Outsourcing Machine Tool Maintenance

April 9, 2009
Even small and medium-sized companies are finding strategic benefits from third-party maintenance approaches.

HydraForce Inc. started with a question: "Is our forte operating machine tools for maximum return or maintaining and repairing them?" At issue was the search for better resource utilization, explains Chris O'Bryan, HydraForce maintenance director. The company is a manufacturer of hydraulic cartridge valves, electro-hydraulic controls and custom integrated circuit manifolds designed for broad application in snowplows, Bobcat tractors, bulldozers, road pavers and transmissions. With a nearly 30 percent compound annual growth rate (CAGR), the company's small maintenance staff was stretched across multiple expanding facilities and an increasing number of machines performing a multitude of functions. Unwilling to compromise its stringent quality standards with tolerances in the millionths of an inch, the company turned to Sunnen Products Co., its primary machine tool manufacturer/supplier.

Adds O'Bryan: "Once we made the decision to outsource the Preventive Maintenance (PM) program, we were able to refocus on meeting the growing product demands. There was no question the machine tool supplier could deliver because they're the ones who built our 28 honing machines."

Looking back over the five years since outsourcing maintenance, O'Bryan refers to satisfying results. He reports stocking fewer parts due to efficient supplier responsiveness and lower costs when repair parts are required. "Our downtime has been cut by 33 percent, but our machines rarely go down anymore. With five thorough service visits a year, most problems are detected and fixed before a part ever fails."

Those outcomes mirror the expectations of Sun Hydraulics, a manufacturer of high-performance hydraulic cartridge valves and manifolds used in lifts, ladders, motors and payload equipment for tractors.

While a service contract can have a definite customer advantage, it also benefits the machine tool builder, says Wes McCullough, field service manager, Sunnen Products Co.

Sun was challenged with scaling up production based upon strong year-over-year sales. Sun's managers wanted resources focused on production, especially given its demanding quality and tolerance requirements, honing hydraulic valve surfaces to millionths of an inch.

The decision point came when a 12th honing machine was added, says Sun's Mike Smith, honing team leader. He says two considerations led to outsourcing maintenance: "What business are we in and what do our customers come here to buy?"

"That evaluation led to a breakthrough decision to implement a service contract to give us the cost savings we wanted across labor and inventory, as well as the equipment utilization needed on our two shifts."

The result: a broad-based payout.

"We're looking at part and service savings between 8 to 11 percent while our average machine downtime has been reduced as much as 12 percent," says Smith. "In terms of improved throughput, I'd say it's easily in excess of 15 percent in volume and that's without additional labor."

The Business Case

Start with a straightforward business-case analysis, suggests Sunnen's Wes McCullough, field service manager. Once the supplier's service reputation and reliability are established, the clincher becomes the impact to the bottom line.

McCullough cites three sources of significant savings:

  • Reduced direct labor costs. He says the savings can easily add up to thousands of dollars annually.
  • Discounted parts and service. He says the discounts are typically offered as an integral part of a provider's bundled pricing.
  • Reduced machine downtime and greater production throughput. Not only are the third-party service technicians specialists, but their proactive maintenance approach is also designed to prevent breakdowns.

When asked to develop a maintenance plan, Sunnen avoids off-the-shelf templates dictating such things as service-call frequency, number of replacement parts or gallons of coolant. Instead, adds McCullough, Sunnen uses a consultative, shop-floor approach, observing production and part-making methods down to the individual operator's habits. He says the evaluation process benchmarks both equipment expectations and common operator complaints in order to project repair frequencies, repair-part inventories and service levels.

"We evaluate their entire process, including each machine and the parts being made, so we can see the processes and parts causing the most stress," explains McCullough. "Compare two identical machines making different parts and spindle bearing problems could occur at 3,000 hours on one machine and at 5,000 hours on the other."

While a service contract can have a definite customer advantage, it also benefits the machine tool builder, says McCullough.

"We see first-hand how customers use their machines and what their expectations are, so we are in a much better position to support them, day in, day out." In addition, manufacturers planning future production changes often consult with the service provider to obtain guidance on machine upgrades, replacement and relocation, adds McCullough.

Boosting ISO Certification

As is the case with both Sun Hydraulics and HydraForce, manufacturers are making service agreements an integral part of their ISO certification process. Quality departments, says McCullough, naturally take a keen interest in the provider's service protocol, monitoring closely the impact on quality, machine productivity and scrap rates. And providing an extra boost to ISO certification is the inclusion in the company's ISO documentation of the provider's service standards and procedures, maintenance schedules and after-service reports.

"This has had a very positive impact on our ISO certification," adds HydraForce's O'Bryan. "When ISO auditors are on-site asking pointed questions and scrutinizing our daily operator's charts, everything is very well-documented, including machine downtime, major repairs and part replacement."

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