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Maintenance... the business opportunity of the 1990s.

Maintenance is a growing business concern for American industry. With maintenance productivity languishing in the 45 to 55 percent range, some U.S. companies will spend more on their maintenance budget this year than they will earn in net profit. It is estimated that U.S. industries will lose in excess of $200 billion this year due to inadequate maintenance. In contrast, European and Japanese competitors will be looking to maintenance as a source of revenue. American managers need to understand why foreign competitors view their maintenance operations so differently because this viewpoint makes the difference between profit and loss.

Consider this scenario: high technology manufacturing processes, increased levels of mechanization, new dimensions in machine complexity, coupled with unprecedented requirements for machine uptime and machine quality output, at a time when there is increasing focus on reducing operating costs.

Sound familiar? Maintenance organizations accomplish the difficult almost every day, and the near impossible from time to time. however, if U.S. companies are really serious about achieving world-class levels of machine uptime and quality machine output, and being truly competitive, they must recognize organization-wide implications that extend beyond the scope of the maintenance department. They (maintenance) simply cannot do it alone. This seems to be something foreign companies understand very well.

More than ever before, U.S. companies are now focusing their attention on improving maintenance performance. Much of this effort focuses on the use of computerized maintenance managements systems (CMMS). Advocates of CMMS see the disciplined planning, information, and control capabilities of these systems to be instrumental in reducing machine downtime 40 to 50 percent or more; reducing spare parts inventories 20 to 30 percent; and increasing skilled trade productivity 25 to 35 percent.

But in actual practice, the expectations of CMMS customers too often exceed the realizations. These systems can be extremely useful and powerful tools in the process of positive change. However, the factors that really bring about maintenance improvement are changes in organizational culture, structure, processes, policies, procedures and practices. CMMS should be the result of this process, not the cause of it.

Machine uptime and quality

The problems associated with machine uptime and quality output involve many functional areas of a plant operation. Everyone from the plant manager to engineers to machine operators are making decisions and taking actions that directly or indirecrly affect machine performance.

Production, engineering, purchasing, personnel, stores, maintenance, outside vendors, etc.; all have internal systems, processes, policies, procedures and practices they use to manage their own pieces of the business enterprise. These organizational systems interact with one another, are dependent upon one another, and constrain one another in a variety of ways. These constraints can have disastrous consequences to machine performance objectives.

Managers can get trapped in the commonly held assumption that machine uptime and machine quality output is the sole responsibility of the maintenance organization. Managers often fail to recognize the dynamic inter-dependencies and shared responsibilities that exist throughout the larger plant organization, and the limitations and constraints this can place on any single functional group such as maintenance. As a result, they will never understand the true nature of maintenance problems, and their maintenance solutions will continue to be less than fully successful. In fact, many (if not most) maintenance problems cannot be resolved inside the maintenance department. They must be resolved within the larger plant organization. This can be illustrated by bringing together the plant people who should know the most about why machines fail. Include production, manufacturing engineering, plant engineering, maintenance and others in this process. Ask them why machines fail.

Typical responses are shown in Figure 1. As shown here, even if the maintenance organization could correct all of those things over which they have some degree of influence and control, there will still be excessive machine failure. The real solution is not so much in what the maintenance department does alone, as it is in what the larger plant organization does about maintenance together.

Another misconception about maintenance that has a major impact on product quality, cost and delivery objectives is the maintenance budget. And, it may be one of the most difficult to correct because it appears to conflict with traditionally acceptable financial and accounting procedures and practices.

The significance of this misconception is dramatically illustrated when the total cost of maintenance is viewed as an iceberg. Only a small part of the cost of maintenance is visible above the waterline. This is the maintenance budget. Most of the total cost of maintenance is hidden from view (below the waterline) within the accounting structure of the organization.

Consider the impact on plant facilites due to:

* Excessive spare parts inventories when spare parts are not properly managed;

* Acce;erated depreciation of capital investment when machinery and equipment are not properly maintained; and

* Excessive capital investment in machinery, equipment and floor-space to assure manufacturing capacity because additional machines are needed to cover machine downtime.

Next, consider the impact on production when machine problems are encountered:

* Machine operators are idle, inefficient or caused to work overtime;

* Schedules are late;

* Parts are reworked; and

* Scrap is created.

Finally, consider what happens to the product when a machine problem causes problems in the product, such as;

* Poor quality and reliability;

* Additional warranty costs, and worst of all;

* Lost future sales.

All of these things are directly or indirectly a part of the total cost of maintenance to the plant. But there is little, if anything, in the plant's accounting system that recognizes these other maintenance cost categories.

Because the maintenance budget is so large, normally there is pressure from the financial orgnization to constrain, or even reduce it. Actually, it is not difficult to reduce maintenance department spending. Stop doing discretionay work, including planned maintenance. Scrutinize every requisition for spare parts and either delay ordering, and/or reduce the amounts requested. Transfer people from budgeted expense accounts, to appropriated capital accounts. If necessary, lay off people. The inevitable consequence of this scenario -- the 'total cost of maintenance' -- will almost certainly increase.

Well-intentioned people may focus blindly on minimizing maintenance budgets, squeeze the visible costs, and risk even greater costs elsewhere in the plant system. Maintenance budgets may need to be increased (at least temporarily) to achieve total minimum costs. Until financial managers understand the concepts of 'total minimum cost of maintenance' and manage the business to that end, maintenance costs will always be excessive.

As a consulting team leader for a major systems integrator, I am reminded that few managers really understand these synchronous issues. They are not consciously aware of the organizatinal dysfunction that causes constraints, roadblocks, and delays throughout the plant. This lack of understanding may invite 'cart before the horse' technical solutions (such as CMMS) that don't deal with the 'root-cause' issues. You cannot solve business problems with technical solutions.

Our approach to planned maintenance (PM) focuses the organization on dealing with the overall 'problem environment' instead of maintenance department issues alone. Managers have been struggling with the same set of maintenance problems for the past 20 to 30 years, with too little success. Why? Because the problems of plant maintenance cannot be solved inside of the maintenance department. This results in solving only pieces of the problem instead of searching out holistic solutions within the larger plant-wide environment.

The key success factors for bringing about positive changed include business strategies, synchronous organization, people, values and beliefs, methods, practices and enabling technology.

Key success factors

Business strategies: relate to business definition, strategic direction, measures of business performance, executive sponsorship and support, and management discipline. Without these, the organization's efforts to bring about meaningful improvement will fail.

Synchronous organization: refers to coordination of the forces that cause events (both intended and unintended) to occur as dependent functional work groups interact with on another in their normal business activities. These forces include organizational; culture, structure, systems, processes, policies, procedures and practices. The objective is to synchronize the forces so they facilitate and reinforce inter-organizational activities.

People, values and beliefs: have the single greatest impact on whether the organization succeeds or fails. They deal with those things that can help meet the needs and goals of the organizion as well as its members. These include: awareness, involvement, participation, commitment, ownership, accountability, attitudes, behavior, achievement and recognition.

Methods and practices: define how specific strategies and tactics are emloyed to perform the activities of the organization. Examples include work order processing, priority management, emergency response, resource allocation, planning and scheduling, spare parts control, communication, training, etc.

Enabling technology: such as CMMS provides information technology supporting business solutions to business problems. Other technology tools such as laser alignment, infrared imagine, vibration analysis and expert systems provide technical solutions to technical problems. The appropriate use of technology is essential to achieving worl-class levels of machine uptime and quality machine output.

As managers begin to better understand the problem and solution issues, they must be cautioned not to rush out and try to solve all their problems. Knowing what's wrong is one thing. Bringing about successful positive change is another thing altogether.

One approach to improve performance

As system integrators specifializing in planed maintenance, the first step is providing organizational awareness. Presentations must be made to the plant's leadership to create awareness of:

* The many assumptions and misconceptions about what is wrong with their maintenance operation and what it takes to fix it;

* The organizational system implications; and

* The process of positive change.

The objectives of these presentations are to break 'mind-sets,' present a sound business case and a logical course of action.

A comprehensive on-site 'opporutinity assessment' is then conducted. Personal interviews, surveys and observations are made to gather information about the maintenance environment. The assessment is designed to:

* Gain insight into the plant's maintenance function;

* Measure the level of perceived problems as seen by the people most affected;

* Identify the areas of opportunity; and

* Assess the organization's readiness for change.

The results of the opportunity assessment go through a team review process where conclusions and recommendations are finalized. All of this information is assembled into a report format and presented to the plant leadership for their review.

Based on the approval to proceed, the next step in the process is development of the plant leadership perspectives and commitment. This is a critical step in the process. First of all, roles and responsibilities must be defined. There must be an executive sponsor (someone in a position to influence the direction of the plant organization) who will stand up and assumed ownership, and lend the power and influence of their office to assume success of the change process. This person is the 'barrier-remover.' Anytime there is an effort to bring about change, there will be barriers. In most cases, these are the very things that have constrained the organization in the past.

There also must be project manager. This person becomes the focal point of the entire change process. There are at least three requisites for this role. The person should be a recognized leader in the organization, a willing volunteer, and a committed resource for th project.

Finally, a project team must be indentified. All of the dependent groups such as production, manufacturing engineering, plant engineering, purchasing, stores, maintenance, the union, should all be represented. The team also needs to be both cross-functional and multilevel. It should include managers, engineers, supervisors, craft employees, machine, operators, stores attendants, etc.

The project team participates in two days of awareness training that deals with understanding the existing problem environment, and the concepts and techniques that could be used to bring about improvement.

The next step is a fully-facilitated workshop structured to produce a high-level action strategy plant. The agenda is specially designed to keep them on tranc and on time. The type of facilitation used enables the team to process a large volume of information and reach consensus in a highly compressed time frame.

This strategy takes advantage of the fact that the people who work within the existing organizational culture, systems, processes, policies, procedures and practices, are in the best position to identify what's broker. They are also in the best position to help identify solutions, if they have guidance and help in the dynamics of that process.

During the workshop the project team should:

* Reach consensus on what is wrong in the existing systems;

* Identify what steps need to be taken to corrent the situation;

* Determine the order or sequence in which these steps should be take;

* Estimate the resource and time requirements needed for development and implementation;

* Identify who will be responsible for the detailed design, development and implementation of each action strategy; and

* Select a small core steering group whose role is to maintain impetus of the project.

The results of the workshop should then be compiled and published, and the project team should present it to the plant leadership for their consideration and approval. Consulting assistance can be provided to the project team during the early stages of implementation, and later as needed during the process of continuous improvement.

Will this type of change process work? Absolutely! Is it simple and easy to do? Absolutely not! Is is worth the effort? It most certainly is! Because of the major impact maintenance operations have on product quality, cost and delivery objectives, the effort is very much worth the time and effort that is put into the project.

Admittedly, the specific process outlined here is only one approach to improving maintenance performance. However, it is a successful approach, and it illustrates a point that can help American business turn the 'burden' syndrome associated with maintenance into a business opportunity. That is, if we look beyond the maintenance department, and view maintenance within the context of the total business enterprise, then we can begin to understand the true nature and cost of maintenance problems. Once we do this, maintenance solutions can be developed; maintenance performance can be maximized; and the total minimum cost of maintenance to the entire plant can be achieved. This is the business opportunity of the 1990's.

Robert S. Hilligoss is a manufacturing consultant in plant maintenance. His previous experience was in engineering and maintenance positions at General Motors Corp. and its subsidiary, EDS.
COPYRIGHT 1992 Institute of Industrial Engineers, Inc. (IIE)
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Author:Hilligoss, Robert S.
Publication:Industrial Management
Date:Mar 1, 1992
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