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RCM, Maintenance, Stock Market Investment, Business Critical, and the Milk Debacle Part 4

RCM, Maintenance, Stock Market Investment, Business Critical, and the Milk Debacle - An Amusing Tale

Following are the letters provided to parents following the ‘Milk Debacle:’

“Dear Students, Parents and Guardians,

“Thank you for your support and partnership with our school administration, staff, and all of the town, regional and state agencies that assisted us in assessing and effectively managing our two incidents this week.  Our district emergency management procedures guided our decision-making as information was unfolding moment to moment.

“We are pleased to report that the six second grade students who had ingested some of the contaminated milk on Wednesday are feeling well and are in school.  Yesterday after receiving a letter I requested from Guida Dairy, I was able to send it home to parents/guardians through our students at Goodwin and our Middle School.  Unfortunately, it arrived too late in the day for our students at the High School to receive it, so they will be taking it home today.  We have posted the letter from Guida Dairy on our website.

“Last evening, Julie Pendleton [Director of Operations, Facilities and Finance] and I received a guarantee from the Executives of Guida Dairy that all of the milk we receive on Monday will be packaged on or after March 30, 2007.  This is important since yesterday afternoon, the Department of Agriculture completed an inspection with members of our Police Department in attendance, giving us assurances that the milk processing plant is conforming to regulatory standards.

“Today, we evacuated our Middle School students and staff to the Park and Recreation building from 8:17 AM until 9:35 AM.  Some students and staff smelled a noxious odor in the seventh grade wing.  It has been determined that there were no toxic gasses present in the air.  The odor was caused by fumes from a gas saw in the courtyard during construction ½ hour before school began which seeped through the doors into a return air duct.

“Everyone connected with either incident has complimented the school district on our effectiveness, efficiency and organization.  I am very proud of our students, our staff, and our administration for working together with our Emergency Management Team, Police Department, Fire Department, Regional Health Department, Ambulance Association, general government personnel and First Selectman.  If you have any questions or concerns, please feel free to call me.  As we enter Spring, I truly wish you and your family a joyous and colorful transition to this season of hope and beauty.

“Sincerely Yours,

“Joseph Onofrio II
“Superintendent of Schools”

The letter from Guida Dairy:

“To: Parents of Old Saybrook School Students
“From: Guida Milk and Ice Cream Co.
“Date: Mid-Day, March 29, 2007

“It is imperative to communicate all information regarding illness experienced by some students drinking half-pints of low fat chocolate milk on Wednesday, March 28th.

“FIRST, the State Department of Agriculture has determined that all Guida milk products except for paper cartons of half pints (8oz) of lowfat chocolate bearing the date of April 13th are safe to drink.

“SECOND, Guidas, with the aid of the CT Department of Agriculture, has isolated the cause of the adulterated chocolate product to be food grade sanitizer.  The adulteration occurred through human error during the changeover process when we sanitize the lines after bottling one product but before we bottle a new product.  Even though a small number of containers were involved, Guida recalled the entire lot as a precaution.

“Guida Milk and Ice Cream Co. would like to extend a heartfelt apology to the children and their families affected by this unfortunate incident as well as praise for all school personnel, emergency response teams and state agencies for their rapid and thorough response.

“We have a long 120 year history of the highest standards for safety and quality products.  Feel secure that a complete investigation is being undertaken to ensure that this will not occur again.”

[Not signed or identified]

The information sent to Northeastern schools:

“ATTENTION ALL SOUTHERN NEW ENGLAND COMPASS GROUP UNITS THAT PURCHASE MILK FROM GUIDA’S MILK & ICE CREAM IN NEW BRITAIN CT - IMMEDIATE ACTION REQUIRED!

“~ DAIRY SERVICE AREA INCLUDES - MASSACHUSETTS - RHODE ISLAND - CONNECTICUT - NORTHERN NEW JERSEY - NEW YORK STATE, INCLUDING LONG ISLAND ~

“~ GUIDA LABEL CHOCOLATE MILK RECALLED - 1/2% HALF PINTS ~

“GUIDA’S MILK & ICE CREAM HAS INITIATED AN IMMEDIATE RECALL OF GUIDA LABEL 1/2% CHOCOLATE HALF-PINT MILK FOLLOWING ILLNESS ASSOCIATED WITH CONSUMPTION OF THE PRODUCT REPORTED BY A CT SCHOOL DISTRICT -

“- THE MATTER IS STILL BEING INVESTIGATED AND THE SPECIFIC CONTAMINANT HAS NOT YET BEEN IDENTIFIED

“What you need to know…

“* Recalled product is currently limited to Guida label 1/2%
chocolate half-pint milk.

“* Product number is identified as “Product # 138” with an
expiration date of “4/13/2007”

“* Guida label is the only chocolate milk recalled.  Other brands
- i.e. Garelick, Hood, etc. - are not recalled.

“What you need to do…

“* Immediately check your chocolate half-pint milk inventory for
recalled product.

“* Segregate and clearly mark any recalled product - “HOLD - DO
NOT USE - RECALLED PRODUCT”.

“* Keep an accurate count and written record of the quantity of
recalled product segregated.  This will help ensure that you receive the credit due for recalled product in your unit.

“* Guida Milk & Ice Cream will provide instruction as to
return/destruction of recalled product.  Contact Guida directly if they have not yet contacted you and you have recalled product in your unit.”

[end documents]

The good news is the quick reaction by all involved.  The bad news is six kids that had their stomachs pumped.

Sincerely,

President, SUCCESS by DESIGN

RCM, Maintenance, Stock Market Investment, Business Critical, and the Milk Debacle Part 3

RCM, Maintenance, Stock Market Investment, Business Critical, and the Milk Debacle - An Amusing Tale

Over the past week in the little town of Old Saybrook, CT, several children felt a little queasy after drinking chocolate milk.  In the past, the food service director would contact the milk company who would take care of the problem and trace the issue back within their organization.  The contaminant was always a food grade (human safe, but irritating) cleaner used to flush the pipes at the factory between product runs.  Once in a while procedures would not be followed [not enough data to make the assumption why, here] and not enough product (milk) would be used to flush the cleaner before continuing production.  Because of the recent scares related to food, including the spinach scare, and pet food, instead of following normal procedures, the principal of the effected school contacted the police and reported poisoning, the town politicians were informed and contacted the news services, all of the milk producer’s products were pulled out of all schools in the Northeast and the company was not given access to the product to figure out what was going on.  It is also interesting that the news was contacted before the food service employees were told to pull the product.  The food services for the town were required to serve only juice for the next few days.  Because of a shortage of juice, there were a few differences and there was a report that the orange juice tasted different, which went through the same channels and the juice was pulled as well.  The very next day, the town was in the news again because the middle school was evacuated after there was a smell of gas, which was assumed by school personnel to be a gas leak caused by a contractor working on the property.  The same level of milk-panic occurred and everyone including the news was contacted before someone thought to talk to the contractor. 

Turns out they were using a gasoline fueled chainsaw.

All because of a maintenance problem at the wrong time.

In the meantime I am waiting, watching for the next circus to occur.  The funny part is that this is a larger-scale problem of the very things that occur in our plants when process is not followed and R&M shortcuts occur.  Upper level management will knee jerk and over-react to ensure the problem never happens again.  In virtually every case, these uninformed reactions have severe negative impacts on the company.

I have reported, in the $Trillion Dollar Report (http://www.motordiagnostics.com/presentations.htm), that $2.5 Trillion in potential business was lost in 2005.  If you were wondering at this number, what do you think the economic impact was of the milk story above?  All because of an improperly performed maintenance procedure in the wrong climate.

It boggles the mind.

OK, enough of the fun stuff.  What do we do about this situation?

The pat is clear: Business leaders and business schools must take a closer look at the impact of reliability and maintenance on the bottom line.  Towards the end of the 20th Century, the focus was to lean companies focused on cost reduction, throughput improvement and inventory reductions.  A broad variety of programs were introduced to achieve these goals and whole new production and software tools were introduced.  Through this entire progress, the R&M organization was either ignored, cut or villainized.

The opportunities offered through a return to asset health management are staggering.  The processes exist for industry to take advantage of these opportunities; it is just a matter of leadership taking hold of the opportunity.

See some of the public correspondence concerning the Milk Debacle in Part 4 below.  In the meantime, contact us at to see how SUCCESS by DESIGN can assist your company in obtaining your share of the $2.5 Trillion in lost business opportunity.

RCM, Maintenance, Stock Market Investment, Business Critical, and the Milk Debacle - Part 2

RCM, Maintenance, Stock Market Investment, Business Critical, and the Milk Debacle - An Amusing Tale

Editorial (Part 2)

Maintenance Contexts:

‘Reactive Maintenance,’ not to be confused with Run to Failure, means that critical operating equipment is allowed to operate until it does not meet its minimal functions (it fails).  The time lost will impact amount and timing of the operation.  Reactive maintenance can be correctly applied as a strategy in specific instances.  These include cases where a company is only going to utilize the resource for a very limited run or time period.  In this case, it would not be cost effective to invest manpower and maintenance resources.

‘Preventive Maintenance’ is a strategy when only specific practices are performed based on a measured schedule such as time, distance or number of operations.  This type of maintenance is often performed on machines that are relatively simple in nature.

‘Predictive Maintenance’ practices utilize tools and measurement devices to detect impending failure.  This strategy is often performed using timed or continuous monitoring and equipment is addressed once a fault is detected at a risk level the company is willing to accept.

‘Condition-Based Maintenance’ is a strategy that is often confused with predictive maintenance.  There is a fundamental difference: In CBM, inspections, measures and tests are performed in such a way to determine the optimal time for performing maintenance.  In it’s simplest form, it could include such tasks as using ultrasonics to detect a lack of lubrication in bearings.  Once detected, maintenance is prompted to add grease.  In effect, preventive maintenance measures are applied when needed.  In cases of identified non-critical equipment, these may be run to failure because there is no measurable return in their maintenance.

The selection of tools and their proper application is critical for success.  This generally comes into play when an RCM, or other philosophy, consultant does not properly understand the industry they are working in.  For instance, there can be a great divide between military and commercial consultants.

Take, for example, the actual goal or mission of the military.  It is mission-reliability critical with minimal consideration for personal comfort and entertainment.  Now, on a commercial aircraft, not only is it mission-critical for maximum reliability for safety, regulatory, mission and cost consideration – but there is also a BUSINESS CRITICAL set of conditions that must be met.  This includes passenger comfort, appearance, entertainment, marketing, etc.  These are the items that, beyond the reliability of the aircraft will effect the reliability of the business.

If we continue with the example of the commercial aircraft, let us consider if a military RCM approach was taken: The maintenance practices would be optimized based upon the reliability and fitness of the aircraft for flight.  However, the 15-30 minutes between legs of the flight for cleaning the interior of the aircraft would be considered wasted.  After all, what impact does it have on the reliability of the aircraft to navigate safely?

Now, let us consider the weary business traveler, who after a day of playing warrior in the boardroom, or serving a client, who wants to move on to the next leg of their trip.  They, or their company, has invested a fair amount into the trip.  He enters the aircraft and looks at the cracker crumbs on his assigned seat, Starbucks® smeared with lipstick crushed in the magazine holder and gum under the arm of the chair that gets on his last pair of clean dress pants [yep, personal experience].  When given the choice of travel, would this person put that airline high on is selection criteria?  Perhaps after the first time, it depends on the passenger, but if it continues to happen would you expect to see a decrease in the passengers who represent repeat business customers?

At first this would appear to be a benefit to the bottom line, but as it continues a serious problem occurs.  As the direct maintenance costs have decreased, after a while the passenger revenue WILL begin to decrease.

This becomes even worse when appearance becomes more of an issue.  Take, for example, my past stories of the tray table being masking-taped to the seat because the mechanism was broken, or the missing inspection panel on the aircraft engine last week (see last week’s newsletter).  While they may not have had a direct impact on the reliability of the aircraft the condition did not exactly inspire the confidence and feeling of well-being (safety) of the passengers.  In fact, there was reaction, nervous laughter and discussion about both situations – and look: Someone is writing about it!!

The other issue that is generated from this problem is the installment of a ‘lack of attention to detail’ by the maintainers themselves, and the actual crew.  If you are working in a nasty, filthy environment, how likely are you to see a real problem?  Then take a spotless aircraft – every problem would stand out dramatically.  I mean, how else could a maintenance professional miss worn gaskets and loose fasteners on an emergency exit cone in a DC-9 (last week’s newsletter).

Now, lets take this to the factory floor.  Food processing plants have specific cleanliness requirements.  There are multiple reasons for this, including reducing the chance for contamination and disease, but it also affects other contaminants other than those in the food that would impact food quality and safety.  The impact of a single error can be devastating to a company as well as panicking the public.  Take, for instance, the recent pet food issue and the spinach issues, of recent times.  The result was an increase in tension.

For more information contact Howard W Penrose, Ph.D., CMRP via email at or our website http://www.motordoc.net

RCM, Maintenance, Stock Market Investment, Business Critical, and the Milk Debacle - Part 1

In the Reliability and Maintenance Industry, there is a rule that is often broken: Tools such as RCM, CBM, Lean Maintenance, TPM, etc. are designed to help the business understand the budget requirements of optimal R&M.  They are not designed to make R&M fit a specific budget.  This error has led to the collapse and disaster of many maintenance program attempts.

In the Reliability and Maintenance Industry, there is a rule that is often broken: Tools such as RCM, CBM, Lean Maintenance, TPM, etc. are designed to help the business understand the budget requirements of optimal R&M.  They are not designed to make R&M fit a specific budget.  This error has led to the collapse and disaster of many maintenance program attempts.

The concept of R&M is to provide an investment into capital assets in such a way that the optimum investment provides the maximum return on that asset.  Excessive maintenance or a lack of maintenance will both have a similar impact: Significant negative bottom line impact on the business as a whole.

Professional financial investors work and study hard to determine how to invest early (minimal investment) and rise with a stock before selling at the peak possible price (maximum return).  The same rules apply for excellence in R&M.

The objective is to perform the correct maintenance at the correct time on the correct equipment for the correct reasons.  This allows both a minimal investment in the asset with the ability to detect equipment degradation ahead of time.  A condition based maintenance strategy will also allow the early detection of issues in such a way that the company can obtain the maximum life of that asset prior to correcting the problem before a loss occurs.  In effect, getting the maximum return before the price falls.  Once in a while a miss may occur – equipment can be as finicky as the markets.

Reactive maintenance can be thought of as an investment disaster – when applied incorrectly.  In this case, it can be thought of as buying a stock at whatever the market price is at the time.  Then riding the stock first up then allowing it to crash without selling.  While it may appear that there is a high return, it is usually short-lived and the investor loses more than the original investment.  However, a reactive strategy does fit some environments.  It completely depends on the goal.

Let’s ponder this for a minute.  Every R&M consultant, every article and every book in R&M and the purpose of many of the philosophical tools we use say that things such as reactive maintenance are really bad.  However, any of the strategies can be valid, in their context.

For more information contact: Howard W Penrose, Ph.D., CMRP via email at or website at http://www.motordoc.net