Implementing and performing improved maintenance processes will help operations reach a sweet spot of efficiency and effectiveness.
By Christer Idhammar, IDCON Inc.
“How can we tell if our maintenance organization is the right size?” I’m accustomed to hearing that question, especially from individuals who are new to the field. Over the years, many maintenance professionals, including myself, have collected substantial data and worked to come up with a simple answer or formula that could finally bring closure to the issue. As a result, some suggest that the size of a plant’s maintenance organization should be based on the number of motors, drives, pumps, compressors, and other equipment systems at the site. But that’s just one approach. Others believe that right-sizing efforts should be based on estimated replacement value.
It’s often said that maintenance costs should be less than 2% of estimated replacement value and the cost of employees a percentage of that figure (often 30% to 60% depending on where in the world the facility is located). This approach, though, can have some drawbacks, given the difficulty in assessing the replacement value of older plants. Moreover, maintenance costs vary in facilities, even within the same company. Many of these costs depend on how rules are applied. Take, for example, the fact that some enterprises view lubricants as an operating cost while others view them as maintenance cost. One of the biggest variations involves the application of rules for what can be defined as a maintenance cost versus a capital cost. Consider the following situation.
Several years ago, I worked with two competing companies. One had maintenance costs of about US$55 per ton of product; the other had maintenance costs of US$120 per ton. Interestingly, their respective cost of manufacturing was about the same. The company with the lower maintenance costs eventually purchased the other. Subsequently, the acquired company adjusted the rules of capitalization and its maintenance costs ended up at the same level as that of its new owner. The question is, had the acquired company capitalized as much as possible because it knew it could be bought?
Another common methodology for determining the right size of a maintenance organization divides the number of hours in the department’s backlog with available hours and then follows this trend. However, unless the maintenance organization has an accurate time and resource estimate of all work in the planned backlog, it is difficult to use this method. Many companies simply do not have accurate time estimates in their backlogs.
The reactive-work factor
It doesn’t make sense to measure anything if your work environment is reactive. In this type of environment, the workload is out of control because it varies too much. As a result, the maintenance organization will require increased resources. Keep in mind that basic maintenance-management processes must be in place and executed well before your organization can ever be effective at measuring what needs to be measured. These processes are:
Prevent. Includes lubrication, alignment, balancing, and operating practices.
Inspect. Includes basic look-, listen-, feel-, and smell-type inspections with smart methods, and predictive technologies such as vibration monitoring, wear-particle analysis, infrared thermography, and ultrasound.
Plan. Answers questions as to what the work is, how to do it, and the time needed.
Schedule. Answers questions as to who does the work and when.
Execute. Involves doing the work according to the set schedule and reporting what was done.
How do you determine if your maintenance work is too reactive? The easiest way is to analyze your actual schedule compliance for weekly and daily work and, if applicable, shutdown work.
Table I shows an example of a non-reactive organization and what best performers achieve, while Table II shows the typical schedule compliance in many organizations.
As shown in Table III, if the wasted time associated with unplanned and unscheduled work is 50% and the percentage of break-in work is reduced from 60% to 10%, a 25% improvement in time performance will be achieved. Wasted time includes time to find out what to do, find people to do it, and to find spare parts. This method measures the efficiency of the process instead of the outdated “wrench time” parameter that reflects a negative approach to people. Wrench time studies only measure the symptoms of the inefficiencies of the process in which people work. It’s not true that busy people aren’t productive unless they’re busy doing the right things. Remember, though, that basic inspections and condition monitoring must be in place to feed the work-management process with early detection of failures.
Mark Twain famously insisted that there are three types of lies: lies, damned lies, and statistics. Even so, we have often successfully applied statistics to estimate the correct size of a maintenance organization.
Table IV shows an example from Company X, where the maintenance organization once had 30 hourly employees. In 2010, this workforce was cut to 26 employees. Since nothing was done to improve the execution of basic maintenance processes at the plant, however, overtime and contractor hours increased from 2010 to 2014. Although there was a strong demand for the company’s product in 2012, 2013, and 2014, production reliability went down. (This was not an isolated incident. I continue to see similar scenarios occurring throughout industry: short-term savings trumping long-term common sense.)
Data in Table IV on the referenced maintenance workforce cuts at Company X were used, as shown in Table V, to estimate the total number of hours needed by the reduced-maintenance organization after improvement initiatives were implemented. The estimated attrition rate, mostly due to retirements, is also included.
Based on the information in Table V, a realistic efficiency improvement of 15% was calculated as a result of improved execution of basic maintenance processes at Company X. This led to an estimate of 61,200 hr. needed in the future. Implementation of improvements and positive results are expected to increase gradually over a period of four years. The estimated attrition rate is based on five of the company’s own employees.
Overtime and purchased services will return to a normal level of 10% each. This means that the right amount of hours for the maintenance department is calculated as 55,200—or 27 employees. This will call for the recruiting and training of four additional maintenance people in four years.
In the end, by continuing to implement and perform improved maintenance processes, the maintenance department at Company X will eventually reach the sweet spot of efficiency and effectiveness it seeks. MT
Christer Idhammar is founder and executive vice president of IDCON Inc., a consulting firm specializing in reliability and maintenance (R&M) management since 1972. Originally established in Sweden, the company has been headquartered in Raleigh, NC, since 1985. For more information on right-sizing maintenance organizations and other R&M topics, email email@example.com.
EDITOR’S NOTE: Details on right-sizing maintenance organizations will be included in an upcoming workshop that Christer Idhammar is scheduled to lead in conjunction with the 2016 Mainstream Conference, set for May 22 to 25, at The Woodlands Waterway Marriott in Houston. Entitled “Manufacturing Excellence in 2016: A Partnership between Operations, Maintenance & Engineering,” it’s one of several full-day, post-conference workshops offered on May 25. For complete information on this year’s information-packed Mainstream event and venue and/or to register, visit mainstreamconf.com.