Chapter 00. Benchmarking Best Practices in Maintenance Management

Benchmarking Best Practices in Maintenance Management

Copyright 2004, Industrial Press, Inc., New York, NY

BenchmarkingBESTPractices inMaint ance Management

Terry Wireman

Industrial Press

C.P.M.M.6477 West Buckskin Road

Pocatello, ID 83201

[email protected]

en



iii

Library of Congress Cataloging-in-Publication Data

Wireman, Terry.

Benchmarking best practices in maintenance management / Terry Wireman.

p. cm

ISBN 0-8311-3168-3 (hardcover)

1. Plant maintenance. I. Title.

TS192.V548 2003

658.2’02--dc21

2003051106


Interior Text and Cover Design: Janet RomanoManaging Editor: John Carleo

Industrial Press Inc.200 Madison Avenue

New York, New York 10016

Copyright © 2004. Printed in the United States of America.

All rights reserved. This book or parts thereof may not be reproduced,

stored in a retrieval system or transmitted in any form without the

permission of the publisher.

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Table of Contents

Preface v

Foreword vii

Chapter 1 Analyzing Maintenance Management 1

Chapter 2 Benchmarking Fundamentals 27

Chapter 3 Maintenance Organizations 55

Chapter 4 Maintenance Training 85

Chapter 5 Work Order Systems 97

Chapter 6 Maintenance Planning and Scheduling 105

Chapter 7 Preventive Maintenance 121

Chapter 8 Maintenance Inventory and Purchasing 135

Chapter 9 Management Reporting and Analysis 147

Chapter 10 World Class Maintenance Management 169

Chapter 11 Integration of Maintenance Management 181

Chapter 12 Benchmarking Best Practices in Maintenance Management 191

Index 209



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v

Preface

Maintenance. Many times the word is viewed with a negative at-titude. In almost all organizations, the maintenance function is viewed as:

• a necessary evil, • a cost, • insurance • a disaster repairing function • prima donnas Because of this attitude, too little time or effort is spent on try-ing to control maintenance activities and costs. In the past, mainte-nance has received little budgetary attention other than a nominal increase or decrease from year to year. Most organizations today are trying to increase profitability. Because maintenance expenditures make up a percentage of production or occupancy costs, attention is being turned to financial accountability for maintenance expen-ditures. As organizations audit their maintenance expenses, they find a sizable amount of money spent with little management con-trol. Proper management controls must be applied to maintenance if costs are to be curbed. But to successfully control maintenance, proper management policies and practices must be instituted. Again, many organizations have tried to use standard production or facilities-oriented methods to control maintenance. This has not and will not be successful. Maintenance is a unique business process. It requires an ap-proach that is different from other business processes if it is to be successfully managed. The purpose of this book is to present in-sight into what is required to manage maintenance. The book can-not provide a complete answer to every maintenance management problem. However, it will provide a framework with options, allow-ing maintenance decision makers to select the most successful way to manage their business.



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Foreword

Status of Maintenance in the United States

According to estimates, over 200 billion dollars were spent on maintenance in the United States in 1979. This is a sizable figure in anyone’s estimation. However, more disturbing than this amount is the fact that approximately one-third of the total was spent unnec-essarily; it was wasted. In subsequent years, there have been no sig-nificant changes in maintenance policy, indicating the waste trend is probably still about one-third. The largest change in the main-tenance costs is the amount. Since 1979, maintenance costs have risen between 10% and 15% per year. Maintenance expenditures in the United States, therefore, are probably now over a trillion dollars per year. If the waste ratio is holding steady, and there are no indica-tions that the ratio is changing, companies are likely wasting today many times more than what they were spending on maintenance 25 years ago, as illustrated in Figure P-1. Where do these wastes occur in maintenance? How can they be controlled? These questions can best be answered by looking at some statistics.

Figure P-1



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1. Fewer than 4 hours per day (out of a possible 8) are spent by maintenance craftsmen performing hands-on work activities (See Figure P-2). This fact is even more alarming: In the majority of maintenance organizations, these craftsmen spend as low as 2 hours per day performing hands-on work. These individuals are not lazy, nor are they shirking their job responsibilities. Instead, they are not provided the necessary resources by management to perform the assigned job tasks. Providing these resources becomes important to increasing maintenance productivity and producing a substantial maintenance labor savings. When we view maintenance salaries as a resource for which we are paying approximately $20.00 per hour, yet we are utilizing the resource at only a 50% level, we can see a tremendous cost waste. Methods that may be employed to increase labor productivity will be explained in chapter 6. 2. Only about one-third of all maintenance organizations employ a job planner to schedule and supervise maintenance activities (see Figure P-3). Most experts agree that better use of planners provides one of the largest potential areas for cost savings in maintenance. These planners help insure that maintenance work is performed ef-fectively and efficiently. Estimates show that planned work versus unplanned work may have a cost ratio as high as 1:5. Performing a $100 planned job could save as much as $400 if the same job was unplanned. We will explore maintenance planners, their qualifica-tions, and assignments in a later chapter.

Figure P-2



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3. The majority of all maintenance organizations either are dis-satisfied with their work order systems or do not have them (see Figure P-4). The presence of a work order system is one of the most important indicators of a maintenance organization’s status. If a maintenance organization does not have in place a work order system that works correctly, it is impossible to measure or control maintenance activities. The importance of a maintenance work or-der system, how to set one up, and how to use the system will be discussed in chapter 5. 4. Of the one-third of all companies that have work order sys-tems, only about one-third, or approximately 10 percent of all orga-nizations, track their work orders in a craft backlog format (see Fig-ures P-5 and P-6). The craft backlog allows managers to make logical

Figure P-4

Figure P-3



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staffing decisions based on how much work is projected for each craft. It provides a departure from the “I think I have enough craft technicians” or “let’s work overtime to get caught up” modes that most organizations find themselves in today. Being able to justify employment levels to senior management is a necessary function of good maintenance management. We will discuss backlogs and their significance in chapter 3. 5. Of the one-third of all companies that have work order sys-tems, only one-third compared their estimates of the work order la-bor and materials to the actual results (see Figure P-7). Therefore, only about 10% of all organizations carry out some form of perfor-mance monitoring. Successful maintenance management requires performance monitoring. Proper methods, including maintenance analysis, will be covered in chapter 9. 6. Of the companies with work order systems that allow for feed-back, only one-third, or about 10% of all companies, perform any

Figure P-6

Figure P-5



x xi

failure analysis on their breakdowns (see Figure P-8). Most of the other companies just change parts. For an operation to be cost ef-fective, good practice in failure analysis must be followed. We will discuss this topic in chapter 7. 7. Overtime, another key indicator in the United States, averages about 14.1% of the total time worked by maintenance organizations (see Figure P-9). This figure is almost three times what it should be. Higher levels of overtime indicate the reactive situation that is stan-dard in the maintenance process. Reducing overtime is essential if a maintenance organization is to be truly cost effective. Proven meth-ods for reducing overtime will be explored in chapters 6 and 7.

Figure P-7

Figure P-8



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8. Preventive maintenance, another major part of any successful maintenance program, currently satisfies the needs of about 22% of the company’s surveyed (see Figure P-10). This low level suggests major problems for the maintenance organizations. Without suc-cessful preventive maintenance programs, maintenance can only react to given situations. Preventive maintenance allows the organi-zation to be proactive. While preventive maintenance means more planning, it also leads to reduced maintenance costs. Over three-fourths of the organizations show needs for major improvements. Methods of implementing and improving preventive maintenance

Figure P10

Figure P-9



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programs will be discussed in chapter 7. 9. Related to preventive maintenance, almost three-fourths of the organizations have some form of lube routes and procedures (see Figure P-11). While this fact seems to be positive on the surface, it is not. Too many organizations believe that preventive mainte-nance is nothing more than lube routes and procedures. Therefore, once they have these developed, they stop further maintenance ef-forts. However, preventive maintenance encompasses much more than lubrication routes. Additionally, the lubrication position (of-ten called an oiler or lubricator) is generally an entry-level posi-tion. The technician’s lack of proper skills and training often results in substandard performance of the lubrication program which, in turn, leads to excessive breakdowns, even though the company has

Figure P-11

Figure P-12



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a lubrication program. To be successful, maintenance organizations must go beyond the preliminaries and fully develop their preventive maintenance programs. 10. An additional fact related to preventive maintenance is the lack of coordination between operations/facilities and maintenance. Almost three-fourths of all organizations experience problems co-ordinating preventive maintenance with the operations/facilities group (see Figure P-12). The problem lies with communication. Either the maintenance organization has not effectively communi-cated the need for the preventive maintenance or the operations/facilities group is not educated properly about the benefits of pre-ventive maintenance. Good, credible communication must be estab-lished if preventive maintenance is to be effective. 11. Second only to the cost of maintenance labor is the cost of maintenance materials. Depending on the type of operation/facility, maintenance materials can range between 40% and 60% of the main-tenance budget (see Figure P-13). To successfully manage mainte-nance, materials must be given close scrutiny. The details of proper maintenance inventory management will be explained in chapter 8. 12. Many companies try to remedy maintenance materials prob-lems by overstocking the storeroom. This remedy creates its own problem because most companies do not then take into account the fact that inventory carrying costs are over 30% of the price of the items per year. For example, the cost of carrying a $1 million inven-

Figure P-13



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tory is over $300,000 per year. To reduce these costs, inventories must be kept low while still providing a satisfactory level of service and avoiding stock outs. 13. Another concern regarding maintenance materials is that maintenance is only responsible for its inventory in about half of all organizations. The other half of the time, someone else is telling maintenance what to stock, how many to stock, and how many to issue. It is the classic example of a support function telling their cus-tomers how to run their business. 14. While most maintenance managers will agree that mainte-nance costs are high, they don’t know how high they are for their own site. In most cases, the costs of maintenance repairs are calcu-lated as the cost of maintenance labor and the maintenance materi-als to effect the repair. However, that calculation leaves out the cost of lost production. This cost may range from two to fifteen times the cost of the maintenance repair (see Figure P-14). The average is usually 4:1. For example, a maintenance repair may be $10,000 in labor and materials, but the actual cost is really closer to $50,000 once lost production is factored in. Is it any wonder that mainte-nance costs are coming under closer scrutiny and control? Over the next several years, annual maintenance costs are likely to exceed the amount spent on yearly new capital investment. With the scru-

Figure P-14



tiny given to yearly capital expenditures, it is indeed no wonder that maintenance expenditures are being closely examined. This foreword has looked at the general condition of the mainte-nance function in facilities and industry today. Through a detailed set of questions, Chapter 1 provides an opportunity to analyze the specifics for each company. The survey will enable a company to closely scrutinize its maintenance/asset management function.

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208 Chapter 12

A-B-C analysis 142-143, 165abuse failures 128accountability 198accounting 99analysis/decision justification reports 161asset care 20-21, 32asset management 176-179asset-value based benchmarks 199attitudes 171, 173-175, 196-197automation 11-12, 121-122automation technology 175-176

backlog 116backlog by craft/crew/department 158batch data-transfer 183benchmarking 27-54, 195-197benchmarking partners 201best practices 27-30, 35-36, 170-173, 191-208bin stock items 140-141blanket work orders 100-101breakdown analysis report 162breakdowns 126-127budget variance report 162

CAD/CAM systems 182canceled PM work 167-168capacity 115-116capital equipment 58-59catalogs 136-137cell dependency 122-123centralized organization 64-65classifying spares 142-143CMMS (see computerized maintenance management systems)code of conduct 51collective bargaining 71combined staff 63competition 171-172competitive analysis 28-29competitive benchmarking 35completed work orders report 158components 129computers maintenance management

systems 40, 71 73, 75, 147-153, 181-182condition based maintenance 125-126consumables 141continuing education 89continuous improvement 20-21, 43, 44contract staff 63-64contracting 21-23control system 81copycat benchmarking 52core competencies 30-31corrective maintenance 61, 75correspondence programs 90cost comparisons 194cost information 57-58cost of maintenance vii, xvcost reductions 56cost savings 144-145cost variance report 167costs 31-34craft training 88, 90-91craft usage summary report 159-160critical equipment units 128-129critical spares 141cross reference listing 160cross training 92-93

daily reports 153-155delivery dates 137document management 23-24downtime report 159

EAM systems (see enterprise asset management systems)emergency report 154emergency work orders 101-102employee/craft/crew listing 160enablers 29-30, 114, 197energy consumption 59, 123energy management systems 182engineering 98-99engineering-centric model 67-69enterprise asset management systems 181-182, 188-189environmental regulations 71

Index



Benchmarking Best Practices in Maintenance Management 211

EOQ report 164equipment 148equipment availability 179, 192equipment failure 127-128equipment history 104equipment history report 161equipment life 123equipment listing 160equipment performance 203-204equipment service 60ERV (see estimated replacement value)estimated replacement value 199

facilities 12-13, 98, 179failure 133financial optimization 19-20, 42-45first-line foreman or supervisor 69-72foreman 69-72

gap analysis 45-47general information reports 160-168general practices 18-19geographical organization 64-66goals 55-60

hands-on activities viiihands-on time 113hard copy catalogs 136-137hybrid organization 65-66

improvement 37infant mortality 127in-house staff 63in-house training 89-90inspections 132insurance spares 141integrating systems 183-184integration of maintenance management 181-189interfacing systems 183internal analysis 37internal benchmarking 35international marketplace 169-179interpersonal training 40-41inventory 9-11, 39, 59-60, 73, 99, 103, 122, 135-146, 148, 165, 192-193, 204-206inventory over max report 164issue/returns report 164

JIT (see Just In Time)job skills 110-111journeyman training 92Just-In-Time manufacturing 122

key performance indicators 43-44KPIs (see Key Performance Indicators)

labor controls 103labor costs 177-178, 193-194labor productivity 114list parts issues 166lubrication xiii

maintenance and ROFA 31-34maintenance and work order systems 97-98maintenance controls 145-146maintenance costs 57-58, 177-179, 193-194, 200-201maintenance organizations 1-2, 55-84maintenance performance 201maintenance planners 72-74, 105-111maintenance prevention 62maintenance problems 105maintenance records 56-57maintenance reporting 14-15maintenance resources 58maintenance spares 140-143maintenance stores 139-143maintenance strategies 38-43maintenance and management 60-69maintenance, status viimaintenance-centric model 66management analysis 147-168management reporting 147-168mandatory tasks 131material delays 135material requirements planning 181, 185-187materials costs 178-179maximizing production 55-56MES systems 181meter-based work order report 154-155monthly reports 158-160MRPII systems (see material requirements planning)MTBF/MTTR report 162

non-mandatory tasks 131non-pyramiding tasks 131-132

on-hand quantities 137operations 12-13, 41, 98organization by area 65organization evolution 81-84outage/shutdown report 163outages 102outstanding P.O. report 167

210 Index



Benchmarking Best Practices in Maintenance Management 211

overdue P.O. report 166overdue P.R. report 163overtime xiovertime report 167

P.O. history report 167partners 37parts activity 164parts adjustment transaction 166parts master list 160parts receipt list 165parts warranty report 166past due work order report 158performance goals 51-52performance indicators 43-44, 77performance measurement 104,139personnel 149personnel summary report 155planned work orders 100planner training 94planners viii-ix, 72-74, 106-111planning 6-7, 103-104, 105-114, 129-130, 192planning effectiveness report 158planning failures 111-112PM compliance report 156PM due/overdue report 156PM efficiency and compliance report 163PM route listing 163predictive maintenance 15-16, 41-42, 61- 62, 71-72, 76, 125predictive work order report 154-155premature benchmarking 52preventive maintenance xii-xiii, 8-9, 38-39, 61, 71-72, 76, 102-103, 121-134, 149, 195price change report 165priority system 117-119proactive maintenance 71, 125procurement 39procedural review 53production-centric model 66-67purchasing 9-11, 73, 99, 135-146, 148-149pyramiding tasks 131-132

quality 70, 123, 171, 173

random failures 127-128RCM (see reliability centered maintenance)reactive maintenance 60-61, 71real-time parts 136rebuildable spares 141redundancy 122

reliability centered maintenance 16-18, 42, 126reliability-focused organization 197reorder list 165reorder report 154repair-focused organization 197repair length report 162repetitive repairs report 162reporting structure 66-69, 195residual parts 142resource requirements forecast 161restocking report 166return on fixed assets 31-34, 176-179return on net assets 176-179ROFA (see return on fixed assets)roles and responsibilities 69-79RONA (see return on net assets)

safety 70sales costs 200-201schedule compliance report 155schedule progress report 154schedule projection report 156-157scheduled refurbishings 125scheduled work orders 100scheduling 6-7, 72-73, 103-104, 105, 114- 120, 130, 192scrap 142shop-floor control systems 182shutdowns 102similar industry benchmarking 35slow moving parts 164spare parts xivstaffing 62-64, 79-81, 200stand-alone system 183standardization 75standing work orders 100-101statistics report 161status codes 115stock out report 165stores (see inventory)supervisor training 94-95supervisors 69-72, 106-108supervisory effectiveness report 159surplus parts 142survey of maintenance management 1-26

technical training 40-41tools and equipment 142top ten report 162total productive maintenance 42TPM (see total productive maintenance)tracking assets 138



212 Chapter 12

training 3-4, 40-41, 73-74, 78, 85-95, 206-207

unethical benchmarking 52upper management 99useless spares 142

vendor performance analysis 167vendor training 89vocational schools 88-89

wear out 155-158where used listings 137work controls 39-40work flows 39-40work order listing 155work order status report 157-158work order systems ix-xi, 39-40, 97-104work orders 4-6, 149-150work summary report 153-154world class maintenance management 169-180wrench time 113, 203



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Chapter 00. Benchmarking Best Practices in Maintenance Management