Maintenance Engineering & Asset Management

Module M06
MAINTENANCE AUDITING SYSTEMS

MAJOR ASSIGNMENT

Name: Hernn Quiroz

Company: Ternium Siderar

The completed assignment must be received at the Programme Office by

23.59 on
Friday 30th May 2011

Late assignments will be penalised.

Table of Contents
I.

EXECUTIVE SUMMARY.................................................................................................................3

II.

ACKNOWLEDGEMENTS................................................................................................................4

III

INTRODUCTION...............................................................................................................................5
A.
B.
C.

IV.
A.
B.
V.

BACKGROUND ....................................................................................................................................5
THE BRIEF .........................................................................................................................................6
REPORT FORMAT ...............................................................................................................................6
OBJECTIVES AND SCOPE ..............................................................................................................7
OBJECTIVES .......................................................................................................................................7
SCOPE ...............................................................................................................................................7
METHODOLOGY .............................................................................................................................9

A.
B.
C.
D.
E.
VI.
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.

DIFFERENT WAYS OF ACCUMULATING EVIDENCE ...............................................................................9

STRUCTURED INTERVIEWING ............................................................................................................9
DATA ANALYSIS ................................................................................................................................9
COLLATION OF INFORMATION, RATING METHOD AND RECOMMENDATIONS ..................................10
PRESENTATION AND REPORT WRITING ..........................................................................................10
RESULT OF THE PERFORMANCE REVIEW .............................................................................11
GENERAL .........................................................................................................................................11
STRATEGY AND POLICY (RATING 0,9 OUT OF 5)...........................................................................11
ORGANISATION (RATING 1,4 OUT OF 5).......................................................................................13
COMMUNICATION (RATING 2,5 OUT OF 5)....................................................................................15
EMPLOYEE INVOLVEMENT (R ATING 1,8 OUT OF 5)........................................................................16
WORKLOAD MANAGEMENT (RATING 2,6 OUT OF 5)......................................................................17
MAINTENANCE REGIME (RATING 0,5 OUT OF 5)...........................................................................19
SAFETY, HEALTH AND ENVIRONMENT (RATING 2,5 OUT OF 5).....................................................20
MATERIALS MANAGEMENT (RATING 0,6 OUT OF 5) .....................................................................21
VALUE FOCUS (RATING 1,5 OUT OF 5)...............................................................................................23
MEASURE OF PERFORMANCE (RATING 1 OUT OF 5) ......................................................................24

VII. RECOMMENDATIONS ...................................................................................................................26

VIII. CONCLUSIONS ................................................................................................................................32
IX.

APPENDICES....................................................................................................................................33

X.

REFERENCES ..................................................................................................................................43

I. Executive Summary
An audit of the maintenance activities of the Ternium Siderar Cranes Steel Shop
has identified that the actual performance is not aligned with the business
requirements.
The most positive finding is the supervisors and technicians empowerment. The
other strengths are the Workload Management, Safety, Communication and
Employee Involvement. But they are in the level where the need for
improvement and change has been recognised.
Nevertheless, along the audit I couldnt find any improvement programme. In
addition to this, there are some topics like Strategy & Policy, measure of
performance, materials management and maintenance regime where the need
for improvement and changes has not been identified.
An

improvement

recommended

in

programme
order

to

managed
improve

by

the

senior

actual

management

maintenance

is

systems

performance. This programme is based on:

-

Review of Maintenance Policy

Review of Maintenance Strategy (procedures, process, workload, KPIs

and standards)

Review the CMMS process

Review the Control of the Maintenance Systems (1st, 2nd, 3rd and 4th order
control

viii

Develop

)
a

Benchmark

with

other

crane

steel

shop

maintenance

organisation.

II. Acknowledgements
Hernn would like to express its grateful to the whole Ternium Siderar Steel
Shop Cranes staff who gives their time and effort to make it possible this
analysis.

I want to thank to Paul Wheelhouse for having trained me in this modality to

audit maintenance systems.

This audit is made in the spirit of continuous improvement.

III.

Introduction
A. Background

1. Ternium Siderar Steel Shop Cranes

Ternium Siderar Steel Shop has 31 cranes that transport all the Converters and
Continuous Casting raw material and final products. As a consequence the
cranes availability problems directly affect the Continuous Casting Machine
(CCM) performances. It is important to highlight that the CCM is the Ternium
Siderar bottle neck.
In addition to this, these cranes are the most criticality Ternium Siderar assets
from the safety points of view. They lift and transport 12 tons slabs and ladles
with 180 tons of liquid steel at 1600 C. There are a lot of crane equipment
failures modes that produces fatality consequences. There are examples in the
steel industry like the Qinghe Special Steel Corporation disaster where thirty two
people died and six were injured when a crane used to transport molten steel
failed iii.

a)

Figure 3: Qinghe Special Steel Corporation Disaster

What is more, in Ternium Siderar during the last five years there were 6
different maintenance steel shop cranes managers. As a consequence there is
no medium or large maintenance continuous improvement program.
To sum up, the steel shop cranes are criticality from production and safety point
of view. After these organizational changes it is crucial to audit the steel shop

cranes maintenance systems in order to determine where each one of the ten
elements of Good Practices1 is ranked. It will be the base for the continuous
improvement program.
B. The Brief
The brief of this analysis was as follow:

Asses the maintenance requirements in the business context.

Determine the actual maintenance performance with an audit.

Suggest the follow steps in order to improve the actual maintenance

performance.

Propone the continuous improvement program in order to align the

maintenance systems with the business requirements and the safety
policy.

C. Report Format
This report describes the work that was performed during the audit and finally
presents the improvement recommendations. It is organized as follows:

Section IV: Determine the Objectives and Scope for this work

Section V: Describe the Methodology used for the analysis

Section VI: Present the maintenance audit results according to the 10

elements of good practices

Section VII: Propone the recommendations for improvement.

Section VIII: Cover the Conclusions of this analysis

Section IX: Contains the Appendices

Section X: Contains the References

The Audit is based on EFQM (European Foundation for Quality Management) business excellent model and
Manchester University Maintenance audit model

IV.

Objectives and Scope

A.

Objectives

The main objective of auditing the Cranes maintenance group is about

discovering opportunities where the continuous improvement can be apply in
order to assure safety operations and make better maintenance performance,
cost-effectiveness, efficiency and service delivery.
As it is known, the role of Maintenance in the modern business is to satisfy the
operational demand for the long term at the lowest total life cycle cost of the
equipment.
Operational demands include:
-

Safe operation

Environment issue

Availability of equipment (MTBF, MTTR)

Throughput rates

Service Delivery Management (SDM)

Product Quality

Cost

Regulatory Requirements

The role of Maintenance Auditing is to confirm how well these responsibilities are
being fulfilled and to recognize areas where the continuous improvement can be
implemented.
In this assessment particular attention was taken about safety operations and
every aspect of maintenance systems that could affect it.
B.

Scope

This analysis focused on evaluating Steel Shop Cranes Group. It was evaluated
all kind of maintenance activities related with steel shop cranes. In order to
obtain how well this group is carrying out maintenance, it was assessed the
following points:

Strategy and Policy

Maintenance Regime

Organisation

Materials Management

Communication

Employee involvement

Value Focus

Safety,

Health

and

Environmental

considerations

Workload Management

Measure of Performance

V.Methodology
According to the Paul Wheelhouse audit model, 5 steps were considered:
A.

Different ways of accumulating evidence

-

Interview with key persons

Plant tours

Attendance at Meetings

Observation of Work activities

Systems can provide very useful information

Planning

Execution

B.

Structured Interviewing

In order to feed up my perceptions of cranes group performance, twelve people

were interviewed. This audit involved operational and maintenance people in
vertical and horizontal cross section. It was included top management, shift
supervisors and front line people. Furthermore it was interviewed maintenance
people

from

planning,

workshops,

warehouse,

safety

and

engineering

department.
The questions were obtained from my own experience and enriched by the
Manchester University sources. They were properly adapted for maintenance
cranes reality.
The result of these interviews was used to score various issue of maintenance
performance.
C.

Data Analysis

This activity included the analysis of the data in the CMMS (Computer
Maintenance Management Systems). I have evaluated the accuracy and
completeness of the data, the ability of the system to plan, schedule, monitor
and report maintenance activities. In addition to this I have tested the peoples
application and understanding of the system and how friendly the system for the
people is.

What is more, I have examined the data of failure rates, cost, work backlogs
and the other KPIs that are available in the Ternium Siderar intranet
maintenance site.
D.

Collation of Information, Rating Method and

Recommendations
The information obtain was used to score the ten elements of maintenance best
practice (see section IV-B: Scope) based on:
-

EFQM (European Foundation for Quality Management) business excellent

model.

M06 Maintenance Audit Systems, from Manchester University.

A step by step guide to Maintenance Audit, by Paul Wheelhouse

I used a simple scoring scheme which gives a rating from zero to five against
each one of the ten elements.
0. The need for improvement and change has not been recognised.
1. The need for improvement and change has been recognised.
2. A change programme has begun.
3. Barriers to achieving World Class performance have been identified.
4. Significant improvements have been achieved and the improvement
programme is well underway
5. World Class performance has been attained when compared to the
recognised benchmarks.
The results were plot in the spider web diagram in order to create a composite
picture of the organisation in a simple snapshot. The key advantage is that it is
possible to compare strengths and weaknesses of maintenance approach at a
glance.
Taking into account the result of the audit, benchmarking, the world class
companies and the Ternium Siderar business objectives, I have develop a list of
continuous improvement recommendation (Section VII)
E.

Presentation and Report Writing

The results of the audit were presented to Ternium Siderar Maintenance Staff
and constructive feedback and suggestions were produced. This writing
document is the final report.

10

VI. Result of the performance review

A.

General

The results of the audit are shown below. Taking in combination, the ten
elements of good practices, reflects an overall picture of how well an
organisation is carrying out maintenance.
From the information review from the systems, interview with key persons,
observation of work activities, plant tours and attendance at meeting; I
summarize the analysis result in a simple snap shot in order to create a
composite picture of the organisation.

Audit Result

STRATEGY & POLICY

5,0
MEASURES OF PERFORMANCE

4,0

ORGANISATION

3,0
VALUE FOCUS

2,0

COMMUNICATION

1,0
0,0
MATERIALS MANAGEMENT

EMPLOYEE INVOLVEMENT

SAFETY HEALTH & ENVIRONMENT

WORKLOAD MANAGEMENT
MAINTENANCE REGIME

B.

Strategy and Policy (Rating 0,9 out of 5)

1. Alignment between Maintenance and Business Objectives (0,1)

There is no overall maintenance policy. There is an informal strategy related to
schedule turnaround but they are not aligned with the actual business
requirements. The planner (technician) is the responsible to determine the
turnaround strategy. He decides the opportunity for each shutdown according

11

with his notes and memory. Nobody remember when the last strategy revision
was performed? The actual maintenance engineers that are related with these
cranes have no participated or reviewed the actual informal strategy. Operations
managers claim that the actual strategy effectiveness is so far from their actual
business requirements.
Furthermore there is no formal communication to the supervision, technician
and workforce about the actual Ternium Siderar business performance,
requirements and the future maintenance and company plans.
There are no formal standards of maintenance required. Every person has its
own feeling.

2. Resources matched to objectives and strategy (0,2)

There is a deficiency of electricians to support the actual informal maintenance
plans. So the technicians produce work orders according the actual capacity
instead of their necessity to guarantee the business required reliability.
What is more the electricians have poor capabilities because they are new in this
job and they do not have proper technical training. As a consequence, there is
an unacceptable child mortality rate.
Furthermore, the engineering improvement support (In Siderar it is called IAME
area), is practically absent. The IAME (applied engineering improvement
department) area that gives the centralized engineering support to study the
chronic or major outages practically does not give service to the crane area.

3. Constraints understood - initiatives in place. (0,2)

Constraints are followed but not completed understood because they are not
proper

communication

between

the

management

and

the

supervision/technicians.
There are initiatives in place for some critical equipment but they are promoting
for individual intentions. They are not part of an overall plan.
There is no evidence of 5Ss implementations. There is a big opportunity in this
topic. (see appendix 6)

12

4. Vision, objectives, shared goals owned by all (0,3)

As I said, there is no formal strategy or objectives. In addition to this there is no
formal vertical communications about the business strategy. So there cannot be
shared goals although many personnel are working to maintain the cranes
working. The supervision, technicians and workforce have a common goal. Their
aim is to avoid failures in lift systems. What is more, their second objective is to
maintain al the crane working, which represent a big personal effort because
there is a 30% of emergencies. There is a culture of reactive maintenance.
Every morning there is a meeting between the supervision, technician and the
workforce. The objective of this meeting is to share the goals for the day and
how to concentrate the resources according to the news. There is no medium or
large term goals. There are no weekly or monthly meetings in order to review
the performance and compare it against the goals.
There is reasonable spend allowed by the site engineering function but there is
no control about it. Technicians do not know the budget and the real spends.

5. The strategy and policy is subject to continuous review and

updating. ? (0,1)
Without a formal strategy it cannot be reviewed or updated but every morning
they are reviewing the work that they are currently doing.
C.

Organisation (Rating 1,4 out of 5)

Certain positive aspects were identified:

-

Teamwork between all technicians

Good technician competence

Technicians commitment

Ownership

However, I think that there are opportunities to improve in the following points:

1. Are there clearly defined responsibilities and accountabilities?

(0,2)
There are clearly defined roles and responsibilities for staff and for the shop
floor. They are not written, but everybody now it informally. There R&R for staff
has not been developed on site. Along the last five years there were 6 different
maintenance steel shop cranes managers. As a consequence this function has
not been performed properly. An evidence of this is that there isnt any medium

13

or large plan in every management aspects. All the management actions are
associated to solve a day to day problem (from the technical or managerial point
of view). The management is working as a firefighting.
Furthermore, there are so limited engineering resources (internal or external) to
perform continuous improvement and it is very difficult to obtain this resources.

2. Flexible work-process based organization (0,4)

There are some flexible processes, with team work on the shop floor. Flexibility
is derived from people and relationships rather than processes.
There is no provision for sickness and holiday cover.

3. Job accountabilities are linked to personal performance measures.

(0,2)
On the one hand managers and supervisors are evaluated according with the
Ternium Siderar Human Resources policy. They should have aims aligned with
their performance measures. But as a consequence of the management
changes, during the last 6 years, each personal performance appraisal has
begun with a manager (and his objective) but was evaluated with a different
boss. Most of these periods there werent supervision feedback meeting after the
performance appraisal.
On the other hand, according with the RRHH policy and the trade union
intention, the shop floor do not has personal performance measures.

4. Multi-skilling spans craft and production disciplines. (0,4)

Some electricians do limited amounts of fitting work. There is an intention to
train fitters or contractors to isolate there own equipment but this is not in place
yet.

5. Needs and skills dynamically matched through training. (0,2)

Training matrices are available and development needs identified. HHRR
department has organised the annual training fixture. At this moment the crane
department does not have programmed or schedule the training for the shop
floor, supervision or staff personnel. Furthermore, the contractors work force is
not included in the Ternium Siderar training programme. In the electrician case
there are some repairs carried out by unqualified personnel.

14

D.

Communication (Rating 2,5 out of 5)

Certain positive aspects were identified:

-

Nextel communication very useful.

The technician, supervisors and engineers has their nextel available at

home 24 hours. They are also available by Nextel during the weekend for
any emergency.

Intranet site

Corporate magazine

Newsletters

However, I think that there are opportunities to improve in the following points:

1. Effective vertical and lateral two-way communication (0,5)

There are a number of methods of communications, intranet site, corporate
magazines, newsletters, emails. These appear to work, but they are only
available for staff, supervision and technician. The workforce could not access to
the intranet communications because their do not use computers.
The top down communication is working but an opportunity area is the bottom
up communication that is so few performed.

2. Mission statement interpreted/owned by all. (0,7)

The company mission, vision and values statement are available on various
notice boards and the intranet site. But it has not been communicated down to
the shop floor.

3. Cascade communications are more effective than rumours. (0,4)

Cascade communications is working but rumours do precede formal information
processes, especially when emergencies or production changes are happening
on site. These operational rumours produce uncertainty in the supervision,
technician and workforce.
What is more, as cranes are considered as a secondary facility like fluids
(services), sometimes there are some suddenly production windows decisions
that are not properly cascade communicated to the crane staff.

15

4. High visibility communication and feedback. (0,3)

As a consequence of the last management changes along of the last 6 years,
there werent supervision feedback meeting after the performance appraisal.
What is more, change initiatives are developed and issued but not always
properly communicated to the shop floor.
What is more, there is a good communications between production and
maintenance staff. There is a daily meeting. Some operators reports problems
by e-mail. The supervisor of every shift reports the equipments failures news by
the QNX frame.
After every work is performed by the contractors, there is no formally feedback
face to face; neither by SAP systems.
Finally there is an important improvement area in the communication when
an operational mistake occurs (feedback). When this communication fails,
it is increased the equipment failure probability with safety consequences.

5. Communications by intranet and CMMS (0,6)

Information systems help communications but not everyone reads everything
because not everybody from the shop floor can access to it. SAP CMMS is used
by

supervisors

and

technicians

in

order

to

request

repairs,

services,

enhancements, spare parts and work orders.

E.

Employee Involvement (Rating 1,8 out of 5)

Certain positive aspects were identified:

-

Technicians and Supervisors empowerment

Technicians autonomy

Technicians commitment

However, I believe that there is scope for improvement:

1. Individuals genuinely empowered to take decisions. (1)

I consider that the most important asset of the crane maintenance systems is
their supervisors and technician empowerment. May be this empowerment has
born as a consequence of the last management changes (6 boss in 5 years).
They are very autonomous and their usually take their own decision. They
decide if a crane must be stopped. If they realize that there is a possibility of
failure in critical equipment (safety point of view), the stop the crane and take
action in order to solve it.

16

2. Effective team-working/problem-solving/shared goals/recognition

(0,1)
No operator maintenance, little responsibility taken by the operators for
housekeeping. Informal system used for the operator task required, in the
reactive way trough the trade union representatives.

3. Everyone's talents are known and harnessed for continuous

performance improvement (0,2)
On the one hand, there is a limited involvement of operators/engineering in site
improvement.
On the other hand, there is a big involvement of maintenance shop floor in order
to improve the equipment performance. They required the management support
in order to emphasize the continuous improvement.

4. All share cost responsibility/information is provided to all. (0,1)

At the moment of the audit, the supervisors do not know how much money they
are spending and what the budget is? After investigation I realize that the
budget is overspending in 50%.
What is more, very little information is passed down about costs so
responsibilities cannot be shared.

5. Continuous appraisal/training/development of all individuals. (0,4)

Appraisal systems was implemented for staff but have not been developed to
shop floor level.
F.

Workload Management (Rating 2,6 out of 5)

Certain positive aspects were identified:

-

Daily workforce programme

Steady workforce (The same people works all days in the crane with the
same supervision)

However, I think that there are opportunities to improve in the following points:

1. Flexible scheduling exploits opportunities and is based around

plant need. (1)
Apart from the steel shop monthly turnaround, the rest of maintenance
shutdowns are planned the day before, according to:
-

A major shutdown plan which determine the opportunity for each crane

17

Production windows opportunity

Criticality malfunction news derives from previous technician inspections.

There are two kinds of shutdowns according with the criticality of each crane.
The most critical cranes stop for maintenance ones a month in concordance with
the steel shop turnaround.
The less critical cranes have their shutdown when the steel shop is producing
because they have a redundancy. In addition to this if the redundancy has an
unexpected outage; it is possible to repair it, with out affecting the continuous
casting speed.

2. Job execution is to plan and best practice whilst under constant

review (0,5)
There is a daily program for the day after. All the resources are program in the
day before. There is not formally revision for the best practices.
Maintenance is very reactive (30% of emergences). Engineering adopting
firefighting strategy.

3. Appropriate use of technology for fault diagnosis, planning,

scheduling, condition monitoring and maintenance management.
(0,4)
I consider that actual planning and scheduling resources are according with the
necessity.
There is a big opportunity improvement with fault diagnosis (mainly not
practiced). There is informal reporting of machine problems and faults.
Considering condition monitoring, there is a set of accelerometer installed in
only one crane but there is no measurement performed. Furthermore there is no
oil analysis. Finally, thermography is limited.

4. Maintenance controlled against agreed performance measures. (0)

There is a sheet to control the maintenance workload but it is not review. The
information is available but nobody used it to detect problems and solve them.
There are some standards but nobody contrast the real length against with the
objective. What is more, I saw contractors that finished their job 2 ours before
the end of the shift and they use the time to rest. Nobody gave them another
work order neither nobody realize the situation.
There isnt a culture of workload control.

18

5. Rational priority setting procedures utilised with feedback. (0,7)

In a day to day basis, the program can be modifying for emergencies. Every
morning before to begin the program work, the workforce supervisor check the
news of the shift before. If there is an emergency, he changes the program in
order to solve it.
G.

Maintenance Regime (Rating 0,5 out of 5)

Certain positive aspects were identified:

-

Teamwork between all technicians

Good technician competence

Technicians commitment

Ownership

However, I think that there are opportunities to improve in the following points:

1. Maintenance regime matched dynamically with the business

needs. (0,1)
On the one hand, there is a maintenance regime that is determined into the SAP
systems, which generate work orders. It is base on five cense inspection and
preventive replacement. In theory there is a maintenance regime.
On the other hand, there is the reality which is completely different from the
SAP systems. The inspectors do not follow the SAP. They usually inspect the
cranes according with their memory, not following a procedure of maintenance
plan. In reality, there is no maintenance regime. The efficacious of the actual
maintenance regime is 63% (see appendix 5). 30% of the contractors man
hours are apply to crane emergences.
Considering condition monitoring, thermography is the only technique that
actually is performed.
Practically there is no maintenance regime; neither will it be matched with the
business requirement.

2. Best current practice figures are achieved for un-planned outages.

(0,1)
There is some evidence of identification of downtime best practice and programs
to improve are in place. But I consider that it is an important improvement area,
because not all downtime are analysed, few of them has improvement plan and
less few are implemented.

19

3. Maintenance tasks and methods determined through logical /

auditable processes (Criticality Analysis, RCM etc.) (0)
There is no evidence of maintenance task derived from logical processes like
RCM or Criticality Analysis. What is more, they do not known RCM when I ask
them.

4. Through-life maintenance prevention and maintainability

improvement established. (0,1)
At the moment there is no maintenance engineer working in order to improve
the

life

maintenance prevention

or

maintainability.

The technicians

are

performing so few improvement but they are limited (with few economic
resources and when they have time to do it.)

5. Contractors, specialists, support services and equipment / spares

vendors are an integral part of the maintenance regime. (0,2)
The cranes are been manufactured by MORGAN or IPH factories. All of them are
so far from Argentina in order to deliver assistance. (10000 to 12000 km)
There is some evidence of Argentinean specialist, like Hillman, that assisted to
Siderar in particular cases. For example in the last year, Hillman supervised a lift
gear changes that took 5 days.
H.

Safety, Health and Environment (Rating 2,5 out of 5)

1. Clear leadership and policy communicated effectively and owned

by all. (1)
There is clear safety and environment policy. The company has put the security
in the upper level of interest, beginning from the CEO. It is a top-down initiative
extended to all levels. This new program had been communicated by different
sources (intranet, visual factory, flash, internal newspaper). This is a recent but
the company has progressed very well.

2. Safety always comes first. Safety critical tasks identifiable /

auditable by the maintenance management system. (1)
The new safety policy considers the security in the first place over the rest of
management issue. In this new plan, there is a topic that we call: procedure of
critical task (PTC). It consist in determine the ten most critical task from the
safety point of view for each department. This PTC required a particular analysis,
review process and audit program.

20

3. Routine audits. Safety competition. Statutory work is continually

challenged. (1)
There is a regular safety audit. Every Monday, Wednesday and Friday, at eleven
oclock, all the supervisors and engineers has to stop their activities and go out
to the floor in order to audit the work of their own responsibility. Every
observation detected, has to be inform in the safety system in order to generate
a plan to solve it.

4. Incidents and near misses are recorded and reviewed so that

lessons can be learned. (1)
All accidents and high criticality incident must be investigated. There is a formal
method to analysis these events. The most critical events are monthly presented
in a company meeting. In this opportunity, the Industrial Director form part of
this presentation.

5. Best current practices are used for safety, health and

environmental management systems (0,8)
The most critical events are analysed, review for safety department and then
communicated to all supervisors in the company. Then they communicate the
same information to their dependant. The object is to learn from previous
experiences.

On the one hand there is a very good policy as it was indicated in the previous
five points. From the policy point of view, safety could be mark as 4,8 out of
five.
On the other hand, I think that the risk awareness to work at high levels is the
weakness safety point. One mistake can produce fatality consequences. I saw
people working at 30 meters with risk to fall without safety harness! This
point reduces the safety mark for this audit. In my opinion it coudnt receive no
more than 2,5.
I.

Materials Management (Rating 0,6 out of 5)

Certain positive aspects were identified:

-

There is a system that identify all the Siderar spare parts

There is a central warehouse that preserves the spare parts.

However, I think that there are opportunities to improve in the following points:

21

1. Stock levels are matched dynamically to the business needs balancing cost and risk. (0,1)
At the audit moment, in the crane department there is no stock strategy. Some
equipment has stocks, it can be overestimated or underestimated, but nobody
review it. In addition to this there are some components that must be in the
warehouse with it correspondent stock. In reality this elements are distributed
along of the steel shop without any sense. (See spare parts pictures in appendix
6). There are unidentified components in the steel shop area.
The warehouse policy is to continuously reduce the stocks without consider focus
for value. Their internal policy is to make so difficult the devolution process. So,
elements like an electric motor of 200 HP that has been repaired in a workshop
will stay in the plant. (See appendix 7)

2. Criticality analysis linked to JIT objective for minimum cost. (0)

There is no analysis related to cost optimization, neither Just in Time analysis.
All the technician audits, expresses that the main problem is the spare part
issue. They do not have place to store the spare parts. There is no policy about
it. It is very difficult to return a spare part to the warehouse because there is a
very difficult procedure to do it. The reason of this difficult procedure is because
the objective of the warehouse management is to reduce the inventory. This aim
it is over any other reason. As a consequence, there is no place to store the
critical equipment.

3.Materials categorised / consumables / common plant spares /

insurance items and managed appropriately. (0,2)
There is a categorisation but it required a review because nobody agrees the
classification that it is in the SAP system.

4.Alliances and partnerships with suppliers to minimise stocks.

(0)
At this moment there are no alliances with suppliers in order to minimise the
stocks levels.

22

5.Appropriate use of technology is made in the maintenance

management system to aid materials management. (0,3)
The SAP is the system that manages the materials and all the maintenance
management issue. The system was softly customized, so I consider that the
technology is not given the properly help to manage the materials management.

J.

Value Focus (Rating 1,5 out of 5)

Certain positive aspects were identified:

-

Continuous improvement is part of the company culture

Maintenance Site to show the KPIs

However, I think that there are opportunities to improve in the following points:

1. Continuous performance improvement is truly embedded in the

organisation. (0,4)
Continuous improvement is part of the company culture. But in this case, there
are so few examples of it. I consider that it could be because there is no
engineer in the area. What is more, the management is based in operational
issue with focus in solve the short term problems.

2. Value for money analysis is carried out by comparing downtime

and maintenance performance. (0,4)
In the maintenance SITE, there are some KPIs that measure the downtime and
maintenance performance. At the moment the KPIs exist but nobody analyse
them in order to generate value for money. The cost of breakdowns is
misunderstood by the supervisors and the work floor.

3. Differentiation of chronic / sporadic problems and corrective

initiative in place. (0,2)
I consider that the information is available; it can be improving its quality. But it
is no generate corrective initiative in place.

4. Continuous review / feedback on methods, tools, techniques,

procedures, organisation, strategy etc. (0,1)
The management control and feedback it is no performed. There is a lack of
management that maintains the continuous improvement process working
(apart of the technique used)

23

5. Suggestions encouraged / consistently evaluated / actioned /

successes recognised / publicised. Optimum use of self-managing
teams. (0,4)
The crane group takes the suggestions from different sources. A more formal
suggestion process could be analysed.
K.

Measure of Performance (Rating 1 out of 5)

Certain positive aspects were identified:

-

In Ternium Siderar there is a culture of KPIs

Intranet maintenance performance reports which contain the following KPIs:

Budget vs. Real Cost reporting

% Work orders completed on time

% Work orders delayed

% Improvement Work orders

Work Orders Backlog

Downtime

Condition Based Maintenance Alarms

However, I believe that there are some opportunities improvements:

1. Simple performance measures linked to business needs and

shared goals are displayed and understood / owned by all. (0,4)
There are useful KPIs but nobody is using them. This KPIs are aligned with
the business objective but not properly understood.

2. Regular performance benchmarking exercises are carried out.

(Internal and external.) (0)
There is no information from others companies in order to make comparisons.

3. A comprehensive / accurate plant history file is available and

utilised. (0,2)
The information is not properly fulfilled into the SAP system. So there is no
accurate history. It is very difficult to represent the cranes reliability from the
information of the systems. The shop floor people do not know the intranet SITE
information.

24

4. Trends in maintenance performance are recognised and root

causes are sought. (0)
Considering the medium management, nobody control the result and neither
follows the tendency. There are no plans associated with the KPIs performance
in order to improve actual performance.

5. Timely exception reporting tailored to individual requirements is

the norm. (Not mountains of un-read paper.) (0,4)
The cranes department is not reporting every breakdown with its consequences.
This is because not every cranes fault produces losses of the continuous
casting machine.

25

VII.

Recommendations

As Paul Wheelhouse said: The main objective of the maintenance Audit is about
discovering opportunities where the continuous improvement can be apply in
order

to

make

better

the

maintenance

performance,

cost-effectiveness,

efficiency and service delivery.

The following analysis refers to the recommendations aligned with the audit
finding:

1. Propose Performance Improvement Programme

a) Strategy and Policy
-

Define the Maintenance Policy

Define the Steel Shop Maintenance Policy

Define the Crane Steel Shop Maintenance Policy. Include the technicians
and supervisors in the definition. Top down and Bottom up approach.

Review and write the Crane Maintenance Strategy. Include the technicians
and supervisors in the definition. In order to develop it iv, consider:

Vision

Mission

Objectives

Roles and Responsibilities

Equipment scope and organisational arrangements

Key process and procedures to be followed.

Questions that must be answered:

What do we want to achieve?

Why is this important?

How are we going to do it?

Develop an electrician training program for the contractors (ASSA

supplier)

Communicate the maintenance policy, strategy, vision and goals.

Determine and formalize the scheduling meeting, include the objective for
each one. (take into account the monthly meeting)

26

Schedule the annual strategy and policy review

b) Organisation

Define Roles and Responsibilities. Write and communicate to all the

persons who works for maintenance crane department (Engineers,
supervisor, technicians, workshop, work floor, contractors)

Determine how the Engineers (IAME) will support the crane department.

Develop a sickness and holiday cover, considering the contractors

candidates for technician position. Close this policy with RRHH department
and with the trade union.

Compliance the performance appraisal process determine by the RRHH

department, including the feedback meeting.

Implement the performance appraisal for the contractors people in order

to identify the future Siderar technicians.

Identify the training matrices needed for our person. Determine a training
programme.

Determine the contractors training requirements and coordinate the

resources to train them.
c) Communication

Generate

periodic

meeting

in

order

to

receive

bottom

up

recommendations. Generate the environment to make it possible. Include

the contractors.
-

Communicate to crane staff including the shop floor, the Ternium Siderar
Mission, Vision and Values. Inform where this information in the intranet
is?

Define the communication procedure for production changes which

generates production windows.

Use the monthly meeting to communicate the last company news.

Generate a non bureaucracy method to assure the contractor feedback

after each turnaround.

27

Develop a brain storming with operation and maintenance crew in order

to increase the operation feedback, specially after one mistake or
accident.
d) Employee Involvement

Empower a continuous improvement team with topics like: Reduce the

fall down probability at high levels working (over the cranes and
everything related).

Develop for each crane a list of:

o

Mechanical continuous improvement necessity

Electrical continuous improvement necessity

Workshop continuous improvement necessity

Contractors continuous improvement necessity

Safety continuous improvement necessity

Drawing and redesign necessity

New products continuous improvement necessity

Communicate the budget and programme task for this year. Take it into
account for the followings budget.

In the monthly meeting, communicate how the real budget is going.

e) Workload management

Review the actual Turnaround strategy for the cranes number 190-191.
They are not satisfying the business requirement.

Develop a process in the SAP system in order to identify the emergencies,

their cause reason and a plan in order to reduce them from 30% to fewer
than 5%.

Implement the performance review after each crane turnaround.

f) Maintenance regime

Develop a plan in order to review the maintenance regime for each crane.
Consider to implement Condition Based Maintenance every time that it is
possible. The implementation must be performed with the technicians.

Train to supervisors and technicians in RCMII method.

28

Implement RCMII in the lift systems for every crane, in order to increase
the lift systems reliability (safety reason)

Review how the outages are informing in the SAP system. Assure that all
the Outages are considered and that the Siderar outage procedure is
implemented.

Generate the ABC problem for each crane in order to create a reliability
programme with the objective of increase the MTBF. Develop a list of
work for the IAME sector. (applied engineering improvement department)

Make a contract with Hillman in order to review the state of the main lift
gears.

Contract to Desk Norsk Veritas in order to audit the situation of the

cranes. (technical point of view)

Consult

to

Morgan

cranes

company

the

maintenance

regime

recommended for Morgan lift systems (the most critically from the safety
point of view)
-

Arrange a training program in Morgan company for the Engineer how is in

charge of the mechanical part of the cranes.
g) Safety, Health and Environment

For this topic, the main issue is the fall dawn risk while the people are going,
working or returning to each crane. In order to improve, the proposal is the
same that I have presented for employee involvement.
-

Empower a continuous improvement team with topics like: Reduce the

fall down probability at high levels working (over the cranes and
everything related).
h) Materials Management

Review the warehouse devolutions equipment process, in order to avoid

the bureaucracy.

Determine the list of stock control for the most critical equipment
(insurance spares) It is necessary to identify the key components and

29

review its situation ones a month in the monthly crane management

meeting.
-

Review

the

warehouse

stocks

applying

the

Manchester

University

Inventory Management concepts v. The idea is to justify the stocks and

determine the ideal total cost of spares stocked in the warehouse.
(Considering the downtime cost and the holding cost). I recommend to
review the case study example about how a paper mill reduce in Scotland
went to reducing its inventory vi.
In addition to this, I suggest to implement the Microsoft Excel
spreadsheet Spares Analysis.xls for the insurance stock

vii

. If you prefer,

another alternative is to apply the SKF software Spare Part Optimizerviii.

-

According

with

the

analysis

recommended

in

the

previous

point,

determine the elements required to stock in the plant. The idea is to

eliminate them. If it no possible, determine their localisation and who the
responsibly will be.
-

Determine the alliances and partnerships with suppliers possibilities in

order to minimise the stocks.

Develop a sap transaction in order to detect the under desire stocks for
the insurance spares. What is more, this information must be available in
the maintenance intranet site.
i)

Value Focus

Review the SAP process related with the downtime and redefines the
registration method for the cranes equipments malfunction. The idea is to
explode the potential of the actual intranet ABC downtime equipment
malfunctions. For this analysis, include the advice of the maintenance
engineering specialist (Eduardo Villagra).

After this, include the following points in the monthly management

meeting:

Downtime ABC equipments and evolution. Work plans.

Differentiate between chronic and sporadic events.

Emergency level, ABC and tendency. Work plans

30

Daily review of the quality registered information about downtime

problems, related equipment and it consequences. Every problem must be
properly registered.

Determine

the

unavailability

level

that

required

the

Continuous

Improvement Report
j)
-

Measure of Performance

Review all the KPIs in the monthly management meeting. The KPIs
exist and they are very useful and well designed. There is a lack of
leadership in order to keep these KPIs working, followed, analyzed with
its correspondent work plans.

Develop a professional net in order to built benchmark with other

companies. I recommend two ways of work

Companies from the same Techint group Holding, like

Ternium Hylsa, Terniym Hymsa and Tenaris Siderca

Siderurgical Companies from others holding like Usiminas, or

Arcelor Mital Acindar.

31

VIII. Conclusions
An audit of the maintenance activities of the Ternium Siderar Cranes Steel Shop
confirmed that performances are not aligned with the business requirements and
Ternium Siderar policy.
On the one hand, it is important to highlight that the most positive audit finding
is the supervisors and technicians empowerment.
On the other hand, the best audit marks are associated with Workload
Management, Safety, Communication and Employee Involvement. Nevertheless,
they are in the level where the need for improvement and change has been
recognised. What is more when the audit was performed I couldnt find any
change programme. I consider that the cause reason for this lack of
improvement programme is the poor leadership as a consequence of the high
rotations of the maintenance steel shop cranes managers. (6 managers in 5
years). In addition to this, there are some topics like Strategy & Policy, measure
of performance, materials management and maintenance regime where the
need for improvement and changes has not been identify.
In my opinion with a continuous improvement programme and its appropriate
leadership it would be possible to achieve the business requirements. These
recommendations are based on revision of maintenance policy, maintenance
strategy, its process and its control through a new meeting schedule. (1st, 2nd,
3rd and 4th order control

viii

32

IX.

Appendices

1. Appendix 1: Ternium
Ternium is a manufacturer of flat and long steel product. Ternium consolidates
the operations of the steel companies in Argentina, Mexico, Guatemala and
United States. It is one of the leading steel companies in Latin American with an
annual finished steel production of 9 million tons i.
Ternium Siderar is the most important Argentinean Steel Factory. It produces
2,8 million tons a year. It manufactures slabs, hot rolled, cold rolled, hot dip
galvanized, prepainted and tinplate steel sheet products. It has 9 production
centres throughout the Argentina.

2. Appendix 2: Ternium Siderar Steel Process

Ternium Siderar is an integrated steel factory. The figure 1 shows the basic
scheme of Ternium Siderar Steel Process.

a)

Figure 1: Ternium Siderar Steel Process

3. Appendix 3: Steel Shop

The Steel Shop is the facility where the pig iron is transformed into slabs, which
is the row material for the Hot Street Mill. It has two main processes, The
Converter area and the Continuous Casting Machine. The cranes are the
equipments that feed up and evacuate these productions units.

33

a)

Figure 2: Converter charging

The Converters is a batch process that feed the continuous casting machine. The
batch process takes 30 minutes in which the Converter produces 180 tons of
liquid steel at 1600 C. If one converter or their cranes has an operational or
maintenance problem, then the continuous casting machine has to reduce the
speed affecting its productivity. If two converters or/and two cranes have
simultaneous problems for more than 25 minutes, then the continuous casting
has to cut the sequence producing a downtime for more than 2 hours2.
The Continuous Casting is the production facility where the liquid steel is
transform into slabs. It has 2 strands of 200 mm of slab thickness.

4. Appendix 3: Production Scenario - Ternium Siderar Bottle

Neck
Actually, the Continuous Casting Machine (CCM) is the Ternium Siderar bottle
neck. The actual CCM downtime cost is U$S 1100 / minute

ii

( 41250/hour).

The following chart shows the capacity of the primaries areas:

Plant

Dealy Capacity
[Ton]

Minimum Dealy
Capacity [Ton]

Blust Furnace

10500

7900

Continuous
Casting

8500

Hot Street Mill

9500

(1) Table 1: Daily Capacity

Two hours is the minimum time required for Continuous Casting Machine to restart the sequence. Apart from
the time required to solve the Cranes and/or Converters problem

34

Today, the Blast Furnace N1 and 2 are working at their minimum technical
capacity. They couldnt produce less pick iron than 7900 Ton/day, otherwise
they become unsteady (permeability- thermal -chemical process problems).
What is more, the Hot Street Mill has an average capacity3 of 9500 Ton/day.
Nowadays, the Hot Street Mill has 90 free hours a month. These hours have not
been program because there are no available slabs to feed it up.
Furthermore the company cant import slabs from another company since there
is no profit margin. (The market cost and sells price make it not possible to
import slabs in order to transform into coils.)
In addition to this, the Argentinean market is demanding more downstream
products that do not have been produced because of the slabs limitation.
To conclude, the actual scenario generate the CCM bottle neck with excess of
pick iron (it is stocking as a solid pick iron) and free hours in the Hot Street Mill.
Every slab that is not produced at Siderar must be import as a final product
from other companies. In this cases Siderar act as a trader. To sum up, it is
crucial to improve the CCM availability (downtime and low speed failures) which
is influenced by the Steel Shop Cranes performances.

Its depends of the production mix (chemical composition, thickness and width). The same considerations
apply for the CCM.

35

5. Appendix 5: Efficacious of the actual crane Maintenance

Regime

6.

Appendix 6: Spare Parts not properly stocked.

36

7.
Appendix 7 Repaired Motors not allocated into the
warehouse (bureaucracy policy)

37

8.

Appendix 8: Cranes Steel Shop Lay Out

38

9.

Appendix 9: KPIs

To continuous it is presented examples of other lines, like continuous casting, in order to

exemplify what it is possible to obtain from the actual CMMS if the registration process is
follow. (the CMMS for the cranes do not have information)

a) Direct Maintenance Cost

MAINTENANCE DIRECT COST

Year

Month
Real

BUDGET

Dif.

Real

BUDGET

Dif.

Services

10.

Materials
Diary Plant
Downtime
Labour
Contracts
Others

a) Diary Plant Downtime

Maintenance Downtime

Total Month

DOWNTIME (Hours Frequency)

Cool Mill

Downtime Last Month

Frequency
Frequency Month IGO

Frequency Last Month

Total Month IGO
Frequency Month SAP

Downtime
Total Last Month

39

b) Pareto Downtime (6 month)

Hours

PARETO DOWNTIME (6 Months)

SAP Equipment Number

c) Efficacy-N Job Completed/Month

40

d) Workshop Backlog

Work Orders

Workshop Backlog

Months

e) Turnover of spare parts

41

f) Frequency Index (FI), Gravity Index (GI)

42

X.

References

Ternium Siderar, http://www.ternium.com/sp/default.asp. Part of this introduction was

developed for others major assignments of Maintenance Engineering and Asset
Management Topics, like M13 or M04.
ii

Ternium Siderar Industrial Engineering Department (January 2011)

iii

Qinghe Special Steel Corporation disaster, available from:

http://www.timesonline.co.uk/tol/news/world/article1671455.ece
iv

Manchester University, Maintenance Engineering and Asset Management, M01Maintenance Strategy, Section 10.2: Strategy Guide.
v

Manchester University, Maintenance Engineering and Asset Management, M02Maintenance Organisation, Section 10.1: Balancing Downtime and Risk.
vi

Manchester University, Maintenance Engineering and Asset Management, M02Maintenance Organisation, Section 10.6: Inventory Reduction Methodology.
vii

Microsoft Excel spreadsheet Spare Analysis.xls develops by Paul Wheelhouse.

Manchester University, Maintenance Engineering and Asset Management, M02Maintenance Organisation, Section 10.3.2: Factors affecting spares needed.
vii

SKF
Aptitude
Exchange,
Spare
Part
Optimizer,
Available
from
http://www.skf.com/portal/skf/home/aptitudexchange?contentId=0.237932.237939.23
8021.238023.238755 [Accessed 16/4/2010]
viii

Manchester University, Maintenance Engineering and Asset Management, M03Maintenance Systems, Section 1, figure 1.2 Maintenance Systems process model.

43