Unlocking Operational Excellence: Four Ways to Strategic Value Creation

When implemented correctly, they add value to an organization in a multitude of ways – from reducing costs to improving asset utilization, increasing compliance with health and safety regulations and offering data-driven insights into profitable capital allocation. All these factors combined can have a huge impact on a company’s bottom line and long-term success. According to Haarman and Delahay (Mainnovation, 2018), there are four ways of adding value to your business by doing maintenance: Cost control, asset utilization, safety, health, environment and quality (SHEQ) control and capital allocation. In discussing these four principles, we can outline how EAM systems can help drive exceptional business outcomes. 

1. Cost Control: Reduce cost of maintenance

One of the most apparent and direct ways of generating value is through cost control. In the short term, every penny saved on the maintenance budget has a positive impact on the bottom line. However, simply cutting the maintenance budget is not sustainable. On the contrary, often more value can be created by investing in maintenance. An EAM is the dominant driver in transforming investment into real value. By optimizing maintenance processes and increasing automation of low-value tasks, an EAM helps reduce downtime, increase asset reliability and minimize reactive maintenance costs.  

The optimization of maintenance processes is the bread and butter of EAM systems. They excel at streamlining work orders, optimizing stock and purchase management, and offering qualitative, data-driven insights that help shape better maintenance strategies. By offering an extensive maintenance history, organizations are empowered to make more informed decisions when it comes to repairing or replacing their assets. This helps avoid excessive expenditures on assets nearing the end of their lifecycle.  

EAM systems help organizations shift from a reactive approach, where maintenance is at a run-to-fail level and exponential costs are incurred because of downtime and emergency repairs, to a proactive approach. This approach focuses on reducing the frequency and severity of incidents and helps the organization be ‘in control’ of their assets. In turn, this enables them to shift their focus from only responding to asset failure, to actually investing in extending the asset lifecycle.  

Once an organization is ‘in control’ of their assets, they may aspire to elevate their maintenance strategies to a more mature level. Data analytics, Internet of Things (IoT) sensors and application performance management (APM) integrations allow them to apply a more holistic form of predictive maintenance. The idea is that by integrating all these technologies with their centralized EAM system, organizations will be better able to predict when assets are going to fail. This unlocks further benefits in terms of planning, resource allocation and stock management, that all work towards generating increased value.  

2. Asset Utilization: Improve Reliability and Uptime

With the right maintenance strategy in place, more emphasis can be put on how the assets are being utilized. By ensuring that every asset is performing at peak capacity with minimal interruption, the uptime and reliability of an asset can be maximized. An EAM system not only helps discern the performance of assets; it also fosters more efficient resource allocation and production planning.  

When assets are effectively operated and managed, production processes become more reliable, reducing the likelihood of breakdowns and increasing the throughput of the entire operation. With an EAM system in place, engineers and operators alike can access real-time data on asset performance. This enables them to act on emerging issues before they become serious problems. In this way, the EAM platform helps keep production on track while at the same time extending the lifespan of critical equipment.  

As such, investing in proper asset utilization is another key value driver. By improving the reliability and uptime of assets, companies may very well achieve higher output numbers that trickle down to more net profits at the end of the day. 

3. SHEQ Control: Lower Compliance Risks

In this day and age of globalization, modern organizations have to comply with increasingly stringent safety, environmental and regulatory standards, often both on a local and global level. Compliance is compulsory, with failure to do so coming at the risk of hefty fines, reputational damage and, in the worst-case scenarios, environmental disasters that severely disrupt and sometimes cease operations altogether.  

An EAM system can flip this narrative, transforming the burden of compliance into the advantage of amenability. By centralizing compliance data, centrally collecting relevant documentation, tracking inspection schedules, and ensuring maintenance tasks are completed according to regulatory requirements, the EAM platform becomes a powerful ally in addressing audits confidently.  

Most of the costs involved are only ever incurred as a result of the very incidents safety, health, environment & quality (SHEQ) control aims to prevent, therefore it can sometimes be challenging to quantify the monetary gains. Still, SHEQ control contributes significantly to the overall value of an organization, by creating safer working environments, reducing environmental risks and improving quality assurance – all while avoiding costly penalties and disruptions to the flow of the business. 

4. Capital Allocation: Extend Lifetime

When it comes to investing into the operation, all organizations will benefit from having data-driven insights to direct the cashflow. Effective capital allocation can have tremendous effects on extending the lifetime of an asset. The premier driving force behind effective capital allocation is a well-rounded, centralized EAM system.  

Through monitoring and maintaining assets properly, the need for capital-heavy replacements or upgrades can be averted. Instead of trailing behind and reacting to what is dictated by the asset install base, companies using an EAM are in the driving seat when it comes to planning for replacements based on qualitative performance data and predictive maintenance insights.  

Extending the lifetime and increasing the efficiency of their assets will yield significant value for organizations using the right EAM platform. An optimized maintenance schedule allows for data-driven decisions with regards to repairing or replacing assets. Having all of the data required to make the most sensible decision turns the EAM system into a real value driver, capable of maximizing the return on investment (ROI) on expensive equipment. Businesses that employ an EAM system to drive more efficient asset management are able to strategically allocate resources. This not only reduces the actual cost of maintenance; it helps generate greater value from assets over time. 

EAM at the Heart of your Journey to Excellence

Maintenance is much more than a cost center; it’s a value enabler. In order to unlock the full potential of their assets, organizations need to take a holistic approach. This involves focusing on cost reduction, asset optimization, safety and compliance and capital efficiency. It is important to recognize that these principles are heavily interconnected. The most successful strategies will strike the right balance between all four dimensions. 

Finding that balance can be a challenge. Fortunately, a centralized EAM system helps address most of the difficulties in finding the biggest potential within the organization. The right investments coupled with the right maintenance strategy can result in substantial savings. Besides the net profit gains, strategic asset management offers a massive competitive advantage. 

This means that integrating an EAM system into your operations is not just a good idea – it’s imperative for modern businesses. Whether your focus lies on cutting costs, improving reliability and uptime of assets, managing safety risks or optimizing capital allocation, EAM will be the heartbeat of your journey to operational excellence.  

To see EAM in action, book a demo with Ultimo today.