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" Web Work Mobile CMMS allows operations and maintenance
exchange information easily and more efficiently to increase workflow, create greater efficiency and improve
Source : Tero Software
Maintenance Tips For Improved Profits: Creating the Business Case to Invest in Automation
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Does it really make sense to spend money to save money? The answer may surprise you when it
comes to maintenance of large capital assets including Facilities, Fleet, Plant Equipment and yes,
even computers. It makes even more sense when you consider that today more and more
companies are adding a new line item in their financial statements called "Deferred Maintenance
Revenue Write Down". A lack of preventive maintenance affects the shareholders of all companies
due to aging assets and reactive maintenance practices.
A complete preventive maintenance program consisting of better business practices and a simple
tool such as a Computerized Maintenance Management Software (CMMS) or Enterprise Asset
Management (EAM) package can streamline the process and result in immediate savings in both
time and money. So how do you justify the initial investment and where can the cost savings be
seen across the enterprise?
What are the Benefits?
The benefits to a centralized maintenance program are many. One central data repository of
maintenance information means operations and accounting can measure results and plan more
effectively in the following areas;
- Increased Productivity - Streamlined business practices and shared knowledge means
greater productivity across all levels of the enterprise.
- Reduced Downtime - Track recurring equipment downtime and plan accordingly.
- Extended Equipment life - Getting longer life from all assets means greater shareholder
value and increased cash flow.
- Reduced Inventory Costs - Know what parts are available and when to order.
- Proactive Safety Program - Work orders include safety tasks for better compliance.
- Increased Warranty Awareness - know its under warranty before spending your money.
- Meet Regulatory Requirements - Capture any regulatory information within the CMMS
for reporting to government & regulatory bodies.
- Centralized Reporting - You can't measure what you can't see, a centralized system
means you can capture and report on data how you want with reduced manpower and
- Improved Work Flow - An integrated package includes automated data transfer between
other software packages such as accounting, fuel card systems, HVAC monitoring and
- Shared Knowledge Base - One centralized system integrated with accounting,
purchasing and other legacy systems can streamline the ability to share real time
information across the enterprise.
These are just a few of the many benefits of a comprehensive maintenance program and what a
centralized CMMS package can do for you. Now, let's look at actually measuring the savings in
terms of hard evidence. For the purposes of this example we'll examine two key areas that you
can use when it comes to justifying a CMMS/EAM investment.
1. Reduced Downtime
This is by far the biggest challenge for any organization no matter what business you're in. This
impacts the bottom line in more ways than one, as it produces tangible and intangible results to
profits. If your equipment goes down due to a lack of preventive maintenance, you can't service
your customer and eventually this will result in lost business.
To measure this, we'll look at a company managing a fleet of 500 vehicles and each vehicle
represents a revenue source of $1200.00 per vehicle per day based on an average of 200
operating days per year the revenue expectations equal $240,000.00 per year. If the vehicle goes
down due to unexpected reasons for eight days within the year, your lost revenue is $9600.00 out
of the 200 working days. If you could reduce this by 50% by implementing a preventive
maintenance program, your revenue generation increases by $4800.00. If 30% of the fleet has
experienced unscheduled maintenance then the total revenue increase could be as high as
$720,000.00. Here is the calculation.
Step 1. Costs = $1200.00/Day X 8 Lost Days multiplied by 30% of the fleet doing unscheduled
maintenance or 150 vehicles = ($9600.00) X (30%X500) = ($720,000.00) lost revenue.
Although this is only an example, it is a tangible calculation that can be used to build the business
case to justify the cost and ultimate return on the investment for a CMMS/EAM package.
2. Savings on Labor Costs
Labor costs are the highest cost to most maintenance shops. Published studies have proven that
an effective maintenance program can increase labor productivity by as much as 24% through
better human resource allocation. Besides being able to more effectively manage schedules, by
automating the data sharing between accounting and maintenance, you can greatly reduce data
entry times as well.
It's not just about managing the people you have, it also has to do with measuring to see if you
have enough resources, so if need be you can hire more people. A simple case would be a
company with large geographically dispersed regions where their maintenance people spend a
great deal of time driving between locations. By recording all travel time, you can quickly
determine if you need to add more people so they can spend less time traveling and more time
actually maintaining the assets.
For our example we will take a shop of 10 maintenance staff averaging $30.00 per hour. If we
could increase the actual productive time spent doing the physical maintenance by 15% we could
add an additional 9 Minutes per hour of added productivity. The savings could be measured as
Step 1. - 9 min/hr X 7.5 hr/day '÷ 60 min/hr = 1.125 hours per day additional productivity
Step 2. - 1.125 hr/day X 220 working days/year = 247.5 hours per year additional productivity
Step 3. - 247.5 hr/yr X $30.00/hr/staff X 10 staff = $74,250.00 total labor savings
As you can see there is hard evidence to show the many tangible benefits for a comprehensive
maintenance program initiative in any organization. These are just two simple examples that can
improve operational efficiencies within any organization. The cost savings alone far outweigh the
initial implementation and maintenance software costs.
The reasons most people delay the implementation of an effective maintenance program is the
fear of costing their company money. Focus not only on the cost savings but more importantly on
the increased revenue generation to get the most from your investment.
Call 1-866-818-8376 for a personalized consultation of your maintenance needs or
email us at firstname.lastname@example.org. With over 25 years of maintenance best practice
experience we can help you achieve positive results to your bottom line.
Take Web Work® for a test drive at www.tero.ca