ERP asset management guide

ERP asset management software allows companies to track physical manufacturing assets involved in production. This includes the plant itself (the buildings) and equipment, such as conveyors, trucks, kiosks used for airline ticketing or car rentals and machinery.

More on ERP modules Find out how vendors have melded SAP and EAM tools Read about ERP inventory management modules Learn about ERP supply chain management modules

"(Enterprise asset management) goes hand in hand with inventory management, but the difference is that inventory management is about the physical goods that are in the warehouse. Asset management is about the equipment," said Ray Wang, senior analyst at Altimeter Group.

Some vendors offer asset management software as a separate application; others make it part of a suite of applications. Some smaller vendors offer standalone applications for capabilities such as assets, inventory and warehouse management. For the purposes of this guide, the term refers to ERP asset management modules that tie into the backbone of an ERP system.

Key functions include tracking for:

• Maintenance schedules
• Equipment uptime and downtime
• Inventory and warranty management
• Compliance with hazardous materials and waste tracking regulations

By integrating enterprise asset management modules with ERP systems, companies can increase the availability of their production equipment and reduce overall plant costs through better service and maintenance programs. Asset management software can also help a company improve its cash flow by increasing inventory turnover and optimizing manufacturing production.

"You need to know if your machinery and equipment are in good working order and if those machines are running at maximum capacity with an uptime of 99.9 percent," Wang said. "If you're collecting revenue throughout the transaction, you need to actively make sure that you fix those machines or keep them in good working order in terms of repair and warranties. It's really critical, especially if you're in the world of production or delivery."

ERP asset management can help a company improve its cash flow in other ways. For example, if a company has ten pieces of machinery and can determine how to use eight more effectively, "you've just saved whatever the cost of capital is for two pieces of heavy equipment," said Wang.

"If you can find ways to create more efficient processes in your plants, then you don't have to worry about too much redundancy with maintenance schedules, minimizing downtime and optimizing production schedules." Wang said. That's where asset management delivers."

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About the author: Catherine LaCroix is a freelance writer based in Portland, Ore. She covers technology used in business, education and healthcare.