Maintenance as a profit center

If you increase uptime, you increase capacity. That’s only possible if you develop a strategic approach to maintenance.

By Rob Nugent, Rockwell Automation March 18, 2013

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:

  1. Assets: The equipment running in your facility
  2. 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.

Give power to the people

To maximize the effectiveness of the people supporting the assets, it’s important to empower them with the right education and tools aligned to the facility needs.

1. Educate and train in-house resources

As automation technology continues to evolve to meet productivity demands, so must training programs designed to teach employees how to operate innovative technology. Without highly trained, knowledgeable maintenance employees, manufacturers can’t expect to truly optimize their production environment and maximize their profitability.

A crucial part of developing an effective training program is prioritizing. Training dollars are often scarce, so it’s up to maintenance managers to be specific and deliberate about where to focus. Start with a training assessment to analyze employees’ skills on maintenance critical tasks. There are multiple ways to conduct skills gap assessments: Many times, an automation vendor can provide “do-it-yourself” testing tools that are automatically included in standard support packages. Or, for more comprehensive results, engage a workforce competency expert to assess, document, and align the facility’s skills need with its skills gaps. Following assessment, the next step for most facilities is to build a cost-optimized training regimen. This may include several different delivery methodologies but ultimately delivers just enough training for each individual.

2. Build a community with the right expertise

Prioritization and risk mitigation are key to effective asset management; however, not every downtime event can be predicted or prevented. Building a proactive plan streamlines unexpected circumstances by empowering existing staff to efficiently marshal the right resources whenever they’re needed.

The status quo for many organizations is to call upon numerous resources when there’s a problem with a system, while attempting to keep production flowing smoothly and efficiently. Complex, interconnected technologies make it harder to immediately diagnose and solve problems, and maintenance engineers often are left guessing about the correct cause of a failure.

When a team has direct, predictable access to the right qualified systems engineers and parts, they are empowered to identify and resolve issues quickly, efficiently, and without wasted time.

Self-diagnosis or the delegation of generalist staff members to specialist-level tasks can be unproductive, ineffective, and costly. Between swapping parts, deciphering true root causes, finding and scheduling an expert to come on-site, and searching for necessary replacement parts, it’s easy to lose track of production goals. Industry-leading manufacturers are leaning on third-party vendors to provide support contracts and secure, cost-effective remote monitoring that acts as an effective contingent workforce.

When a team has direct, predictable access to the right qualified systems engineers and parts, they are empowered to identify and resolve issues quickly, efficiently, and without wasted time. An organization’s maintenance leader can easily meet fluctuating demands for support without lengthy recruitment efforts, overtime costs, and expensive full-time salaries of harder-to-find talent, all the while protecting against retirements of skilled talent.

Native intelligence is kept in-house, while staff builds upon their experience. With a larger pool of knowledge from which to draw, maintenance managers relieve the pressures of not having the right skill sets readily available, and further empower those they do have.

Reactive, ad-hoc support provided by vendors is unpredictable—it’s difficult to determine when a facility will be up and running again after equipment fails, and it can wreak havoc on the maintenance budget. The production environment has evolved drastically, and a new approach may be in order.

Having the right resources a phone call away makes it easy to troubleshoot downtime events quickly. Guaranteed response times for parts and labor reduces MTTR by streamlining the recovery process. Problems are fixed correctly and efficiently. Establishing a process that automatically executes means fewer people are needed to remedy problems and less time is spent justifying and approving expenditures. Ultimately teams are empowered to fix issues quickly, even those they are not experts on, and they can concentrate on preventative maintenance and improving production runs to fulfill current orders.

Taking a holistic approach to maintenance that focuses on reliability of assets and empowerment of people will deliver measured results to the bottom line. Streamlining downtime support reduces MTTR, while building reliability-based maintenance processes on the most critical equipment helps improve MTBF.

Ultimately, both drive higher OEE and RONA, which are common key performance indicators in most facilities. Get started today—maintenance can drive up competitive advantage and profitability.

Selecting a maintenance vendor

Not all vendor support contracts are created equal. A few factors to consider when selecting a third-party maintenance provider include:

  • Guaranteed arrival of parts – With this guarantee, the maintenance staff can rest assured that a machine won’t sit idle due to an out-of-stock part.
  • Guaranteed arrival of service professional – Once the failure point is detected and it’s determined that physical on-site support is needed, the provider should guarantee that the plant’s support workforce will be on the plant floor to provide immediate service.
  • Guaranteed remote support response– The provider should be able to guarantee that the support team will be able to respond quickly to any machine failures. Failures can happen at any time, so 24/7 support is generally best.
  • Remote monitoring – When a machine or line fails, every minute of downtime means lost profit. A provider that offers remote monitoring technology will be able to quickly and securely connect from any Internet connection to the plant and begin troubleshooting within minutes instead of hours or days. It also can gather real-time data and analytics in order to recognize quickly when a machine is not working properly and efficiently repair the failure point.
  • Workforce enablement tools – A third-party maintenance provider should always provide transparent integration to the facility staff and tools to facilitate better local execution, such as online resources, community sharing, chat, and self-assessment tools.
  • Periodic health checks –When applied on a plant-wide basis, periodic checks can help plants dramatically cut maintenance costs by providing greater insight into impending machine failures, reducing unplanned downtime and minimizing wear on critical equipment. This type of check can help ensure that basic maintenance activities are performed on a regular basis—which can be reassuring when in-house staff is consumed with other critical tasks.
  • Fixed price billing – In an atmosphere of relentless, quarter-by-quarter budget scrutiny, variances are unacceptable. Managers are left scrambling to prevent unexpected spikes or dips in maintenance spend—further hampering their ability to meet productivity demands. Fixed-price billing by the provider, regardless of number of part ships and support engineer dispatches, eliminates these concerns and helps flatten maintenance expenses.