Archive | February, 2006

180

3:07 am
February 2, 2006
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Wanted: Champions

The word champion has two basic meanings:

  1. One who wins first place in a competition of some kind; and
  2. One who fights for, defends or supports a cause or another person.

The maintenance function in general, and your plant in particular, need both. If you are not now a maintenance champion, maybe you should consider becoming one—of either type.

The last several decades have proved the importance of the second kind of champion. In almost every program of change, every model for improvement needs one or more champions to be successful. The champion may be the CEO, president or other officer, plant or departmental manager, team leader, team member or just an individual who takes responsibility for supporting or leading an initiative.

To move ahead, maintenance needs such people. I dare say that no plant has moved from reactive to preventive maintenance or from preventive to predictive without one or more champions. Root cause analysis and reliability centered maintenance don’t get established without champions. But championing needn’t necessarily be connected only with these kinds of major overhauls of maintenance programs.

Champions can contribute and make a difference at every level.

I know of one maintenance worker, for example, who took it upon himself to champion the reduction of free-issue maintenance materials. Among the items he noticed being used to excess were work gloves. As time allowed, he would retrieve usable gloves—many in near-new condition—from trash barrels. During weekly maintenance meetings, he would point out the waste he had uncovered and encourage his coworkers to be more aware of ways to prevent it. His efforts resulted in thousands of dollars of savings in maintenance costs. Champions can emerge from anywhere. For example, I’ve known maintenance supervisors and managers who discover an idea at a trade show or conference and return to their plants to champion the institution of that idea in their plants.

We’ve all experienced the frustration of making a suggestion only to see it ignored or rejected at some higher level, when all the suggestion needed was a champion to support the cause and follow through. For the most part, there is no shortage of ideas, only a shortage of champions for those ideas.

Maybe you, too, should consider starting down the path to become a maintenance champion of the first kind—the winner of a competition. If you look around, you can find several recognition programs that are worthy of your efforts. Probably the most rigorous and prestigious of these programs is the North American Maintenance Excellence Award (www.nameaward.com). The winners of this award will tell you that it’s nice to have your maintenance operations declared a champion program. But, they also will tell you—as most champions would—that the real reward is what you accomplish along the way to the championship.

Yes, maintenance needs champions. You or your department should be among of them. MT


Richard L Dunn is currently executive director of the Foundation for Industrial Maintenance Excellence, the organization that administers the North American Maintenance Excellence (NAME) Award. He has been an observer, critic and supporter of industrial maintenance for more than 35 years.

The NAME competition Dunn refers to here is the topic of an entire track at MARTS 2006. Feel like being a “maintenance champion?” Plan to join Rick and others at MARTS to learn how your organization can vie for the NAME Award.

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210

3:06 am
February 2, 2006
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Understanding The Impact Cost Of Maintenance & Reliability

terry_wireman

Terry Wireman, C.P.M.M. Editorial Director

In the last two issues, we’ve discussed the cost of inefficient maintenance practices and the impact they have on a company’s expenses. This month, we’ll be focusing on an element I refer to as the “impact cost of maintenance and reliability.”

Let’s explore these impact costs in the context of a hypothetical production plant that finds itself in a sold-out condition. Everything that can possibly be manufactured is being sold to customers. When a line or critical piece of equipment fails during the production run, operations are halted until the equipment is repaired and returned to service.

What would this type of production disruption cost the company? Would the cost be calculated on the total lost sales dollars, or only on the lost profit?

First, consider the difference between lost sales revenue and lost profits. Profit is usually calculated by taking total income (sales) and subtracting total expenses (salaries, energy, etc.); the profit is what’s left. If a production disruption reduces the total income by reducing the sales volume, then lost sales would have to be a factor in calculating the impact of the production disruption. This reduces the numerator in the impact calculation.

At the same time, expenses also may be increased during the production disruption. There may be overtime for the maintenance technicians making the repair, or there could be product lost (particularly in a continuous process operation). These increased expenses impact the denominator in the impact calculation.

While this sold-out plant scenario may seem simplistic, very few organizations consider all of the parameters when considering the cost of lost production. Visualizing the problem becomes even more clouded when a plant is not in a sold out condition. At that point, the impact on lost sales revenue becomes a matter of debate.

Can the lost production be made up and still meet the customer delivery in a timely manner? If the answer is “yes,” then the sales volume may not be impacted. However, the denominator of the calculation will still be impacted.

Will expenses increase to make up the production? Here, the answer will be “Yes,” since the equipment will have to be operated when it was scheduled to be shutdown. Accordingly, there will be increased labor costs (usually at an overtime rate) and increased energy costs as well. So, again, the true profits of a company will be impacted negatively.

But, we’re not done calculating, yet. There is still another variable to consider.

What if the company has an extra line? Can the production crew be moved over to the spare line and run the product without any impact on profit? Possibly, but this line of reasoning leads to a much larger problem: a poor financial standing with investors. And why not? Profits, while important, are only part of the picture. The higher level indicator used to evaluate companies today is Return on Assets (ROA). This will be our topic of discussion next month.

In the meantime, if the information in this column has interested you, I invite you to join us at the Maintenance and Reliability Technology Summit (MARTS). April 17 – 20th, in Rosemont, IL, just outside Chicago.

On April 19th, I will be discussing the topic of “return,” specifically “ROI for Reliability.” During my presentation, I will show you how to present reliability issues using a methodology that is certain to appeal to the executive managers in your plant. For more information, visit www.martsconference.com I look forward to meeting you at MARTS 2006. MT

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439

3:02 am
February 2, 2006
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Part I: A Corporate Scorecard: Tracking KPIs Across Multiple Plants And Business Units

This two-part article is based on a paper presented at the 2005 SMRP Conference in St. Louis, MO. It traces the design and development of standardized reliability improvement metrics that have been deployed at 35 plants across three business units and multiple manufacturing technologies within USG Corporation.

Corporation (USG) consists of five wholly-owned subsidiaries, United States Gypsum Company, USG Interiors, Canadian Gypsum Company, L&W Supply Corporation, USG Mexico and USG International. Its North American operations encompass 56 manufacturing and warehousing sites operating 34 gypsum board lines, five cement board lines, 20 joint treatment facilities, seven paper mills, nine quarries/mines and 11 ceiling product lines. The corporation employs approximately 1,800 maintenance personnel (mechanical, electrical and process controls) with an annual maintenance budget exceeding $150 million.

Asset care best practices
USG began its implementation of asset care and work management best practices in 2001. The goal of this project, which has come to be known as the Reliability Performance Model and the RPM Initiative, was to develop a world class asset management program utilizing recognized best practices that focused on the areas of equipment reliability and maintenance productivity to improve plant operating efficiencies. The aim was to change the corporation’s maintenance departments from being fire fighters and emergency-based into departments that are based on prevention with controls in place to be proactive.

The resulting RPM Initiative is a structured and disciplined approach that focuses on increasing production output through equipment performance and workforce productivity improvements. Today, it continues to strongly influence the way asset care, maintenance and reliability are managed at USG’s manufacturing facilities.

The work management portions of the program, work orders, planning, scheduling and shutdown coordination form the foundation of the model, as shown in Fig. 1. These are the core competencies that are the focus of the current training. All manufacturing facilities are employing planners and building central storerooms to support this effort.

USG looked to the RPM Initiative to deliver in several ways, including helping the corporation:

  • gain control of our work through the work order system;
  • maximize the effectiveness of the crafts via planning and scheduling; and
  • begin eliminating defects by prioritizing work, assuring that the right parts, tools and employees are available to do the work so we can spend time on the most important work and performing this work right the first time.

These core competencies support USG’s proactive organization, which:

  • is reliability centered for developing maintenance strategies that are based on solutions to equipment failures;
  • employs a database of equipment histories so we can make decisions based on accurate information; and
  • utilizes well managed centralized storerooms for spare parts handling.

This work will lead to a phase where the organization builds on it successes. By putting this model into place at all USG manufacturing facilities, the company should be able to drive a culture of reliability and continuous improvement.

The initiative
USG continues to implement the RPM Initiative in phases (approximately 10 facilities each year). The first implementation began with two pilot projects in 2001 – 2002. Based on the success of those pilots, the initiative became a company -wide program. The model was then rolled out to an additional 33 facilities. The plan is to continue the implementation until all 56 manufacturing facilities have been trained and are implementing the model. Three years into the project, sites that had embraced the initiative were reporting:

  1. Maintenance delays going down
  2. Outages/down days better managed
  3. Plant recovery rates improving
  4. More project work being accomplished
  5. Infrastructure repairs completed without additional costs using the savings this initiative had generated
  6. Maintenance productivity up, and more work being done by smaller crews
  7. Maintenance unit costs flat or going down
  8. Plant output increasing

Teamwork has been a critical component to the success of this initiative. All USG employees understand that the RPM Initiative is a company- and plant-wide program—not just a maintenance or planner program. They also understand that the production departments are integral to the success of this initiative, and their involvement has been another reason for the program’s success.

Asset care metrics
Another key to the program’s success has been the corporation’s ability to measure maintenance performance. Relevant and standardized metrics have been developed to foster continuous improvement by involving employees at every level within the organization.

Key Performance Indicators (KPIs) and expectations were developed at the beginning of the RPM Initiative. They’re what are used to drive improvements—and what USG uses to measure its performance.

The KPIs provide information on where the process is working well and where it isn’t. This helps the corporation build on its successes and leads it to making process changes where unfavorable trends are developing. Table I highlights the Maintenance Benchmarks USG uses for rating various KPIs, along with the ratings for a typical USG plant.

Plant key performance indicators
During the pilot implementations, USG realized that it needed to measure the program’s progress. While the organization was collecting a large amount of information in its computerized maintenance management software (currently DataStream’s MP2 Access 2000) via the work order system, it realized that the data was only useful if it could be utilized to support decision making.

With the assistance of PCA, a set of Plant KPIs that focused on measuring the process and its implementation were developed. The following reflects the first 13 of the 26 KPIs currently utilized by USG.

1. Monthly Maintenance Spending (by dollar)
KPI #1 breaks out maintenance spending for labor, materials and contractors during the month.

2. Monthly Maintenance Spending (by %)
KPI #2 provides the same information as KPI #1, but shows the percentage of maintenance spending for labor, materials and contractors during the month.

Benchmark: Maintenance labor and material costs should be balanced operating close to a 50/50 split. Balanced costs indicate cost efficiency. High labor costs may indicate craftspeople are working ineffectually. High materials costs may indicate something is wrong with parts reliability or preventive maintenance.

3. Monthly Work Mix by Priority
KPI # 3 uses work order priority codes to define when a work order should be done relative to others. It calculates the percent of hours worked for the month for each work order priority (shown in Table II: Work Order Priorities), providing a clear picture of what kind of work is being done, e.g. routine, break-in, emergency or down day. Benchmark: Less than 10% of the completed work should be reactive (emergency/urgent/break-in, i.e. priorities 1, 2 and 5.)

4. Monthly Work Mix by Type (hours)
KPI # 4 is the work order type code that indicates the nature of the work performed (e.g. preventive, repair, rebuild, modify, etc.).

Each work order is coded with a work order type (as shown in Table III: Work Order Types). This KPI breaks out the work orders completed during the month by type based on actual hours charged against the work order. As with KPI #3, KPI #4 helps to provide a clear picture of what kind of work is being done.

5. Monthly Work Mix by Type Summary (%)
KPI #5 provides the same information as KPI #4, but summarizes each major work order type as a percentage of hours worked during the month.

Benchmark:40% of all hours worked should be preventive and condition based maintenance (PPM—Preventive and Predictive Maintenance).

A second benchmark measures PPM effectiveness. 15% to 30% of all hours worked should be generated from PPM inspections (FROMPM). You want your PPMs finding defects. If PPMs are not finding defects, then you may be doing the PPM too frequently or ineffectively. If you find too many defects during your PPMs then you may not be doing the PPMs often enough.

By setting these PPM benchmarks, USG is placing a priority on preventive work to drive equipment reliability improvement.

6. Monthly Work Mix by Expense Class
KPI # 6 uses an expense class code on the work order that is used to further define the type of work. It calculates the percentage of hours worked during the month for each expense class (as shown in Table IV: Work Order Classes).

7. Completed Work Orders per Man Day
KPI #7 provides the monthly trend for the past 12 months of the number of work orders completed per craftsperson.

Benchmark: Three work orders per person per day and trending up.

KPI #7 can be negatively impacted at plants where there is a high percentage of project and rebuild work thattends to be single work orders for large time commitments (e.g. 40 hours per week for a single work order).

8. Priority 1 Equipment Closed Emergency Work Orders
KPI # 8 tracks emergency work orders by the priority of the equipment. Equipment Priorities range from 1 (regulatory) to 9 (least critical) and are detailed in Table V: USG Equipment Priority Codes.

KPI #8 provides information on the number of emergency work orders completed on the plant’s most critical equipment during the month. This is a “bad actor” report and it is used to help focus or direct where resources should be placed to address problems (e.g. increased inspections, preventive work, predictive work, failure analysis, etc.).

9. Equipment Other than Priority 1 with 4 or More Closed Emergency Work Orders
KPI #9 provides another snapshot of the “bad actors.” It identifies equipment other than Priority 1 units with repetitive problems, as indicated by multiple emergency work orders to help identify where additional preventive work is required (e.g. increased inspection frequencies, PPM optimization, failure analysis, etc.).

10. Equipment with Costs Greater than $1000
KPI #10 is similar to the previous two KPIs as it is providing information on equipment that is expensive to maintain, to help identify where to focus efforts (e.g. review PPMs, plan capital replacements, initiate upgrades, etc.).

11. Failure Codes
KPI #11 provides information on the craftsperson’s initial assessment of the cause of the failure (refer to Table IV: Failure Codes, for a partial listing of the failure codes available). This information is used to assist with root cause failure analysis, as well as to determine training needs (i.e. alignment is a common failure), PPM requirements (i.e. wear is a problem), lubrication improvements (i.e. lube failures are high), etc.

12. Job Delays
KPI #12 provides reasons for the various job delays for the month. After a work order has been completed, the craftsperson codes the work order with a job delay code. The job delay code explains what, if anything, caused a job to take longer than anticipated (i.e. charged hours are greater than estimated hours). The primary sources of job delays are interruptions (reactive issues) equipment readiness (scheduling issues), job scope changes and tools/material readiness (planning issues) and material problems (storeroom issues).

Benchmark: Zero (0) job delays due to planning, scheduling, and materials management.

13. PPM and SAR Completion Times
KPI #13 provides information on how well USG is managing its preventive maintenance and OSHA-required safety inspections (SAR), and whether the work is being completed when scheduled.

Work orders closed with $0 charged indicate that the PPM or SAR work was not completed, although it was scheduled. Plants should be evaluating why PPMs and SARs are not being completed.

Benchmark: Zero (0) PPM/SAR work orders not completed in the scheduled period. Part II of this article will appear in the next issue of Maintenance Technology. It will cover the final 13 KPIs used by USG and detail the results the corporation has seen since it began utilizing these metrics. MT

 

Table I: Maintenance Benchmarks for USG
KPI World Class Typical USG
% emergency/reactive work < 10% 20%
Use of Standing Work Orders < 5% 9%
Man-hours planned 90% 5%
Work Orders with Feedback 100% 97%
Estimating Accuracy ±10% ±20%
Schedule compliance > 90% 77%
Backlog of work (crew-wks) 3 – 5 5 – mechanical
5 – electrical
% Backlog > 90 days old < 5% 35%
Preventive maintenance 40% 22%
Work from PPM 15% – 30% 5%
Age of Completed Work (% < 1 week) < 15% 40%
% of Storeroom Live 100% Best – 100%
Worst – 0%
Storeroom Accuracy 98.5% Best – 85%
Worst – unknown

 

Table II: Work Order Priorities
Work Order Priority Description Explanation
1 Emergency Work is performed immediately.
2 Urgent / Break-in Work is performed soon and interrupts the current Weekly Schedule.
3 Routine Scheduled This job is scheduled in a future week.
4 Down-day This job is scheduled for the upcoming down-day schedule.
5 Down-day Add On Added to the existing down-day schedule.
6 Down-day Pre-work Work that is scheduled and completed before start of the down-day.

 

Table III: Work Order Types
Work Order Type Code Field Description
ADJUST Minor Adjustment To Equipment
ADMIN-MTG Administrative Work Or Meeting
AUD-INSP Audit Or Inspection
DEMOLITION Demolition / Decommission
FABRICATE Replacement Part Fabrication
FROMPM PPM Feedback Corrective Work
HOUSEKEEP Area Housekeeping
MODIFY Modification Or Improvement
PLANNER Maintenance Planning
PLC Hardware Or Software
PPM PM & PdM Maintenance Tasks
PROJECT Project Work
REBUILD Rebuild Or Refurbish Equipment
REMV-REPL Remove & Replace
REPAIR Repairing Equipment
SAFETY All Safety Work Other Than SAR
SAR Safety Audit Request Item
SSUG Maintenance from Safety Suggestion
SUPV Maintenance Supervision
TRAIN Training
TROUBLE Troubleshooting

 

Table IV: Work Order Classes
Expense Code Field Description
CAPITAL Capital Work Orders
ROUTINE-M Routine Mechanical Work Orders
ROUTINE-E Routine Electrical Work Orders
STANDING Standing Work Orders (SWOs)

 

Table V: Equipment Priority Codes
Equipment Priority Code Description
1 Mandated by law or corporate policy
2 Impacts multiple processes, runs continuous without an on-line spare, and/or causes lost delivery
3 Impacts multiple processes, runs intermittently without an on-line spare, and/or causes lost production in less than 4 hours
4 Impacts a single process, runs continuous without an on-line spare, and/or causes lost production between 4-24 hours
5 Impacts a single process, runs intermittently without an on-line spare, and/or causes lost production in more than 24 hours
6 Impacts multiple processes, runs continuous with a an on-line spare, and causes no lost production
7 Impacts multiple processes, runs intermittently with an on-line spare, and causes no lost production
8 Impacts a single process, runs intermittently or continuous with an on-line spare, and causes no lost production
9 Minor or no impact on safety, product, or cost

 

Table VI: Failure Codes (partial listing)
Failure Code Explanation
ALIGN Misaligned
CPLG Coupling Failure
CRCK Cracked
ELEC Electrical General
GEAR Internal gears are worn
LOOS Loose
LUBE Lube Fault
MECH Mechanical General
MTCE Maintenance Improper
NOFL No Failure
OPTR Operator Error
OVLD Overloaded
SHRT Shorted
VIBR Vibrating
WATR Water Damage
WEAR Worn

Jay Padesky is Technical Manager Manufacturing Reliability and Maintenance for the US Gypsum Co. He is a Registered Professional Engineer (Michigan) and a Certified Maintenance and Reliability Professional (CMRP) with over 25 years of experience in various engineering and management positions. Since 2002, he has headed up USG’s RPM Initiative, which is instituting work management, material management and reliability best practices at all 56 USG North American manufacturing locations. Padesky is active in the Society of Maintenance and Reliability Professionals (SMRP), where he is a member of the association’s Best Practices Committee. He holds a Bachelor’s degree in Chemical Engineering from the University of Michigan.

Dick DeFazio is the president and CEO of Performance Consulting Associates, Inc. (PCA, Inc.), an asset management consulting and engineering firm headquartered in Atlanta, GA, since 1976. He is a Board Certified Management Consultant (CMC) with over 25 years of experience in both the public and private sectors. He and his team help corporations implement Best Practices

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