Reduction in maintenance costs as a result of introduction of a maintenance management system - a case study
1. BackgroundSince 2007 the building industry has been in turmoil. It started with a number of wrong decisions. It was then hit with the banking and mortgage crisis and now with a triple dip recession. This has also affected all cement manufacturers (with a few geographic exceptions). One of these manufacturers decided that rather than wait and see what happens, it will make more sense to address his major costs through a focused project. A quick Pareto analysis revealed that in most cases maintenance is the single most expensive and impactable cost that a cement plant has. However, merely reducing maintenance budget and cutting costs, without thinking of the impact, was not the answer that the manufacturer was looking for. He wanted a sustainable cost reduction without negative impact on manufacturing and reliability. For this reason, the client decided to seek external help in the form of consultants specialising in operations and maintenance change programs.
2. The Set Up - Maintenance System AnalysisThe project started with an analysis of current maintenance activities and a maintenance system in place. This meant reviewing: the spend, short and long term planning, preventative routines, condition testing routines, condition based maintenance, managerial behaviours, meeting structure, work order analysis, typical day for a mechanic and an electrician, operational maintenance KPIs, parts purchasing process, subcontractor usage and spend, in sourcing capability. The review took two weeks and resulted in a maintenance performance report showing major areas of concern that was demonstrated in increased costs. All of these could be traced back to a weak maintenance management system and weak management behaviour:
- Maintenance Planning was weak; this was done just before the work assignment which made it impossible for any work preparation and led to large amounts of lost time. In some cases the fitters and electricians had to wait for 60 minutes until the plan was made.
- There was no standard job times present on the work orders and the staff were not communicated time expectations for the jobs. This resulted in jobs taking considerably longer than necessary and negatively affected staff productivity.
- Management did not follow up and control performance on a daily basis. Jobs were done as and when they got done without understanding if any deeper issues were involved when the job to the expected standards.
- The collaboration between production and maintenance was limited
- There were no operational KPIs showing how good or bad the department was doing in terms of performance.
- Historical breakdown analysis was not being performed to understand where the majority of issues were created and why.
- Root cause analysis and FMEA were not performed.
- Although seen as important, preventative routines were often not carried out; this led to more frequent breakdowns.
- Subcontractors were used without first considering if the job can be done in-house; the cost was never seen as an issue.
- Some systems were exchanged before their life expectancy was met in order to stay on the safe side.
- There were no clear winter overhaul plans which led to over usage of subcontractors and unnecessarily prolonging the shutdown.
- There were no weekly /monthly maintenance spend reports or budget follow up, which meant there was no cost control, thus promoting "spending without thinking".
- Parts were purchased by the maintenance department without any involvement of the purchasing department which led to overspending, in some cases, of up to 15-20% of part value.
3. Developing a Solution - Making Operations and Maintenance Work TogetherThe improvement project run needed to be different than so many others done previous to that. It required management behaviour change, process change and a management system that empowered the management to have more control and a greater sense of responsibility for the work done. It also required a closer collaboration between production and maintenance to enable it to become a success. A multi-functional project team was put together, comprising of: consultants, production and maintenance staff, all working together to develop a brand new approach to maintenance through a maintenance management system. The system would define how the maintenance department will function, how it will track and control all maintenance activities and coordinate jobs. The idea was to change the organisation from a very reactive one to a proactive one, a world class maintenance department. To make the changes sustainable, all the implementation was done by the production and maintenance staff while the consultants provided the leadership. This also gave an additional hidden benefit, the start of close collaboration between production and maintenance. The team started by defining how maintenance should work in an ideal world:
- What information should they have and when?
- How should the meeting structure aid both production and maintenance?
- What is the role of supervisors and managers?
- How should leadership manage maintenance activities and maintenance staff?
- How should work progress be controlled?
- How should work preparation be conducted?
- When should subcontractors be used?
- What condition based monitoring should be employed and at what frequency?
- How should maintenance activities be planned and at what frequency?
- How should maintenance budget be controlled?
- What training should be given to management and staff?
- How should progression be planned?
- A new planning process
- Time expectation setting process
- Information requirements on the work orders
- Active management behaviour
- Operational KPIs
- Meeting structure and agendas
- Weekly spend review meeting
- Preventative program definition
- Spend prioritisation
4. Implementing a Maintenance Change ProgramThe implementation started with a communication drive aimed at all levels within the organisation. This was done to ensure that everyone was aware of the changes about to happen. Implementation itself was done in phases.
- Phase one involved active management training for all managerial levels.
- Phase two focused on meetings and organisational structure redesign.
- Phase three ensured that all planning related activities involved were performed as the model stated; this included plan and KPI visualisation.
5. ChallengesAs with all change programs, not everything went smoothly, some of the managerial behaviour changes were difficult to accept by members of staff. Supervisors that have been in the role for a long time did not understand why the follow up was necessary. They believed that the mechanics and electricians should be trusted to do their job. Implementing the idea of follow up required a considerable amount of personal coaching with each of the supervisors.
To begin with, planning as an activity was dismissed as impossible in maintenance and the idea of prioritising work orders was looked upon as comical. This was overcome by a public analysis of a month's worth of work orders. Indeed, it proved that these could have been planned out and only a small fraction of these were emergency jobs.
Similarly, the idea that there was not enough staff to do all the jobs without the help of subcontractors was proven as false.
- The project decreased subcontractor usage by around 45%
- Spare parts life expectancy was extended through better prevention and condition testing, allowing savings of around 13% on annualised spend
- The price paid for spare parts was on average reduced by 7%
- Winter overhaul time was reduced by19%
- Improved communication within the plant
- Less stress amongst all the staff
- Preparation and part kitting done in advance
Can similar maintenance management change program be implemented in other industries?In a word, yes. The type of maintenance management system developed here can be developed in other industries using a similar approach. The industry itself is not as important as the approach and attitude to a change program. Similar maintenance systems have been implemented by our consultants in food, pharmaceuticals and manufacturing industries, to name a few. Moreover, our consultants used the same approach when developing management systems in production, sales, warehousing and purchasing.
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Is implementation of a maintenance management system just a cost cutting exercise?No, it is not. Implementation of a management maintenance system delivers a different, more structured, way of working. The so called cost cutting is just one of the benefits of being organised. Please contact us to find out how we can help You.
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