Building a Corporate Reliability Culture

Common threads run through maintenance and reliability transformations at leading companies. They include peer networks, benchmarking, reliability focus, and performance measures.

During the turbulent years of downsizing, restructuring, and globalization, another important change has been taking place, but largely off the radar screen of most observers of industrial management. It is the pursuit of corporate maintenance and reliability identity by major companies. As a witness to many of those "transformations," I have observed a number of common threads in many of the companies' success stories.

In the mid-1980s, after 25 years in the manufacturing plant environment at DuPont, I had an opportunity to serve in a role that called for an unrestrained look at maintenance and reliability practices outside of DuPont. It was during the early benchmarking work from 1987 through 1993 (the year I retired), that we in DuPont first began to observe the techniques and strategies used by other companies to drive improvement in their maintenance and reliability cultures. Since 1993, I have observed the strategies of several multi-site companies, small and large, including Alcoa, Amoco, Bayer, Clorox, Hercules, ICI, Rohm & Haas, Stepan Chemical, and the U.S. Postal Service.

The approaches used by some of these well-known companies indicate the presence of several common strategies.

Similar approaches: Evolving cultures
Basically, all the companies started their efforts with some form of assessment of their current capabilities and maintenance practices. Specifically, all the companies mentioned in this article started with the question "Where are we now?" What separated their assessments from more conventional maintenance audits was the concept of quantitative comparison with other companies' plants through a process called benchmarking. The benchmarking approach perhaps leads to the same conclusions as a conventional audit, except that it carries the credibility of validated (apples-to-apples) comparison data.

In all cases, benchmarking assessments provided a clear view of the plants' strengths and improvement opportunities. The documented strengths allowed for corporate sharing of pockets-of-excellence. The documented improvement opportunities provided a basis for each plant to develop a strategic plan for maintenance and reliability - a roadmap for future improvement. Taken collectively across multiple corporate sites, the improvement opportunities often underscore common issues that need to be addressed at a corporate level.

The natural consequence of benchmarking multiple sites, developing site strategies, and recognizing key common issues, was the commissioning of corporate steering teams that were created to address the common issues so plant sites did not have to "reinvent the wheel." These steering teams often became the consensus agents-of-change by:

  • Determining strategies to address key corporate issues.
  • Preparing corporate guidelines for the various segments of maintenance and reliability management (e.g., spare parts management, planning and scheduling, contracted maintenance).
  • Providing training and training tools to assist plants' efforts in boosting awareness of the changing reliability culture.

Amoco (BP Amoco) in transition
In 1996, the Amoco Chemicals Manufacturing Council established 20 manufacturing metrics to measure performance of the chemical sector and the chemical plants. It also established five "Networks of Excellence" to drive improvement in these metrics. One of these networks, the Maintain Asset Network (MAN), served as a vehicle to substantially strengthen the culture of maintenance and reliability in Amoco's Chemical businesses over the past 5 years.

Initial MAN group activities centered on improving three primary metrics:

  • Maintenance costs (as a percent of estimated replacement value)
  • Availability ratio (reliability)
  • Sustaining capital.

The baseline cost was established and a goal was set to reduce maintenance by 50 percent over a 3-year period. The group struggled with the magnitude of the goal, differing maintenance accounting practices, and the calculated replacement value of the plants. One network member was assigned the task to develop standard guidelines for maintenance cost accounting and replacement value calculations. The MAN members also devoted time to understand each other's organizations, work processes, current efforts, and opportunities.

The benefits of networking—working together to develop consensus and synergy—became evident. It was clear that the network approach would continue to be a key ingredient in setting priorities and allocating resources.

A strategy subcommittee decided that it would support a project to benchmark the maintenance and reliability practices at several representative Amoco plants. The first comprehensive report was issued in 1998 and was reviewed with the manufacturing council. The report found that there were several "pockets-of-excellence" in Amoco plants. Several data correlations also were made:

  • Some plants with stronger commitments to support staffing have lower costs.
  • Several plants with the greatest commitment of reliability resources have lower costs.
  • Plants with more disciplined planning practices tend to have lower costs.
  • Plants with the greatest productivity have well-staffed reliability functions and do the best job of planning and scheduling.

Numerous plant-specific recommendations were made in the individual plant reports, but there also were several recommendations for the sector as a whole, including:

  • Prioritize work properly
  • Train planners
  • Develop long-range planning processes
  • Close reliability staffing gaps
  • Leverage pockets-of-excellence
  • Reduce slow-moving inventory
  • Reduce warehouse staffing

Based on the rolled up savings generated from the plants benchmark teams, the initial report estimated that the sector could reduce maintenance costs by 30 percent and estimated that it would take 3-5 years to realize this savings. Some of this work was described in "Strengthening Asset Management at Amoco Chemical" (MT 9/99, p 12).

Amoco, through the MAN group, developed an excellence model for maintenance and reliability that focused on condition monitoring and sound, basic preventive maintenance (PM) work. Subsequently, with the merger of Amoco and BP, the two companies merged their reliability networks into the Maintenance and Reliability Network (MRNet). The new network has issued a new global excellence model which it calls "Getting Maintenance and Reliability Right," or the GMRR Guide.The current BP Amoco Excellence Model contains eight key elements and 16 key maintenance and reliability processes. BP Amoco supports performance measures, with emphasis on asset utilization, equipment reliability, and financial results.

The 8 elements are leadership and accountability, people, health and safety, environment, productivity,strategy, reliability, and technology.

The sixteen processes include delivering assurance, performance targets, reliability management, computerized maintenance management system, equipment ownership, equipment improvement teams, root cause failure analysis, early equipment management, reactive to proactive maintenance, planning and scheduling, spare parts management, contractor management, turnaround processes, quipment inspection and integrity, knowledge management, and maintenance tool box.

Alcoa
Work with Alcoa began in 1994 with two unrelated requests. The first was from a plant in Iowa investigating the popular metric of maintenance cost as a percent of plant estimated replacement value (ERV). The second was through an organization in Australia conducting a benchmarking study on behalf of 12 Australian manufacturing plants, including an Alcoa smelter in the state of Victoria.

As a result of the work in the U.S. and Australia, two separate global studies were commissioned: One for the global smelting operations, one for the global refining operations. Early in the process, there was little networking with the formality or impact seen with DuPont or with BP Amoco. Both business divisions were simply trying to drive improvements at the plant level through benchmarking and identification of improvement opportunities. The assessments spanned mid-1994 through early 1997 and included 11 smelters, seven refineries, and three mining operations in six countries.

Both the Smelting Division and the Refining Division took the results seriously and drove hard to get the sites to develop improvement strategies. Shortly after the completion of assessments in two Italian smelters in early 1997, the Smelting Division assigned a new manager to meet with smelter engineering and maintenance managers in a networking environment. Their mission was to review key issues and to drive improvement. During the next 2 years, Alcoa went through a period of substantial change, with numerous mergers, acquisitions, organizational restructuring, and personnel retirements and reassignments. Continuity of efforts to improve maintenance and reliability in the Smelting Division was made difficult by the continuous sequence of changes taking place.

In 1999, a renewal of commitment appeared in the Smelting Division. Driven by the division's manufacturing director, the maintenance network began to meet and discuss priorities. As a corporation, Alcoa had decided to use its variation of the Toyota Production System (Alcoa Production System—APS) as a primary umbrella for change across the corporation. The Smelting Reliability and Maintenance Network saw this as an opportunity to drive reliability improvement and asset utilization concepts under the APS banner.

What began in 1994 as an assessment of maintenance costs, once again became an issue of driving reliability. The Maintenance Excellence Model that emerged at a corporate level highlighted 10 key elements as critical success competencies:

  • Leadership
  • Planned maintenance
  • Preventive maintenance
  • Predictive maintenance
  • Reliability focus
  • Materials management
  • Contracted maintenance
  • Human resources
  • Research
  • Networking

The primary focus for the Smelting Division for year 2000 has been training based on the 10 best practices identified in its excellence model and APS, with strong linkage between the two training schemes.

As with BP Amoco, Alcoa places strong emphasis on performance measurement. The primary metrics are contained in Alcoas concept of a "Balanced Scorecard" which looks at both leading and lagging indicators.

Leading indicators:

  • Planned maintenance
  • Preventive compliance
  • Predictive maintenance
  • Overtime
  • Backlog

Lagging indicators:

  • R&M cost per unit of product
  • Safety
  • Equipment availability
  • Delivery performance
  • Productivity

A third category of benchmark indicators is used to keep tabs on the progress of the "outside world."

As with BP Amoco, Alcoa uses today's Web technology to link locations, techniques, metrics, and information around the world.

DuPont
DuPont's efforts have been widely reported in this magazine and elsewhere. A brief sequential summary will serve to make the comparison of similar approaches taken by others.

DuPont, of course, is well known for its early work in benchmarking and reliability practices. In the late 1980s and early 1990s, DuPont plants evolved through improvement strategies, recognition processes, maintenance excellence models, and evaluation of Total Productive Maintenance (TPM) concepts. More recently, the focus has shifted from maintenance excellence to manufacturing excellence. What was once the Corporate Maintenance Leadership Team (CMLT) now falls under the umbrella of manufacturing excellence. Just as maintenance excellence is comprised of a number of best practices, maintenance excellence itself is a best practice of the manufacturing task.

DuPont, at a corporate level, is driving manufacturing excellence with the tenets of Six Sigma. In many ways, the company's approach parallels that of Alcoa with APS and BP Amoco with TPM. Networks are active, metrics are in place, the excellence models are developed, and progress continues. As with BP Amoco and Alcoa, DuPont uses the Intranet and Web technology to make information readily accessible.

07-00mm1
FACILITIES CAPABILITY MODEL ROHM & HAAS: Example of an analysis of a unit’s asset utilization.
Rohm & Haas
Rohm & Haas' efforts began in about 1992 and in the early stages there were several discussions with DuPont, as well as with other companies. To the extent that no one had to give up any proprietary advantage, the 1990s represented a period during which companies became much more willing to discuss their improvement approaches. Just as DuPont had learned from Ford, Alumax, Ore-Ida, and others, Rohm & Haas had discussions with DuPont, Alcoa, and numerous others.

Rohm & Haas interacted with several benchmarking partners during the mid-1990s and used the resulting knowledge to develop its own view of world class maintenance practices. It then developed a two-tiered assessment process that:

  1. Provides an initial assessment that is more subjective than benchmarking.
  2. Provides a more in-depth look at a site's practices, with recommendations for improvement actions.

The process is team-based and develops a consensus set of priority key issues that the site team can use for the focus of its strategic planning. The process was outlined in "Assessing Maintenance Performance" (MT 11/97, p 13).

The second-tier process tends to be more quantitative, and results in scoring against a more rigorous excellence model. Again, the result focuses on issues for improvement, using the strategic planning process. It also provides a quantitative assessment of maintenance practices. The process today includes an analysis of the unit's asset utilization (AU) in an effort to bring attention to the business potential of improving reliability.

Today, Rohm & Haas thinks in terms of manufacturing excellence with reliability and maintenance as key ingredients. The maintenance excellence components of the Rohm & Haas "Reliability Policy and Best Practice Manual" are:

  • Leadership
  • Planned maintenance
  • Process and equipment reliability
  • Reliability-centered design
  • Maintenance material management
  • Contractor administration
  • Human resource development
  • Information systems
  • Performance measures
  • Assessments

Rohm & Haas has a well-developed maintenance and reliability network, coordinated from corporate offices in Bristol, PA. Performance measures are part of the company's culture today. Every operating area is encouraged to employ two principal measures: Asset utilization and maintenance cost. Additional measures are used as core result indicators and as input/output metrics for the functional activities outlined in the Best Practice Manual.

Rohm & Haas continues to evolve its philosophies and processes today. With its acquisition of Morton Salt, additional work is underway to broadcast the basic concepts of manufacturing excellence, and to continue the process of assessment, strategy development, and reliability improvement.

Common threads
By now, you have seen some of the common threads in the approaches used by these companies. These strategies have been observed in many companies' successful efforts to strengthen plant performance, reduce costs, and bolster business results. Perhaps the most consistently successful tools are:

  • Use of peer networks to share knowledge and build consensus.
  • Use of benchmarking or other assessment tools to identify both strengths and improvement opportunities.
  • Strong focus on reliability, rather than on cost reduction.
  • Development and use of an excellence model to describe and define corporate beliefs regarding maintenance and reliability.
  • Extensive use of performance measures, with appropriate "target goals."

It is also clear that each of the companies discussed has made a concerted effort to incorporate its improvement strategies with other corporate initiatives, trying desperately to avoid the "program-of-the-month" syndrome. The best indication that these efforts have paid dividends rests in the durability and continuity of each companys journey to excellence.

The payoff
The payoff for each of these companies lies in improved business results. While we once considered success to be reflected in lower maintenance costs, we now hear many companies measuring their success through:

  • Lower costs (maintenance and production costs)
  • Higher equipment productivity
  • Postponed plant expansions (deferring capital requirements)
  • Improved morale
  • Better housekeeping
  • Improved safety

The typical benefit sequence is substantially lower costs during the early years, followed by continuously improving plant reliability and throughput that continues indefinitely.

For smaller companies?
Do these common threads and payoffs apply to smaller companies with only a few plants, or to single-plant companies? Yes, best practices still apply even to the smallest plants.

Best practices apply, regardless of organization structure. It becomes a matter of how to adapt the best practice concepts in a smaller plant's environment. Multi-plant networks become meaningless when you have a single plant. Writing volumes on maintenance excellence models becomes bureaucratic when you have only a few plants. Formal documents may become simple statements of beliefs, agreed to by the plants, and supported by the corporate manufacturing manager. Performance measures may be less formal and fewer in number, but thoroughly understood by all. What is absolutely essential is a commonly understood philosophy of maintenance and reliability practices.

Culture shifts occur slowly
While the improvement issues may be very clear, and the action items can be easily listed and prioritized, the actual act of changing a corporate maintenance and reliability culture will take time. Generally, the larger the corporation, the longer it will take to shift the culture. Substantial inroads can be made in 5 years. Don't expect to see substantial changes in employees' behaviors or beliefs during the first 2 years. We all resist change to some degree. Permanently changed beliefs and behaviors will take time to evolve.

You'll know you've made progress when you can begin to feel the employees embracing and driving the new concepts rather than resisting and doubting their effectiveness. To speed the cultural evolution (or revolution, if you're in a panic), involve employees early in the process. Involve employees at every level possible, as early as possible. Encourage consensus building; promote teams and sub-teams, focus on business outcomes. Include as many people in as many aspects of the effort as possible. Remember, it's hard to berate a strategy for the future when you've been part of its development.

Much has been said about the emerging global economy. Technology's pace is accelerating; companies are merging; organization structures are changing (and downsizing). Companies that adopted the status quo are already out of business. Those who improved too slowly are in peril. Those at the forefront of change, and continuously improving, will survive.

Most successful improvement efforts I have observed over the past 15 years have started with an honest assessment of current state. If you can see the landscape, pinpoint where you are, and pinpoint where you want to get to, the rest is strategy and execution. Not much different from football, really. Once you know youre on the 50-yard line, and you want to be in the end zone, the rest is strategy and execution. Wear your protective gear and have a safe journey. MT


This e-mail address is being protected from spambots. You need JavaScript enabled to view it , P.E., is a consultant based in Newark, DE. He can be contacted at (302) 234-3438

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