Maintenance as a profit center
If you increase uptime, you increase capacity. That’s only possible if you develop a strategic approach to maintenance.
The Oreo. On the surface it seems pretty black and white: two chocolate wafers separated by a cream filling. But in today’s global marketplace fueled by increasingly diverse consumer preferences, it’s not quite so simple. The filling could be chocolate, vanilla, or mint flavored. Or maybe it’s dyed red and green for the holidays, or it’s “double stuffed,” or half the fat. The possibilities are seemingly endless—and that doesn’t even consider the packaging options.
While all these choices help generate consumer interest in hopes of growing profits, they also make production—and maintaining the technology it requires—much more complex. Other challenges, such as regulatory requirements and workforce skills shortages, further complicate the landscape.
Unfortunately, adding complexity in production processes doesn’t mean more budget is available to maintain efficient operations. The opposite has happened in many organizations. Manufacturers are being pressured to reduce operational costs while increasing productivity. At the same time, resources for activities like maintenance that are traditionally viewed as an overhead cost and a liability have been cut to the quick in recent years.
In many organizations these cuts are actually moving profitability in the wrong direction. With fewer resources, bare-bones maintenance staffs spend most of their time in firefighting mode reacting to unplanned maintenance crises.
The average impact of unplanned downtime in process industries is $20 billion, or almost 5% of production, according to a 2011 ARC Advisory Group report. As productivity demands seem to get more intense each year, maintenance departments, like every other business function, cannot escape the demands to be more efficient while still curbing the rising costs of production downtime.
With every 10 workers retiring, only five will take their place, which means fewer skilled people will be trying to support ever more advanced and technically interconnected plants. A strategic plan is in order, and it is in order right now if any facility is expecting to survive the continued national and international competitive pressures.
A strategic plan for maintenance
Establishing a holistic maintenance plan to survive this new reality is the best way to cope with increasing budget and skilled labor challenges while improving production KPIs. Just as any effective business plan would, a maintenance plan should include an assessment of the current situation, clearly defined objectives, and an outline of metrics that will gauge results. The maintenance plan must align with the overall facility business plan, as well as objectives such as accurate production forecasting.
The maintenance plan should have two primary areas of focus:
- Assets: The equipment running in your facility
- People: The staff keeping the equipment running
These two areas are interdependent and must be addressed holistically to effectively optimize costs through sustained adoption and facility improvement. Taking a disciplined approach gives flexibility based on the facility’s business plan, maintenance needs, and ability to invest.
There are a number of steps needed to optimize your assets:
1. Implement a criticality-and risk-based approach
Implementing an asset management program will improve equipment utilization and performance, reduce capital and asset-related operating costs, extend asset life, reduce spare parts inventory, and improve RONA, MTBF, and MTTR. With budget and people resources stretched to the max, prioritization is the key. In today’s plants, at least 60% of preventive maintenance tasks are considered unnecessary. Defining equipment criticality and risk can help reverse this trend.
A risk-based approach should also be taken to not only understand hierarchy, but also to determine risk of failure. Defining criticality is fundamentally a question of economics. To determine which equipment is critical, consider the financial impact of downtime on production, such as costs associated with lost data, lost product, and loss of visualization. Also consider the impact of replacing or repairing equipment, and potential hazards associated with downtime.
A risk-based approach should also be taken to not only understand hierarchy, but also to determine risk of failure. Defining criticality is fundamentally a question of economics.
Addition of a risk-based approach also can help determine hierarchy of equipment and risk of failure. To get started, an experienced reliability engineer should perform a failure mode effects analysis (FMEA) to determine possible failure modes. For mission-critical equipment, this type of investment is necessary to put true reliability-based maintenance processes into place. Additional lower-cost risk mitigating activities should also be completed across the enterprise for less critical equipment that has the potential to wreak just as much havoc on productivity.
2. Assess the installed base
Simply developing a complete understanding of the installed base of components can drive immediate risk reduction and financial gain. But many facilities still do not have a complete understanding of their installed base. This is dangerous to both production and finances.
Understanding its installed base allows a staff to make prioritized decisions to mitigate or eliminate risk on obsolete equipment and identify spare parts gaps.
Obsolescence risk can be mitigated through reserve repairs from an automation provider or eliminated by migrating the technology. Lack of spares can usually be cost-effectively overcome with vendor-managed inventory. As a financial benefit, understanding the installed base in a facility as well as in the storeroom presents an opportunity to remove excess and inactive inventory from the books immediately.
Defining equipment criticality and understanding the facility’s installed base, including obsolescence risk, is the best start toward taking control of a facility’s assets and command of equipment reliability. This leads to confident prioritization of investments, preventative maintenance, and other risk-mitigating activities that can drive adoption of sustainable maintenance processes. At a minimum, select the most critical equipment to drive this end-to-end approach, and collect the quick win and productivity gains before moving on to other areas.
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2012 Salary Survey
In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.
Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.