You are currently viewing Myth Busting 18: There are a lot of savings in maintenance cost reductions

Myth Busting 18: There are a lot of savings in maintenance cost reductions

Myth Busting SeriesThis one is a HUGE MYTH. Maintenance costs are a direct result of what you do and what you do produces capacity for service delivery or production (depending on your business). Cost is a consequence of your actions, available cash (in a budget) does NOT determine what you will spend.

Imagine you are operating a production line with a delivery deadline. Part way through your production run you suffer a failure on a key piece of equipment. A drive shaft has broken, before it stopped it fell into another piece of equipment and jammed it. The jammed machine stopped and overloaded. Your operators don’t know what’s happened except that their line has stopped and they can’t restart it. Their attempts only trip breakers. They call the on-shift maintainer, who happens to be an electrician. He resets the breaker and tries a start – fails. He knows there more than just a spurious electrical fault. Your plant is running 24/7 and you need that production or you miss the deadline and suffer penalties. What do you do?

Your shift crew can’t handle the job on their own. You’ve got an electrician on shift and need a mechanic to come in. Your budget for overtime – has already been spent. Never mind about that – you need to get that machine back up, so you call in your mechanic (he’s getting double time for a night time call in). About 2 hours into the event, the electrician has isolated the machine and locked it out. Your mechanic has arrived, inspected and seen what happened. The shaft broke due to cyclical overloading – it had been poorly aligned when installed after the last repair. The bearings holding that shaft are also damaged and had likely been showing signs of distress for a while, power consumption may have been noticeably higher too (if anyone had been watching).

He’s stripped down the broken equipment and cleared the jam – there’s no work order. He now knows what parts he needs, goes to your onsite storeroom, searches for about half an hour but can’t find the parts. He knows the supplier, so he calls the supplier and rushes parts to the plant. His local storeroom didn’t have the shaft so he’s rushed it in from the manufacturer who, luckily, is only 100 km away. There’s no purchase order. Two hours later a taxi arrives with the part. Repairs can now start – 4 ½ hours after the failure. Repair takes another three hours, the electrician de-isolates the machine and it is turned over to production. Total downtime is 7 ½ hours, production has been idle for that time, the supplier will send an invoice for rushing parts in (no doubt at a premium price due to the time of day and taxi fare) and your mechanic earns 15 hours of pay for his 7 ½ hours of effort. None of that was budgeted. With no work order to close, the discovery of the poor alignment job and damaged bearings goes unreported and no improvement efforts are taken to avoid having that happen in the future.

When your ability to meet your customers’ needs is compromised, you pull all the stops and ignore the budget. In this case you also ignored the Work Order system and Purchasing Processes – but those are another topic.

At budget time it is common to be asked to shave a bit – maybe 5 or 10%. The accountants running the budget process know that you’ve probably added a bit of padding, just-in-case. If your budget process is based solely on last year’s actuals, then you have no basis on which to ignore the request. If your budget is zero-based (e.g.: activity based costing), then you need to cut specific activities. What do you cut?

You know that “emergencies” will arise, so need some extra for those – you can’t avoid spending on those (as above). So you cut from discretionary parts of the budget: training, PMs, you don’t hire that extra planner, you cut outside services, defer the RCM program, etc. All of those compromise your ability to improve and get better at what you are doing. All of them drive you in the direction of reactive maintenance. Reactive work is, on average, 3 or more times the cost of being proactive. For every dollar of improvement oriented money (discretionary spending) that you cut from your budget you are adding three or more to the non-discretionary / reactive work spending. Cutting costs at budget time is not working – in fact, it’s a fantasy to think you’ll save money that way.

If you want to save money on maintenance look at what companies that focus on reliability achieve. Their costs for maintenance are largely spent on proactive work, planned work and improvement initiatives aimed at delivering greater value. They suffer less downtime and most of that downtime is controlled because of the quality of their PM program. They produce more and maintain less. Costs per unit of output, or unit of service delivery, are low. They’ve focused on reliability.

Let’s look at the equivalent scenario in a plant with a well-designed PM program (e.g.: one developed using RCM) and good planning for all of its workload.

The potential for misalignment is a human error that can be easily avoided (training, procedures and alignment equipment). The damaged bearings could have been detected far sooner – perhaps through vibration analysis. The increase in power consumption could have been detected also if anyone kept track of it on your SCADA system. All of those are potential outcomes of an RCM program. The failure due to misalignment would most likely have been avoided altogether. The failure of bearings (normal wear and tear and far less often) would have been detected by either vibration analysis or power consumption. Downtime for repair could have been scheduled on a normal day shift at a time when you don’t impact delivery schedule. The repair itself would have been fully planned, no parts would have been missing, and the work would be less time consuming. No overtime, no taxi charges, no premium priced parts, no loss of production. What’s not to like about that. The cost – monitoring carefully and making sure that alignments are done with precision.

If you want to cut maintenance costs, you need to invest in reliability. Directly attacking maintenance costs, usually at budget time or in response to overspending events (like the one above), always backfires.