified, incorrect, inaccurate or outdated.

4 mitigates the ability of facility managers and management teams to make informed decisions. For example, without accurate information on the MRO materials, the facility manager will be unable to determine which machines require maintenance and which storerooms contain the spare parts needed. The management will be at cross roads trying to balance the scales between machine breakdown repair and the preventive maintenance for all the machines. This creates a lot of unwanted situations when it comes to the MRO lifecycle. Consider a typical line-down scenario as follows. Preventive maintenance fails The problems with a line-down scenario usually start with the lack of effective preventive maintenance measures in place. Preventive maintenance is an important aspect of a maintenance plan as they help minimize unscheduled downtimes, costs and lost revenue generation opportunities. It is predetermined work performed to a schedule to avoid a breakdown or sudden failure of equipment components. It helps protect assets and prolong the life of critical production equipment, improve system reliability, reduce the cost of replacement and injury. Maintenance systems consist of databases with information about the material assets like incidence of preventive maintenance jobs, check-lists and the list of materials required in addition to other pertinent material data like component reliability information, equipment lifetime, inspection records, servicing records, replacement frequency, inspected component failures and replacement schedules. The system database helps a facility manager to have visibility into the maintenance lifecycle and make informed decisions. But with no framework for the creation of this material data, it is largely inconsistent and inaccurate. This may give rise to an avalanche of a maintenance failure that affects many stages of the lifecycle as below. An error in or absence of the part replacement data leads to a machine or equipment running on a material beyond its lifetime. The internal machine part breaks unexpectedly. The machine goes down, bringing an entire production line down with it. The shift foreman places a call to maintenance engineering and everyone working on the line takes a forced break while engineering is en route to diagnose the problem. The engineer diagnoses the problem quickly, but needs to return to his own office in a different building to access reference documentation from the OEM that built the machine. Part search fails Preventive maintenance is an important aspect of a maintenance plan as they help minimize unscheduled downtimes, costs and lost revenue generation opportunities. It is predetermined work performed to a schedule to avoid a breakdown or sudden failure of equipment components Because of inaccurate MRO item description, MRO item search in the maintenance system fails. From OEM documentation, the engineer identifies the part he needs, then proceeds to hunt for it in the system, which takes longer than

5 it should because there is only high-level proprietary item classification taxonomy in place, item descriptions are cryptic and lack vital attribute information. The engineer finds an MRO item that looks like it might be the right part but, due to incomplete information, he is unsure. He heads over to the designated storeroom and requisitions the part. The storeroom operator locates the part, scans it out of inventory and gives it to the engineer who takes it to the machine. Right part, wrong size. The engineer takes the part back to the storeroom where it needs to be added back into inventory and replaced in its original location. He attempts another search now, halfheartedly because he is pressed for time, does not find the part in inventory even though it is available at a plant less than one mile away. He puts a rush order into purchasing and calls the foreman to inform him the line will be down overnight. The shift foreman sends idle production workers home. Procurement/spend management fails The buyer/planner in the material procurement team receives a rush order. She repeats the engineer's search in her system which in turn accesses the system database to make certain the part is not in inventory. Encountering the same search difficulties as the engineer, she finds what might be the right part and calls down to the storeroom, causing another physical search. She then calls over to the engineer who goes back out to check the second part. Still the wrong part. The engineer now hopping mad demands that the buyer get an order out immediately. Because there is now an extreme rush on the order and the buyer wants to be sure the correct part gets delivered, she goes directly to the OEM who built the machine to purchase. She does not look for a lower cost alternative, does not check to see if the part is available through a preferred distributor, and does not competitively source the part. Of note is that the OEM does not make the component part, but sources and sells it at a high mark up through its aftermarket business. Because the OEM is not a strategic or preferred supplier and the order is a rush, there is no question of negotiating price or obtaining a discount. Because there is now an extreme rush on the order and the buyer does not look for a lower cost alternative, does not check to see if the part is available through a preferred distributor, and does not competitively source the part. Transaction processing fails Since the OEM is not an approved supplier, the buyer cannot use her company's preferred transaction automation solution and must manually execute the transaction, meaning spend data ends up in an unexpected place for the type of item being purchased. The buyer must also set up a new supplier master record to enable the transaction. She is in a hurry, so fills in only the minimum of information required to get the order out. Later, accounts payable will have

6 trouble paying the invoice and will have to backfill important missing information, making the payment late, missing a potential early-payment discount and incurring interest charges. The OEM has the part in inventory, but not locally, so the buyer must also call a freight expediter and pay premium rates to obtain the part in the shortest possible time frame. The buyer lets the engineer know the part will arrive in 48 hours. Now sales must get into the act, adjusting delivery dates for orders that were supposed to be rolling off the downed production line. Likewise, the production foreman and human resources need to arrange temporary furloughs for the workers who won't be needed until the machine can be repaired. Inventory fails Meanwhile, the engineer calls the buyer to let her know there are six similar machines operating in different plants and asks her to order extra parts to have on hand for the future. For convenience, the buyer changes the existing order, incurring even greater procurement and freight costs plus costs to receive, move, and process unneeded replacement parts into inventory. Excess parts go into inventory where they may or may not be needed in the future. What is more, because the process of creating the new item master was handled under rush conditions and not done thoroughly, the potential now exists for the new part information to be inaccurate again in the maintenance system database and the MRO items to be missed in inventory four years down the line when a different but similar machine goes down in a different plant and is being repaired by a different maintenance engineer. The scenario above shows the scale and level of unwanted costs and losses created by bad MRO data in the maintenance systems which spread across all the stages of the production lifecycle and moreover, leave ample scope for similar failures in the future. It focuses on operational risk, cost-increasing and timewasting behaviors that can result from a failure to manage repair-related MRO item in maintenance systems. Accurate enterpriselevel views into MRO inventory and actual consumption are the only ways to pinpoint either excessive consumption or the likelihood of undocumented inventory. Accurate enterprise-level views into MRO inventory and actual consumption are the only ways to pinpoint either excessive consumption or the likelihood of undocumented inventory. Clean, enriched, de-duplicated MRO item data that is accurately and granularly classified to standard taxonomies forms the foundation required for being able to see and benchmark MRO consumption patterns in ways that enable true demand management to begin. These challenges and needs have made organizations today to look for a solution to overcome them, bringing Master Data Management to the picture.

7 Master Data Management: Delivering value added MRO master data MRO master data is one of the most crucial elements in the MRO supply chain and and for the systems that manage it and needs to be managed effectively. Master Data Management is a comprehensive strategy to determine and build a single, accurate and authoritative source of a company's information assets and deliver this on demand as a service. According to the industrial best practices, an effective Master Data Management initiative comprises two key parts Historical data cleansing and On-going Data Maintenance (ODM). Historical data cleansing involves classification and business-value enrichment of the existing MRO legacy data across the maintenance systems and other systems, applications like ERP, SCM, etc. and organizational units of an enterprise. It ensures enterprise wide visibility of the MRO material base leading to efficient MRO asset management, inventory optimization and rationalization. On-going data maintenance on the other hand, involves maintaining quality of MRO data on an ongoing basis and creating a framework for the creation, use, access and maintenance of data across the organization, leading to enhanced operational efficiencies and improved sourcing strategies. A successful Master Data Management initiative delivers many benefits to the MRO supply chain and the maintenance systems as below. Improved performance of maintenance systems and increase in value delivered MRO supply chain optimization and Greater process compliance Efficient sourcing strategies and Significant spend reduction Enterprise Visibility enhancement and Efficient Enterprise Risk Mitigation Inventory optimization and effective Materials Handling Streamlined operations, Increased productivity and profitability Informed maintenance decision making through better maintenance intelligence sharing with historical, current and predictive views of maintenance operations An effective Master Data Management initiative that delivers accurate MRO data and keeps it clean on an on-going basis adds immense value to the MRO and strategic sourcing initiatives of an organization. An effective Master Data Management initiative that delivers accurate MRO data and keeps it clean on an on-going basis adds immense value to the MRO and strategic sourcing initiatives of an organization. It drives significant bottom-line savings, achieves enhanced business and operational efficiencies, unlocks the ROI and performance of maintenance systems, minimizes to a great extent costly downtimes and losses, and more importantly, helps the management make informed and sound decisions on maintenance based on sound MRO data in the databases leading to enhanced Maintenance performance.

8 About Verdantis Verdantis, Inc. is an independent company focused entirely on master data quality, master data management and master data governance solutions for G1000 organizations. Verdantis is the first to offer Master Data Management services and solutions that bring real ROI and Business Value by focusing on the business use and application of organizational Master data. Verdantis uniquely offers end-to-end automated ERP MDM solutions driven by our suite of Artificial Intelligence (AI) based solutions and business roles and rules, easily configured to fit enterprise requirements for classification, enrichment, screens, fields, security, attachments, workflow approvals, languages and more. Verdantis Harmony services prepare legacy data to become master data in its true sense assuring a de-duplicated, consolidated, classified, validated and standardized data set in the output formats needed for uploading into client's ERP and EAM systems and Verdantis Integrity On-going MDM suite. Verdantis Integrity a bolt-on ERP suite of easy-to-use On-going Master Data Governance repositories and processing solutions for on-boarding new enterprise asset master information and maintaining current data for Items, Suppliers, Customers, Products and Financial information. Leading global companies have chosen Verdantis solutions for the following reasons: n n n n End-to-end automated processes to harmonize & enrich historical master data Ability to ensure both semantic and structural ongoing data integrity and quality In-depth industry and data specific domain expertise with a robust project methodology Ability to handle huge volumes of cryptic and complex data in multiple languages NORTH AMERICA Princeton: 103, Carnegie Center Suite 201, Princeton, NJ Ph: Atlanta: 555North Point Center East;4th Floor, Alpharetta, GA Ph: EUROPE London: Office 404, 4th floor, Albany House, 324/326 Regent Street, London, W1B3HH. Ph : +44 (0) ASIA Mumbai: Plot No. GJ 07, Seepz++, Seepz SEZ, Andheri (East), Mumbai , Ph: