Have you ever had a discussion with your significant other about non-value-added activities? For instance, why rake leaves when the wind eventually will blow them into the neighbor’s yard? Why make the bed if you’re going to sleep in it again tonight?
Non-value-added activities can be a problem for maintenance and engineering departments, and managers would be wise to take a closer look at technicians’ priorities and activities. Do technicians regularly perform preventive maintenance (PM) activities that add no value? Do they spend too much time doing PMs? How detailed are the tasks on the PM list? Are they general tasks open to interpretation, or are they detailed enough that anyone on the team can execute a high-quality PM on that equipment?
The Hidden Cost of Routine Activities
In my experience, too few managers pay close attention to the planned maintenance activities in their facilities. When I ask managers about the situation, typically I hear, “That’s the way it’s always been” or “The OEM recommends this so many times a week, month, or year.”
Most PM waste hides in plain sight because no one questions tradition.
I once worked with a facility that finally had enough of unscheduled breakdowns on a large 350-kilowatt rotary air compressor. Every time this unit shut down, the facility faced significant interruptions and financial damage. The unscheduled breakdowns were increasing each year, and the maintenance team was spending exorbitant hours on the equipment. To remedy the situation, we conducted a workshop with a cross-functional team to review the department’s PMs to improve the compressor’s reliability and, ultimately, reduce costs.
Understanding the PM Overload Problem
First, some background on the situation is necessary. The compressor’s downtime costs — all company contributions, including 401(k) and health insurance — were $5,000 per hour. The average hourly wage for a technician — again, including all company contributions — was $56.25. Downtime totals for the most recent three years were 102 hours in Year 1, 118 hours in Year 2, and 121 hours in Year 3.
To address the growing problem, we took several necessary steps. First, we selected the equipment we wanted to address initially based on both repair costs and maintenance hours. We then collected all current PMs, checklists, and the equipment’s failure history.
Next, the team conducted a workshop analysis. We reviewed the compressor’s operating environment, function, and requirements. The team had conducted a formal failure mode and effects analysis (FMEA) of the equipment, but a more thorough review was now necessary.
The team studied current maintenance strategies and based their justifications on failure history and consequences. The team reviewed current PMs and matched them to the list of known failures, using the failure-history report from the CMMS. They also matched the PMs to the FMEA document to ensure that potential failures were captured on a PM.
Unreliable assets aren’t just mechanical problems – they’re financial ones.
Once completed, the team documented improvement recommendations, along with suggested modifications and skills assessments, which identify the department most appropriate to perform a particular task. Given all of the changes and modifications, approval was key to the success. Top management needed to understand the process’s positive impact, as well as its impact on stakeholders and operations.
The Reliability and Financial Impact of PM Optimization
The PM review yielded significant cost reductions and improvements to technician utilization while increasing the reliability of an unreliable asset. The department made changes to the CMMS, the new PMs began cycling through, and data began to flow.
The reallocation of responsibilities, the elimination of non-value-added PMs, the extension of PM intervals, the elimination of duplicate PMs, and the implementation of specific value-added PMs were substantial changes. The results of the process were staggering. Among the more interesting results:
- Eighteen percent of the total PMs for the rotary air compressor were duplicates.
- Nine percent of all PMs were deleted.
- Only 19 percent of existing PMs remained unchanged.
- Nineteen percent of PMs added more details to a task.
- The new tasks added represented 9 percent of total tasks, while another 9 percent of tasks were extended, meaning, for example, a PM task changed from weekly to monthly.
How PM Optimization Transformed Labor and Downtime
The process also improved the department’s labor use. While the above results reflect a significant reduction in the non-value-added hours technicians had been spending on PM tasks that seemed to do little or nothing to reduce the air compressor’s failures, the reality is quite the opposite. If you look at the failure history, the failures actually increased over three years at a substantial cost.
Eliminating wasteful PMs instantly unlocked technician capacity.
During the workshop, the team identified PMs that had no impact on the compressor’s reliability, yet consumed many hours of the technicians’ capacity. As a result of the team’s efforts to reduce, delete, and extend PMs, an electrician who had spent 408 hours on PMs before the changes now spends only 168 hours, a 59 percent reduction. A mechanical technician who had spent 816 hours now spends 662 hours, for a 19 percent decrease, and an HVAC technician who had spent 1,263 hours now spends 942 hours, for a 25 percent decrease.
The Financial Return From Eliminating Wasteful PMs
The results also affected the department’s bottom line. Reducing the number of non-value-added PMs freed up maintenance hours that technicians used to perform more tasks that add direct value. Value-added utilization, or wrench time, rose from 22 percent to 38 percent, and value-added work hours per week rose from 8.8 to 15.2. With a total craft workforce of 50 technicians, an increase in available hours per week of 6.4, and an average hourly rate of $56.25, the annual cost reduction or avoidance was $936,000.
Smart PMs cut downtime costs from six figures to almost nothing.
Downtime also improved as a result of the changes. The department realized significant financial benefits from performing the correct PMs on the air compressor and identifying potential failures. The team took a deep dive into the data to determine the compressor’s historical failures and their consequences. They then reviewed and modified tasks to identify failure early. After topping out at $600,000 in Year 3, downtime costs dropped below $100,000 in Year 4.
Managers looking for opportunities to curtail costs can take this column as a prime example of the benefits of making the business case for an optimization workshop and a review of current PM strategies, both aimed at reducing costs and increasing asset performance and employee utilization.
