Do You Have Spend Targets to Build a Robust Maintenance Excellence Program?

June 10, 2014
ASK THE EXPERT: LEAN LEADERSHIP  Have a question about lean leadership? Let Larry Fast tackle it for you.

QUESTION: Do you have any maintenance spend targets to build a robust maintenance excellence program?

ANSWER: The short answer is no.  But there is a process I recommend you use to assist in accomplishing a much more robust maintenance excellence program.  The process is this:

• The objective is to always maintain the equipment such that it performs based on the original manufacturer’s specification.  Robust but routine preventive and predictive maintenance processes should always accomplish this basic requirement.

• If the equipment is no longer capable of operating to the original specs, then maintenance and engineering need to determine what is required to put the equipment back into that kind of condition.  For example, does the equipment require a complete rebuild?  Does it require a high cost replacement part that is available commercially, or does it require a high cost replacement part that is only available by special order from an independent machine shop?  Is the equipment fully depreciated?  If not, how much value is still on the books?

• At this point collect quotes for the extent of the required work and its cost.

• Consult with your plant controller to determine what the pros and cons are financially to replacement vs. repair.  For example, is there a higher productivity version of the same process out there that represents a great cost-reduction opportunity?  My experience is that if you can improve costs enough to pay back the investment in less than years you should buy new equipment assuming capital funds can be made available.  If the payback isn’t there or the capital cannot be made available then take the technical folks’ best recommendation for doing repairs.

• The final question is this:  If it was your money would you spend it on the solution you recommend?

• An often overlooked possibility is to simply eliminate the equipment that is about to cost big bucks to repair/replace by getting more throughput from other existing machines.  I once had a plant manager ask for capital for a new machine that cost about $250,000.  When challenged it was determined that the three machines already installed were only operating at a 45% OEE and were capable of making up the loss of capacity by simply doing a better job of loading and operating them.  A solution that does not involve capital spending is always the better answer.

Relative to spend targets, I don’t care for them in the early stages of a maintenance/manufacturing excellence initiative because it supports the wrong mindset.  The requirements for maintenance should not be negotiable based on some calculated target.  In the short-term when maintenance is one the top 3 issues in the shop, the spending required to right the ship is necessary to be done without arbitrary constraints.  Otherwise you’re not serious about achieving  excellence.

That said, it’s not a blank check.  We are always capable of prioritizing "the spend" as long as we do it smartly.  I like to “take inventory” of what needs to be done in dollars and cents to raise maintenance reliability to a stable state.  The best measure for that is to track the breakdown maintenance rate (BMR) as defined in the last writing.  Here’s where the priority setting comes in to play:

  • Priority 1 is to get all constraint systems or processes completed ASAP—whatever it costs!  The costs of not doing this far exceed the loss of constraint capacity and, consequently, the loss of operating margin.
  • Priority 2 is to work on other systems or processes critical to the operations that are not currently up to the original operating specs and have a BMR greater than 5%.   Another method of priority setting is to thoughtfully review the BMRs and go after the worst offenders first until you get into the 5% range.
  • Priority 3 is everything else, i.e. those things that normal PM systems will maintain by following good process going forward.

Finally, don’t be surprised if your maintenance spending goes up before it starts to trend down.  Neglected processes take longer and cost more to repair than well-maintained ones.  Do your best to forecast your needs so you don’t surprise the boss, but be firm on the short-term need if you’re really serious about creating excellence in the shop.  There are no short-cuts to doing this the right way!

Once you have everything up to spec operating condition, and only then, should you begin to think about what % of the total spend is maintenance.  To do it before you can sustain a steady state does nothing but delay your journey to excellence.   The purpose of this metric is not to control spending but rather to provide a trigger for management review when the variation, plus or minus, is significant.  For example, why are we so far off the target and what are the necessary corrective actions?  You can’t “build” excellence with a spend target but you may be able to use it as a tool to “sustain” excellence into the future.

About the Author

Larry Fast | Founder & President

Larry Fast is founder and president of Pathways to Manufacturing Excellence and a veteran of 35 years in the wire and cable industry. He is the author of "The 12 Principles of Manufacturing Excellence: A Leader's Guide to Achieving and Sustaining Excellence," which was released in 2011 by CRC Press, Taylor & Francis Group, as a Productivity Press book. It was a best seller in its category and a 2nd. Edition was published Sept. 24, 2015. It features a new Chapter 1 on leadership, various updates of anecdotes, and new electronic tools on the accompanying CD. At Belden, where he spent his first 25 years, Fast conceived and implemented a strategy for manufacturing excellence that substantially improved manufacturing quality, service and cost. He is retired from General Cable Corp., which he joined in 1997 to co-lead North American Operations. Fast later was named senior VP of North American Operations and a member of the corporate leadership team. By 2001 the first General Cable plant had won Top 25 recognition as one of the IndustryWeek Best Plants. By 2008, General Cable manufacturing plants had been recognized for 19 awards. Fast holds a bachelor of science degree in management and administration from Indiana University and is a graduate from Earlham College’s Institute for Executive Growth. He also completed the program for management development at the Harvard University School of Business in 1986.

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