After decades of lean manufacturing, JIT, outsourcing, Total Quality Management and Six Sigma, where does a manufacturing executive turn for the next big competitive improvement? The answer has been hidden in overhead accounts and factory corners since the beginning of mass production. The tools to manage it effectively have been emerging steadily in recent years, and today the science of asset management is accessible to any organization willing to undertake fundamental change in the way they manage production assets. The rewards can be astounding. In most manufacturing or distribution operations, maintenance department costs are 5 to 15 percent of operating costs. Most accounting systems require that several accounts be combined to identify the total cost of maintenance operations, but the information is there, and it is just the beginning of the asset management story. The financial impact of asset management, good or bad, touches all parts of the organization: Lean manufacturing cannot function with less than 99 percent overall equipment reliability. In a JIT system of five steps, the reliability of each station must exceed 99.8 percent for the system to deliver 99 percent uptime. In this environment, running equipment until it breaks down is simply not an option. In today’s era of paper-thin manufacturing margins and ever-shrinking customer lead times, it is unrealistic to even think of carrying finished inventory to cover unreliable equipment. For the same reason, nobody can afford to carry duplicate production assets to cover unreliability. The time and cost to repair an equipment breakdown are three to five times what it takes to make a planned repair of the same equipment, prior to failure. Safety and quality costs associated with equipment failure add up to a very convincing case for 99.8 percent equipment reliability as a corporate asset healthcare strategy. "All right," you say, "that’s a great set of generalizations, but how do I determine the financial potential of asset management in my operation?" Fair question. The complete answer requires a thorough assessment of your business, but some important clues are readily available from a short self-assessment. These clues point only to the actual cost of maintenance, but that is an important beginning: Total Cost of Maintenance (TCM): The accounting department should be able to put this together pretty fast. It is a departmental cost, not the "cost of unreliability" (COUR) index that we use elsewhere. The total is a surprise to most executives. TCM includes the following: Total labor, benefits and overtime cost of maintenance technicians and support personnel. Total labor, benefits and overtime cost of production and other personnel that help maintenance during repair operations. Total cost of maintenance materials, including express freight, short lead time premiums, etc. Total cost of maintenance supplies and the maintenance portion of production supplies. TCM does not include general overhead that is applied to maintenance today, unless trimming the maintenance department would reduce this cost as well. (Usually it won’t.) Benchmarking this cost depends on industry, company size and several other factors, but the figure itself is usually an eye-opener. If you liked this article so you would like to collect more info with regards to leone asset management - https://disqus.com/by/disqus_jamesprice/ please visit our website.