December 29, 2022

CMMS Cuts Costs

Companies in various industries enjoy the benefits of a computerized maintenance management system. Each uses the system for its unique operations even though the function and features of the system remain the same from company to company. How the business puts the system to work will be a factor in how much a CMMS cuts costs.

However, to state that a CMMS cuts costs raises several questions. Where? When? How much? Won't it cost more to get started and won't the company have to make more purchases, especially in inventory?

Let's answer the easy one first. As mentioned, the size of the company and how the system is utilized will determine cost savings.

'When' is also an unknown factor, but it's not unreasonable to see progress within ninety days. Another factor of the question is how much of the system are you using. Let's use a simple example to illustrate this. You're tired of handwriting essays, so you invest in a word processor. Now, you’re finding that typing is much more efficient and you're cutting costs of paper because you don't use nearly as much. You print out only one copy when the project is completed.

Are you truly being more efficient? There might be more costs cut by using that word processing feature.

This is not a criticism. I know one company that has been using a CMMS for several years. They started by experimenting with one part of the maintenance department with a few CMMS features. Later, they added more of the department and more features, and so on. Business still needs to continue even with the introduction of something new. A gradual increase in usage is not bad. It cuts the cost of being overwhelmed with too much change and information to absorb and struggling with how much data to input.

Let's tackle the question of the initial expense of purchasing not only the CMMS itself but inventory. First, let's not look at this as a negative 'cost' but as an investment. Second, the price will be determined by the number of users, the number of assets, and what modules the company wants. That should be a discussion between workers, supervisors, and management with further assistance from the CMMS vendor.

As for inventory, if you've been in a reactive mindset—not tending to problems until they occur—then shifting to a proactive or preventive mindset looks pretty costly. Not only is money for parts and supplies for the preventive maintenance jobs being spent, but worker effort. Remember, though, this is an investment. With proper use, the purchases and worker effort will pay off.

The biggest question is where the CMMS cuts costs. Savings should be seen and measured in specific areas. Going back to the word processor, one sees savings in the purchase of paper and time spent writing longhand. Yes, this is a simple example and yes, you're buying a printer and ink cartridges. You have to look at the long-term savings that this change produces.

Let's look at four areas where a CMMS cuts costs. As we move through these, notice how they overlap in terms of expense, time, and labor.

Assets

With assets, both equipment and non-equipment, a CMMS would be used for preventive maintenance. Routine inspections, lubrication cleanings, replacement parts, etc. Because of this, unplanned downtime is reduced. Because of that, loss of productivity and extra expenses are reduced.

Through routes that help the maintenance technician accomplish more in less time, efficiency and worker productivity increase. With a route, you're saving time. A worker has one work order for similar jobs in different locations. These routes are created in the CMMS and attached to work orders.

Assets themselves will operate to capacity better with routine PMs listed in the CMMS. Because they're being tended to, the company isn't spending extra buying new because the machine's 'life' is shortened.

Within the CMMS, lists of assets, routes, and PMs for these assets are created. Look for related inventory (discussed later) to also increase efficiency. Also, look for areas to track equipment readings. These are a vital part of asset management and will help shape those PMs.

Inventory

The stockroom is disorganized. A CMMS will help assign a location for each item. This saves search time, thereby saving labor time.

The stockroom runs short. A CMMS will track quantities used and initiate a purchase order when a minimum threshold is reached. This saves money for emergency purchases.

The CMMS will also offer the option to mark critical spares and substitute parts so items won't run short.

The stockroom is piling up with parts that don't move, are rarely used, and vary in quantity with parts that do move. The CMMS can show a supervisor the' last date used.' This gives information about how often parts are used, saving money because too many are being purchased. Another aspect of this is if a last used date is known, the supervisor can see a part is still on the shelves for an asset no longer in operation.

In addition to this past point, the CMMS inventory list should have an option for package size and how many items are used for each job. Once again, money is saved.

Search time also is reduced by assigning inventory to assets. Kitted parts are a great time-saver.

Parts going out and coming back at random. Parts 'showing up' or are returned to the incorrect location. For this problem, a CMMS issue/return policy is in order. Once again, search time is saved. Money is saved because stock is better tracked.

Maintenance

Here, the argument is that with the list of PMs, there is extra money for labor. This should be compared with unplanned equipment downtime and the related emergency purchases and extra labor.

With a CMMS, all information can be seen in reports. Supervisors can look at cost of purchases and labor.

Review the section about routes. The idea is to keep the worker attainment percentage high while not giving an overload of jobs.

Part of this comes from a CMMS scheduler. This is a great way to aid productivity. Another is the feedback workers can provide through work orders to improve future jobs.

Purchases

By this point, purchasing has been mentioned a few times in CMMS cost-cutting. Because of proper asset management, purchasing replacement or new equipment is reduced. Proper inventory management means reduced over- or understock. Proper work order management is connected to inventory and assets so the purchase of stock is better organized.

With the purchasing/vendor areas or modules themselves, one also should see costs cut.

Vendor information is as detailed as necessary. Shipping/invoice terms are input as well as these vendors offering discounts for bulk or special orders.

A definite time and cost-saving feature a CMMS should have is in the area of blanket purchase orders. Creation of these may take a little time, but they're great when you have several items regularly purchased from individual vendors. Why have fifteen purchase orders from one vendor when fifteen items can be included in one PO?

A computerized maintenance management system is designed for increased organization and productivity. Because of these, costs will be reduced. Proper administration and usage of a CMMS show where improvements can be made. It provides cost reports for review of any input information.

For a powerful and easy-to-use system, visit the case studies pages of Mapcon Technologies. Call 800-922-4336 for further details and to schedule a free demonstration. Start cutting costs with MAPCON!