Integrating EAM applications with ERP applications - The need for it
EAM system has a broader impact apart from its core function of work scheduling and asset management, which includes financial, inventory and workforce management. Since these functions are also covered by ERP applications, there are inefficiencies when EAM and ERP are operated as standalone systems without the ability to share information.
1. How to overcome these efficiencies and what’s the best way to leverage niche functionalities offered by ERP package & EAM packages?
2. What are the options of integrating best of breed ERP application which manages supply chain, human resources, and financials with work asset management functions of EAM based on the merit of the package?
In my opinion to answer the above question we need to understand why EAM applications are of strategic importance to Power Generation utility companies even though they already have an ERP system to manage their back office functions.
Utility companies involve in power generation deals with assets which are of very high value and any failure of these assets is disruptive and costly. Any downtime arises due to assets failure not only results in loss in production capacity but can also seriously affect sales, customer satisfaction and profitability. Utility industry also needs to adhere to stringent health and environmental regulation and the downtime also has a regulatory impact. To minimize the downtime Utilities companies tries to maintain optimal availability and reliability of their assets.
To maintain these assets there is a need of an Enterprise Asset Management system which helps these organizations to manage these assets and to minimize any downtime. Enterprise Asset Management system produces significant cost savings for Asset intensive companies such as utilities (power generation companies) whose assets are spread over wide geographical areas and as an organization they are seeking to maximize availability and minimize costs of operations.
The EAM solution provide integrated end-to-end capabilities for managing corporate assets across all phases of the asset lifecycle, along with real-time visibility into asset performance and maintenance. EAM system provides the central workflow application for storing, managing, and tracking all work related information, safety, resources and related information. This system ensures smooth workflow across multiple business process and systems. The system provides better estimation and monitoring of work orders and maintains information of assets from a financial and operational perspective. The core functions for any EAM system are as follows:
Gathering and disseminating information about the operational status and condition of equipment at fixed intervals
Implementing effective equipment-based maintenance schedules to reduce downtime
Manage work order processes to ensure on-time delivery
Reduce maintenance-related inventory levels for increased savings
Determine optimum asset levels and drive decision making
Maintain historical operations, inspection and maintenance information. This historical information serves as a proof of compliance with regulations and also as reference for future maintenance task.
Typical Day in life scenario in work management process:
Whenever a defect is found it would be entered into the EAM system so that a work order could be created.
The planning process would then identify labor, material, health and safety requirements.
If the material is available in inventory then the work will be scheduled and fault will be fixed
If material is unavailable, the material requirements would be entered into an ERP system so that the materials could be ordered.
The PO will be raised in ERP system and it needs to share the information with EAM system on when the items were ordered and when to expect the delivery of the items.
Once the items were actually received the information needs to be shared with EAM system so that the work could be scheduled and the fault can be fixed
If we look above there are few functions like advanced procurement, material management and planning that are best done in ERP package based on the merit of the package. Hence there is a need to consider benefits that an asset-intensive organizations gain by integrating ERP and EAM functions:
Greater purchasing power and better spending control: Integration of ERP with asset management allows better control over purchasing processes (negotiation, decision-making, electronic ordering, spending control) and helps standardize and minimize spare parts inventories.
Production efficiencies: An integrated system makes it easier to view production schedules to determine the best time to take an asset off line, for example for preventive maintenance. In this the ERP solution can help easing scheduling conflicts with manufacturing unit, particularly if a piece of equipment needs to be shut down for preventive maintenance. By entering the scheduled work request for a specific time in the manufacturing schedule the manufacturing unit will have that visibility to adjust not only the maintenance work but they can also plan their work to optimize production in the plant during the scheduled downtime.
In my view Organisations need to evaluate the merit of the packages available in market to leverage best in class supply chain, financials and work asset management functions. EAM package allows maintenance managers to write up work orders, schedule personnel and manage other aspects of its department, but integrating with an ERP solution will tie the EAM into other departments, making inventory, purchasing and communication with the entire company much easier.
