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Operations: New Ideas For Smooth Systems

Aug. 18, 2005
Best-of-breed pure solutions continue to do well, but manufacturers are turning to outsourcing and ERP extension for the care of various assets.

A move to outsourcing and a shift toward enterprise resource planning (ERP) software for maintenance applications are among the key trends taking place in the market for maintenance, repair and operations (MRO) software.

Also referred to as enterprise asset management (EAM), software for MRO is used by manufacturers to plan, execute and record maintenance and repairs performed on equipment, facilities, vehicles and other assets. Because manufacturers typically have a large number of varied assets and components to look after and maintain, software generally is required to ensure maximum uptime of critical equipment.

"You've got to have a good MRO system in place so you can understand the implications of your decisions," says Dan Miklovic, vice president and manufacturing research leader at Gartner Group, which reports that plant maintenance consumes up to 10% of operational expenditures.

"We see a trend of manufacturers outsourcing their maintenance, having others completely take over the information technology, labor and spare parts inventory," Miklovic adds. Ken Ruggles, research director for supply chain management at AMR Research, agrees. "We see a lot of outsourcing of maintenance, with manufacturers focusing on uptime of the assets," Ruggles says.

Durand Glass Manufacturing Co., Millville, N.J., uses MRO Software's Maximo system to create and track work orders, monitor maintenance and replenish parts.Another shift taking place is for manufacturers to depend on their ERP vendors, such as Oracle or SAP, for their maintenance applications. "Among the Tier 1 companies, we see a shift to MRO being incorporated into the ERP system," Miklovic says, but he adds that among medium-size manufacturers, though, so-called best-of-breed MRO software firms such as MRO Software, will continue to find buyers.

One example is the Durand Glass Manufacturing Co., a Millville, N.J.-based unit of ARC International, which uses MRO Software's Maximo system to create and track work orders, monitor maintenance and spare parts inventories, and create purchase orders for parts replenishment. "Before we started using Maximo, we had a homemade application," says Fabien Klimsza, project engineer at Durand Glass. "Now our foremen and mechanics are able to set up a preventive maintenance plan to prevent breakdowns, which reduces the number of production interruptions."

Another area where the glass manufacturer benefits is in improved inventory management. Using software to manage inventory levels offers savings as well as labor efficiency. "Before we installed this system, an employee had to walk the aisles of the storeroom to see if a bearing was in stock," Klimsza says.

In the aviation industry, where the term MRO refers to maintenance, repair and overhaul, the shift to outsourcing MRO functions and management is accelerating. "We see a preponderance of aviation firms moving to large outsourced operations," says Frank Stocks, product strategy director in the aviation sector at Oracle Corp., which offers its Complex Maintenance Repair & Overhaul application specifically for aviation and aerospace firms.

MRO becomes especially critical for the airlines and other aviation firms, says Milton Bevington, senior director of maintenance applications at Oracle Corp. "Companies need a single source of information that all parties can access in realtime.

"Working on a piece of major capital equipment such as an aircraft is like fixing the human body -- you need to have the medical record, the service history, in front of you."

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