RESULTS ORIENTED MAINTENANCE MANAGEMENT

AND STRATEGY GP048

JULIO NASCIF

Abstract

Since Maintenance is a strategic function, cost-cutting strategies widely used do not promote better results. Maintenance Management and Strategy shall be a systematized process, aligned with company goals and guidelines. Best Practices and Audits are the way to do and check the process, promoting the improvement.

Key Words

Maintenance Management, Costs, Results, Best Practices.

1 Introduction

Maintenance is a strategic function at organizations around world and the best or worst performance impacts directly the results. The “main product” delivered by Maintenance is Availability. That’s what “The Client” needs (or buys). Maintenance Mission can be defined as “guarantee the

assets availability and reliability with safety, environment preservation and adequate costs.” [2] While availability, reliability, safety and environment preservation are comprehensive things there is a problem with costs. For many organizations and managers costs seems the most important thing, i.e, “the king”. No wrong the worry with costs and the natural tendency to reduce them. The problem occurs when the cost becomes the only one most important thing, making blind managers and professionals. 2 The Scenery The competitive business scenery suggests a culture focused on “cost-cutting strategies” as a way to obtain advantage over competitors. If your competitor always has better results your company can die. In order to maintain or improve profits with competitive prices the first rule is cut costs. (1).

PRICE = COSTS + PROFITS (1)

Cost-cutting practice has is sustained trough the daily events around the world like paradigms broken, competitiveness changes, emergent economies menace, innovations and so on. For each “wave”, managers see the obligation to reduce costs as a medicine to solve all. While cost-cutting is a good results practice at short term, it is not effective at long term. Several studies

reported that, after a short time of good results, in the subsequent years many companies suffered losses as:

• Increase in costs • Dismantling organizational structure • Eliminate good professionals • Collapse in employee morale • Reduce productivity • Assets degradation

If there are poor results in medium and long term, why managers continue applying cost-cutting strategies? Some suppositions can be proposed:

• Managers ego • Results in short term can generate managers

personal dividends career • Lack of organization strategic planning • Minor management and technical knowledge

Inquiring engineers and supervisors about costs, the question “What your direct manager (boss) asks to you: the adequate or the minimum maintenance cost?” is often answered as “The minimum cost”. Abraman – Brazilian Maintenance Association [1] surveys indicates costs as the most important indicator (kpi) in comparison with other maintenance indicators as answered by large and medium companies’ maintenance professionals. (See table 1)

Table 1 – Maintenance Indicators Importance Degree

The same “paradigm” can be find in others countries around world, confirmed by poor results, catastrophes, injuries and lost of market share. Costs are consequence of the practices adopted by companies. Poor practices imply in poor results and high costs. The cost-cutting do not guarantee only the cost reduction but the risk increase too.

3 Management Pattern

Management is the most important company function. Despite technical knowledge, be fundamental, the management is the most important thing because it makes the things run. Making a comparison between a company and a country, the company management is the political system in a country. If there is no political purpose, there is no completion. There are many management tools but all of them, are structured trough the following steps (see figure 1):

Figure 1 – Management structured system

Unfortunately, there are a lot of companies in which does not exists a global management pattern and each area makes efforts individually, without coordination and not always focused in the company needs. In these places exists the better occasion and situation to implement the cost-cutting strategy, because do not rest anymore. When the company perform work based on a management tool like that showed in Figure 1, validated and/or applied for all areas and people, there is an effort sum actuating positively on results. All company areas/departments and professionals have a global orientation on defined goals which support the improvement necessary to change up the productivity, competitiveness, profits, market share, i.e. all results. 4 Maintenance Management Since Maintenance is one of those company areas, likes others, shall develop actions aligned with strategic guidelines, like others, in order to guarantee the reach of strategic goals established by high administration.(See Figure 2)

Figure 2 – Company areas strategic management

alignment However, this is necessary but not sufficient. Maintenance shall meet three basic conditions to fulfill its mission and support the management system. The first one is develop Plans aligned with company guidelines, working according full PDCA cycle. The second is an Organizational Structure adequate to work on demand and plant complexity. The third is to have qualified and certificated staff /professionals. Obviously, contractor personnel are included too. As illustrated in figure 3, these three conditions – PLANS, ORGANIZACIONAL STRUCTURE AND QUALIFIED PERSONNEL, are the basis on which will be develop the coordinated efforts to carry the company from the actual to a desired situation, better than the actual. These coordinated efforts include:

• Best practices application • Internal and external audits program • Analysis and plans adjustments

Figure 3 – Basic conditions on Maintenance

Management

4.1 Best Practices Best Practices are defined as those practices that allow best results. Best practices together indicators are the essence of benchmarking process that empathizes seek,

comprehension, adapting and application of practices responsible for improve the process, the costs and the results. Some maintenance best practices are listed bellow: • Failure analysis to determine and eliminate the root

cause. • Work together operation and engineering to reduce

failures and improve availability and maintainability.

• Increase predictive maintenance / inspection as a tool to reduce interventions on assets, production broken and maintenance costs.

• Reduce reactive maintenance replacing it by predictive maintenance and preventive where the predictive maintenance is not possible.

• Reliability Centered Maintenance - RCM program application preferably to critical equipments and systems

• Adopt TPM-Total Productive Maintenance as a practice to change operational culture and improve synergy between operation and maintenance.

• Prepare, discuss and apply writing procedures for maintenance services.

• Improve the craftsmen skills trough training and qualification program that includes on-the-job training, external courses, seminars, manufacturer’s presentations and courses.

Best Practices application represents the phase DO in PDCA cycle. 4.2 Audits

The last stages of PDCA cycle are C – Check and A- Act. These two stages could be named CRITICAL ANALYSIS (C+A) since this procedure is fundamental to promote the improvement. Is not possible making better the process, the work, the methodology without perform these two stages completing PDCA cycle.

Figure 4 – Continuous improvement by PDCA turn

Audits represents the CHECK stage in PDCA cycle being very important to making available the analysis and comparisons necessary to understand and make Plans adjustments and/or corrections. These corrections, implemented immediately after – stage ACT, can involve the plans, review goals, establish new patterns and references on practices or people, and so on.

Even if the word audit inspire afraid, the check, audit, evaluation or other name more acceptable shall be performed periodically. In Brasil, some companies like Petrobras, Vale and Votorantim, for example, adopt a systematic maintenance performance evaluation in their management process. In addition to the internal evaluation, these companies are audited by an external maintenance expertise consulting company once a year. 5 The real maintenance world

The management process described before, looks like a simply and logical model to be adopted or pursued. In general, all people agree with this affirmation. Additionally, the majority of maintenance professionals knows best practices (if not all) around world. However, although known all best practices, asked if they use these practices the answer is “no” or “some” or yet “only one or two of them”. Worse is the answer like “we do not have time to apply these things because we have much work to do all time”. If you known the best practices can understand their value and impact on results, why do not apply them? This is the big difference between organizations and managers, i.e. those who apply e those who not apply. But, this typical inertia in the implementation of best practices is not a privilege of very small companies. Large international companies have this paradox and some of these are suffering continuously damage. World Class Maintenance or Best in Class Maintenance are that which apply best practices and control the

performance trough (few) representative indicators. From specialized literature, some real maintenance facts are listed bellow: • “The report concluded that if U.S. automakers

implemented Japanese performance efficiencies at all of their plants, savings would be dramatic. If GM could produce vehicles as efficiently as industry-leader Nissan, for example, it could save $ 925 per vehicle, or $ 5.3 billion a year; Ford would save $ 612 per vehicle, or $ 2.8 billion a year; and DaimlerChrysler would save $ 950 per vehicle, or $ 2.9 billion annually.”[9]

• OEE – Overall Equipment Effectiveness is about 85% and greater for continuous processing plants while USA industries have a typical value of 50% that’s mean 35% of occult recoverable capacity.[3]

• General Motors Advanced Engineering group has conducted a maintenance benchmarking study finding:[8]

o More than half of all maintenance was reactive

o Preventive maintenance averaged one-third of the effort

o Predictive maintenance averaged only 13% of the total

• Abraman Survey shows that since 1997 predictive maintenance application in Brazilian large

companies is stabilized at 17% while preventive is 35% and reactive maintenance is 28% approximately.[1] For medium and small companies reactive maintenance reaches percents higher than 60%.[5]

• “Currently North-American industries seem to be improving as maintenance programs begin to gain traction and sophistication. However, some 75% of companies still continues to focus on reactive maintenance.“[6]

• “Recent surveys on maintenance management effectiveness indicated that one third – 33% of all maintenance costs is wasted as the result of unnecessary or improperly carried out maintenance”[4]

These findings, listing USA and Brazil facts, certainly occur in the same manner in all countries, more at one than others do. A real maintenance world based in the findings and testimonials permits to make some inferences: • Reactive maintenance has the higher application

percent (>50%) though all people known that emergency work implies in high costs, more time spent and less safety.

Figure 5 – Reactive maintenance safety less [11]

• Wrench time is 26% to 32% while could be

approximately 50% making better work force conditions and satisfaction from efficient planning actions.

• OEE has a medium value of 50% showing the management mistakes on operation, maintenance, supply-chain and human resources.

• Predictive and Inspection actions will be increased if managers had more knowledge and information about the cost-benefit relationship.

• In general, engineers and supervisors do not know the costs involved at process. Thus, they are not able to justify changes or improvements, perform anticipated actions that imply costs, nor convince the manager to shut down a machine, buy a new instrument or training your personnel.

5 The good side

Never were available as much information as actually we have trough books, internet articles, speeches, seminars, and congress, graduation and pos-graduation courses. Maintenance becomes a strategic function to the companies deleting the past “center of expenses” concept; Maintenance National Associations emerging as important vehicles of maintenance culture dissemination around the world. World companies begin to practice a global politics to maintenance, linked with enterprise corporative goals, trying additionally leveling all sites, what is a not ease work. Holcim, Gerdau, Arcelor-Mittal and Alcoa are international groups where maintenance has a corporative comparison and techniques exchange. In Brazil it is remarkable the work developed by Votorantim Metais Group in pursuit the World Class Maintenance. There, Maintenance is treating as an important corporative function to support and improve operations and results. Since 10 years ago, Votorantim Metais formulated a corporative model composed by central manager and maintenance managers of all sites. The process includes:

• Management Manual with all procedures and orientations

• Methodology aligned with guidelines and goals • Best Practices application • Audit program including internal and external

evaluators. • Comparison between all sites in order to change

experiences, disseminate best practices and analyze results on established metrics and goals.

Electronic, micro-electronic and software development has become predictive/inspection instruments cheaper making available technologies to ensure the monitoring and consequently continuous operation for longer time. Costs vary with the type of maintenance adopted as can see in table 2.

Maintenance type US$/HP/year relation Reactive maintenance 17 to 18 2,0

Preventive maintenance 11 to 13 1,5

Predictive + Planed Repair 7 to 9 1,0

Table 2 – Maintenance type costs [7] Thus, as far as possible predictive maintenance application makes maintenance costs go down. Additionally, a higher availability is promoted by periodic monitoring causing more production volume at same time that means greater sales and billing. If the input money goes up (billing) and costs goes down there are greater profits and prices can be at same level ou smaller than other competitors. This simple equation is quite different from that one recommending cost cutting. Compare, at figures 6 and 7, what occur using for example to the best practice “predictive maintenance”.

Figure 6 – Cost-cutting practice

Figure 7 – Best practices – Predictive Maintenance

6 Benchmark Benchmark can be defined as the metric or specific measure that reflects the best result or the reference in a given instant. As previously described, benchmarking is a process to reach the benchmark (metric, indicator) trough best practices application. Actually, maintenance benchmarks are available by several sources and their utilization for comparison is widely adopted. This is a positive fact since, making ease the comparison, can be used to do an improvement plan. In Brazil, Abraman [1] performs a bi-annual survey that can be used as a indication but not yet as a benchmarking study. But, anyway is an excellent information source about the medium Brazilian maintenance situation. Table 3 shows some maintenance metrics. At left column are the 2007 results of Abraman surveys and at right column a medium benchmark value of some sources.

MetricAbraman

[2]

Benchmark

[10]

Maintenance costs / E R V 4,2% 2 - 3%

Maintenance costs / total sales 3,9% 2 - 4%

Up-time 91,0% >90%

PdM + PM hours / total hours 56,0% >50%

Reactive hours / total hours 25,0% <10%

Stores as value a % of E R V 1,2% 0,25 - 1,0%

Spare parts inventory turns 2,4 1,0

Stores costs / maintenance total costs 13,0% 25,0% Table 3 – Some maintenance metrics

6 Conclusion

Business scenery imposes effectiveness to the companies in order to reply many demands like sustainability, environmental preservation, appropriated quality, social responsibility, employees and clients satisfaction, and so on. To stay alive in this scenery the management shall be professional, organized, systematic and methodized. The internal areas or functions in the companies are, together, like a champion team with a main goal – WIN. Maintenance is one of the most important functions for the companies’ success and all kind of efforts to change it better are valid, necessary and compensating. The final reflection: It is very hard to cut costs in maintenance. The cost cutting in maintenance usually implies in availability reduction. By other hand, working better it is possible to obtain higher availability. This is much more ease to maintenance professionals and that is what companies need. Thus, when the boss ask for maintenance costs reduction, offer a small rise in maintenance costs but also a rise in plant availability. The small rise in plant availability is much more significant than a maintenance high cost reduction. References

[1] Abraman - Associação Brasileira de Manutenção - Documento Nacional - A situação da Manutenção no Brasil – Abraman 1995/2007 [2] Kardec, Alan e Nascif, Júlio - Manutenção Função Estratégica – Editora Qualitymark Rio de Janeiro- [3] Mitchell, John S. & Others, Physical Asset Management Handbook -2002, Clarion, Louisiana, TX- USA [4] Mobley, R. Keith – An Introduce to Predictive Maintenance – 2nd edition - Plant Engineer and BH – USA [5] Nascif, Júlio – Tecém Reports – 1996-2008 - Belo Horizonte - Brasil [6] Peterson, Bradley – Up Time Magazine, Jan 2008- Netexpress USA Inc. [7] Plant Engineer, Fluor Daniel, USSteel and others - National Manufacturing Week –Chicago-1998 [8] Reyes- Picknell, James V. and Campbell, John D.,Up Time, 2nd edition, Productivity Press, USA 2006 [9] Rick Carter, IMPO Editor-in-Chief, Demand for World-Class Maintenance Will Increase as U.S. Automakers Pursue Japanese Standards, IMPO - Advantage Business Media, Madison, WI 53713.- 2008 [10] Wireman, Terry 2004 – Moore, Ron 2004 – Picknell & Campbell 2006 – Arruda, Carlos H. 2006 [11] Xavier, André F. Nascif, cartoon designer - 2008 - Belo Horizonte - Brasil

Júlio Nascif, mechanical engineer, diretor of TECÉM Tecnologia Empresarial Ltda, consulting and training enterprise; co author of Maintenance books; consultant and teacher of Post Grade Maintenance Engineer Courses.