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 What
does your maintenance really cost?
by R.T. “Chris” Christensen
Part 3
In the previous articles in this series, we have been going over
what maintenance is and the reason that we really do need to migrate
from a reactive or “fix it when it’s broke” type maintenance to a
reliability type maintenance some of us call RCM or Reliability Centered
Maintenance. To easily understand the absurdity of run to failure, just
remember this discussion the next time you take a trip on an airline.
Obviously, from your point of view as the passenger, run to failure is
not an acceptable way to run an airline. But we run our factories that
way, don’t we? Is that really the smart way to do it?
Now don’t get me wrong.
There are times when you are looking at a part whose failure has no
negative effect on the outcome of the mission, is relatively cheap, easy
to replace and you have no negative costs. Then you run to failure.
To fly or not to fly
Even on the airplane, if the light bulb burns out in the galley, you
don’t PM the bulb, you run to failure; life can go on with no negative
effects. But is the aircraft flyable? For you sticklers out there, the
airline has a minimum equipment list of items that must be in working
order before a flight can be undertaken. And at the home office in the
maintenance department there is the MEL Officer (Minimum Equipment List
Officer) who must authorize a maintenance task or allow a flight to
proceed if there is a discrepancy. The MEL Officer must check the MEL
developed for each aircraft (each airplane has its own MEL) and make the
decision to fly or not to fly and ask the pilot if he or she is
comfortable flying with the discrepancy.
It is their joint call on
whether or not to fly with the galley light out by answering the
question of need, hazard and potential other failures if the flight is
undertaken with the light out if no maintenance can be completed.
That guy is my cousin Dave
at a major U.S. airline and it works for him. You just might want to
make it work for you, too.
But, you say, it costs too
much money to maintain your factory at this level. Remember, the major
cost is not the cost of maintenance, but the consequence of the
potential failure. So ask your finance people to help you understand the
total cost of maintenance. Ask them to help calculate the COST of
repair, PLUS the cost of the downtime, LOST production and the COST of
the late or missed shipment. Look at an automobile assembly line — 60
cars an hour with an average sales price of $25,000 each means that 15
minutes of lost production costs the company $375,000 in lost sales.
Run the numbers
Let’s put some numbers together here. If you currently have no PM
program and you are reactive and run to failure, your total maintenance
cost for direct and indirect costs is 100 percent. All your maintenance
money is going to fix things when they break. If you implement a PM
program, a good PM program, we can see your total direct and indirect
maintenance cost go from 100 percent down to 70 percent of what it was.
That is a substantial savings. But let’s take this another step and look
at what our maintenance costs will be if we get into a predictive mode.
Here we see that the
maintenance cost has dropped again and instead of being at 100 percent
for run to failure or 70 percent with a good PM program, your costs are
now down to 50 percent of what they were. I’m not making this up. This
information came from a study by the Electric Power Research Institute.
And all we have done is to put in a good PM program and follow that up
with a solid predictive maintenance program.
Now let’s take this a little
further and look at RCM. Now we are applying the aircraft rules of the
MEL to the equation. I have shown you the effects and potential cost
savings of moving from failure mode to PM and PdPM.
Here is where you will need
the help of your finance people. They need to assist you with the cost
of the failure. The airline example is cost prohibitive, but look at
some of your operations. Do you not have some operations that by having
a failure could be catastrophic from a cost point of view? Say a
compressor went down. Or a boiler failed. Or you lost power to your
freezer. Now you are beginning to assess the total cost of failure. RCM
is called risk management. Answer these questions:
1. What is the Risk to production if you
have a failure?
2. What is the Risk if you don’t have a part
when you need it?
3. What is the Risk to the equipment if you
continue
running after a failure?
4. What is the Risk to your customer?
5. What is the Risk of a major failure?
6. What is the Risk to the company of a
catastrophic failure?
Now you are starting to
understand the true cost of maintenance and why we need to do it. Twenty
years ago, we only loaded equipment to 60 percent and ran two shifts,
five days a week. That was full load and we could take machines down
with no effect on the six questions stated above. But now, we run 24/7,
at an 86 percent load, and these questions come into play. You need to
answer these questions and become RCM oriented. Have you thought about
making your own MEL for your shop?
R. T. “Chris” Christensen
is Emeritus Faculty at the University of Wisconsin, Madison, and is
Emeritus Director of Operations and Maintenance Management Certificate
Programs at the Universities Executive Education Department in the
School of Business. Contact Coach Christensen at 262-613-0073; E-mail:
crchristensen1958@wi.rr.com.
This article appeared in the
August/September 2006 issue of MRO Today magazine. Copyright
2006.
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