
09
Aug
Selling Maintenance as a Profit Center
In: Articles, Asset Lifecycle Management, Cost, MRO, Planning and Scheduling
By: George Williams
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The best way to change perspectives is to show the entire organization how maintenance provides value.
By Joe Anderson | Oct 13, 2015
Throughout my years in manufacturing maintenance, I have faced situations in which my peers and managers above me have had no understanding of the value of maintenance. For a long time, I blamed them. As I have matured in my management journey, I have come to understand that it is my job to educate everyone, not just those for whom I am responsible, about maintenance’s true worth.
Example 1:
Cost avoidance related to a vacuum pump failure
When a vacuum pump failure occurred on a production line, the total cost associated with that failure was $9,523:
The awareness gap results from management having limited or no knowledge of the maintenance function and its ability to contribute to the manufacturing process; and maintenance personnel, managers included, having limited understanding of the business side of manufacturing. The result is that management and maintenance often are often unsure how they together contribute to the company’s success.
Your company’s maintenance attitude
- 1 vacuum pump = $2,700
- 3 hours of downtime = $2,250
- 1 hole in the wall repaired = $500
- Emergency weekend work = $4,073 (four support techs were scheduled, multiplied by two shifts to run new wire and fix conduit. This 64 hours of work multiplied by $57 per hour = $3,648 in labor + $425 in materials)
When I ask managers or hourly workers what their organization’s perception of maintenance is, I tend to get the same types of responses. I hear things like:
- Maintenance is a cost center
- Maintenance is a necessary evil
- Maintenance is the cost of doing business
- Maintenance personnel are firefighters
- Convenience is sold through a demonstrated or statistical approach to prove that a plant will be safer and will produce higher-quality product, resulting in less rework. Greater production efficiency means lower costs; lower costs gives us marketing advantage; marketing advantage and enhanced competitiveness can promote job security. You empower people to do what they know to do by providing the proper tools and removing obstacles to their getting it done.
- Process improvement is sold through less downtime. This means running to plan, which makes the production manager look like a superhero. Better asset use improves capacity, which means more volume, more profit, and more recognition. Also, less downtime results in less frustration, raising morale and helping to drive culture change.
- Financial value is sold through the freeing of cash flow, reduced costs, and higher profits. These all translate into two things: higher stock value and more capital for reinvestment into the company.
- Death: $4,538,000
- Incapacitating injury: $230,000
- Non-incapacitating evident injury: $58,700
- Possible injury: $28,000
- No injury: $2,500
- Dollars of maintenance spend to percent of RAV
- Dollars of inventory stock to percent of RAV
- Maintenance cost per unit
- Year-over-year utility spend.