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Going beyond the repairable asset part #2 - how to balance cost with returns...

25 January 2013

The value and economics of plant reliability on a macro basis is something that is being missed by production/maintenance seniors, site principals and financial personnel

The value and economics of plant reliability on a macro basis is something that is being missed by production/maintenance seniors, site principals and financial personnel. In a series of informative articles Europe's leading MRO service and supply specialist ERIKS looks at where the gaps are and how addressing them can transform the bottom line - this is the second part in the four part series.

The first part of this series looks at using experienced suppliers with a breadth of knowledge; experience and resources to bridge the knowledge gap and benefit both parties by delivering real-world positive changes. The piece also establishes that improvements have to be tailored to the specific needs of an individual management team or the opportunities for improvement that are unique to that site. Whether it is manufacturing rocket fuel or storing frozen food however, the savings are there to be made.

Having looked at a host of examples that illustrate how looking beyond the individual repairable asset can make a huge difference to a company's performance, what is the next step?

Sourcing outside help is the next logical step, this however raises a thorny question for the maintenance team; how can the additional expenditure be justified and how to balance expenditure with returns? It is all well and good recommending the use of outside professionals to find improvements beyond the repairable asset, but how are they measured and what can each service be expected to achieve.

There is a cost of carrying out maintenance which is generally the budgeted cost of the maintenance team, resources, stock of spare parts and the purchase cost of additional new materials and parts, including subcontracted service costs; these are quantifiable, but what is far more difficult is calculating the benefits of effective maintenance because often everybody else benefits except the maintenance team.

The balance has to be right between spending money on predictive maintenance and a reliance on reactive, corrective maintenance. The graph below shows how equilibrium is achieved in principle:

[Graph - Predictive maintenance and a reliance on reactive, corrective maintenance]

ERIKS as a company is committed to helping maintenance teams get the most from their budget while also demonstrating the value that is gained as a result of the programme. One of the methods for calculating the overall benefits of maintenance measures is the practice of signing-off cost savings.

Effective signed off cost savings should include: The repair cost of a breakdown that would have happened had a failure occurred (one that was predicted, by vibration analysis on a bearing supporting a critical piece of plant equipment for example, one that if it were to seize would stop and entire process site). The maintenance cost saving i.e. not having to perform on-going maintenance checks of the critical piece of equipment regardless of its status, because it is unknown other than at the point of checking.

Energy savings due to the fitment of more efficient electromechanical power transmission equipment or the reduction in motive power required as a result of reduced friction or improved balance. And of course the cost of lost production due to planned or unplanned downtime - the cost of unplanned downtime is usually far higher due to lost production that was expected and the knock-on effects it has for the rest of the business. Maintenance teams have to be able to justify investment made by the company in them and their systems and this is an ideal way of achieving it.

A great example is the implementation of a critical plant survey, this practice records every piece of electromechanical equipment on a site and grades it based on its importance in the effect a breakdown would have on product, including the speed of repair or replacement. Having surveyed the site, the wear items found to be of most importance to the site are then monitored, either continuously by fixed sensing systems or periodically by mobile sensing devices.

A recent project undertaken by an ERIKS maintenance team at a large pharmaceutical production site in the UK identified remedial maintenance work that was carried out without having any effect on production that resulted in an overall cost saving of £78,000, the investment in the survey and the work carried out, including labour and components was a fraction of that amount, but without the full calculation the pro-active work carried out on a plant that on the surface looked to be OK would have been hard to justify.

A useful method of quantifying the positive effect of maintenance best practice is to apply an overall equipment effectiveness (OEE) calculation, a vital component of Lean Manufacturing philosophy. OEE provides a methodology for calculating the overall effectiveness of the equipment deployed by measuring and then optimising the efficiency of a machine's performance or that of a whole manufacturing plant.

The OEE score is made up of three components: Availability (A) - percentage of uptime of each asset, Performance (P) - percentage throughput against target, and Quality (Q) - percentage of scrap or waste. When multiplied together A x P x Q = OEE and measures each different form of wastage in any manufacturing process.

Once the OEE calculation has been made, a gap analysis is undertaken between the current plant efficiency and the desired target or benchmark. The necessary investment and optimisations can then be undertaken and progress monitored through the Overall Equipment Effectiveness calculation.

It is possible to strike the right balance between pro-active maintenance and traditional reactive maintenance, and for maintenance teams to prove both the efficacy of this approach and the overall value to a business. This goes to underline that finding the right suppliers and making best use of internal resources, while monitoring and reporting on cost savings as well as expenditure is also vital to successful use and implementation of the latest predictive techniques that are available.