Things to Think About and Do in 2012: Advantage

Below is an excerpt from ReliabilityWeb.com's E-Book: Things to Think About and Do in 2012.

The simple reality is that maintenance departments are cost centers. This means maintenance costs the company money and does not provide a value-added service to the end customer. In short, maintenance departments do not create salable product, yet your job exists solely to support salable product.

Therefore, maintenance must be managed as a competitive advantage. By changing organizational thinking to view maintenance as a competitive advantage, more innovative ideas are implemented. To affect this shift, maintenance is measured by the value produced. First run output becomes a direct measure of equipment capability, therefore reliability.

Reliability value is measured by the maintenance cost of the best sustainable run output. Sustainable output length is organization dependent; common timeframes include 90 shifts, 3 months, outage to outage.

Reliability Value

Best 90 shift output=9,000 widgets

10 hours/shift yields=10 widgets/hour

Maintenance costs for timeframe= $500,000

Maintenance cost/widget= $55.56

Whenever maintenance costs are below $55.56/widget, the company sustains a competitive advantage. That advantage can be used in profit taking, or in lowering the product price to gain market share.

Maintenance decisions are now based on cost per widget. Consider the decision to enter into condition-based monitoring (CBM) at monthly costs of $10,000. To be advantageous, the program must guarantee an additional 180 widgets ($10,000/$55.56 dollars/widget). At 10 widgets/hour, the program must improve equipment uptime more than 18 hours/month.

Under cost center thinking, a $10,000/month CBM program would be an unlikely approval. However, when viewed under the competitive advantage model, it can be approved because there is a tangible measure of success—hours of equipment uptime.

—Kate Kerrigan