Motorblog

Considerations on Present Day Maintenance Programs

President, SUCCESS by DESIGN

Discussion of the condition and opportunities of existing maintenance programs.

As I watch, listen and discuss the subject of reliability and maintenance with people in all walks of life, or business.  The responses and outlooks actually appear to be very similar, in each person’s context.  However, why is the number of reactive industrial maintenance programs increasing at a steady pace?

In past newsletters we have discussed the general view of why this particular situation has occurred.  Some of this has to do with the change in business management, some has to do with issues of competitiveness and some has to do with manpower issues.  However, the largest issue has to do with the lack of understanding of the concepts of reliability and maintenance across all levels of the organization, including outside investors.

Prior to the early 1910’s, companies pushed people and equipment up to and beyond the breaking point in an effort to ‘speed up’ production, especially with mass production, in an effort to reduce costs.  The idea is that if you produce more, in a given period of time, and your fixed costs remain the same, for that period, then your cost per unit of production is reduced.  Most of the machines were over-designed and robust.  With a high rate of unemployment (~15% in 1910), workers were put in the position of making due with working conditions and hours or they had a ready replacement.

In the mid-1910’s, the US Government implemented work week limits and safety requirements.  Labor continued to organize with major accomplishments occurring in the mid-1930’s.  The balancing act of working with improving labor costs while maintaining production levels continued through the 20th Century.  So, while different plans for improving operating costs continued, such as the Theory of Constraints, Lean Manufacturing, and other business models continued, there was a defined shift from production-based management towards finance-based management.  This hit its culmination in the 1960’s with the acceptance of the MBA and the increasing importance of the trading floor (“Wall Street”).  The result has been a focus on the finance and business side of companies, at the executive level, and less on the actual mission of the company.

During this time, with new materials and improvements in engineering, the cost of manufacturing industrial assets begins to decrease through the optimization of materials.  The new machines cost less, produce more and have much greater accuracy than their predecessors.  However, they have a tendency to be less robust than the older machines.

As time has moved on, there has also been a reduced understanding and interest in maintaining the assets of the company in an effort to decrease costs.  Now, if we also include the human assets, there has been a decreased effort in maintaining the human element where the rubber meets the road on the factory floor.  This has all combined into an issue with the Skilled Workforce (“Skilled workforce in the 21st Century,” http://www.motordiagnostics.com/presentations.htm) and a gradually decreasing reliability in production.

So, what can we do about this?  We have the opportunity to take advantage of the present situation.  The general reliability and maintenance of most companies has slipped enough that virtually any positive change will have good financial, profit and other business impacts.  The pendulum has swung from planned maintenance to reactive maintenance, over the past several decades, and now it is time for the pendulum to return.

The cost of lost opportunities has increased over time to be over 20% of the annual GDP, which represented a loss of $2.5 Trillion in the USA, alone, in 2005 (~20% of $12.5T).  In a recent document put out by one reliability company, they estimated the direct cost of R&M at $200 Billion during the same period.  However, this is not feasible, as the $200 Billion number was also the number published by MIT in 1979 with a projected annual increase of an average of 10% per year.  According to Ken Bannister in his book, “Lubrication for Industry,” that would put the present level at over $1 Trillion with over $500 Billion in unnecessary expenditures in 2006.

According to J. Piotrowski in his article “Pro-Active Maintenance for Pumps,” February, 2001, Pump Zone Magazine, reactive maintenance in plants actually has a direct cost of $18/hp/year, preventive maintenance $13/hp/yr, predictive maintenance $9/hp/yr and condition-based maintenance (RCM) has a cost of $6/hp/yr.  If this is then applied to Mr. Bannister’s numbers, then the unnecessary expenditures would actually be in a range between $500 Billion and $750 Billion per year (comparing the over 60% reactive companies to condition-based opportunities).

There is a significant hurdle, however.  A rule that I have put forth since the late 1990’s was that it takes 12 to 24 months for the benefits of a program to be felt by the company.  This range was echoed in late 2006 by Jack & Suzy Welch in their book “Winning: The Answers:” ‘Most change programs usually take about a year to get traction – that is, before people start to feel any impact and know the change is for real.  If you have a persuasive case and lots of positive energy, most of your team will come with you, even some of the “older and wiser ones” who seem so resistant today.’ (p. 68)

In every program where I have witnessed success, there is some champion from labor or management that continues to push the program forward, demonstrating how the program should succeed.  In every case that I have seen it fail, everyone seems to be sitting back waiting for some hero to appear to save the day, or the feeling that the battle is lost.  The ones that really leave me heart-sick are the programs that have reached a pinnacle, only to come apart because of a lack of interest.  Terrence O’Hanlon, CMRP, of ReliabilityWeb.com and I coined the phrase ‘maintenance entropy’ to describe this issue.  It is the situation where a program becomes successful enough that there are very few unexpected failures and others see the opportunity to ‘lean’ the program and end up removing the very components and maintenance assets that made the program successful in the first place.  The challenge for the maintenance department is that it takes the same 12-24 months for the full negative effects of the change to be felt, as well.

So, with all of this potential and the negative aspect of maintenance, what can the maintenance warrior do to change it?  How can a maintenance person on the floor make a change?  How can we win this losing war of lost business opportunity and turn it into a winning war that can have a positive impact on our economy?  And, yes, I mean that.  Every positive improvement in your maintenance organization will not only have a direct impact on the profitability of your company, but will also have a direct impact on the nation’s economy.  Oh, yes, in a small way, at first.  But as a company’s asset health improves and it becomes noticeable on the bottom line, there is less chance that a company will close a factory or outsource.  Will it take time?  Absolutely.  It took a century to get where we are now; it will take a long time to get where we need to be.

In the past half century, it took finance to get in and start looking where a company could make improvements and ‘lean’ to a point of global competitiveness.  It took marketing to brand companies and get exposure.  It took IT to develop the programs and information to work within the company to expose additional opportunities.  In each case, these groups held sway in the boardroom.  With the huge opportunities that maintenance can provide to industry now, it is time for R&M to enter that boardroom.  The question is: Can your maintenance organization make that step?