RECENT TRENDS IN MAINTENANCE MANAGEMENT

IMPORTANCE OF THE PREVENTION MAINTENANCE IN

DECREASING QUALITY COSTS
Case study at Libyan Iron and Steel Company
Ali Al-buzidi
Faculty of Engineering, Elfathe University- Libya
Albuzidi@yahoo.com
Ali Shetwan Ibrahim Badi
Higher Institute of Industry Faculty of Engineering, 7th October University
Ali_shetwan@hotmail.com ibady@hotmail.com
Fax.: +218 51 615314

Abstract
In the last few years, the international competition becomes an important factor in the
industry, which has affected their shares in the market. This is clearly seen in companies
whose products have low quality from customer's point of view. Therefore, the customer
demand for high quality products leads to huge investments in quality control programs.
Consequently, those programs will create additional costs. However, the mangement
should have considered these costs and their causes. One of these costs is failure cost,
which is related to the preventive maintenance.
Therfore, this paper focuses on the quality costs concept, its objectives, types, categories,
and the preventive maintenance. Thus, the paper carried out a case study in order to reduce
the quality costs.
The rolling bars and mills plant, at Libya Iron and Steel company has been taken as case
study for this work. This paper presents many results and recommendations including the
evaluation of the current prevention maintenance, and the issues a raise from lake of
execution plan and the shortage of spare parts, training programs and skills. This increases
the quality cost involved including the failure cost (down time, down grade product,
scraps, rework, … etc). The paper also include recommendations regarding the importance
of the use of the quality cost system as a tool of production operation deviation detection,
and also express defects in term of money to bring attention of the decision makers to the
importance of the prevention maintenance.

1. Introduction
Quality costs are the costs associated with preventing, finding, and correcting defective work.
These costs are huge, running at 20 %- 40 % of sales. Many of these costs can be
significantly reduced or completely avoided. The prevention maintenance can be used as a
tool to decrease these costs (failure costs) to the minimum. Also these costs can be used as a
language of money to impact on upper management, to make right decisions.

1.1 Quality costs:

The term "quality costs" had different meanings to different people. Some equated "quality
costs" with the costs of attaining quality, others equated the term with the costs of running the
quality department. The emerging interpretation of the quality specialists has been to equate
"quality costs" with costs of poor quality (mainly the costs of finding and correcting defective
work).
Quality costs: any expenditure made for the purpose of achieving or preserving quality in a
product or service.[3]

Al-buzidi, A., Shetwan, A., Badi, I. 1

Objectives of evaluation:
1. Quantify the size of the quality problem in language that will have impact on the
upper management.
2. Identify major opportunity for cost reduction.
3. Identify opportunity for reducing customer dissatisfaction and associated threats to
product stability.
4. Expand budgetary and cost controls.
5. Stimulate improvement through publication.

1.1.1 Categories of quality costs:

A) Internal failure costs: these are costs associated with defects that are found prior to transfer
of the product to the consumer. Examples of sub-categories[1]:
1. Scrap.
2. Re-work, repair and replacement.
3. Re-inspection and re-testing.
4. Downgrading.
5. Downtime.
6. Failure analysis.
B) External failure costs: These are costs associated with defects that are found after product is
shipped to the customer. Examples are[1]:
1. Warranty charges.
2. Complaint adjustment.
3. Returned material.
4. Loss of good will and sales.
5. Allowances.
C) Apprisial costs: These are the costs incurred to determine the degree of conformance to
quality requirements. Examples are[1]:
1. Incoming inspection and test.
2. In-process inspection and test.
3. Final inspection and test.
4. Product- quality audits.
5. Maintenance accuracy of test equipment.
6. Evaluation of stocks.
D) Prevention costs: these are costs incurred to keep failure and appraisal costs to a minimum.
Examples are[1]:
1. Quality planning.
2. New- products review.
3. Process planning.
4. Quality audits.
5. Supplier quality evaluation.
6. Quality training.

1.2 Prevention maintenance:

The prevention maintenance can defined as any planned maintenance activity that is designed
to improve equipment life and avoid any unplanned maintenance activity. The main reasons a
preventive maintenance program is necessary are[4]:
1. Increased automation.
2. Just-in-time manufacturing.
3. Business loss due to production delays.
4. Reduction of equipment redundancies.

Al-buzidi, A., Shetwan, A., Badi, I. 2

 5. Reduction of insurance inventories.
6. Cell dependencies.
7. Longer equipment life.
8. Minimize energy consumption.
9. Produce higher quality product.
10. Need for more organized, planned environment.
Higher product quality is a direct result of a good preventive maintenance program. Out of
tolerance equipment never produce a quality product. World class manufacturing experts
realize and emphasize that rigid, disciplined preventive maintenance programs produce high-
quality products. To achieve the quality required to compete in the world markets today,
preventive maintenance programs will be required.

1.3 Types of preventive maintenance

The various types of preventive maintenance are[4]:
1. Routine-lubrication, cleaning, inspection, etc.
2. Proactive replacement.
3. Scheduled refurbishing.
4. Predictive maintenance.
5. Condition- based maintenance.
6. Reliability engineering.
A good preventive maintenance program will incorporate all of these types, with the
emphasis varying from industry to industry and facility to facility. This list also provides a
progressive, step-by-step method of implementing a comprehensive preventive maintenance
program.
The preventive maintenance will reduce these costs:
1. Operator time loss.
2. Cost of repairing or replacing the failed part or component.
3. Maintenance cost.
4. Lost production or sales cost or both.
5. Cost of scrap due to maintenance action.
Most of these costs are self-explanatory, but the costs may still be difficult to calculate. One
of the largest intangibles is the price paid for late or poor quality deliveries made to a
customer. Lost business or unhappy customers can have a dramatic impact on future
business. A consulting group published figures showing in their client base that customers
lost because of poor quality can average as high as 10% of sales per year, couple this with
averages as high as 30% of the manufacturing budget going for quality problems and rework
and it becomes easy to stress the importance that preventive maintenance program can have
to quality.
The costs and savings of preventive maintenance are[4]:
A) The preventive maintenance increases:
1. Maintenance personnel costs.
2. Repair parts costs.
B) The preventive maintenance decreases:
1. Scrap/ quality costs.
2. Down time costs.
3. Lost sales costs
There are some indicators that show when a preventive maintenance program is ineffective,
among of them:
1. Low equipment utilization due to unscheduled outages.
2. High wait or idle time for machine operators during the outage.

Al-buzidi, A., Shetwan, A., Badi, I. 3

 3. High scrap and rejects indicating a quality problem.
4. Higher than normal repair costs due to neglect of proper lubrication, or service.
5. Decrease in the expected life of capital investments due to inadequate maintenance.
Each of the above indicators can be used as an argument for improvements in an existing
program or as justification for a starting a program. For example, if there is high wait time for
the machine operators when the equipment does fail, it indicates a major failure. Major
failures should be detected by a good preventive maintenance program before they occur.
Figure (1) illustrates the maintenance costs.

Total costs of preventive maintenance and operational losses

Costs as a result of breakdown, idle time,

over time and extra wear or damage due to
late repair
Costs of preventive maintenance rise linearly
with the amount in which it is apllied

Costs

The thin lines hold in case of a greater

efficiency of the maintenance service

Amount of preventive maintenance

Shift in optimal level of preventive maintenance as a result

of a greater efficiency of the maintenance service

Fig. (1) costs of malfunction and of preventive maintenance as a function of the

amount of preventive maintenance

2. Case Study
The designed capacity of Iron and steel company from liquid steel is 1,324,000 tons/ year.
The company uses the direct reduction method and the electric arc for steel production. It
utilizes the natural gas in production process to reduct the imported iron billets to produce
sponge iron.
The case study in this paper has been carried on the rolling bars and mills plant for three
consecutive years. The plant production capacity is 400,000 tons/ year. It consists of two
production lines with four shifts each. The raw material (billets) of the plant comes from steel
plant, and then a reheating process take place in the plant's furnace, then they are rolled and
shaped to produce bars, roads, and sections.

2.1 Preventive maintenance in the plant

The preventive maintenance in the plant, is represented by the following procedure[5]:
1. Routine, lubrication, cleaning, and inspection.
2. Annual maintenance of the plant.
But, there are obstcals, related to maintenance works, which decreases the efficiency of the
maintenance programs including the following[5]:
1. Shortage in data related to the maintenance, especially the data related the costs,
which ultimately affects the support of the upper management for preventive
maintenance provision.
2. Most of maintenance crew are local labor, but with low skills.
3. There are training programs, but some times they are not effective.
4. The support of upper management is usually for production sector more than the
maintenance sector.
5. Shortage in spare parts, and, some times, they use a low quality spare parts.

Al-buzidi, A., Shetwan, A., Badi, I. 4

2.2 Training programs
The company prepares an annual training plan. The following points have been noted on
2005 plan[7]:
 The expected number of training courses in year 2005 is (156) courses, with a rate of
(1261) candidates.
 The expected number of maintenance training courses in the same year is (23)
courses, with a rate of (391) candidate-week, which represent a (31 %) of the total
number of courses.
 The estimated cost of the maintenance training programs courses, with reference to
similar previous training programs is (97,000) L.D.

2.3 Production down time

Fig. 2 illustrates the down time that results from mechanical, electrical, and rollshop[6].

1200
1000
Time (hr)

mech. 800
600
elec.
400
ro.shop
200
0
0 1 2 3 4
years

Fig. (2) Production down time

The following points are noted:

1. The mechanical down time represents approximately 50 % of the total down time.
2. The total number of downtime represents a percentage of 21 % to 25 % from the total
available production time.
3. The down time cost is illustrated in Fig. (3), and the following notes is considered:
1. The cost range of miss roll and scrap from one to two million L.D. The
previous cost is considered to be high compared with annual sales.
2. The figure also shows that the higher cost from down time associated with
miss roll, scrap.
3. The higher cost is illustrated from shortage in preventive maintenance
implementation program.

16000000
14000000
12000000
costs, L.D.

scrap 10000000
missroll 8000000
downtime 6000000
4000000
2000000
0
1 2 3
years
Fig. (3) Scrap and down time costs

Al-buzidi, A., Shetwan, A., Badi, I. 5

3. Conclusion
The aim of this paper is quanitize the effect of preventive maintenance on the quality costs, to
bring the attention of the decision makers to the roll of preventive maintenance reducing the
total production cost. The cost of missroll and scrap has been noted that increased from year
to year. This indicates deterioration in preventive maintenance programs.
A number of important factors have been insigthed from different approaches including
personal interviews with managers, production engineers, studying annual reports and site
visits:
1. There are no organized data and information banks in the company, which affect the
flow of maintenance information between .
2. The maintenance information should be available to the cost and maintenance
departments in order to produce more effective reports to the decision makers.
3. The authors recommend the following points:
1. The company should promote the maintenance training programs, especially
those dealing with the preventive maintenance.
2. The upper management should support maintenance management programs in
the company.
3. The effect of down time could be reflected in delay of orders and/ or quality
down grade of products.

References:
[1] Juran, J.M, Gryna, "Quality planning and analysis", 3rd edition, McGraw Hill Book Co., Singapore, 1993.
[2] Juran, J. M, Gryna, "Quality control handbook", 3rd edition, McGraw Hill Book Co., 1974.
[3] Tylor, J. R., "Quality control Systems", McGraw Hill Book Co., Singapore, 1989.
[4] Wireman, terry "world class maintenance management", 1st edition, Industrial Press Inc., 1990.
[5] Interviews with production and maintenance managers.
[6] Annual Maintenance reports, Libyan Iron and Steel company
[7] Training program book, 2005, Iron and steel company.

Al-buzidi, A., Shetwan, A., Badi, I. 6