IT IS WORTH CONSIDERING two possible approaches: a conservative approach to weather the storm, and an aggressive approach to take advantage of vulnerable competitors.

A conservative approach

If the plan is to “hunker down and weather the storm”, then it is important that the reliability improvement strategy is adjusted accordingly. The focus will be on minimizing costs. Let’s quickly review some opportunities.

EQUIPMENT FAILURE

If we experience fewer failures, then we avoid the costs of repairing the equipment: parts, materials, and overtime labor. Pareto analysis can tell you which items of equipment are costing you the most. If our Pareto analysis only tells us which items fail most frequently, that will be useful, but if we know the costs associated with each failure, then we will know exactly which items of equipment we should focus on.

Once we know which equipment is the biggest drain on our maintenance budget, we can investigate why the equipment is failing, and what we can do about it. We can implement proactive steps (lubrication, cleaning, etc.) we can consider cost-effective reliability improvement tasks (eliminating the root cause) and we can ensure we have condition monitoring and inspections
in place so that we can see the problems coming.

Equipment failures also impact production output and potentially safety/environment, but we will discuss that separately.

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STOREROOM INVENTORY

There is a great deal of money tied up in spares/material inventory and the holding costs can be a drain on the business. In many countries/regions the tax system requires organizations to treat the inventory as an asset and thus tax must be paid. If you are holding parts or materials that have not been fully depreciated but are no longer required in your plant then you may be able to sell those parts, even if it is just for scrap. They may not be required to be held in inventory for a few reasons:

•  They are too old to be used
• You have changed the design of the process and those parts/spares will not be required
• You are holding such a high volume that a reduction would not have an impact for a very long time (but you will need to weigh up the benefits of selling those assets versus the likelihood that you will have to repurchase them in the future)

It is also important to evaluate where the inventory is being held, and the restocking policy.

HOLD INVENTORY WITH A TRUSTED VENDOR

If you have a clear understanding of the likelihood of equipment failure and the lead time available to order the necessary parts, then you can consider holding stock with a supplier (i.e. at their facility and not yours and you do not pay for them until you need them) and you can reduce the quantity ordered when stocks are low. It is unfortunately common for purchasing departments
to order higher volumes, especially if there is a volume discount. When times are tough, it is even more important to review those decisions.

KNOWING WHICH SPARES WILL BE REQUIRED

One key element of this is the requirement to understand the future demand for spares and material. If the plant suffers a high level of reactive maintenance, then we will need quick access to the necessary parts and materials which probably means holding a larger inventory.

Pareto analysis will tell you which equipment fails most frequently which helps you to plan which spares must be held on site. But Pareto analysis is based on historical data - we are worried about the future.

SEE PROBLEMS COMING

With an effective condition monitoring program, we can see the problems coming with enough time to order the parts without having to pay a premium for the parts or their transportation. Pareto analysis, criticality analysis, and a clear understanding of failure modes will enable us to review whether we have the appropriate condition monitoring and inspections in place.

If we can reduce the number of failures through improved reliability, and gain an earlier warning of future failures, we can reduce our inventory and order fewer replacements when stock gets low.

OVERTIME REDUCTION

Overtime that results from equipment breakdowns will obviously be reduced if there are fewer failures, which we have already discussed. But if you have an effective condition monitoring program, and an effective planning and scheduling system, then you can perform the corrective maintenance work more efficiently and avoid the necessity to perform that work outside of normal hours.

QUALITY LOSSES

Every organization wants high first pass quality, but it is especially important when the organization must reduce its costs. You must understand the needs of your business so that you understand the importance of improving quality. The costs associated with poor quality can include:

1.  Wasting precious materials if the product is scrapped
2.  Wasting energy (and incurring overtime labor costs) during rework or catchup production
3.  Regulatory fines and other potential costs when disposing of poor-quality product

There are two basic ways to address this issue. One is to wear an Engineer’s hat and look at the logic of how quality is being affected, and the second is to wear an Journalists’ hat and engage with people to understand what they have observed that impacts quality.

Ultimately, we need to perform root cause analysis to understand what is at the heart of quality losses so it can understand what we can do to eliminate them.

WASTE

Every business needs to reduce waste, but it is especially important when the focus is on reducing costs. Downtime, quality losses, inefficiencies, and excess spares/material inventory are all forms of waste which we have already discussed.

If you are engaging with operators and technicians and asking them for their observations and ideas for improvement, you will learn about all forms of waste. If you conduct plant walk-throughs and you stop and observe people going about their work, you will observe many forms of waste.

Your challenge is to assess which cost the business the most and then set about eliminating those forms of waste.

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WHAT ABOUT DOWNTIME REDUCTION?

Downtime may be more tolerable if there is reduced demand for the product being manufactured. If you provide a service, wastewater treatment for example, then the requirement to minimize downtime will not change. Only you understand your organization.

If reducing downtime is still critically important, then all the normal goals apply. Reducing equipment failure and effective planning and scheduling (supported by effective condition monitoring) will help you reduce downtime.

What about safety and the environment?

Safety, environmental protection, and regulatory compliance apply regardless of the business conditions, so we must never
lose focus on those critical areas.

WHAT NOT TO DO

A common reaction to the demand to reduce costs is to cut out all training and reduce the maintenance department headcount.

Given that the author runs a training business, I obviously have a conflict of interest, however if people are not skilled or qualified to perform their roles they will make mistakes which will cost the business more money. The good news is that virtual training, and elearning, are less expensive than instructor-led public training.

Reducing headcount is also counterproductive.

You need people to perform the proactive tasks of cleaning, lubricating, adjusting, inspecting, and monitoring equipment condition
in order to avoid future failures. When you cut the headcount, not only does impact morale, but the number of equipment failures will increase.

THE MAIN MESSAGE

There are basically two ways to reduce costs: cut and slash versus improving efficiency and reducing waste. History has told us that the organizations that cut and slash do not succeed unless the situation is truly urgent.

Improving efficiency, improving quality and throughput, and reducing waste in all its forms (which includes equipment failures) not only helps an organization through a crisis but it sets it up for future success.

An aggressive approach

When the market is down, and your competitors are struggling, it presents a great opportunity to leap forward and grab market share. Who knows, maybe we can become strong enough to acquire a competitor.

One of the ways to grab market share is to offer a higher quality product, in greater volume, at a lower cost.

HIGHER QUALITY

You must examine what it takes to improve quality and determine whether you have any influence over those factors. We discussed this in the previous section, although in that case our primary goal was to reduce costs.

GREATER VOLUME

There is a relationship between product cost and volume. If you reduce your internal costs in the ways discussed in the previous section and you can produce more product, you can reduce the price of your product or service and still be profitable. If you reduce the price of your product or service, and there is additional demand for that product or service, thenthere will be a need to increase your capacity to deliver on the higher volume.

Equipment reliability is obviously important when there is a requirement to increase output. But there are several factors that ultimately impact on output:

INCREASE THE OVERALL EQUIPMENT EFFECTIVENESS (OEE)

The OEE is a measure of our ability to produce the saleable product. An OEE of 100% means the equipment is always available, it is able to operate at 100% of the desired rate, and there are no quality losses. We have discussed quality but let us take a quick look at the other factors.

Obviously, reliability affects the availability. Eliminating the root causes of failure will increase the reliability of the equipment.

Condition monitoring, effective planning and scheduling, and effective spares management ensure that periods of downtime are minimized. But there are other factors that affect availability and production rate:

• We must minimize the number of minor stoppages. They will not be recorded officially as “downtime,” but they still reduce our ability to produce product. Minor stoppages may be due to reliability issues, operator error, and for several other reasons. You must understand what those reasons are. Pareto analysis can help in this regard, but only if the length of the delay and the reason for the delay are recorded.
• We must minimize changeover losses. If you use the same equipment to produce different products, and there is a delay while equipment is set up for the new product run, then it is critically important to reduce those delays. The best analogy is the racecar pit crew. They can change the tires, refuel, and perform repairs in a fraction of the time it would take you or me because they have streamlined the process and they are prepared before the car reaches the pit. We must investigate how we can achieve optimal levels of efficiency.
• We must also examine the production rate, i.e., the number of widgets per hour. Why is the equipment unable to operate at the desired rate? Is it possible to operate at a higher rate? We must answer those questions and address the root causes.

A traditional reliability specialist might look at these items and believe that they are outside their sphere of influence and experience to attempt to address these issues. The author humbly disagrees. If you engage with people, ask for their suggestions and ideas, but do not wear maintenance/reliability blinkers, you will find ways to eliminate waste and increase production output. If you are smart enough to be involved with maintenance and reliability, you will be able to handle any opportunities for improvement that are revealed.

INCREASE PLANT CAPACITY

Plant capacity can be affected by seasonal factors, limited product demand, and other factors. But one of the major contributors to restricted plant capacity is scheduled maintenance (shutdowns, turnarounds, and outages).

At one extreme, a plant with poor reliability, a lack of understanding of the failure mechanisms and reliability theory, and ineffective planning, will suffer frequent long outages.

At the other extreme:

• A plant with higher reliability will have less work to perform during the outage and the time between outages can be extended.
• A plant that understands reliability theory will utilize condition-based maintenance and thus perform less time-based maintenance. As a result, less work will be required during the outage.
• A plant with an effective planning process, with written procedures for every task, and kitting and staging, will ensure that the time during the outage is used efficiently.
• A plant with highly skilled and motivated maintenance technicians who have the training and tools to perform precision maintenance, will perform the necessary work correctly the first time. Rework will not be required, and infant mortality failures will be eliminated. The plant will start up the first time and begin producing quality products more quickly.
• And a plant with documented startup procedures will ensure the equipment is not stressed during startup thus eliminating operator driven infant mortality failures.

LOWER COST

There is a great deal you can do to create an environment where your company can reduce the price of its products or cost of your service. As described above in the “conservative approach” section, you can eliminate failures and waste to reduce the cost of doing business. It is worth noting, however, if you increase output without increasing overhead costs, the cost-per-unit-product goes down even before you focus on cost reduction.

What will you do?

You must decide what changes you can make in the shortest period of time (given that this is an urgent situation), and the relative importance of quality versus output versus cost. The more you understand about your organization, its goals, constraints, risks, and opportunities, the more likely you will be to survive this difficult period, and potentially flourish.

JASON TRANTER, ARP-L, Mobius Institute 

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