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The role of Asset Management Systems in Smart Manufacturing

Industry 4.0



The role of Asset Management Systems in Smart Manufacturing

Martin Horvath | May 14, 2019

Assets build the foundation for any business - no matter if it’s the axe to chop down a tree or a robot that assembles a car. In my last post, I covered one of many justifications on why Asset Management in Manufacturing needs to be done properly. Now that we’re sure about that, it’s time to think of “what we want to achieve” with the new solution in the manufacturing industry.

Improving the Asset-Turnover-Ratio!

Not surprisingly, we are again facing the Asset-Turnover-Ratio that tells us how much sales we generate with every dollar the business has in form of assets. If an axe has a value of 100 dollars and is used to chop 4 trees a month which are then sold for 400 dollars, that’ll be an asset-turnover-ratio of 4! If that axe is damaged while chopping tree number two, then the repair and exchange-time determine how much impact this breakdown has on the asset-turnover-ratio. In other words, it has a direct impact on the monthly result of the business!

It is obvious that the asset management solution needs to have capabilities to decrease the non-productive time or even avoid the breakdown, helping the business to generate sales and keeping the asset-turnover-ratio on the desired level. What’s the solution for that? Of course… it’s predictive maintenance. But hold on, it’s a long way to that point.

How to get ready for predictive maintenance?

Let us stick to the example of the axe and the tree and think of solutions for that problem:



Every wood chopper has a replacement axe with him.

Asset-turnover-ratio is decreased by 50% because the standby asset is not generating any sales.

One service technician is on standby for every five woodchoppers

Higher costs for personnel and asset-turnover-ratio is decreased by appx. 25% because of some standby assets.

Axes that are likely to breakdown on the next tree are replaced pro-actively.

Ideal solution that minimizes the standby assets and efficiently utilizes a minimum number of technicians.

To bring the third solution to life, a bunch of information and knowledge is required: The business needs to analyze the axe-breakdown events to identify a common pattern. E.g. how many oak trees an axe can chop before it usually breaks down. There needs to be information of how many streaks an axe can do before it breaks. It is of interest if weather conditions affect the lifetime of an axe and so on.

This is what an enterprise asset management solution is about: Allowing a business to keep track of assets, their performance, their health, their value, the related incidents, the location-history, how they were used,... A proper asset management is flexible enough to hold all information a business needs to collect and is not limited to pre-defined measurements. It is extensible so that it can inform other systems and it offers a pool of data for reporting and analytic applications. It is an electronic library with everything about the assets, very well organized and connected to the assets in near-real-time whenever possible.

So how do we get ready for predictive maintenance? By doing this. By creating a place where all the information about assets can live. By introducing enterprise asset management to the business.




Trees chopped

Time since last breakdown


Next maintenance









Oak tree


















While the above table is just a very minimalist starting point to create awareness regarding what information such a system can store, full blown commercial solutions cover aspects like work orders for maintenance purpose or spare part information. Some offer “digital twins” to inspect connected devices in real time and some even allow the asset configuration over the air. At the end of the day, asset management is overlapping with many other solutions and can only develop its full potential in a connected system landscape.

Download Predictive Maintenance Whitepaper

What the core of Asset Management can do

Let us take a closer look at core functionalities of Asset Management and how they should connect to other enterprise systems:

Asset Management Function

Secondary Domain

Why the connection is required

Register all assets and their parameters


Calculate KPIs and keep track of the monetary value of assets

Provide documentation and instructions about assets

Operations and Maintenance

A single point of truth of repair instructions, operating procedures and more make maintenance tasks easier, faster and less error prone.

Visualize assets on a map


Knowing where assets are located helps to reduce logistic efforts and ensures in-time availability when needed (e.g. replacement in a factory)

Manage the service plan for each asset

Operations and Maintenance

Each asset has its own service plan and a centralized management of intervals, replacement parts and needed personnel decreases the cost for overall maintenance.

Provide reporting on an asset level

Business Intelligence

Tailored reports allow “acting” instead of “reacting”. This applies to finding the right time for equipment upgrades, aligning maintenance timing, getting rid of unused equipment and so on.

Offer near real-time data of assets

Operations and Maintenance

A so called “digital twin” offers data about any asset, anywhere on the world at any time. This allows an efficient controlling of productivity and taking the right decisions

As a wrap up, it hopefully became clear that an Asset Management is not just a piece of software. It’s an essential piece in a big puzzle and deserves a central place in any business. A smart system design with a tightly integrated asset management opens doors to predictive maintenance, financial transparency, smart manufacturing (with tools like SAP ME/MII) and obviously strategic and competitive advantage on the market!


Interested in Learning More?

Are you ready to start deploying smarter asset management in your business? View our services and solutions for better asset management.