If the basics are implemented, there may be an initial maintenance cost increase to start, but as equipment becomes more reliable over time, there are fewer breakdowns, fewer spare parts are used, less resources are needed, and the mine, plant, mill will produce more. According to the data, these causes accounted for 70 to 80 percent of all failures. This choice is often called opportunity cost in financial terms. Maintenance efficiency is an important factor in this as typically more than half the In most cases, the stock market pressures a company to improve stock prices by making more profit. Maintenance Expenses (Costs of Maintenance): Definition For example, classifying a cost as capital investment costs versus expense changes if a company is making a profit or a loss any given year. Often, another business consultant looks at the business and compares the maintenance cost with similar plants in the industry and draws the conclusion that the maintenance cost is too high, and the same circus starts over again. Bearings are installed with a bearing heater to shafts, etc. There are four necessary steps to maximizing maintenance cost reduction: training, use of failure prevention technology, implementing a predictive maintenance program and taking advantage of the typical consultative services provided by the normal service provider. 1. Training needs to include basic fundamentals of rotating equipment operation, troubleshooting principles and a complete understanding of equipment components and how they work. HomeGuide found that the average American spends about $1,200 to $2,400 per year on lawn care and landscaping. Use of non-OEM, cheaper parts can reduce some initial cost, but most of these parts have been reverse engineered. There is an important unavoidable fact that the stock market doesnt understand and probably doesnt care about. Very few also fail from misalignment or improper foundations. In other words, ensure that you are not scheduling maintenance tasks that do not prevent anything specific. Assume also an average MTBM of 18 months, which is fairly typical. To train personnel correctly, find a professional training program and use it. Well, nothing happens! The breakdown of the production line was avoided (1. When option 2 & 3 are implemented, IDCON has seen many clients follow the curve below. All the pumps have mechanical seals. The electronic components of the technology will almost always last longer than the mechanical components of the equipment it is designed to protect. They are: Note that some of these actions require support systems. Check out IDCONs Practical Prioritizing for Leadership in Maintenance to learn more about building a successful partnership between operations and maintenance through a unified work process. That is why companies exist. If you stop doing maintenance work, the equipment and the plant stops running, and your revenue will go to nil. Reduce unpredictable costs by up to 3.2x. Maintenance Costs Maintenance prevention such as cleaning, lubrication, alignment, balancing, correct installation, etc. Why is the cost increasing? Abstract. Why do companies disregard revenue and focus on cost? But how can you prevent breakdowns? Its not all or nothing. of equipment that needs to be back on-line quickly, we will have to pay maintenance overtime cost. Maintenance cost has a delay effect going both ways. Only 100 use VFDs and the remaining 400 pumps are fixed speed. Maintenance While it may be difficult Not upgrading equipment will result in increased failures. 8 IT Maintenance Cost Reduction Strategies - UpperEdge The Huurteam Utrecht helped over 700 tenants with complaints against their landlord, like too high rents, incorrect service costs, unclear leases, and overdue maintenance. They achieved exceptional equipment reliability and could sell more product. Consider partnering with a competent service provider who will commit a specified amount of time in the plant each week to assist in application engineering of equipment, troubleshooting and process engineering assistance. Assume that an industrial plant has 500 pumps installed. Predictive maintenance involves the ability to detect changes in equipment component condition, so maintenance personnel can plan a controlled maintenance event to correct/replace the failing part(s) without catastrophic failure, unscheduled downtime or environmental impact issues. Continuously managing health of machinery can take reliability programs to the next level. Not uncommonly, $100,000 is found to be "dead inventory." Imagine (or worse, try) analysing all your maintenance operations one by one with a pen and pad of paper? But jobs cant be planned that fast, so craftspeople will be handed emergency work. Other instigators to maintenance cost reduction initiatives are business consultants that compare a plants maintenance cost with similar plants. Referring to the earlier logic in this article, they had two choices: No matter how, you spin these options, option 1 will always be cheaper since you add the cost of the breakdown risk in option 2. An inexperienced person may say that the people are working inefficiently, they may only have a tool time of 30% total work time. This will not only mean saving on maintenance costs but also on high repair costs. Take a simple example of a conveyor belt that transports iron ore outside in a hot, humid environment to a similar belt that transports wood chips indoors in a northern paper mill. Companies should seek the assistance of only board-certified analysts. Each pump is addressed quarterly and each motor is addressed semi-annually. This happens often, especially when failure prevention or predictive maintenance technology is not being used, making troubleshooting operations more lengthy and netting fewer wins per unit of time. Equipment projects should not be in a maintenance budget, so that is seldom an option. The organization must understand that training of craftspeople is important, that rubber parts, electronics, hydraulics must be stored cool and clean, that planning of work is important etc. If the maintenance is cut quickly by doing less maintenance, there is a delay effect for the cost to go up again. A well-maintained plant runs well at a low cost with few breakdowns. The culture of instant gratification is another reason hidden maintenance cost is allowed. For example, if a plant has poorly documented preventive maintenance routines, the cost of fixing that problem is not clear to all. maintenance Many organizations do not properly account for all the maintenance cost drivers. If Preventive Maintenance activities are allocated to the preferred frequency intervals above in a If reducing maintenance cost would be the key goal for a maintenance department, it is a very easy goal to achieve. The equation Revenue cost = profit is hit twice! However, reducing maintenance spending by half requires almost superhuman efficiency. It can be argued that the maintenance cost/ unit is completely irrelevant, what is more relevant is the total cost/ unit. Industry 4.0 and predictive technologies for asset maintenance But, if you change the oil every 6-9 months, the car engine may run 25 years. Failure prevention technology reliably detects problems within a pre-set time frame. Since customers rely on manufacturers for newer, more efficient, more reliable and technologically advanced products to meet changing requirements and tougher standards, manufacturers cannot afford to invest in extensive research and development if all profitability is driven out of their products. Inventory amounts are typically based on usage, or turns. These are two essential services in any reliability program. Today's technology is a reliable solution. In addition, customer storerooms typically have dead inventory that no longer directly or indirectly supports equipment in the plant. These teams address "bad actors," using the traditional 80/20 rule. Either you have too many people, and/or there is maintenance work that doesnt need to be performed. If the motor is replaced before the breakdown it may cost 1. Pumps can be centrifugal or positive displacement. In a plant, there are thousands of equipment and millions of failure modes, but the delay effect will be the same. Low profit immediately transfers into cost cutting measures, but the other half of the equation is disregarded. Planning to fix: improving maintenance efficiency | McKinsey Many plants are regulated by union agreements and may have to lay off the most recently employed maintenance crafts people. The stock market demands instant results as well, no one wants to wait for a stock to be profitable in 2-5 years. Inventory reduction/management assistance. If you buy a new car and never change the oil, the car may run for 5 years (wild guess, I have not tried) before the engine seizes. It would be more or less impossible to make an analysis that encompasses all the important factors that include maintenance cost. Clarifying the Choices for Reducing Maintenance Cost This means that reactive maintenance is not only haemorrhaging money and resources but also time. Execute contracted maintenance work more efficiently. A 60-month MTBF is reasonable based on normal bearing and mechanical seal life expectancies. Some have even claimed that 2% is considered to be best practice, or world-class. Finally, you should bear in mind that ordering parts in bulk allows you can negotiate better prices. WebMaintenance & Cost Reduction 13-14 Mar, 2023, Pullman Kuala Lumpur Bangsar Register Now IPA Training is Registered with Learn from the Best Ir. The normal carry cost and tax levied on inventory value is 20 percent of the total value annually. It should be undertaken by HTM managers with technical skills (such as those located at a maintenance workshop). A bet someone may ask the question, why do we spend so much on preventive maintenance when we never have any break-downs? WebIn most industries, the cost of maintenance is between 10 and 25 percent of total operating costs. While some companies may debate the ability to prevent human error, system upsets or component failure upstream or downstream of the rotating equipment, most will reluctantly agree that preventing these conditions is nearly impossible, especially with today's reduced staffs. Well, from what weve seen there is typically little to no data, information, or basis for the decision that maintenance cost is too high. WebAccording to the McKinsey management consulting firm, predictive maintenance can generate substantial savings by increasing production line availability by 5 to 15% and reducing maintenance costs by 18 to 25%. Web5. They are not always easy to predict, since breakdowns in most cases cannot be anticipated. The customer addresses 100 pumps each of the next 4 years, so all of his pumps are protected after 5 years. Contracted Maintenance: Should You Contract Your Maintenance Work? According to the results from this poll, very few pieces of equipment fail because they were improperly applied or constructed with the wrong materials, which leads to corrosion or wear-related premature failures. Instead, lets try to cut maintenance costs by 20%. A fire departments work is primarily to prevent fires through regulations, education, and inspection, should we get rid of them because there are few fires. As reliability improves, MTBM and the ability to reduce inventory levels improves. There is no universal definition of maintenance cost. The cost should be analyzed together with a set of balancing, additional KPIs such as Overall Production Efficiency (OPE), total cost, revenue, etc. Thermography and ultrasound are more cost effective and have historically helped the customer reduce maintenance costs while also providing more efficient and accurate information. Assume that a predictive maintenance program is initiated for all 500 pumps during the first year. In most situations the maintenance manager decides to reduce the number of people or defer needed maintenance work. Cut the amount of maintenance work by deferring it. The execution of the chain and preventive maintenance is the key. Finally, if a reputable service provider chosen by the customer consigns some or all remaining inventory, inventory costs can be almost completely eliminated. The key to successful predictive maintenance is competent analysis of the data collected during the monitoring process. They may say, This maintenance cost increase must be something completely new! Educating the customer is one of the greatest challenges because significant cost reduction cannot be achieved without the customer modifying current maintenance philosophies and investing in the technology necessary to ensure success. Use the data collected by your IMMP to understand where the bottlenecks and productivity losses are. What happens if, in the first year, this customer addresses 20 percent of the installed pumps, assuming 20 pumps are using VFDs and 80 are fixed speed? QuickFMS shares 6 maintenance cost reduction strategies you must follow: # 1 Learn How to Care The first and foremost step that you should take is, teach and train Improved financial performance is not immediate, the correct procedures have to be in place for some time in order to see the financial results because of the delay effect in maintenance. Lubricants: Some companies include it in the maintenance cost while others label it as an operational expense. There is no one strategy to reduce maintenance costs. It is simple. However, most will also agree it is possible to prevent equipment from failing when subjected to these failure conditions. So, cost cutting it is. All designed to help you and your team keep your plant running, Reduce your costs with an effective PM program, President & CEO, IDCON Inc. Review all the contracts you have with suppliers and learn if there are any that you can renegotiate, any that are not being fulfilled, or any that can provide more than one service for a more competitive price. Increase Asset Performance and Reduce Maintenance Costs The opportunity cost for maintenance can be compared to the maintenance of your body. The customer actually saves more than this for two reasons. Short-term result in lower cost can be achieved. Erik Daron becomes President & General Manager of Teikoku USA Inc. Randy Brown Named Acting President of Fluid Components International, Brel & Kjr Vibro Names Ingo Anders as CEO, 5 Ways Remote Pump Monitoring Benefits Water Transfer Companies, Smarter Technology for Seamless Communication, 4 Benefits of Real-Time Condition Monitoring Programs, Optimizing Automation and Controls Improves Operations and Minimizes Maintenance, Permanently Installed Technology: The Major Advance in Motor Testing, A Complete Guide to Pressure Measurement Basics, Ensuring Water Safety With ANSI/NSF-61 Certification, Treatment Plant Makes a Successful Switch From UV to PAA to Disinfect Effluent, In-depth articles on pump industry issues, Expert insights into important topics in the field, Driving manufacturers to continuously reduce prices on replacement parts, Running damaged equipment until it fails completely before addressing repair (band-aid approach), Organizing reliability teams/departments to address equipment reliability, Upgrading materials and equipment specifications to"toughen up" the equipment, Integrating process control schemes to better control equipment, Using failure prevention technology and predictive maintenance services sporadically. Reducing Maintenance and Operation Costs at Industrial and Municipal Facilities 1. Without a doubt, you should invest in a good preventive maintenance strategy and ideally in an Intelligent Maintenance Management Platform (IMMP) capable of scheduling, tracking and reviewing all technical operations. But it is important to understand that as long as the product manufactured can be sold with a profit margin, meaning that sales price/unit is larger than the cost/unit to produce it, reduced downtime (therefore increased production time) will be more important than cutting the maintenance cost. ), then over 5 years the customer would save $50,000 from the free use of the service provider's engineer. Optimising work orders can help technicians to act faster and understand immediately what they need (protective materials, tools, etc). The wear of the belt that carries rock in the sun will be more than the one that carries wood chips indoors, therefore, the maintenance cost will be higher. Heres some real-world examples of the hidden maintenance cost: Bricks were falling out of a lime kiln in a chemical plant in Canada. Best practices. Perhaps it can be compared with baseball pitches or ice hockey slap shots, which are roughly the same speed. Many are obsessed with measuring the speed of a pitch or slap shot, but is it relevant? As inventory levels decrease, ROA increases. If all of your employees know how to detect problems, malfunctions will be detected much faster. For example, condition monitoring using vibration analysis (VA) is useless unless the problems found are planned, then scheduled, then the bearing is changed. The same can be done in industry. The second choice is to pay $50,000 + risk of break down (%) X Cost of break down. In fact, morale at the plant may plummet! Implementing predictive maintenance will result in a lower average repair cost. Trying to benchmark the MC/ERV between industries is preposterous and incompetent. While the maintenance cost is an important long-term outcome of maintenance management, it should not be the main goal. If the goal for maintenance is to deliver equipment reliability instead of reduction of maintenance cost, everything changes. More breakdowns mean more labor, more parts, and more downtime. Top Maintenance Cost Management Strategies - Device Magic It is assumed that these reductions are realized fully by the fifth year, and the example does not account for smaller savings in the previous years as reductions begin to occur. Company, local state/province and international tax laws differ and change over time, which adds another level of variability of the definition of maintenance cost. After the failure prevention equipment and training are purchased over the first 5 years, these costs go away and the customer is left with only the cost of predictive maintenance as an annual reliability program cost. Increasing revenue takes marketing effort, product development, improvements in production etc. Since the warning system (Condition Monitoring) is eliminated or reduced, the planner tries to plan breakdown work that is happening today. Plant with 500 pumps, all with mechanical seals. Did you know that 30% of preventive maintenance Maintenance cost is an important indicator for a plants performance. A good pitch or slap shot is tad over 100 mph. Maintenance efficiency is an important factor in this as typically more than half the cost is labor. 75 percent of all failures occur due to operator error, system upsets and failure of components upstream and downstream of the pumps that cause the pumps to run in a failure causing condition. The program would feature quarterly vibration monitoring and analysis for the pumps and semi-annual monitoring and analysis for the motors. Traditionally, industrial and municipal plants (customers) have employed similar tactics to offset maintenance costs. For example, when you receive notifications of breakdowns, usegeolocationto find out who the nearest technician is to optimise travel. If one plant selected equipment with good maintainability, inspectability and reliability, they will have a lower maintenance cost than a plant that has not spent that investment up front. By eliminating $425,000, this means the customer saves $85,000. As you see, these opportunities are not always easy to connect with. Furthermore, improving maintenance efficiency has a positive impact on reliabilityso companies can cut costs without risking performance. Running damaged equipment until it fails is not a good idea for two main reasons. There may be a slight increase in cost early in the improvement effort to reduce maintenance cost. Bearings are lubricated with the right amount, clean and the correct type of oil! The available choices to cut the maintenance cost for any organization are: 1. The revenue side of the equation is reduced AND the maintenance cost is going up. maintenance In addition, few, if any, run without maintenance or repair until the end of their design life (fatigue). Reducing Maintenance and Operation Costs at - Pumps Since it is hard to find skilled people, it is not uncommon that a Human Resource (HR) department spends both substantial time and investment to find maintenance crafts people. Even though most managers know better, they are forced to cut something, and it cant be repairs that may stop production. In some cases, you may even want to insure some specific components talk to your technicians to decide which policy is the most appropriate for your business. Therefore, one of the best ways to reduce maintenance costs is to avoid reactive maintenance. Well, here is some news! The customer spends $12,500 for training, $640,000 for failure prevention equipment and $210,000 for predictive maintenance services over the first 5 years. We want our candy, soda, and desserts now, we dont care if we gain weight later. The key is toeliminate waste. For a manufacturing plant, a halt in production is devastating. There are only three ways to cut the maintenance cost.
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