Elevating Maintenance and Reliability Practices The Financial Business Case: Part 1

Elevating Maintenance and Reliability Practices The Financial Business Case: Part 1

Introduction:

In this inaugural issue of Uptime Magazine, it is my distinct pleasure to write this feature article that will attempt to put the technical and engineering aspects of maintenance and reliability into business terms – essentially into the context of a financial business case that is hopefully interesting and natural for the readers of this magazine and for the most senior-level executives in industrial corporations world-wide. Hopefully, this article will help you to make the translation and adjust your language, strategy and tactics to communicate to top executives and people not directly involved in maintenance, the tremendous business value associated with elevating maintenance and reliability practices in your company. In this article, I will discuss:

• The current state of maintenance and reliability, the level of awareness among business executives of financial business performance that can be achieved with top level reliability practices, and “what good looks like” in the few successful companies which have reached top quartile performance and enjoyed significant benefits


• Performance yet to achieve - even by the top performers


• Statistics showing the potential benefits in United States industrial companies and how that might extrapolate out to companies world-wide


• What the business case might be at your corporation

Current State, Awareness & What Good Looks Like:

As recently as five years ago, I think it is fair to say, there was very little awareness at the corporate executive suite level of the contribution to financial and business performance improvements that can come from improved levels of physical asset reliability. In addition, I think it is fair to say, five years ago we did not enjoy an accepted consensus among industry experts about what good maintenance and reliability practices look like. If we asked what are the characteristics exhibited by top performers who have increased operational performance of their physical assets - while reducing the overall cost of production (including reducing the cost of maintenance), we were likely to get varying answers depending on who was asked. In fact, as recently as five years ago, there were no true success stories in this arena. There were some spotty, incremental achievements, but no enterprise-wide success stories.

Today, although there are only a handful of companies that have, in fact, seriously elevated their maintenance and reliability practices, and improved business performance as a result, those few companies provide ample data that paints a very consistent picture of what good looks like and what results can be expected. Companies like Rohm and Haas, Allied Signal/Honeywell, Dofasco Steel, and, more recently, Cargill Corporation, among a few others, have made dramatic shifts in their physical asset management strategies that have driven significant financial results in many parts of their businesses. Several lessons should be taken from these success stories.

First, the characteristics exhibited by these “Early Adopters” are remarkably consistent regardless of the industry in which they operate. These characteristics generally but clearly show:

• Annual maintenance spend below 2-3% of Replacement Asset Value (RAV)


• Significant use of a variety of Predictive Maintenance (PdM) and condition monitoring technologies on the majority of the candidate equipment population


• LESS time-based, invasive preventive maintenance (PM) – less than 25% of the equipment population in a top performer is covered by time-based invasive PM