CHAPTER 2:

PLANT MANAGEMENT
2.1 Scheduling of Inspection and Maintenance
2.2 Record Keeping and Inventory
2.3 Spare Parts Management
2.4 Cost Control
Plant Management
PLANT

SYSTEM

HUMAN
 Plant Manager

Quality Stock Control &

Operation Safety Administration
Control Purchasing

Maintenance

Regular System
Maintenance Improvement

Instrumentation
Mechanical Electrical
& Control

6/08/2018 Suha Mt_July2018 3

 Plant Manager
 Who watch over and organize the daily operations of
manufacturing plants to make sure the plant is running
smoothly, quickly, efficiency and safety.

 Plant managers help develop budgets and write policies and

rules for the plant.

 Managers also hire, train, supervise and evaluate the lower-

level managers or supervisors who oversee
purchasing or obtaining raw materials, production or
manufacturing, and distribution or getting
the finished products to customers.
Plant Management
Management aspect include;
• Employee-HR
• System use (SCADA)-Engineering
• Technology use-IT (Information Technology)
• Safety
• Stock/warehouse/in out raw material, product-purchasing
• Account
• Quality-QA&QC
• R&D
• Production/process/mechanical/electrical/utility
How to be a good plant manager and
make a good plant management
system in your company/plant?
• GOOD TECHNICAL KNOWLEDGE
 Operational Excellence
 New product, Services and business Models
• GOOD ATTITUDE
• GOOD COMMUNICATION SKILLS
• EXPERIENCE
2.1 SCHEDULING OF INSPECTION
AND MAINTENANCE
The value of effective
maintenance
 Planning To remove as many
obstacles.
• The process of making
plans for something.
• The act or process of
making a plan to achieve To increase Importance
or do something uptime for of planning To reduce
the maintenance
production expenses
equipment

Less overtime pay and

contract craftspeople
 Scheduling

• Scheduling (who and when to do the job) is the written process whereby
labour resources and support equipment are allocated/appointed to specific
jobs at a fixed time when operations can make the associated equipment or
job site accessible

 Work can be scheduled up to that level when manpower

availability is known
 It can be day to day, weekly, monthly and yearly
Planning & Scheduling

 Maintenance work is efficiently organized and prioritized and

available resources-labor, materials , equipment and time – are
assigned to accomplish the tasks in the most efficient, timely and
economical manner.

 Effective planning should be done via planned, scheduled and written

work order.
 Planning Process
No. 1 Estimating Labor Hours
- Historical and experience

No.2 Providing information: sketches, prints and special tool

- details information-engineering, vendors and contractors

No. 3 Parts and materials needed

- available, pre-kit necessary parts, supplies, special tools
Planning sheet for larger jobs
No. 4
- forecast of labor, material, tools, job elements, time estimates, safety and
permit requirement, measurement actual cost, scope, location, priority, skills
and number of craft personnel
DEVELOPMENT OF WORK PROGRAMS
Because maintenance is managed by controlling backlog within established limits, the current
backlog upon maintenance crews must be calculated and analysed. A Work Program should be
developed for each maintenance team at least monthly.
2.3 SPARE PART MANAGEMENT
What is spare part?

A spare part, spare, service part, repair part,

or replacement part, is an
interchangeable part that is kept in an
inventory and used for the repair or
replacement of failed units.
 Introduction
• Spare parts must be monitored effectively.
• Keeping spare parts for major equipment is
essential to ensure a properly run
maintenance system.
• If the required spare parts are not on hand
when needed during regular maintenance
or repairs, plant downtime is resulted.
• Similarly, if too many spare parts are on
hand, the company will absorb excessive
costs to maintain the inventory.
The following factors shall be considered in any
spare part management system:

a) Spare Part List

b) Purchasing Method
c) Vendor
d) Plant Storage Capacities
 Spare Part List
• Spare part list is normally provided by the
equipment supplier, and further compiled
by plant maintenance engineer.

• Every spare part shall be assigned with

spare part numbers, which can be
identified and traced easily.
Purchasing Method

 Nowadays, there are many ways to purchase

spare part.
 Purchase can be performed directly via
manufacturers, through local agents or via
Internet.
 However, the big question is always when to
purchase and how many to purchase
EOQ (economic order quantity)
ROP (Reorder point)
Automatic Replenishment
 Economic Order Quantity
(EOQ)

Determine item desired in the maintenance inventory

Optimal order quantity

D= Annual demand (units)

S= Cost per order ($)
C= Cost per unit ($)
I = Holding cost/carrying cost (%)
H= Holding cost/carrying cost ($) = I x C
Holding/carrying cost

Holding costs are the additional costs involved in storing

and maintaining a piece of inventory over the course of a
year.

Lead Time
In purchasing, lead time is the estimated time between
ordering goods and receiving the goods
EOQ Model Equations
2 DS
Optimal Order Quantity  EOQ 
H
D
Expected Number Orders N 
EOQ
Working Days/Y
Expected Time Between Orders T 
N
D
d  D = Demand per year
Working Days/Year
S = Setup (order) cost per order
H = Holding (carrying) cost
ROP  d  L d = Demand per day
L = Lead time in days
 EOQ
Example
You’re a buyer for SaveMart.

SaveMart needs 1000 coffee makers per year. The cost of

each coffee maker is $78. Ordering cost is $100 per order.
Carrying cost is 40% of per unit cost. Lead time is 5 days.
SaveMart is open 365 days/yr.

What is the optimal order quantity & ROP?

 SaveMart EOQ

2 D  S
D= 1000
S= $100
C= $ 78 EOQ 
I=
H=
40%
CxI
H
H= $31.20

2 1000  $100
EOQ 
$31.20
EOQ = 80 coffeemakers
(optimal order quantity)
 SaveMart ROP
ROP = demand over lead time
= daily demand x lead time (days)
=dxl

D = annual demand = 1000 per year

Days / year = 365
Daily demand = 1000 / 365 = 2.74
Lead time = 5 days

ROP = 2.74 x 5 = 13.7 => 14 unit

Tutorial:
A = 1,000 units demanded (required) annually.
S = RM20 cost (average) per purchase order.
I = 20% of unit purchase price.
C = RM5 unit price.
Calculate EOQ?
A = annual demand in units (n)
S = cost per purchase order (RM)
I = inventory carrying cost (%)
C = the average unit price (RM)
Automatic Replenishment
 In general, spare parts are ordered based
on the quantities at store room.
 Reorder Points System (ROP) – A point
system which determines the criticality of
ordering spare parts based on existing
quantities in the store room.
 Once inventory level for a spare part falls
below the reorder point threshold, a
suggested reorder together with its
required quantities is generated
automatically via a computerized system,
which in turn creates a requisition.
 This system will save time and prevents
the delays and errors that can occur with
manual purchasing processes.
 Vendor Service Levels

 Buying the spare parts from the right sources

is equally important
 Recording supplier services and performances
within the inventory record will help us to
identify the most efficient, dependable, and
cost-effective vendors.
 Preferred suppliers can be selected based on
their previous performances such as historical
lead times, pricing, number of short- or over-
shipments, quality of goods received,
frequency of backorders, etc.
 Storing Capacity

As mentioned before, buying too many spare

parts will result tremendous space and cost to
maintain them. There are 2 ways to monitor this
situation: just in time method and vendor
managed inventory.
 JIT : Just In Time Method
Just-in-time (JIT) replenishment is a popular
inventory control method. It enables minimal
inventory being stored in the warehouse and
replenished only when and as needed just in
time.

This method results significant cost savings, but

high risks involved. Any best replenishment
formulas cannot predict emergency cases such
as vendor is going out of business, a carrier
going on strike, or a sudden shortage of raw
materials. This will prevent equipment from
being repaired in a timely manner or
continuous running of a production line.
.
Vendor-Managed Inventory (VMI)

We let the responsibilities of keeping the

spare parts to the suppliers. They will keep
the inventory until needed. This strategy
will reduce inventory and administrative
costs, while meeting the demand for parts
and equipment.
2.4 COST CONTROL
 Introduction

 The maintenance budget are necessary for running

the maintenance department.
 Since facilities become automated and equipment
more complicated, maintenance costs become a
larger part of the costs of operations.
 Budgets for cost centers, profit centers, single or
combined programs, new technology applications,
selected customer sector activities and other
specialized budgets.
 Maintenance budget should be tied with the
overall organizational objectives.
 Benefit: avoid maintenance shortfalls that might
impact production or service costs.
 The Chart of Account

 The costs of goods and services listed in the

budget under a number of categories called the
chart of accounts.
 Each categories is called a line account, a line
item or simply an account.
 Each account defines an individual type of
expense such as labor, salaries, fuels, electricity,
lubricants and so on.
The Operating Expense Statement

 A report that produced each month or

accounting period.
 The report are useful as a tool to monitor
and control costs of selected line items.
THANK YOU!!