Turning maintenance into a profit center with CMMS

The word “maintenance” is typically associated with negative connotations. Whether the word makes one think of a broken machine or a repair need, it is clearly linked with negativity and pessimism. On the contrary, maintenance is defined as “the work of keeping something in proper condition; upkeep.

07/15/2008


The word “maintenance” is typically associated with negative connotations. Whether the word makes one think of a broken machine or a repair need, it is clearly linked with negativity and pessimism. On the contrary, maintenance is defined as “the work of keeping something in proper condition; upkeep.” Thus, maintenance is much more important than many people realize.

Varying approaches

In an effort to view maintenance as a positive activity, it is important to see it as a profit center instead of a cost center. A cost center approach is strictly concerned with adhering to the budget and decreasing expenses as much as possible. In contrast, the profit center model realizes that investment and operating costs can be allocated to improve efficiency. This increased efficiency naturally results in higher profits.

Maintenance is the backbone of any organization where equipment must be maintained %%MDASSML%% whether it is a manufacturing plant or a utility company. With a CMMS in place, maintenance can save time and money for a number of industries.

It is clear that companies must take a profit center approach to maintenance. Companies can turn maintenance into a profit center in numerous ways. One such way is through “product quality with zero error.”

Just as professional athletes must train to keep their bodies in excellent shape, this approach stresses keeping the machinery and facilities in the best possible condition. Thus, producing higher quality products will lead to a lower return rate. Typically, profits will increase.

Another way that companies can turn maintenance into a profit center is through “Overall Equipment Effectiveness.” OEE consists of three factors: availability, utilization and quality rate (see sidebar).

Another example of how companies can turn maintenance into a profit center is through preventive maintenance. Take a hypothetical plant where $1,000 is lost for every hour of downtime. Since it is not uncommon for equipment to be down for a few weeks each year, assume 100 down hours per year.

In this example, the company loses $100,000 in the 100 hours of downtime. Multiply that by the number of machines per plant or facility, and the number could be staggering. If appropriate PM was in place, downtime would be minimized and a great deal of money would be saved. This is exactly how maintenance is turned into a profit center.

How can CMMS help?

CMMS can be used to ensure the high quality of both equipment condition and the output. Not just a means of controlling maintenance, it is one of the primary tools that improve the productivity of maintenance. The benefits of using a CMMS include increased labor productivity, increased equipment availability and longer equipment life.

Of these, one of the most significant is increased labor productivity. If the system provides an employee with a planned job, the procedures, needed parts and tools, the employee will be able to work without interruptions. They will also work more safely, since job plans would include all safety procedures.

The tangible benefits of a CMMS include reduction in overtime, reduction of outside contract work, reduced maintenance backlog, reduced cost per repair, improved morale, better service, less paperwork and a reduction in supervisor follow-up.

Users will also see reduced inventory costs and better documentation of safety and compliance issues. Preventing accidents and injuries as a result of proper procedures, documented by CMMS, can save companies a significant amount of money.

While many companies simply view maintenance as an added expense (or a cost center), maintenance should instead be thought of as an important investment in a company’s future. CMMS offers a number of benefits, the greatest being that it helps cope with downsizing and increases efficiency.


Author Information

Kris Bagadia is president of


Components of OEE

Availability : The percentage of time that a machine is available for production.

Utilization : Essentially, the rating of a machine, provided by the manufacturer. It provides the customer with a design specification rating for the machine.

Quality rate : How good the final product is. Out of every 100 items produced, it reveals how many meet company standards of approval for distribution or sale.

Unfortunately, North American companies average an OEE of only 40%, which is less than half of what world-class standards consider acceptable. Whereas many companies simply buy newer machinery, it is much more cost effective to maintain the equipment you currently have. Higher OEE means higher machine capacity, which in turn means higher output, leading to increased sales capacity. This is a good example of how maintenance can be turned into a profit center.



No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2013 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Leaders Under 40 program features outstanding young people who are making a difference in manufacturing. View the 2013 Leaders here.
The new control room: It's got all the bells and whistles - and alarms, too; Remote maintenance; Specifying VFDs
2014 forecast issue: To serve and to manufacture - Veterans will bring skill and discipline to the plant floor if we can find a way to get them there.
2013 Top Plant: Lincoln Electric Company, Cleveland, Ohio
Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Plant Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.

Bring focus to PLC programming: 5 things to avoid in putting your system together; Managing the DCS upgrade; PLM upgrade: a step-by-step approach
Balancing the bagging triangle; PID tuning improves process efficiency; Standardizing control room HMIs
Commissioning electrical systems in mission critical facilities; Anticipating the Smart Grid; Mitigating arc flash hazards in medium-voltage switchgear; Comparing generator sizing software

Annual Salary Survey

Participate in the 2013 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.

2012 Salary Survey Analysis

2012 Salary Survey Results

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.