Achieving High Performance at the Lowest Possible Cost
One thing that is common wherever I visit, no matter what the region or the sector, is the strength of opinions on the cost of maintenance. I usually find two camps - engineers and maintenance professionals who complain that they never have enough funding to do the work they need to vs. finance and business teams who worry about shrinking margins, so want to reduce fix costs. In many companies, maintenance has become viewed as a nuisance function, a high cost with low perceived value in return and resistant to change.
It is a cold reality that businesses need to make a profit, so it is usually the cost reduction option that businesses choose, which is unfortunate since around 70% of fixed cost reduction programs fail in the long-term. Budgets get cut, but maintenance is still required and short-term corner cutting leads to costs increasing again. This process brings new problems such as poor reliability, poor morale and loss of trust as both sides of the argument blame each other for the failure.
I have heard a lot of stories about failed cost-cutting and people often complain “You cannot have low-costs and high-performance”. The exception to this is a small number of pace setting companies who have proved that that this is not the case, turning in year after year of outstanding reliability and safety performance at a consistently competitive cost. They do this through a methodology we call Cost Effective Maintenance. They have moved to a far more commercially focused approach and by doing so, they have converted maintenance from a “Nuisance function” to a competitive edge for their businesses.
So, what are they doing differently? Here are some examples:
They align maintenance teams with the needs of the business. The business priorities get shared along with the commercial model, how income is generated, customer requirements and the impact the cost and quality. This requires open discussion and a business plan for the next five years or more. Once they have this, the maintenance team, along with operations, can develop their own strategy to align with the business needs with the core question being “How can maintenance improve profitability and sustainability of the business”.
Moving away from purely focusing on costs. Most maintenance teams are given a budget and told to stick to it (or preferably reduce it) and this can lead to malnourished maintenance practices. Cost Effective Maintenance considers maintenance as an investment and top tier companies seek out opportunities to improve performance where this generates value. Often an improvement in the quality or the amount of production greatly outweighs the maintenance investment required to achieve it.
Eliminating all unnecessary work. We have assessed multiple companies around the world and have found the most are doing work that is not required. Either the scope is too large all work is done too frequently. On average, we find between 20 and 30% of all work done is not necessary. This provides a significant opportunity to reduce maintenance costs without a performance penalty. It does require a systematic approach, but it can be done.
Innovating and improving the way work is carried out. Companies that have adopted effective planning and scheduling of maintenance are seeing major improvements in all areas. However, in truth most companies only achieve basic planning and do not fully challenge work methods or innovate. There is a big difference between an average plan and an optimised one. Many plans are simply a repeat of what was done last time, but this guarantees performance will not improve - many of the methods and equipment we use are the same as our grandparents would have worked with. Pace setters study productivity and tool time and achieve maintenance efficiency improvements year-on-year. We normally find a 25 to 50% gap between average and top tier companies.
They engage, develop and empower the shop floor There is little point in improving ways of working if the people doing the work are not trained in the process, do not believe in them or are not motivated. This is not just about in-house personnel it includes contractors, how they are selected, developing a constructive relationship with them and setting a contract that drives performance.
They use a rigorous methodology. Transforming performance is not easy and it will not happen overnight. Maintenance is a challenging and often chaotic field, so improvement requires a range of tools and a methodology to direct efforts in the right place, in the right way at the right time. Pace setters understand this and adopt a project style mentality with clear roles, explore external best practice and adopt a proven methodology before starting. Average performers kick off initiatives without a plan, without dedicating resources and no structure.
They always believe there is more to do and are open to new ideas. The classic response of an average performer when we give them examples of best practice is to simple say “We do all this” and then do nothing. Poor tier performers tend to be defensive, criticise and resist. Top tier performers seek out best practice from other companies and advice from genuine experts and ask “How do you think we compare?” They measure their own performance, they benchmark against best practice and they run Continuous Improvement processes that are open minded and give everyone a chance to take part.
These are a few examples of best practice in Cost Effective Maintenance, which can provide an opportunity for a quick health check – how would you rank your own performance against these? Remember, average performers will tend to read these quickly and conclude they have them covered and poor performers will conclude they are nonsense or “Won’t work here.”
Try to challenge yourselves since there is a big prize here. I have worked with companies who have achieved outstanding results by taking on this challenge:
About the Author
This article has been written by PLUS Specialty Training’s international subject matter expert, Laurie Dummett.
Laurie Dummett is an award winning consultant and trainer with over 25 years of experience in maintenance. He has worked across five continents, in a wide variety of environments from the world’s largest oil refinery to a small bottling plant. Laurie has 10 years of maintenance management experience in the process industry, so brings a very practical approach to training. He moved into consulting with ABB Eutech as their global maintenance specialist where he led maintenance best practice panels, delivered a wide range of maintenance improvement projects and trained other consultants.
Laurie founded his own consultancy, in 2002 to focus on maintenance improvement and best of the best methodologies. As part of this, he developed a range of maintenance “models of excellence” with inputs from authors, international lecturers and some of the world’s leading consultants and operators.
Laurie remains close to the industry and continues to help operating companies, testing and refining his maintenance models in the process. His work in maintenance improvement has been recognized as best-in-class winning prestigious awards such as the UK Chemicals Industry Association national award for Excellence in Engineering.
To view Laurie’s courses click here
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