pL. ppt Maintena 1 Paes la " a MatLibrary of Congress Gataloging-in-Publication Data Wireman, Terry. Benchmarking best practices in maintenance management / Terry Wireman, pem ISBN 0-8311-3168-3 (hardeover) 1. Plant maintenance. 1, Title. ‘TS192.V548 2003 638.202--de21 2003051106 Benchmarking Best Practices in Maintenance Management Interior Text and Cover Design: Janet Romano Managing Editor: John Carleo Industrial Press Inc. 200 Madison Avenue New York, New York 10016 Copyright © 2004. Printed in the United States of America. All rights reserved. This book or parts thereof may not be reproduced, stored in a retrieval system or transmitted in any form without the permission of the publisher. 987654321Preface Foreword Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12 Index Table of Contents Analyzing Maintenance Management Benchmarking Fundamentals Maintenance Organizations Maintenance Training Work Order Systems Maintenance Planning and Scheduling Preventive Maintenance Maintenance Inventory and Purchasing Management Reporting and Anal World C! Integration of Maintenance Management s Maintenanee Management Benchmarking Best Practices in Maintenance ManagementPreface Maintenance. Many times the word is viewed with a negative at- titude. In almost all organizations, the maintenance function is viewed as: © a necessary evil, © a cost, * insurance a disaster repairing function ¢ prima donnas Because of this attitude, too little time or effort is spent on try- ing to control maintenance activities and costs. In the past, mainte- nance has received little budgetary attention other than a nominal increase or decrease from year to year. Most organizations today are trying to increase profitability, Because maintenance expenditures make up a percentage of production or occupancy costs, attention is being turned to financial accountability for maintenance expen- ditures. As organizations audit their maintenance expenses, they find a sizable amount of money spent with little management con- trol, Proper management controls must be applied to maintenance if costs are to be curbed. But to successfully control maintenance, proper management policies and practices must be instituted. Again, many organizations have uied to use standard production or facilities-oriented methods to control maintenance. This has not and will not be successful. Maintenance is a unique business process. It requires an ap- proach that is different from other business processes if it is to be successfully managed. The purpose of this book is to present in- sight into what is required to manage maintenance. The book ean- not provide a complete answer to every maintenance management problem. However, it will provide a framework with options, allow- ing maintenance decision makers to select the most successful way to manage their business.Foreword Status of Maintenance in the United States According to estimates, over 200 billion dollars were spent on maintenance in the United States in 1979. This is a sizable figure in anyone's estimation. However, more disturbing than this amount is the fact that approximately one-third of the total was spent unnec- essarily; it was wasted. In subsequent years, there have been no sig- nificant changes in maintenance policy, indicating the waste trend is probably still about one-third. The largest change in the main- tenance costs is the amount. Since 1979, maintenance costs have risen between 10% and 15% per year. Maintenance expenditures in the United States, therefore, are probably now over a trillion dollars per year. If the waste ratio is holding steady, and there are no indica- tions that the ratio is changing, companies are likely wasting today many times more than what they were spending on maintenance 25 years ago, as illustrated in Figure P-1, Where do these wastes occur in maintenance? How can they be controlled? These questions can best be answered by looking at some statistics. %. Maintenance Cost Escalation 2000 re 1800 Toy 800/] Sat ca Eat ie “ oem Figure P= viiACTUAL HANDS-ON WORK Figure P-2 Derren merce 1, Fewer than 4 hours per day (out of a possible 8) are spent by maintenance craftsmen performing hands-on work activities (See Figure P-2). This fact is even more alarming: In the majority of maintenance organizations, these craftsmen spend as low as 2 hours per day performing hands-on work. These individuals are not lazy, nor are they shirking their job responsibilities. Instead, they are not provided the necessary resources by management to perform the assigned job tasks. Providing these resources becomes important to increasing maintenance produetivity and producing a substantial maintenance labor savings. When we view maintenance salaries as a resource for which we are paying approximately $20.00 per hour, yet we are utilizing the resource at only a 50% level, we can see a tremendous cost waste. Methods that may be employed to increase labor productivity will be explained in chapter 6. 2. Only about one-third of all maintenance organizations employ a job planner to schedule and supervise maintenance activities (see Figure P-3). Most experts agree that better use of planners provides one of the largest potential areas for cost savings in maintenance. ‘These planners help insure that maintenance work is performed ef- fectively and efficiently. Estimates show that planned work versus unplanned work may have a cost ratio as high as 1:5. Performing a $100 planned job could save as much as $400 if the same job was unplanned. We will explore maintenance planners, their qualifica- tions, and assignments in a later chapter. viiiMAINTENANCE PLANNERS PERSPECTIVE TN) Figure P-3 NO PLANNERS 3. The majority of all maintenance organizations either are dis- satisticd with their work order systems or do not have them (see Figure P-4). The presence of a work order system is one of the most important indicators of a maintenance organization's status. If a maintenance organization does not have in place a work order om that works correctly, it is impossible to measure or control maintenance activities. The importance of a maintenance work or- der system, how to set one up, and how to use the system will be diseussed in chapter 5. 4. Of the one-third of all companies that have work order sys- tems, only about one-third, or approximately 10 percent of all orga- nizations, track their work orders in a craft backlog format (see Fis ures P-5 and P-6). The craft backlog allows managers to make logical WORK ORDER SYSTEM ANALYSIS ReenaCRAFT BACKLOGS MAN-HRS./CRAFT forces Figure P-5 staffing decisions based on how much work is projected for each craft. It provides a departure from the “I think I have enough craft technicians” or “let’s work overtime to get caught up” modes that most organizations find themselves in today. Being able to justify employment levels to senior management is a necessary function of good maintenance management. We will discuss backlogs and their significance in chapter 3 5. Of the one-third of all companies that have work order sy tems, only one-third compared their estimates of the work order |: bor and materials to the actual results (see Figure P-7). Therefore, only about 10% of all organizations carry out some form of perfor- mance monitoring. Successful maintenance management requires performance monitoring. Proper methods, including maintenance analysis, will be covered in chapter 9. 6. Of the companies with work order systems that allow for feed- back, only one-third, or about 10% of all companies, perform any BACKLOG MEASUREMENT Figure P-6Ale). ae). ia)-iag COMPLETION ANALYSIS Opt ee Deets) Peet meaieks See at Figure P-7 failure analysis on their breakdowns (see Figure P-8). Most of the other companies just change parts. For an operation to be cost ef- fective, good practice in failure analysis must be followed. We will discuss this topic in chapter 7 7. Overtime, another key indicator in the United States, averages about 14.1% of the total time worked by maintenance organizations (sce Figure P-9), This figure is almost three times what it should be. Higher levels of overtime indicate the reactive situation that is stan- dard in the maintenance process. Reducing overtime is essential if a maintenance organization is to be truly cost effective. Proven meth- ods for reducing overtime will be explored in chapters 6 and 7 RCA esta ee eo ert ee eee ce ey eet downs, oe Figure P-8 SaOvertime Lee Arar 14.1 percent. Best reetrekeun etc ee tues Poe oni) Figure P~ 8. Preventive maintenance, another major part of any successful maintenance program, currently satisfies the needs of about 22% of the company’s surveyed (see Figure P-10). This low level suggests major problems for the maintenance organizations. Without suc- cessful preventive maintenance programs, maintenance can only react to given situations. Preventive maintenance allows the organi- zation to be proactive. While preventive maintenance means more planning, it also leads to reduced maintenance costs. Over three- fourths of the organizations show needs for major improvements. Methods of implementing and improving preventive maintenance PREVENTIVE MAINTENANCE PROGRAMS Figure PIO Roman xiiFigure P-11 programs will be discussed in chapter 7 9. Related to preventive maintenance, almost three-fourths of the organizations have some form of lube routes and procedures (see Figure P-11). While this fact seems to be positive on the surface, it is not. Too many organizations believe that preventive mainte- nance is nothing more than lube routes and procedures. Therefore, once they have these developed, they stop further maintenance ef forts. However, preventive maintenance encompasses much more than lubrication routes. Additionally, the lubrication position (of- ten called an oiler or lubricator) is generally an entry-level posi- tion. The technician's lack of proper skills and training often result in substandard performance of the lubrication program which, in turn, leads to excessive breakdowns, even though the company has COORDINATION PROBLEMS FOR PREVENTIVE MAINTENANCE Figure P-12 on aaaMaintenance Spare Parts DUET iacy Pou uaa 40 to 60% of the total Pinu ecmet| Figure P-13 a lubrication program. To be successful, maintenance organizations must go beyond the preliminaries and fully develop their preventive maintenance programs. 10. An additional fact related to preventive maintenance is the lack of coordination between operations/facilities and maintenance. Almost three-fourths of all organizations experience problems co- ordinating preventive maintenance with the operations/facilities group (see Figure P-12). The problem lies with communication. Either the maintenance organization has not effectively communi- cated the need for the preventive maintenance or the operations/ facilities group is not educated properly about the benefits of pre- ventive maintenance. Good, credible communication must be estab- lished if preventive maintenance is to be effective. 11. Second only to the cost of maintenance labor is the cost of maintenance materials. Depending on the type of operation/facility, maintenance materials ean range between 40% and 60% of the main- tenance budget (see Figure P-13). To successfully manage mainte- nance, materials must be given close scrutiny. The details of proper maintenance inventory management will be explained in chapter 8. 12. Many companies try to remedy maintenance materials prob- lems by overstocking the storeroom. This remedy creates its own problem because most companies do not then take into account the fact that inventory carrying costs are over 30% of the price of the items per year. For example, the cost of carrying a $1 million inven- xivtory is over $300,000 per year. To reduce these costs, inventories must be kept low while still providing a satisfactory level of service and avoiding stock outs, 13. Another concern regarding maintenance materials is that maintenance is only responsible for its inventory in about half of all organizations, The other half of the time, someone else is telling maintenance what to stock, how many to stock, and how many to issue. It is the classic example of a support function telling their cus- tomers how to run their business. 14. While most maintenance managers will agree that mainte- nance costs are high, they don’t know how high they are for their own site. In most cases, the costs of maintenance repairs are caleu- lated as the cost of maintenance labor and the maintenance materi- als to cffect the repair. [lowever, that calculation leaves out the cost of lost production. This cost may range from two to fifteen times the cost of the maintenance repair (see Figure P-14). The average is usually 4:1, For example, a maintenance repair may be $10,000 in labor and materials, but the actual cost is really closer to $50,000 once lost production is factored in. Is it any wonder that mainte- nance costs are coming under closer scrutiny and control? Over the next several years, annual maintenance costs are likely to oxeeed the amount spent on yearly new capital investment. With the seru- oe Maintenance costs compared to Downtime costs Danie erage 4:1 compat OEE eee oer rr range from 2:1 to as much as 14:1 — with Eons Eau ey te ~ lee Tenis a Figure P-14 xvtiny given to yearly capital expenditures, it is indeed no wonder that maintenance expenditures are being closely examined. This foreword has looked at the general condition of the mainte- nance function in facilities and industry today. Through « detailed set of questions, Chapter 1 provides an opportunity to analyze the specifies for caclSompaay, The survey will enable a company to closely scrutinize its maintenance/asset management function.