Maintenance Managers in the Pursuit of World-Class Performance

What? MAINTENANCE AND QUALITY ?

INTRODUCTION

Maintenance and quality are two terms usually not associated.  Normally, these terms are only mentioned together when equipment condition effects scrap rates.  However, if maintenance managers become familiar with historical quality philosophies, there are some lessons that can be applied to maintenance.

As the quality movement grew, many companies mistakenly pursued exceedingly lofty quality goals.   Excessive cost of mistakenly set high quality levels resulted in the inability to compete in the marketplace.  The cost to produce excessive levels of quality eliminated profitability.  There are levels of quality for which the customer will not bear the cost.  Customers that purchase custom-tailored clothes are willing to pay much more for quality than the customer that is purchasing off-the-rack clothing at a discount store.

Quality definitions then expanded to include customer needs and wants.  Quality grew to be defined as the precise product the customer desired.  The customer (marketplace) defined the level of quality, the acceptable price, and the exact availability of the product.

What if there was a tremendous product developed, with perfect quality, and great availability (timing) that the customer was not aware?  Would that mean that it was an inferior product?  The customer could not identify something they did not know existed.  The introduction of cell phone technology is such an example.  It became apparent that allowing the customer to define quality, in many cases, would require the quality provider/creator to educate the customer.

MAINTENANCE PARALLELS

Contrary to many articles about maintenance, most companies view production/operations as the sole customer of maintenance. The end product user (product consumer) is only viewed as a customer of maintenance when asset condition affects final quality. This is the business environment in which maintenance managers attempt to improve equipment effectiveness and reliability through the maintenance function.

To excel in these organizations, maintenance managers need to recognize that the production/operations customer must be educated similarly to the cell phone example mentioned previously. Most production/operations managers either have a financial or productions background. There is not an understanding of the maintenance function. The maintenance manager must strategically educate the customer in ways that do not seem obvious. Opportunities must also be recognized as they arise.

Ultimately the definition of quality will be high equipment reliability at low cost. The magnitude of reliability and cost depends on the existing manufacturing environment of operations. The skilled maintenance manager will need to choose the right strategies for the existing manufacturing environment.

RELIABILITY IMPROVEMENT

For the maintenance function to improve reliability and lower costs, the maintenance function must move from a highly reactive organization to a proactive organization. Work identification, prioritization, scheduling, and planning are processes that move maintenance toward being a proactive organization. Various tools to use to be more proactive include preventive maintenance, predictive maintenance, TPM, and conditioned-based monitoring to name the most popular.

As these various practices are implemented, the maintenance department creeps toward a more proactive mode. Reliability will increase ever so slowly. Initially, investment in equipment will increase, and then decrease as it is being restored to a more reliable condition. Operations will notice the improvement. At the same time, the maintenance manager should be educating the production/operations customer.

Amazing as it may seem, the operations/production function will unknowingly work to hinder this maintenance improvement. The greater organizational culture has not been influenced by the maintenance department’s move toward being proactive. Production/operations still operates in a highly reactive mode. Maintenance is expected to break prioritized work schedules possibly resulting in future emergency work because of operation’s (production’s) failure to plan proactively. The maintenance proactive sub-culture is overwhelmed by the highly reactive organizational culture minimizing maintenance gains. This makes it imperative for the maintenance manager to educate the production customer.

EDUCATING THE PRODUCTION CUSTOMER ABOUT MAINTENANCE QUALITY

In most operations, the maintenance manager is alone on an island. Operations management is generally unfamiliar with maintenance management. Maintenance is viewed as a necessary evil. Maintenance only adds overhead and should be minimized to increase profitability. The maintenance manager must be resourceful.
Educating the customer needs to be done very tactfully. It must be done in a very clear and concise manner. Operations need to be able to see the cause and effect relationship between a proactive maintenance organization and a reactive operations organization. If this is done effectively, the maintenance department will create a positive environment and drive organizational change toward a more proactive culture.

Many times if maintenance is moving to a new proactive process that requires additional resources, a business plan and justification will need to be submitted to management. This should include a PowerPoint presentation. Return on Investment (ROI) calculations based on the many estimates available in various maintenance writings should be included. Be sure to under promise on financial return estimates so actual results are over delivered. This presentation is an excellent opportunity for training. However, if this initial way to training is not a viable option for the current situation, there are other subtle opportunities for educating the operations/production customer. If there is no effort to educate the operations/production customer, any maintenance gains will be minimized.

OTHER CUSTOMER TRAINING VENUES

Most operations have daily morning manufacturing meetings. Manufacturing schedules, quality problems, production results, manpower shortages, and production efficiencies are often discussed. In many organizations report boards are used to display pertinent daily data. In some organizations, although maintenance attends these meetings, only breakdowns are discussed. In other organizations, maintenance does not attend; it is only a production meeting.

This meeting is an excellent opportunity for a maintenance manager to educate operations. If the meeting uses a reporting board format, then maintenance should create an effective reporting board. If report boards are not used, the maintenance manager could drive organizational change by starting one. Naturally, the operations manager/plant manager should give his blessing to any changes in reporting boards or additional reporting from maintenance. This is his meeting. An operations manager that would refuse more accurate information for decision making is not deserving of his position. This would be the only impediment to educating the operations customer. In other organizations that use a paper report format, the maintenance manager should use the same strategy only on a published report.

As with all organizational changes, the change will not be welcome. The maintenance manager could receive some negative feedback. As the maintenance report shows cause and effect relationships, other departments will eventually be singled out to improve. However, as the maintenance manager is recognized for driving positive organizational change, many career opportunities should become available in good organizations.

MAINTENANCE TRANSPARENCY AND THE DAILY MEETING USING KPIs

The maintenance organization will have to be totally transparent in the daily report. This is a calculated risk. There could be a downside for the maintenance manager if operations management does not recognize the positive change that is taking place. Reporting just the facts, even if they are bad, does not show departmental failure. Corrective actions and remedies should become apparent. This drives continuous improvement. Key performance indicators (KPIs) that do not do this are useless. Occasionally KPIs will need to be redefined to drive future improvement. What KPIs should be used to create transparency of the interdepartmental relationships and failures will become apparent to operational managers?

The first and most important KPI needs to show maintenance resource use efficiency. One that is very effective at displaying this message is:

The target for efficiency should be 80%. This is based on a rule of thumb for project management that suggests people are only able to work 80% of the time because of breaks for lunch, bathroom use, and other normal personal needs. Unplanned/unscheduled/emergency work that is performed will decrease this figure. This directly shows the effect of highly reactive demands on proactive work plans.

Naturally, emergency breakdowns will always take precedence, but this provides the maintenance manager a forum in the production meeting to daily show the cause and effect. Include a comments column on the daily report board. Notes on cause and effect can be included to indicate specific reasons why efficiency is lower. Specifically performed work off-of-schedule can be listed. The exact percentage change in the efficiency rating can be documented. Break downs and safety issues should be the only acceptable reason to break a maintenance work schedule.

In many organizations, operations will expect maintenance to forsake a work schedule to do work that was not scheduled as it should have been because lack of operations planning. Examples might include: production requesting maintenance to perform production work; and maintenance to stand and observe an operation for long periods of times because of production problems that are not maintenance related. Rush work such as building tooling that was requested only a short time before it was needed even though the production schedule has been set for a week. This failure to plan moves this work to emergency work at the last minute. It exposes operations to future downtime issues. Maintenance is not able to complete the work assigned from their prioritized work schedule in order to respond to operations unplanned needs. This is also something that can be included in the comment column.

Start up efficiency:

A start-up efficiency KPI is also very useful. Tracking operational effective efficiency (OEE) for the first few hours of production is excellent for indicating how efficiently maintenance preps operations for production. OEE is calculated in the following manner:


 OEE =

This should be tracked in ways that are applicable to the individual situation. It is amazing how focusing on this KPI improves results. It focuses the production meeting on root cause improvement. Maintenance will naturally work to improve this since it is being measured. The production meeting will no longer blame maintenance for all start-up issues. Production problems in startup will become apparent.

Work Backlog:

Another valuable KPI is work backlog. This backlog list should be broken into reliability work, work that can be performed during production, all other work, and a backlog total that is the sum of these sub groups. Reliability work should include the following work order types: preventive maintenance, predictive maintenance, TPM identified work, PM identified work, and PDM identified work. Work that can be performed during production is usually all the general repair work that needs to be scheduled but is not pressing and can be done during production. All other work includes everything else. These backlog divisions can be changed to meet specific requirements but the most important classification is reliability. This classification is the work that needs to be performed to increase or maintain asset reliability. It is important to track, identify, and communicate reasons for negative changes in this specific class of work orders. If trending is negative, operations then has the ability to make decisions to enable maintenance to correct this trend.

Backlog should be identified in maintenance department capacity days. A capacity day is equal to the hours of work a day the department can complete in a planned manner. As a result the reactionary rate of work performed by maintenance must be factored into this calculation. If the department has available 100 hours a day and the average reactionary work rate is 20%, then the department capacity day is 80 hours.

Naturally, targets should be set for backlog. Reliability work order backlog should be less than 7 days. In some cases this target value should be less to avoid breakdowns for identified problems. Work that can be performed during production should be at least 7 days and not more than 14. If work during production is too low, maintenance personnel will have nothing to do. If this value is too large, work order input will lag. Operations will believe it is useless to initiate work orders as they seem to be ignored. Other work order backlog targets can be set at a point that best fits the current situation. The total work order backlog should be two to three weeks as a general rule. This number is used to define maintenance staffing. The work backlog sub-groups will identify where the staffing is needed.

The maintenance manager will also be able to ask operations to initiate new work orders for during production as backlog decreases. Again a comments column can give insight as to why reliability work orders become overdue.

As the cause and effect of disciplined work order execution becomes apparent to operations, a partnership should start to develop. Opportunities to release equipment to maintenance for reliability work should provide value to operations as it will make the equipment more reliable. The education effort of the customer will start to show dividends.

Reactive Work:

Another KPI that is useful in showing departmental proactivity is the reactive and proactive work percentage. All work that is scheduled by the scheduler from the prioritized work order backlog list is proactive. It has been identified ahead of time and scheduled in a disciplined manner. All other work that does not go through the scheduling process is reactive work. This definition infers that any work that requires a maintenance person to drop or adapt his schedule is reactive work. Generally, all reactive work orders are written after the fact and do not have CMMS numbers on them. This fact can be used to get data for this KPI. These should be calculated in the following manner:

These figures should have a daily and rolling-year-to-date component. Goals for these should be based on your operation, but generally world class organizations do 8% or less reactive work. If the operations culture is such that they believe they can have maintenance personnel do whatever they desire at the time, the effect on proactive work will readily show this. Naturally a comments column can be used to define what caused maintenance personnel to break their schedule. Again breakdowns and safety issues should be the only satisfactory reason. It must be stated here that maintenance is not refusing to do work for operations; maintenance is just requesting operations to work in a controlled and planned manner. This planning will give maintenance advance notice of support needs so they can be planned.

To this point all KPIs discussed are calculated and updated daily. There are a few KPIs that should be displayed weekly.

Standard Reliability Work Completions:

Weekly KPIs should include completion percentages of standard scheduled reliability work. This should include PM completions, PDM route completions, proactive work completions and anything else you may do for reliability on a regular basis scheduled through your CMMS. These should be calculated weekly in the following manner:

If these numbers are too low, the daily numbers should show reasons for this. Staffing, operations demanding work not related to reliability, or excessive breakdowns can be reasons. This displayed on a board should drive the daily production meeting to understand why organizational dynamics are resulting in lower reliability.

Financials:

Other KPIs to be reported are maintenance financials. Daily updated KPIs would be tremendous but in many organizations, weekly will be the best that is available. The many and various ways different operations track cost, will influence use of these. Customization of these KPIs might be needed to put them in a useful form for the daily meeting.

Repair and Maintenance Parts:

R&M Parts usage should be tracked. One way to track this is:
Amount spent month to date; Monthly Budget; Amount spent year to date; Budget year to date
Other ways to express this is:

R&M parts include all parts purchased and used through the storeroom, purchasing for individual jobs, credit card purchases, standing purchase orders, open purchase orders and any other way an individual organization may obtain parts. Only Capital purchases are omitted from this category.

Repair and Maintenance Services:

Maintenance financials should also include maintenance services purchased. These KPIs should be tracked in the same manner as R&M parts above. Again the manner this is done is organizational dependent.

Maintenance Manpower Costs:

Maintenance manpower costs KPIs should be reported. Usually this will be a weekly KPI. Popular ones include: overtime percentage, percent budget spent month-to-date, and percentage budget spent per year. The latter two are tracked exactly like the parts and services financials. Maintenance overtime is tracked in the following manner:

Since financials are measured slightly differently by every organization, the above KPIs might need some mathematical manipulation to yield information that is recognizable to your organization. Examples can include ‘cost per manufactured part’ or some other such measure for operations recognition. Every maintenance manager needs these KPIs in a form as indicated above to effectively manage his department.

Other useful but non-publicized (on the daily board) KPIs:

In addition to the previously mentioned KPIs, there are some KPIs that can be derived easily from this financial data for interdepartmental tracking and planning. They should be calculated at this time for efficiency.

One KPI would be total department costs per man/hour worked.

Operations production run-hours may be substituted for total maintenance hours.

These KPIs can be used for extrapolating department budgets as production is expanded or as the maintenance function is expanded.

Another such internally tracked KPI would be R&M parts cost per man-hour worked. This is used for estimating departmental parts usage during planned shutdowns. Storeroom parts and auxiliary parts that are used over and above the materials specifically purchased for shutdown projects need to be estimated to properly estimate the cost of the shutdown.

As with all general rules for estimating costs, the longer the data is collected, the better it is for estimating actual costs. Statistically, unrepresentative swings in the data will have less effect on a larger population. It is a good idea to track these unpublicized KPIs in a rolling year-to-date manner so that a highly accurate number is accurate for planning purposes.

CONCLUSION

To achieve low-cost, high-quality maintenance, organizations need to understand the inter-departmental relationships that result in a world-class manufacturing organization. Organizations that do not recognize how these inter-departmental relationships affect pursuit of world-class performance, build cost into their organization. World-class performance will not be achieved efficiently.

The maintenance function will need more resources to satisfy organizational reactive demands. Maintenance departments working in a non-scheduled reactive mode can only work at 40-50% efficiency. Properly scheduled maintenance departments working in a proactive, scheduled, and planned mode will approach 80% efficiency. The same amount of work needs to be completed to achieve world-class status. Working at a lower efficiency requires more resources to complete that work resulting in higher costs.

A savvy maintenance manager can cause organizational change by financial presentations for resources to introduce proactive implementations. He also can use the daily management meeting with the proper departmental KPIs to illustrate and teach these lessons. He will also improve the management and control capabilities of the maintenance function by using the proper KPIs.

The maintenance manager pursuing this course must realize that it is a two-edged sword. If operations management is intelligent and understands the change being driven, the maintenance manager will benefit in future promotions and recognitions. He also must realize the organizational change he is driving will not be popular. It will force other departments to be organized and plan or be singled out when maintenance has to break a work schedule to react. This could result in a cover-your-backside culture if the operations manager is not willing to control this response. If operations management is uninformed, this maintenance improvement will be viewed as divisive and not allowed to move forward.

In any case, for the person that has earned the title of maintenance manager, taking this journey to improve your organization will give you a clear indication of your organization’s will to succeed. In today’s competitive economy, those not willing to succeed will cease to exist. This advanced knowledge and insight is invaluable for career planning.

Organizations that do not have the will to succeed will reduce the maintenance budget continuously as market pressures mount. Maintenance will not be able to improve. The maintenance manager will be replaced without any immediate future career plans in place. Keep your career options in your control.