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Production Planning & Control: The Management of


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A model for considering the impact of rescheduling


planned maintenance activities in a maintenance
service contract
a a a
Marco Tantardini , Alberto Portioli-Staudacher & Marco Macchi
a
Department of Management, Economics and Industrial Engineering, Politecnico di Milano,
Piazza Leonardo Da Vinci 32, 20133, Milano, Italy.
Published online: 28 Feb 2012.

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To cite this article: Marco Tantardini, Alberto Portioli-Staudacher & Marco Macchi (2014) A model for considering the impact
of rescheduling planned maintenance activities in a maintenance service contract, Production Planning & Control: The
Management of Operations, 25:3, 241-259, DOI: 10.1080/09537287.2012.665094

To link to this article: http://dx.doi.org/10.1080/09537287.2012.665094

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Production Planning & Control, 2014
Vol. 25, No. 3, 241259, http://dx.doi.org/10.1080/09537287.2012.665094

A model for considering the impact of rescheduling planned maintenance activities


in a maintenance service contract
Marco Tantardini*, Alberto Portioli Staudacher and Marco Macchi
Department of Management, Economics and Industrial Engineering, Politecnico di Milano,
Piazza Leonardo Da Vinci 32, 20133, Milano, Italy
(Received 2 May 2011; final version received 4 February 2012)

Maintenance services are becoming increasingly relevant and both service providers and users are paying more
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attention to cost and service level. Nonetheless, until now very little attention has been devoted for understanding
and evaluating rescheduling costs which can be quite relevant, particularly if maintenance is outsourced to
external providers. This article proposes a model to measure the costs for rescheduling maintenance
interventions, thus allowing to take them into consideration both when defining a service contract and when
running it. The model has been developed after a wide empirical analysis deployed in two phases: a first
exploratory phase aimed at identifying the variables of the rescheduling problem by interviewing the main
maintenance service providers in Italy; the second, a confirmatory phase has been developed validating the model
using data from real industrial setting and analysing the results with the managers who supplied the data.
Keywords: outsourcing; maintenance service contracts; rescheduling; cost model

1. Introduction goods is available to serve the market, production may


The relationship between production and maintenance be interested in an anticipation of the maintenance
is conflicting in nature (Rishel and Christy 1996, schedule in order to exploit the idle time determined by
Weinstein and Chung 1999). Production aims at the reduced workloads. A third and last example is
manufacturing high numbers of goods at low cost; to related to the case when maintenance personnel is used
this end, it requires the maximum availability of to assist the production in technical activities such as
production systems. Maintenance asks for a time to set-ups due to product change over: unscheduled
step-in to restore the production equipment from set-ups may be required by production to meet a
degradation; this causes a reduction of available time demand mix different than expected. This creates a
(Budai et al. 2006) if the intervention is performed conflict related to the use of the maintenance personnel
during the production shift, but enables to avoid the for unscheduled activities of production assistance
occurrence of costly failures in the near future instead of scheduled maintenance.
(Tam et al. 2006). Due to different objectives, a In all the cases, production assumes unconstrained
conflict arises between continuing and stopping the availability of the maintenance personnel and fixed
production. costs regardless of when and how the maintenance is
Indeed, even if production and maintenance carried out, which is not true in the case of scarcity of
achieve a joint decision for their respective schedules, resources: indeed, with rescheduling there is a potential
there is still a hidden conflict which may arise with for an inefficient use of maintenance resources (oper-
rescheduling in the case of unexpected events. ator, material, planner, etc.) because of the changes to
Production may require a change in the maintenance previously committed programs and activities.
schedule if the demand grows in the short term, in But how has scientific literature analysed the
order to limit the risk of stock outs. In this case, time problem? Recent literature has paid attention to
available for making maintenance activities is usually coordinated decisions between production and main-
constrained and, often, maintenance is asked to move tenance (see, e.g. Cassandry and Kutanoglu 2005,
to a later period featuring a low demand. Another Ji et al. 2007, Oyarbide-Zubillaga et al. 2008), by
example situation is just the opposite case. When the proposing models to develop joint plans and schedules.
demand is temporarily low and a high stock of finished Three principal issues have been presented: (i) planning

*Corresponding author. Email: marco.tantardini@polimi.it

2012 Taylor & Francis


2
242 M. Tantardini et al.

models, used to solve an optimisation problem con- (Taracki et al. 2006), and the strategic importance of
sidering the degradation of production equipment and coordinated actions between the producer and the
simultaneously minimising the costs incurred in the service provider (Kumar et al. 2004), are the main
production and maintenance domain, such as produc- motivations for focusing our research on improving
tion, setup, inventory, labour, maintenance and quality the interaction and the relationship between these two
costs (see, e.g. Weinstein and Chung 1999, Pistikopolos players and for selecting this problem scope.
et al. 2001, Aghezzaf et al. 2007, Aghezzaf and Najid Furthermore, this research originates from the request
2008); (ii) planning models, where the stocking of of an important provider of maintenance services to
production material is included as a buffer to absorb better investigate how the rescheduling problem is
the demand variation and the changes in the produc- tackled in real companies: this is another proof of
tion rates subsequent to the stoppages of equipment interest from the industrial field.
for maintenance activities (see, e.g. Chelbi and In the remainder of this article, outsourcing in
Ait-Kadi 2004, Chelbi and Rezg 2006, Chelbi et al. maintenance is first introduced with its main features;
2008, Regz et al. 2008, Radhoui et al. 2009); (iii) sched-
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the cost model is then put into this context and briefly
uling models, aimed at optimising typical operational presented in its intended use (Section 2). The
performances, like the flow time, tardiness, makespan rescheduling problem is analysed in more detail
and availability, subject to the constraints created by (Section 3), assuming the perspective of the provider
the stoppages scheduled for maintenance reasons of maintenance services: the results of an exploratory
(Lee 1999, Qi et al. 1999, Lee and Chen 2000, case study analysis are herein shown to identify the
Kubiak et al. 2002, Cassandry and Kutanoglu 2003, variables of the problem. As a follow up, the cost
2005, Aggoune 2004, Crespo Marquez et al. 2006, model is formulated and discussed in its use in
Chen 2007, 2008; Kuo and Chang 2007, Ruiz et al. practice (Section 4). The model is then validated
2007; Liao and Tsai 2009). Single machine and flow (Section 5) based on the data sets taken from different
shop are the most common systems studied by the industrial settings. Concluding remarks (Section 6)
literature; moreover, it is worth observing that only eventually discuss the implications that can be
specific models, such as Yulan et al. (2008), consider elicited, from our work, for industrial practice and
cost as part of a multiple objective function of the joint scientific research.
scheduling problem.
Notwithstanding this wide literature on joint deci-
sions between production and maintenance, to the best
of our knowledge, no one has expressly discussed in the 2. Problem scope
past the problem of rescheduling planned maintenance The recent trends in industry show that outsourcing in
interventions and of the resulting inefficiencies. To this maintenance has become a common practice in
end, we propose a cost model for assessing the different sectors (Taracki et al. 2006, Garg and
rescheduling inefficiencies. The model is developed Deshmukh 2010).
starting from the research work on MRP nervousness According to Harland et al. (2003), outsourcing is
presented, for example, in Ho et al. (1995), Ho and motivated by the objective to involve specialists to
Carter (1996) and Kadipasaoglu and Sridharan (1997). provide competences, technologies and resources.
These papers tackle the topic of rescheduling produc- Basically, three fundamental factors bring companies
tion orders generated by MRP, and thus represent a to use outsourcing in maintenance: (i) cost reduction,
good basis for developing our research into the issue of since specialised providers are more experienced, have
rescheduling maintenance orders. The final outcome of more sophisticated equipments and decision models,
this article is a model that is an analytical approxima- hence they can provide better service efficiency;
tion of the rescheduling costs. The model can be used (ii) more skills, since using external resources is a
to support cost-based decisions within the maintenance way to get rapidly new skills via qualified people and
scheduling system. For developing the model we have specific instruments; (iii) a higher service level, since
investigated, through case studies, the operational this can be linked to a system of rewards/penalties
variables typical of the scheduling system and their established in the contract in a so-called bonus/malus
effects on costs. The cost model is proposed as a formula and measured on Service Level Agreements
supporting tool for rescheduling decisions jointly (SLAs) for which the provider is duly responsible.
achieved, in an inter-organisational context, by the The development of appropriate contracts is essen-
third party, providing the maintenance service, and the tial to take advantage of these factors. Indeed,
customer. The recent trends observed on outsourcing according to Panesar and Markeset (2008), a good
in maintenance as a common industrial practice contract is needed in order to create an environment
Production Planning & Control 3
243

Table 1. Candidate processes for a maintenance service contract.

Outsourced processes Activities

Operative/operational maintenance Includes all the activities at operational level, such as equipment repair, intervention
preparation, intervention reporting and so forth.
Maintenance management Includes all the activities at management level, such as work order request management,
work order assignment, data storage, resources management, and so forth.
Contractual management Includes all the activities needed to transfer administrative information, contracts and
documents between customer and provider.
Data management Includes all the activities necessary for the acquisition and transfer of equipment data
from the customers site to the providers service workshop, for their further analysis
in maintenance engineering, condition monitoring, and so forth.
Spare parts management Includes the acquisition and storage of spare parts, as well as analysis on data regarding
spare parts logistics.
Maintenance engineering Includes all the activities aimed at improving performance of the maintenance contract
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by leveraging on preventive (cyclic time based and condition based) maintenance and
proactive maintenance.
KPI monitoring Includes the monitoring at different levels of analysis (KPIs at operative, tactical, and
strategic levels) of maintenance activities.
Training activities Includes the activities offered to the customers maintenance personnel in order to
enable the transfer of information and knowhow required by maintenance
interventions.

facilitating the execution of the maintenance activities A proper monitoring of key performance indicators
planned in the outsourcing scope. A general prerequi- (KPIs) is a strategic process for the contract success.
site for the success of outsourcing is the proper It is needed, first of all, in order to control how far the
establishment of contractual agreements, as they are contract is meeting the established SLAs and, as a
the instruments which will allow both customer and consequence, to calculate related penalties/rewards.
service provider to share what has to be done in the Besides, measuring maintenance activities allows for
outsourcing scope (Kumar et al. 2004). In particular, checking whether management practices are properly
contract clauses have to be established in order to deployed in the processes and work flows are linked to
define the equipment for the maintenance services to be the contract; a positive measurement is a leading
provided; services are then declared (services can range indicator of the quality of the contract execution and,
in a very wide spectrum from, e.g. field services to do as a consequence, an outlook on its future, positive
repairs, expert assistance for diagnostics; logistics results.
support; advanced training; etc.); finally, the job It is also strategic, especially in performance-based
responsibilities for each party, maintenance processes contracting (Kim et al. 2007), that decisions made in
and related work flows are agreed upon with regard to the maintenance management process are coordinated
the equipment and services established in the contract between the customer of the service, and the provider
(Kumar et al. 2004). of the service: indeed, maintenance work order assign-
Table 1 presents, with no claim of exhaustiveness, a ments to proper resources and times should result from
range of candidate processes for maintenance out- a joint decision, in order to take into account the
sourcing, and it is the synthesis of different parts respective exigencies issued by the customer (i.e.
adapted from different authors at the scientific and production exigencies) and the provider (i.e. mainte-
international levels. A main inspiration can be the nance exigencies).
above-mentioned work by Kumar et al. (2004). Also, Considering these two relevant processes, we pro-
we think that it is important to refer to technical pose a cost model in order to measure the inefficiencies
publications, because they provide contributions con- resulting from the modifications of a previously
cerning the practices issued in industry for contract committed maintenance schedule. The model proposed
setup and execution; in this regard, we can mention for allows, on the one hand, for a more effective costs
example Gomez et al. (2009). Other references can be control on the part of the maintenance service
sourced from the literature on after sales management provider; on the other hand, it enables to quantify
(see, e.g. Legnani et al. 2009), discussing the configu- more precisely possible economic compensation for the
ration of assistance processes according to the after flexibility exhibited in such rescheduling situations by
sales strategy of a company. the maintenance service provider.
4
244 M. Tantardini et al.

3. Problem setting Table 2. Characteristics of the sample of companies target


of the interviews.
A multiple exploratory case study investigation see
Yin (1994) for details on the research methodology Company Services provided
was carried out in seven companies providing mainte-
nance services, with the objective of assessing the A Multinational company, provider of
relevance of the rescheduling problem within real maintenance services
B After sales department of a company
industrial companies, understanding the rescheduling producing engineered-to-order (ETO)
variables and their effects on cost and, finally, with the equipment
aim of recognising to what extent the rescheduling C Consulting company in maintenance
costs are considered and quantified in a maintenance outsourcing
service contract. D Multinational company, provider of
maintenance services
In sampling, we have included the different typol- E Multinational company, provider of
ogies of companies that could provide us with different maintenance services
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viewpoints on the rescheduling problem. This is the F After sales department of a metalwork
reason why we have included pure service companies multinational mass producer
providing maintenance services, manufacturing firms G After sales department of a company produc-
ing ETO equipment for processing
providing maintenance as after sales services and a industries
consulting company in outsourcing maintenance inter-
ventions in our case study analysis (this company
advises manufacturing companies on how to structure
the outsourced maintenance contracts). human resources are involved in carrying out mainte-
We have decided to consider all these groups of nance interventions for different customers in different
companies because all of them could be affected by the plants, rescheduling an intervention may result in the
problem of rescheduling planned maintenance inter- need to modify other interventions. Consequently,
ventions and could be interested in understanding how rescheduling is more expensive as the maintenance
to better manage such an issue. In fact, all these groups intervention has to be rescheduled in periods showing
of companies are interested on the one hand in defining already committed interventions for the maintenance
the fair pricing for the maintenance service contract resources provided to operate a given contract, and
and on the other hand are interested in being able to when such interventions require highly skilled techni-
evaluate the inefficiencies brought by the modification cians who are often more saturated because of their
of already committed interventions. Moreover, includ- higher costs. Should it not be possible to obtain a
ing all these groups of companies could make easier for skilled resource in-house for the period required, it is
us in assessing the problem of rescheduling in a broad then necessary to hire competences from third parties,
sample of companies and business context, with the which are very expensive. Besides, inefficiencies deriv-
ultimate goal to highlight all the cost components that ing from rescheduling also affect the management of
are worth to be considered in the rescheduling cost technical materials (spare parts, tools and equipment).
model. For example, when an anticipation for an intervention
Among these three groups of companies, we have is required, the materials might not be available in
decided to study only multinational companies with
stock, and this could cause a costly expediting. On the
hundreds of employees because we believe that within
contrary, when an intervention has to be postponed,
these companies it is more likely to highlight possible
the service provider may require extending the hiring of
best practices and thus an overview of the industrial
some specific equipment necessary for the maintenance
state-of-the-art on the topic of rescheduling mainte-
intervention.
nance interventions. Specific case studies were then
Last but not the least, the manager underlines that
selected from a list of companies based in the North of
it is important to know about the rescheduling request
Italy that we know they put emphasis and invest in the
with an adequate anticipation: a low time to the
development of best practices in maintenance. Table 2
intervention that is going to be rescheduled causes high
presents the sample of companies interviewed.
inefficiencies, especially in the case of anticipation.
Even if rescheduling is perceived as a critical issue,
the associated costs are currently neither measured
3.1. Company A (apart from the costs of hiring external resources) nor
The manager of company A reports on the high expressly considered in the maintenance contract.
relevance of the rescheduling problem. Since the Thus, the service provider currently has no levers to
Production Planning & Control 2455

demonstrate such inefficiencies to the customer and to spare parts management is adversely affected by
obtain an acknowledgement for its flexibility whenever rescheduling.
a change to the schedule is requested. Nonetheless, to This leads to a list of inefficiencies that are usually
reduce the inefficiencies, the manager of company A under-estimated or even not taken into account in the
sometimes agrees with the customer the possibility for real practice of the company. Indeed, the manager
the providers company workforce to carry out addi- states that the rescheduling costs are not communi-
tional activities (e.g. set-up) in order to avoid a possible cated to the customer and are not currently inserted
under-saturation, induced by a rescheduling decision. into the contracts because they are difficult to be
measured. However, to reduce the inefficiencies, the
manager states that sometimes he defines in the
3.2. Company B contract an upper bound for rescheduling decisions:
the customer has to pay a lump sum roughly defined
Also the manager of company B reports on the
criticality of rescheduling, usually occurring as a on the spot situation for each additional change over
a defined limit.
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consequence of demand variations. The logic in this


case is, in fact, to give priority to production needs,
rather than to maintenance needs; the current mindset
of the manager is that maintenance has to be able to 3.4. Company D
follow production for all the changes required. The manager of company D confirms that reschedul-
Nonetheless, modifying an already defined mainte- ing is a frequent problem. Rescheduling need is due to
nance intervention is recognised as leading to ineffi- production causes in 70% of the cases, in the remain-
ciencies (e.g. in terms of expediting spare parts ing 30% of the cases it is due to maintenance reasons
production). (e.g. the occurrence of a failure requires a new
Next to the likely higher expected maintenance schedule).
costs in the case of postponement of an intervention Rescheduling results in higher inefficiencies, as
(higher risk of failure means higher expected costs for external resources are also required and as the inter-
corrective maintenance), when an already committed ventions are shifted to more expensive periods (e.g.
intervention has to be modified, rescheduling costs when other interventions are already committed, or
arise also for the resources directly involved. For during week-ends).
example, the technicians may need to reschedule their Currently, rescheduling costs are neither considered
business commitments. Moreover, since company B in the contracts nor measured: the provider is expected
provides maintenance activities for equipment world- to have enough flexibility in order to chase production
wide, rescheduling an intervention could imply waste modifications and no formal extra-cost is charged to
in very high travel costs. Last but not the least, another the customer asking for rescheduling events. However,
important waste, pointed out by company B, concerns if production requires rescheduling an intervention in
the time of the maintenance planner to administer the either a too expensive (due to high risk of failure) or
rescheduling decisions. unfeasible period (because it has previously been
Nonetheless, company B is not used to think in committed for the resources), the service provider
terms of rescheduling inefficiencies and in the contracts signals the impossibility to carry out such an interven-
there are neither KPIs related to reschedules, nor the tion, and a new date is agreed upon.
related costs allocated. Henceforth, company B cur- In conclusion, the manager of company D under-
rently offers a high flexibility to the customer that is lines the importance of flexible schedules, with very
not expressly acknowledged. narrow planning windows and quick feedback on the
need for rescheduling in production. Furthermore, to
achieve even more flexibility, the manager of company
3.3. Company C D only schedules activities for 80% of the human
Rescheduling decisions are particularly frequent in this resources available. The rest of the workforce is in fact
kept free to absorb the variations.
company. Inefficiencies resulting from reschedules are
more or less critical depending on the entity of the
temporal shift required by the reschedule and on the
average time between two consecutive interventions in 3.5. Company E
the program. For example, when interventions are The manager of company E asserts that each modifi-
close in time one to another, rescheduling one may cation of the maintenance schedule requires a
imply to reschedule the other. Furthermore, also the re-organisation in terms of human resources activities
6
246 M. Tantardini et al.

and availability of required materials or equipment. In highly saturated, the resulting rescheduling costs may
particular, the inefficiencies resulting from reschedul- increase dramatically.
ing become more critical as the intervention to be In fact, in the above situations, rescheduling one
rescheduled is close to the current time period. More activity might be very complex due to the constraints
precisely, the manager of company E states that the from the other interventions committed and might
more you need to anticipate the intervention, or the likely require rescheduling other activities in order to
closer the intervention to be rescheduled is to the cur- obtain a feasible plan, or might also require hiring
rent date, the more likely the reschedule required could temporary workers.
be unfeasible or anti-economical. The manager of company F does not measure the
The manager of company E affirms that the rescheduling costs precisely. He only uses a rough
flexibility to respond to the production exigencies is estimation for remarking to the customer that the high
appreciated by the customer, although not formally flexibility for rescheduling has a cost for the provider.
acknowledged. On the other hand, company E neither This is a lever in order to obtain an economic
compensation when the number of required resched-
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measures nor encloses rescheduling costs in the main-


tenance contract. uled activities increases too much.
Notwithstanding these facts, in order to reduce the
impact of the inefficiencies related with rescheduling, 3.7. Company G
company E asks the customer to communicate the
The manager of company G highlights the fact that
need to reschedule as soon as possible, in order to
production has always priority over maintenance, thus
allow to organise at best the activities and involved
it is a goal for the provider of maintenance services to
resources: to this regard, sometimes company E
be flexible enough in order to avoid high costs in
stipulates a minimum time acceptable in the contract
rescheduling interventions. Moreover, the manager
to issue a request for rescheduling maintenance activ-
remarks that rescheduling events is not only due to
ities. Furthermore, company E may ask to enclose a
production exigencies. In fact, in 30% of the cases it is
contract clause for the possibility to employ its human
required to modify the scheduled event because of a
resources for other activities (e.g. improvement activ-
problem related to maintenance (e.g. the spare parts or
ities, set-ups, etc.), whenever they are called upon for
the tools are not available on the dates agreed upon for
rescheduled activities.
the intervention).
Basically, even if rescheduling decisions result in
quite strong and frequent inefficiencies (the manager
3.6. Company F
highlights that the customer requires to reschedule
The manager of company F points out that reschedul- about 25% of the interventions), their measurement is
ing costs depend on the type of intervention required: not always straightforward and, subsequently, neither
rescheduling the greasing of a bearing is much less is their association to the right responsibilities. This is
critical than rescheduling the replacement of an the reason why the rescheduling costs are not included
important component in a big piece of equipment. in negotiations with the customer.
Thus, for measuring rescheduling costs it is necessary On the other hand, the manager of company G
to consider the number of shifts required by the knows well the entity of the rescheduling costs and the
intervention, the type of interventions to be shifted and main drivers. Hence, out of his normal activities, first
whether rescheduling an intervention implies modify- of all, he devotes 5% of his time to rescheduling.
ing other interventions. Besides, he knows that rescheduling generates extra-
Actually, rescheduling inefficiencies are related to costs related to obtaining spare parts, in the case of
the complexity of the interventions already scheduled anticipated events, or with storing spare parts, in the
in a maintenance program. Another important cause case of postponement. Costs related to spare parts are
of inefficiency is the time between two interventions: if proportional to the periods of shift of the maintenance
these are too close after rescheduling, this may cause interventions and to the material itself.
other changes to the maintenance program, which To reduce the impact of rescheduling inefficiencies,
normally results in inefficiency too. the manager of company G requires that the notice for
Rescheduling also results in inefficiencies at labour a rescheduling decision arrives at least two weeks in
cost level, and this is related to the scarcity of advance to the scheduled event. In rare cases the notice
resources: for example, when the same maintenance arrives only one week in advance.
technicians are shared among different plants and Eventually, also for this company the inefficiencies
different customers or when the human resources are resulting from rescheduling are not acknowledged by
Production Planning & Control 2477

the customer: company G only requires an economic waste transportation tickets already
compensation for the direct costs of manpower when bought.
the maintenance activity is shifted to the week-end. In (IV) Anticipation of the rescheduling notice.
Table 3 we have summarised the main findings in the When the need to reschedule an inter-
case study analysis. vention is communicated with poor
advance, then higher costs for both
workforce and materials are to be
3.8. Summary of the case study analysis expected because it is required to
The multiple case study analysis highlighted several re-arrange the intervention in a short
interesting findings, enlisted in the remainder. time with a limited number of levers to
manage efficiently such rescheduling.
(1) Rescheduling is a very critical problem in all (V) Number of shifting periods. The higher
the companies that we have interviewed: it is the number of shifting periods, the higher
frequent and the associated costs are not the cost for both workforce and spare
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considered negligible. parts. Increasing the number of periods of


(2) Rescheduling costs are hardly measured by anticipation means increasing the proba-
service providers; also, they are not normally bility not to have both the workforce
considered in the maintenance contract, except (because committed to other interven-
for some formula for economic compensation, tions) and the spare parts (because not
defined with respect to very specific situations yet in stock) available. On the contrary,
(e.g. manpower working during the week-end, increasing the number of postponement
costs of hiring external resources, excessive periods means increasing, for example,
number of reschedules with respect to a fixed inventory costs and failure risk (with the
upper bound, etc.). associated costs). Furthermore, increasing
(3) Avoiding to better formalise the rescheduling the number of shifting periods may lead to
costs in the contract seems to be a missed high changes in timing between interven-
opportunity for the service provider: indeed, in tions: this could likely increase the need to
most of the cases, a formulation acknowledging reschedule other interventions that may
the flexibility offered to the customer may be then result either too close or too far-off
interesting. one from the other.
(4) Rescheduling costs vary depending on the (VI) Resources shared with different cus-
following operational variables. tomers/plants. As resources are shared
with different customers/plants, resche-
(I) Period when the planned maintenance duling costs may increase because it
activity has to be rescheduled. For exam- would be more complex to highlight an
ple, rescheduling an intervention in the effective and efficient reschedule consid-
week-end or in a period in which the ering the different constraints. Indeed, it
resources are committed to other activi- could be required to hire external
ties is more expensive. resources or to reschedule some interven-
(II) Typology of maintenance activity that tion in other plants/for other customers,
has to be rescheduled. Depending on the with the related costs (e.g. travel costs to
typology of maintenance activity to be move from one plant to the other).
rescheduled, the cost may increase. For
example, rescheduling an activity done on The operational variables summarised above have
critical equipment may be more expensive helped us to develop the cost model for rescheduling
than rescheduling a simple activity, done interventions, and to assess their relevance in the total
on redundant equipment. cost function of the maintenance service.
(III) Number of interventions to be resched- 4. Model formulation
uled. Each rescheduling requires the
Rescheduling maintenance interventions impacts on
modification of an already defined plan
the following three areas of costs:
(both workforce plan and spare parts
supply plan). For example, modifying . administrative staff;
a workforce plan may both require to . maintenance materials;
re-arrange some intervention and to . maintenance workforce.
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8
Table 3. Summary of case studies.
248

Case A Case B Case C Case D Case E Case F Case G

Are rescheduling Very much Very much Very relevant and Very relevant and Relevant and Generally yes, but Yes, about 25% of
problems relevant? particularly frequent frequent depend on the the planned
frequent intervention to interventions are
be rescheduled rescheduled

Which costs are  Equipments and  Equipments and  Equipments and  Manpower  Equipments and  Manpower  Equipments and
affected? materials materials materials materials materials
 Manpower  Expected costs of  Manpower  Manpower  Manpower
corrective main-  Administrative  Administrative
tenance staff activities
 Manpower and
manpower-
related
(e.g. travels)
 Administrative
staff

Which are the main  Presence of other  Presence of other  Number of shift  Presence of other  Time to the  Number of shift  Number of shift
rescheduling opera- interventions interventions periods interventions intervention periods periods
tional variables? already commit- already commit-  Time between already commit-  Number of shift  Number of inter-  Materials
ted in the ted in the two consecutive ted in the periods ventions to be required
period period interventions period rescheduled  Time to the
 Highly skilled  Number of shift  Periods with  Time between intervention
technicians periods higher costs for two consecutive
required  Time to the carrying out interventions
 Number of shift intervention interven-  Typology and
periods tions (e.g. complexity of the
 Time to the weekends) interventions to
intervention  External be rescheduled
resources  External
M. Tantardini et al.

required resources
required
Are costs measured No (apart from the No No, because they No No Not measured pre- Costs are measured
and enclosed in the costs of hiring are difficult to cisely, not but not enclosed
contract? external be measured included into the in the contract
resources) contract apart the direct
costs of mainte-
nance during
week-ends
How the provider Provider sometimes No specific actions Sometimes an When the number Manager requires
manage as to asks to carry out upper bound for  When the resche-  Sometimes it is of rescheduling that the notice
reduce the resche- additional activ- rescheduling duling date is agreed the mini- activities for a reschedul-
duling ities (e.g. set-up) decisions is set: unfeasible for the mum anticipation required ing decision
inefficiencies? in order to avoid for further provider, a new to issue a request increases too arrives at least
a possible reschedules date is agreed for rescheduling much the man- two weeks in
under-saturation required the upon maintenance ager uses a advance to the
induced by a customer has to  Manager sched- activities rough estima- scheduled event
rescheduling pay a fixed sum ules activities for  Provider some- tion of resche-
decision 80% of the time times asks to duling costs for
of human carry out addi- remarking the
resources avail- tional activities cost of the
able, the rest is (e.g. set-up) in flexibility
kept free to order to avoid
absorb the under-saturations
variations
Production Planning & Control 2499

In our model we have only considered the real costs function with the number of interventions to be
that are related to the resources provided in the rescheduled.
maintenance service contract and that are therefore
both easier to be expressed concretely and easier to be
allocated to the responsibilities of the involved parties. 4.2. Maintenance materials
With such logic, the failure risk cost associated to the Rescheduling also affects the technical materials costs.
shift of an already committed event is, for example, not This occurs whenever the maintenance activity requires
considered in our model for various reasons. First, a replacement of components (spare parts) or the use
such a cost could be difficult to be measured and be of special equipment/tools (e.g. cranes, scaffoldings).
shared by the parties, because it is based on a We assume these costs to be directly proportional
probabilistic approach (see, e.g. Fumagalli et al. to the number of periods of anticipation (or postpone-
2010). Second, a failure risk cost becomes a real cost ment): if the temporal shift gets higher, the costs
only as the failure happens and when the failure increase (cf. Section 3.1 operational variable V). This is
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happens after a rescheduling request, it could be not expected to represent well the following cases: (i) the
that easy to attribute the proper responsibilities. costs for urgent deliveries due to expediting, which can
Moreover, for the sake of simplicity, we have be considered proportional to the anticipation; (ii) the
considered all the various maintenance interventions as warehousing costs for equipment/spare parts or the
having the same degree of criticality/complexity. costs of extension for the hiring of special equipment/
Consequently, despite the suggestions from the tools, proportional to the postponement.
manager of company F, rescheduling any intervention Costs are also dependent on the typology of
has been considered in our model to have the same material. Finally, they are set to be inversely propor-
unitary cost. Therefore, the operational variable II tional to the time to the intervention (cf. Section 3.1
(Section 3.1) was not included in our proposal. operational variable IV): if the rescheduling is issued
We have also considered, for the sake of simplicity, with a certain anticipation, managers may have more
that performing maintenance activities has the same levers in order to reduce the inefficiencies due to
cost in each planned period. Therefore, despite the rescheduling.
suggestions from the manager of company D, we have
not identified more expensive or cheaper periods in
which to reschedule maintenance interventions. The
4.3. Maintenance workforce
operational variable I (Section 3.1) was thus not
included in the proposed model. Maintenance workforce costs are associated to the
inefficiencies due to the rescheduling of human
resources. We assume that such costs are assessed
mainly when the human resources of the providers
4.1. Administrative staff company are shared among different customers.
Every time a rescheduling is requested, the planner of In fact, in this case, the rescheduling decision in
the service provider needs to re-process maintenance order to respond to a request of one customer affects
requirements and resource availability, to define a new the provision of such common resources to provide the
feasible schedule. service to another customer, thus finally impacting on
The unit cost value depends on the fact that the service duties of different contracts.
resources are shared with different customers/plants The unitary costs increase as the workforce is more
(cf. Section 3.1, operational variable VI). The more the specialised and skilled. Besides, we make a distinction
resources are shared with different customers, the whether it is required to anticipate or to postpone the
higher the cost because of the constraints increase. intervention. When it is required to anticipate an
Moreover, such administrative cost associated with the intervention, we suppose the costs to be directly
rescheduling activity is mainly related to the number of proportional to the number of required periods of
rescheduling actions (operational variable III in anticipation (cf. Section 3.1 operational variable V),
Section 3.1). because it is likely that the resources are already
We assume that the same unit cost may apply to committed to other interventions. Instead, when an
both anticipating and postponing events. Nonetheless, intervention has to be postponed, we have considered
it is worth considering the complexity of rescheduling that the resulting cost is a fixed value, not related with
multiple interventions, in order to finally model a the number of shifting periods. Thus, the number of
more expensive cost if compared to rescheduling shifting periods is not regarded as influent on
a single intervention. Thus, we set a linear cost the cost formulation because, with postponement,
10
250 M. Tantardini et al.

Table 4. Rescheduling cost components.

Anticipation Postponement

Administrative staff (Equation (1)) arac * Na arac * Np


J P
P E J P
P E
Maintenance materials (Equation (2)) acm"j am"j A"j  pcm"j pam"j P"j 
j1 "1 j1 "1
PJ PE PJ PE
Maintenance workforce (Equation (3)) acw"j aw"j A"j  pcw"j pw"j P"j 
j1 "1 j1 "1

Notes: Here:
j 1, . . . , J
workstations (subject of the maintenance service contract)
" 1, . . . , E
maintenance interventions
arac fixed unitary cost for administrative rescheduling
Na, Np number of anticipated (Na) or postponed (Np) interventions
acm"j, pcm"j materials costs, related to anticipating (postponing) one period the "-th planned maintenance intervention on
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workstation j.
am"j, pm"j smoothing coefficient for materials costs related to anticipating/postponing the "-th planned maintenance
intervention on workstation j.
A"j, P"j number of anticipation/postponement periods for the "-th planned maintenance intervention on workstation j.
acw"j, pcw"j workforce costs related to anticipating (postponing) one period the "-th planned maintenance intervention on
workstation j.
aw"j, pw"j smoothing coefficient for workforce costs related to anticipating/postponing the "-th planned maintenance
intervention on workstation j.
P"j binary variable: it is equal to 1 in case the "-th maintenance intervention on workstation j is postponed,
otherwise 0.

the workforce is likely to be idle or featuring a lower pw"j defined in Equation (4) allows for controlling the
workload. In fact, when postponing an intervention smoothing effect of the rescheduling costs. The value
conflicts with other activities already scheduled rarely of such coefficients depends on how much the com-
emerge. Consequently, it is reasonable to measure munication to reschedule the intervention is noticed in
solely a fixed cost resulting from the rescheduling advance to the planned intervention and on the two
inefficiencies caused by the variation of the human parameters ( and D) that enable to adapt the cost
resources program (e.g. the resource has to modify its model to each particular provider.
travelling plan to the sites). tm"j T1
  
Similarly to materials, the anticipation/postpone-  D 1  "j
"j "j , tm"j , T, D 1
4
ment costs are also considered to be inversely propor-
tional to the time to the intervention (cf. Section 3.1, where:
operational variable IV): the longer the time to tm"j period when the "-th maintenance interven-
intervention, the lower the impact of its modification. tion has been planned in the previous
schedule
T period when the rescheduling decision is
4.4. Mathematical formulation issued
"j parameter, ranging from 0 to 1, measuring
Table 4 reports the mathematical formulation for the
the providers flexibility in either anticipat-
different cost components. An important element of
ing or postponing interventions
the formulation of costs for maintenance material and
D parameter, ranging from 1 to tm"j  (T  1),
workforce is the presence of some coefficients for
defining the number of periods during
smoothing, introduced in order to consider the effect of
which rescheduling costs shall be assumed
issuing a request to reschedule with proper
as steady
anticipation.
We have exploited the research work on MRP As "j tends to 1 (i.e. high flexibility), the smoothing
nervousness presented in Ho et al. (1995), Ho and coefficient in Equation (4) tends to 0. In such a
Carter (1996) and Kadipasaoglu and Sridharan (1997), situation it is possible to avoid extra-costs for the
in order to define the values of the smoothing service provider, thus it is not costly to reschedule the
coefficients am"j, pm"j, aw"j, pw"j. The formula maintenance interventions. Besides, as the parameter D
for the smoothing coefficients am"j, pm"j, aw"j, decreases, the smoothing coefficient is rapidly cut.
Production Planning & Control 11
251

4.5. Model implementation


Measuring actual costs for each rescheduling decision
is not an immediate activity. This is because the data to
be considered are dispersed throughout the organisa-
tion: the cost data are available at the administration
level while operational variables, such as the number of
anticipated or postponed interventions, result from
rescheduling. Thus, measuring actual costs for each
rescheduling decision may cause administrative delays
Figure 1. Smoothing coefficient value for D 1. but, due to the time constraints imposed by the
rescheduling request issued by the customer, delays
are scarcely acceptable. The cost model presented in
this article is intended as an analytical approximation
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to allow managers a quick estimation of rescheduling


costs and thus for enclosing them in the daily
decision-making process.
To be put in practice, the cost model requires being
set-up with the unitary costs of Equations (1)(3). Such
costs have to be thought of as standard costs for a
rescheduling decision: a costing framework is then
required in order to develop such standards.
To this regard, we consider the framework of
Figure 2. Smoothing coefficient value for D 4. Mirghani (2001) as reference model for planned
maintenance costing. Aligned to known general refer-
This is used to represent the sensitiveness of the ences for accounting (see, e.g. Horngren et al. 2000),
provider at the time to the intervention. When the Mirghani underlines the co-existence of two
provider has a high sensitiveness (i.e. low D), resche- approaches in a maintenance accounting system:
duling costs can be dramatically reduced if the (i) the cost traceability, obtained by means of recording
customer issues the need to change with some, even costs in planned maintenance orders; (ii) the cost
short, anticipation. In Figures 1 and 2 we present how allocation, in the case of support services (maintenance
the value of the smoothing coefficient "j varies by engineers, planners, utilities, etc.) or when cost tracing
modifying the aforementioned parameters. is not economically feasible.
In real practice, the parameter  should be adopted We consider cost traceability for the calculation of
to define a general feature of the provider. The more the unitary costs for maintenance workforce and
the provider has resources to be flexible (e.g. it has a materials on each planned maintenance order (i.e. for
capacity buffer for the maintenance workforce, the the calculation of acm"j, pcm"j, acw"j, pcw"j and of their
spare parts provisioning is flexible enough due to some smoothing coefficients am"j, pm"j, aw"j, pw"j). The
agreements with spare parts providers), the more standard cost so obtained is based on the number of
flexibility there will be during contract operation. In shifting periods (operational variable V), to calculate
Figure 1, the effect of higher flexibility is shown: for the unitary costs acm"j, pcm"j, acw"j, pcw"j, and the
example, when  0.4 the provider requires the anticipation of the rescheduling notice (operational
customer to anticipate the rescheduling request by variable IV), to smooth the unitary costs so calculated
eight periods in order to reduce the related costs by a accordingly with the flexibility of the provider. Cost
similar amount that a company with  0.7 has with allocation is instead adopted solely for evaluating the
an anticipation of only four periods. unitary cost of the administrative staff arac. The total
The parameter D is used to define the number of budgeted cost of the maintenance planner to admin-
periods with steady rescheduling costs. For example, as ister rescheduling decisions is needed to this end: the
shown in Figure 2, even in the case of low provider total number of interventions to be rescheduled (oper-
flexibility ( 0.1) there is a reduction equal to 10% of ational variable III) on the contracts managed by the
rescheduling costs if the customer anticipates the planner is then used as basis for the allocation of this
request in a range between 5 and 8 periods, while cost, so as to obtain the arac standard cost.
rescheduling costs cannot be reduced between 1 and Once standard costs are available, our model can
4 periods. be adopted as a decision-making tool and can also
12
252 M. Tantardini et al.

Table 5. Summary of information required to run the increases as time elapses from the last maintenance
model. intervention this enables to consider the growing risk
of failure. For modelling failure rates we used the same
Standard Reschedule
costs of parameters of logic as in Pistikopoulos et al. (2001), that is to have
the service the customer constant and increasing rates in different periods.
contract request More precisely, maintenance costs express the total
costs of the maintenance service, divided among:
Administrative staff arac Na
(Equation (1)) arac Np
(1) the cyclic preventive maintenance during the
Maintenance materials acm"j am"j A"j weekly timetable, (2) the cyclic preventive maintenance
(Equation (2)) pcm"j pm"j P"j during the week-end and (3) the corrective mainte-
Maintenance workforce acw"j aw"j A"j nance, based on a stochastic failure rate. The model
(Equation (3)) pcw"j pw"j P"j also considers the following production costs: (1) setup
costs, (2) manufacturing costs, (3) inventory costs,
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(4) labour costs in regular time and (5) labour costs in


quickly provide an estimation of the rescheduling costs overtime.
for a reschedule required by the customer when a After obtaining the joint master schedule, we tried
contract is run during the year. Table 5 summarises the to figure out some likely causes for rescheduling, based
outputs of our model and the inputs that have to be on the experience gained from the managers inter-
prepared by the accounting system. viewed in the exploratory case study analysis. Such
causes for rescheduling imposed the definition of new
schedules, i.e. to re-run the model for joint production
5. Model validation and maintenance planning.
Therefore, after rescheduling, maintenance costs in
In this phase we aim at evaluating the relevance of the
the joint production and maintenance master schedule
rescheduling costs and at validating the ability of the
have been compared with the rescheduling costs: thus,
model to properly represent them. We have collected
assessing the impact of the latter and the validity of
the real data from contracts with two maintenance
considering them expressly as a relevant component of
service providers and we have simulated a number of
the total costs of the maintenance service. In the
different scenarios in order to assess the impact of
remainder of this article we summarise the results from
rescheduling inefficiencies.
two representative cases of the four investigated in this
Data were taken from two service providers inter-
validation phase.
ested in evaluating the practical relevance of our model
in their context. Indeed, their interest was to quantify
the rescheduling problems and their effects on cost and
to recognise, as a consequence, to what extent they 5.1. Validation company 1
should change their management process, in order to The automated production line of validation company
limit the rescheduling inefficiencies. 1 works three shifts per day, 5 days per week, 48 weeks
In particular, with real data we have generated a per year, 120 h per week. The actual time available for
joint production and maintenance master schedule, by production is 20% less because of micro-stoppages and
using a cost-optimisation logic (i.e. joint optimisation other production inefficiencies.
of master schedule between production and mainte- It is also possible to use over-time work during the
nance). The model we used for creating the joint week-end for a maximum of 16 h (i.e. 8 h on Saturday
schedule has been presented in previous works and 8 h on Sunday). Working cost during regular time
(Portioli-Staudacher and Tantardini 2008) and it is a is 50E/h, while during the week-end it is 62.5E/h
mixed-integer linear programming optimisation model (i.e. 25%).
derived from the model presented by Weinstein and During maintenance interventions, it is required to
Chung (1999). The model jointly schedules production stop the whole line and to stop production. In order to
and maintenance activities with the aim of minimising avoid frequent stoppages, as the line is stopped
the sum of production and maintenance costs. maintenance is provided to all the different stages of
Maintenance costs are given by the sum of preven- the line. We have thus modelled the whole line as a
tive maintenance costs and of expected costs of single machine with production rate equal to the rate
corrective maintenance. The latter are given by mul- of the slowest stage in the line and with maintenance
tiplying the cost for a corrective maintenance inter- time equal to the maximum maintenance time of the
vention and the failure rate in every period which different machines in the line.
Production Planning & Control 13
253

Table 6. Production data. Table 8. Rescheduling costs.

Production family Anticipate Postpone

X Y Administrative 400 E per 400E per


staff reschedule reschedule
Set-up costs 1000E 1000E Materials 2000E per shifting 500E per shifting
Set-up times 240 min 240 min period period
Variable production cost 0.2E/pc. 0.22E/pc. Workforce 2000E per 1000E per
Production rate 500 pcs./min 500 pcs./min shifting period reschedule
Inventory cost 0.04E/pc. 0.044E/pc.

situations mostly related to rescheduling are, referring


Table 7. Maintenance data.
to the words of the manager interviewed:
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Average cost for a preventive 11,000E . impossibility to carry out the maintenance
maintenance intervention in regular
time intervention in the planned period
Average cost for a preventive 13,000E (e.g. because reworks are required, because
maintenance intervention in over time tests are required on new products, etc.);
Average cost for a corrective 17,000E . increase of demand in periods coinciding with
maintenance intervention
already scheduled intervention.
Average time for a preventive 16 h
maintenance intervention Rescheduling activities result in high inefficiencies
Average time for a corrective 72 h
maintenance intervention
in validation company 1 for three operational reasons:
. maintenance planners are highly saturated
and paid high salaries, so their time should
be used in an efficient way;
Production can be grouped into two families . technicians come from far away; the provider
(X and Y), quite similar one to the other apart from of maintenance services is in fact geographi-
the raw materials used. This is the reason why family Y cally far from validation company 1;
is 10% more expensive to produce than family X. . the preventive maintenance interventions are
Each family is produced on alternate weeks with quite complex, and they require a highly
batches of 2.5 million pieces. Set-up time is 4 h and 5 skilled workforce.
operators are required to change from family X to Therefore, the fixed costs due to administrative
family Y. Set-up cost is 1000E/set-up (5 operators * 4 h activities required for rescheduling are quite high
* 50E/h). In Table 6 we present the production data, (i.e. 400E regardless of the number of periods of shift
while in Table 7 we present the maintenance data. required), while the costs related to material and
Maintenance activities are outsourced to the produc- human resources may vary significantly in the case of
tion line manufacturer. anticipations or postponements.
A preventive maintenance intervention takes 16 h Anticipating interventions creates higher inefficien-
(12 h of maintenance plus 4 h for restarting produc- cies than postponing interventions. Nonetheless, such
tion). A corrective maintenance intervention instead inefficiencies also depend on the number of shifting
takes 72 h because providers technicians are required periods. In Table 8 we summarise the rescheduling
to reach the customer site. costs in the examined case.
With the data provided by the manager inter- It is then to be noticed that rescheduling costs
viewed, we ran the joint model for production and further depend on the time from the notice of the
maintenance on a planning horizon of 28 weeks in rescheduling and the maintenance planned period. In
order to simulate at least 24 weeks (i.e. 6 months) at a this situation it is fundamental to obtain the notice as
steady state. soon as possible. Therefore, when setting the param-
The joint master schedule produced three interven- eters for the cost smoothing coefficients (in particular,
tions: 1 in week 8, 1 in week 15, 1 in week 22, all of for  and D), the manager took into account all these
them required during regular working time. From such aspects. D was set equal to 4 with a week as the unit
a solution, we have simulated different possible period in order to maintain rescheduling costs steady in
scenarios that require rescheduling activities. The the month. A graphical analysis of the different values
14
254 M. Tantardini et al.

Table 9. Scenario analysis validation company 1 (MC versus RC).

Event Costs

1 In week 6 the impossibility to carry out the maintenance event in week 8 arises. MC: 57,310E
Old schedule: w8w15w22 RC: 7286E
New schedule: w7w14w21 Impact:12.7%
2 In week 6 the planned event at week 15 must be anticipated. MC: 57,310E
Old schedule: w8w15w22 RC: 1880E
New schedule: w8w14w22 Impact: 3.3%
3 In week 13 the impossibility to carry out the maintenance event in week 15 arises. MC: 39,510E
Old schedule: w15w22 RC: 6280E
New schedule: w14w21 Impact: 15.9%
4 In week 6 an increase of 10% in demand volume for period 8 comes up. MC: 57,310E
Old schedule: w8w15w22 RC: 1880E
New schedule: w8w14w22 Impact: 3.3%
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5 In week 6 an increase of 20% in demand volume for period 8 is recorded. MC: 57,310E
Old schedule: w8w15w22 RC: 7286E
New schedule: w7w14w21 Impact: 12.7%
6 In week 6 an increase of 30% in demand volume for period 8 is registered. MC: 58,160E
Old schedule: w8w15w22 RC: 12,766E
New schedule: w6w13w21 Impact: 21.9%
7 In week 6 an increase of 10% in demand volume for periods 7 and 8 arises. MC: 57,310E
Old schedule: w8w15w22 RC: 2907E
New schedule: w9w16w23 Impact: 5.1%
8 In week 6 an increase of 20% in demand volume for periods 7 and 8 is registered. MC: 58,160E
Old schedule: w8w15w22 RC: 10,280E
New schedule: w6w14w22 Impact: 17.67%

helped the manager to set the proper value of . integration of some mechanism in the maintenance
In particular: management process; this may help improving the
coordinated decisions between Customer (production)
.  anticipation material 0.3;
and Provider (maintenance) even at the rescheduling
.  anticipation human resources 0.5;
moment. Referring specifically to the data of this
.  postponing material 0.6;
particular case, for example, assume that the two
.  postponing human resources 0.8.
parties have agreed an upper limit in a default decision
In Table 9 we present the results from the analysis in the contract for rescheduling at 10% of impact on
of the different scenarios tested for the case, where in the total maintenance costs: then, only scenarios 2, 4
the column costs we report maintenance costs (MC) and 7 may be acceptable by default. This means that
and rescheduling costs (RC). MC represent the sum of other requests might be rejected (or subject to further
the preventive maintenance costs and the expected negotiations before deciding on the reschedule), with
corrective maintenance costs from the joint planning the end effect of avoiding too frequent changes and,
model utilised for generating the schedule. Instead, RC finally, of keeping a better stability in the maintenance
represent the expected rescheduling costs to change program. Furthermore, highlighting a situation with
from the old schedule to the new schedule, calculated very high rescheduling costs may also suggest to the
through our cost model. Therefore, RC are not two parties to explore different and likely cheaper
enclosed in MC. alternatives, for example by postponing a production
The impact of rescheduling costs in validation order or by redesigning maintenance activities distri-
company 1 is critical since it varies a lot (from 3.3% to bution over the following interventions.
about 22%). Not taking into account such costs in this
case actually means not controlling a relevant part of
the expenditures. Thus, it seems to be important for 5.2. Validation company 2
this company to consider such costs in the maintenance This company is a medium-sized manufacturing firm
service contract. that employs about 120 people. The annual turnover is
In particular, having the knowledge of the costs due around 15 million euros and the core business is to
to rescheduling inefficiencies may help envisioning the produce and sell valves for tires (for both cars and
Production Planning & Control 15
255

Table 10. Vulcanisation department production data. Table 11. Vulcanisation department maintenance data.

Product family Average cost for a preventive maintenance 1000E


intervention in regular time
A B Average cost for a preventive maintenance 1500E
intervention in the week-end
Set-up cost 76E/set-up 76E/set-up Average cost for a corrective maintenance 5000E
Set-up time 3.5 h 3.5 h intervention
Variable production cost 0.065E/pc. 0.06E/pc. Average time for a preventive maintenance 16 h
Production rate 7800 pcs./h 7800 pcs./h intervention
Inventory holding cost 0.0013E/pc. 0.0012E/pc. Average time for a corrective maintenance 60 h
Weekly demand 500,000 pcs. 300,000 pcs. intervention

trucks). Moreover, the company produces manome- Table 12. Rescheduling costs vulcanisation department.
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ters, inflation equipment and a list of accessories for


Anticipate Postpone
the automotive industry.
Production volumes are around 50 million valves Administrative 50E per reschedule 50E per reschedule
per year. The production system consists of 4 stages: staff
machining department, mixture production depart- Materials 100E per shifting 100E per shifting
ment, vulcanisation department and assembly depart- period period
Workforce 75E per reschedule 50E per reschedule
ment. In our research we have focused on the
vulcanisation department that consists of 2 identical
machines each one working two production families.
The vulcanisation department works in regular on a new product, re-works, unexpected
time 12 h per day. The maximum over time per day is demand variation, etc.);
4 h; hence the vulcanisation department can work at . 10% increase in demand in the period when
maximum 16 h per day. Working cost in regular time is the interventions were scheduled and in the
19E per hour. Overtime working cost is instead 50% close periods; we have not simulated higher
higher, i.e. 28.5E per hour. Maintenance is entrusted to increases of demand because products are not
an external provider that carries out about one characterised by high variations in demand.
intervention every 3 months.
Rescheduling costs have been assessed as in
In Tables 10 and 11 we report production data and
Table 12. The manager interviewed confirmed that it
maintenance data as received from the manager
is more critical to anticipate an intervention rather
interviewed. Basically, the very high cost of corrective
than to postpone it: this is the main operational reason
maintenance interventions is due to the fact that, in the
for being efficient in a schedule for the case.
case of unexpected failures, it is necessary to find very
All the scenarios identified in this case have been
quickly both specialised technicians and materials.
evaluated in three rescheduling moments, so as to be
Since failures imply stopping production, having quick
able to assess diverse time to intervention. Parameters
repair is very important. This is the reason why
for the smoothing coefficients have been selected by the
corrective maintenance costs are so high.
manager as follows:
We have run the joint model for production and
maintenance planning with the data provided. It . D 4;
emerged that the optimal solution was to have 1 .  (anticipation) 0.5;
intervention on machine 1 in week 14 and 1 interven- .  (postponement) 0.6.
tion on machine 2 in week 13. From such solution we
In Table 13 we summarise the results from the
have simulated different likely scenarios that would
analysis of the different scenarios tested in the case. In
require rescheduling activities.
Table 13 MC and RC follow the same logic as in
Consistently with managers suggestions, the sce-
validation company 1.
narios that we have tested represent the following
Second companys rescheduling costs impact less
situations:
than in validation company 1. Moreover, costs have
. unavailability of one of the machines to be a lower variation, ranging from 2.3% to 8.3%.
maintained in the planned period, because of Anyhow, their relevance cannot be neglected, most of
constraints imposed by production (e.g. test all as the frequency of rescheduling requests increases.
16
256 M. Tantardini et al.

Table 13. Scenario analysis validation Company 2 (MC versus RC).

Scenario Costs

1 In period 5 the unavailability of machine 1 to be maintained in week 14 is noted. MC: 6032E


Old schedule: w14(M1)w13(M2); RC: 137.5E
New schedule: w12(M1)w13(M2) Impact: 2.28%
2 In period 11 the unavailability of machine 1for week 14 is noted. MC: 4809E
Old schedule: w14(M1)w13(M2); RC: 400E
New schedule: w12(M1)w13(M2) Impact: 8.32%
3 In period 11 the unavailability of machine 1 for week 14 is noted, both in regular time and weekend. MC: 4809E
Old schedule: w14(M1)w13(M2); RC: 400E
New schedule: w12(M1)w13(M2) Impact: 8.32%
4 In period 5 an increase in demand of about 10% in week 14 arises. MC: 6032E
Old schedule: w14(M1)w13(M2); RC: 137.5E
New schedule: w12(M1)w13(M2) Impact: 2.28%
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5 In period 8 an increase in demand of 10% for week 14 arises. MC: 5582E


Old schedule: w14(M1)w13(M2); RC: 225E
New schedule: w12(M1)w13(M2) Impact: 4.03%
6 In period 11 an increase in demand of 10% for week 14 comes up. MC: 4809E
Old schedule: w14(M1)w13(M2); RC: 400E
New schedule: w12(M1)w13(M2) Impact: 8.32%
7 In period 8 an increase in demand of 10% during weeks 13 and 14 arises. MC: 5655E
Old schedule: w14(M1)w13(M2); RC: 450E
New schedule: w11(M1)w12(M2) Impact: 7.96%

Hence, the acceptance of a rescheduling request flexibility to follow production for all the changes
issued by the customer may be assessed with these required (see, e.g. in Section 3, our companies B and G
numbers: referring to the data of the case, assume, for of the exploratory case study analysis).
example, that Customer and Provider have agreed in
the contract on an upper limit of 5% impact, as
threshold to accept by default the rescheduling request;
6. Conclusions
only scenarios 1, 4 and 5 may be executed under this
agreement. Rescheduling maintenance interventions is a frequent
As a conclusion to this case, then, we can confirm issue in maintenance service contracts. Nonetheless,
the results of validation company 1. Indeed, consider- today the providers of maintenance services hardly
ing expressly rescheduling costs is important also in measure the inefficiencies deriving from rescheduling in
validation company 2 for supporting the decision- terms of costs.
making process about rescheduling events. The higher In the current mindset of managers, production has
the generated inefficiency, the higher the need for the highest priority and maintenance providers have to
highlighting a rescheduling alternative. be flexible enough to modify the schedules as produc-
Moreover, it is worth observing that validation tion requires. Provider flexibility is thus very appreci-
company 2 is different from validation company 1. ated by the customer (production), but there is no
At the beginning of the study in validation company 2, robust scheme to correspondingly acknowledge an
the operational reasons for being efficient seemed quite economic compensation.
important but were dominated by the need to provide This happens even if rescheduling costs are esti-
quick repairs in order to reduce the impact of mated to be an important quota of the maintenance
production losses during corrective maintenance. costs. For example, in the validation case studies
At the end of our study, we have shown that the presented in this article rescheduling costs can range
inefficiencies from rescheduling are significant indeed from a 2.3% to 22% of the total maintenance costs of
and thus it is very important not to neglect them. This the master schedule. This underlines the importance of
conclusion can be used as a general remark for all considering them. Hence, some managerial implica-
those companies recognising that the problem of tions have to be elicited from our research.
maintenance efficiency exists but declaring, at the First of all, the service provider should consider
same time, that maintenance has to provide all the such rescheduling costs since they represent a relevant
Production Planning & Control 17
257

part of its expenditures. Not measuring well these costs flexibility of maintenance service are achieved, we
means neglecting an important quota of the total costs envision that this theory may be considered in the field
of the maintenance service contract and possibly of life cycle costing (LCC) of physical assets. Using
wrong understanding of the profitability of the LCC, we expect to discuss the benefits (reduction of
contract. operating costs) of investing in an improved flexibility
Therefore, enclosing rescheduling costs in the of the maintenance services.
maintenance contracts, in the negotiations between Concluding, in this article we have demonstrated
providers and customers and, last but not least, in the that neglecting rescheduling costs is a bad, but very
KPI monitoring process, could allow for the possibility frequent practice for a maintenance service provider.
to provide a new support for decision making and the For future works, we expect new studies investigating
information needed to calculate the economic com- the problem of rescheduling planned maintenance
pensation for provider flexibility. As the formulation interventions, both by enlarging empirical proofs and
of the cost model is clear and has been agreed upon by investigating the adoption of the model in the theory of
the contracting parties, this can be the base ground for LCC of physical assets.
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evaluating whether to accept or not a rescheduling


request and how much to compensate the rescheduling
decision and the related inefficiencies that have been Acknowledgements
created by the decision.
We would like to acknowledge the anonymous reviewers for
Eventually, we consider that measuring reschedul- their constructive and helpful comments. This research is
ing costs should be used by the service provider as an part of the activities performed by ASAP service manage-
economic quantification of the flexibility provided to ment, a network of Universities and Companies devoted to
the customer, regardless of the fact that there is an the development and dissemination of improvements in
express economical compensation associated to such managing services.
flexibility or not.
Basically, measuring and showing rescheduling
costs to the customer means making clearer the fact Notes on contributors
that an extra-flexibility often not expressly stipulated Marco Tantardini received his BSc,
MSc and PhD degrees in Industrial
in the contract is actually provided to the customer.
Engineering at Politecnico di Milano,
In this article we have also proposed a cost model where he currently received his post-
for quantifying rescheduling costs that has been doctoral position at the Department
validated and considered suitable for implementation of Management, Economics and
by managers of real companies. The model properly Industrial Engineering. His research
interests concern the operational
considers the components of the rescheduling costs and
excellence in service companies, in
provides the correct associations between the opera- manufacturing companies (in particular, in non-repetitive
tional variables affecting such costs that were high- manufacturing environments) and in supply chains. He is the
lighted in our case study analysis. author and co-author of about 20 papers. Some of his recent
However, one point that requires attention in the articles have focused on investigating how the implementa-
mathematical model proposed is the measurement of tion of the Lean principles affects the operations manage-
ment of non-repetitive manufacturing companies and of
providers flexibility through the smoothing coeffi- service companies and on investigating the use of workload
cients. Their parameters, D and , are the base elements control for the supply chain management of manufacturing
for the theory on flexibility of maintenance service, and service companies.
proposed in this article; it would be interesting to
further analyse such theory, in order to see whether a
correlation exists or not among different maintenance Alberto Portioli-Staudacher is a Full
organisations, featuring different levels of management Professor of Operations and Supply
Chain Management in Politecnico di
maturity and financial resources, and with different Milano, where he started working in
production contexts. 1990. His research interests are in the
Moreover, another development of our research area of operations, quality and supply
findings can be considered using our cost model to chain management, where he has
assess investments on the improvement of flexibility of deepened the issue of operational
excellence and operational improve-
a maintenance service (e.g. an investment in a capacity
ment in both manufacturing and service organisation. He has
buffer for the maintenance workforce or in a flexible published four books and over 100 articles in international
scheme for the quick spare parts provisioning). Indeed, journals and conference proceedings. He is running training
once good empirical proofs of our theory on the program on Lean Six Sigma and the Director of the
18
258 M. Tantardini et al.

Executive MBA at MIP the Business School of Politecnico Chelbi, A. and Rezg, N., 2006. Analysis of a production/
di Milano where he is responsible of the operations and inventory system with randomly failing production unit
quality management area. He leads research and consultancy subjected to a minimum required availability level.
projects on operational excellence in manufacturing and International Journal of Production Economics, 99 (12),
service companies in Italy and Europe. 131143.
Chen, W.-J., 2007. Minimizing total flow time and maximum
Marco Macchi is a Researcher at tardiness with periodic maintenance. Journal of Quality in
Politecnico di Milano, currently teach-
Maintenance Engineering, 13 (3), 293303.
ing modelling of production systems
and logistics and design and manage- Chen, J.S., 2008. Scheduling of non-resumable jobs and
ment of production plants, Vice flexible maintenance activities on a single machine to
Director of the Executive Master on minimize makespan. European Journal of Operational
Industrial Maintenance Management, Research, 190 (1), 90102.
scientifically responsible of the Crespo Marquez, A., Gupta, J.N.D., and Ignizio, J.P., 2006.
Observatory on Technologies and Improving preventive maintenance scheduling in semicon-
Services for Maintenance, Secretary of the IFAC Working ductor fabrication facilities. Production Planning &
Downloaded by ["Queen's University Libraries, Kingston"] at 05:15 06 January 2015

Group on Advanced Maintenance Engineering, Services and


Control, 17 (7), 742754.
Technology, Book Review Editor of Production Planning &
Fumagalli, L., et al., 2010. Economic value of technologies in
Control. He is author or co-author of four books and more
than 100 papers at national and international levels. His an e-maintenance platform, In: Preprints of 1st IFAC
research interests are in industrial engineering, with special workshop, A-MEST10, advanced maintenance engineering,
concern to maintenance management and industrial plant services and technology, Lisboa, Portugal, 12 July.
automation. Garg, A. and Deshmukh, S.G., 2010. Engineering support
issues for flexibility in maintenance. Asia Pacific Journal of
Marketing and Logistics, 22 (2), 247270.
Gomez, J.F., et al., 2009. Outsourcing maintenance in
services providers. In: A. Martorell, et al., eds. Safety,
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