Many may think a mission statement requires a document the size of War and Peace (Tolstoy, Viking Press, ISBN 0140444173); however, before you begin writing the next chapter, check what some of the experts advise by visiting the following online resources.

A good starting point for mission statement tips is the Leader to Leader Institute web site (formerly the Drucker Foundation). This page offers a comprehensive set of instructions and advice to set a mission statement project in motion. Business guru Peter Drucker says the mission should "fit on a T-shirt," yet a mission statement is not a slogan. It is a precise statement of purpose.

One Page Business Plans stresses simplicity and clarity at its web site. According to the site, a mission statement should state what your business unit does, what you care about, and why someone should use your services.

According to Janel Radke, in an article posted at the Craftsmanship Center, a mission statement's message should be accomplished in a brief paragraph that is free of jargon and "terms of art." In other words, it should avoid the kind of shorthand you may be in the habit of swapping with others in your field, but is unfamiliar to anyone outside the organization or the field in which it works.

A mission statement is a marketing tool, a leadership tool, and a motivational tool so it should not be rushed nor should it be dictated or forced. It is useful to get contributions and participation from all of the stakeholders or people who will be affected by the mission statement.

Most experts agree that the mission statement should be kept short, should be easy to remember, without having to read it, and should sound good when spoken.

An offbeat guide for building a mission statement is available at the ABC News site that suggests you start with a short questionnaire for both internal and external contacts. It also suggests a strategy for involving a group and keeping focus to get the best mission statement.

About.com offers a great resources area for writing a mission statement at. This site offers a 12-step process and includes some handy tips.

If you are leading, facilitating, or participating in a project to create a mission statement, you may want to use the knowledge and experience you gain to write your own personal mission statement.

Some examples of a maintenance and reliability mission statement may be:

• To ensure machinery reliability
• To support manufacturing through coordinated maintenance
• To increase availability
• To drive profit from increased reliability MT
  

At a small chemical plant several years ago, the plant manager was overheard complaining about the expenditures for spare parts related to a process pump. "The pump costs only $18,000 brand new. How is it that we spent $14,500 in spare parts in one year? I have added these costs several times. I kept thinking there must be a mistake; unfortunately, numbers don’t lie.

"How much money did we really lose in production time?," he questioned. "Why aren’t we smart enough to track equipment repair costs? We didn’t need to repair the pump. We needed to replace the pump. Downtime expenses, mechanics’ time, and spare parts combined, we have probably wasted $50,000."

Why did this situation exist? The answer is simple. Many businesses have no way of tracking their maintenance activities.

The "we are too small" mentality
"We don’t need maintenance software. Maintenance software is for big companies. We just don’t have the staff. We don’t have enough people to warrant the use of software. Maintenance software couldn’t possibly work here."

In reality, even a one-person maintenance department can reap the benefits of maintenance management software. The same benefits realized by the maintenance crew in larger companies are there for smaller maintenance departments also.

Smaller companies are typically forced to do more with less in nearly every area of their business. If they are not organized, they will continue to work harder—not smarter. If the amount of time to administrate a repair or equipment failure can be cut in half, those unused resources are available for other tasks. Without software, the small maintenance group will waste time trying to figure out the answers to these common questions nearly every time maintenance is performed on a piece of equipment:

• Where did we buy that last spare part?
• How much did we pay?
• Do we have a warranty for this equipment?
• Who was the salesperson we talked to?
• What was the phone number?
• Do we have an open purchase order with the company?
• How was the last part shipped?
• What was the delivery time for the last one we ordered?

The maintenance person probably will get on the phone to accounting or other departments and ask them to research their records for the information. Again, more wasted time. Even with the most economical maintenance software package, most of this information can be right at your fingertips.

Another important issue to consider is the amount of information that can leave the company when a key maintenance employee leaves. Years of critical technical information can be lost the moment the employee walks out the door.

Implementation failure syndrome
"Implementing maintenance software is easy; I’ve done it six or seven times so far."

It is because of these failures that some smaller companies decide against the purchase of maintenance software. Some studies indicate maintenance software implementation failure rates as high as 70 percent in some industries.

It is not unusual to find a company that owns several different maintenance software products. Although software is usually the first point of blame when implementation fails, humans are the real reason implementations fail in most cases.

"See that box on my bookshelf? I could have paid for my son’s undergraduate degree with what I paid for that. Maintenance software is just like an iceberg. The software costs are merely the tip. The salesman wanted another six times what the software cost us to populate it. He left us high and dry. That purchase nearly cost me my career."

Many consumers of maintenance software have been led to believe that the only way the software will ever work is to spend thousands of dollars on implementation services. But end users can implement the software. In many cases, they will do a better job than the software vendor because the end user is more familiar with the facility.

Implementation basics
Implementing maintenance software can be quite easy if the end user has patience. Users should expect to write work orders in four to six weeks after software installation; however, an efficient, smooth-running operation may take 18 months or more.

Getting organized is the first step in getting ready to use maintenance management software. This process can be started before purchasing software.

Name areas. The first thing to do is assign area names to the facility. This may be as simple as calling one area the manufacturing area, another the warehouse area, and so on. Consider breaking the areas into sub-areas. The manufacturing area may be broken down into materials, product pre-assembly, final assembly, painting, packaging, etc. Think along the lines of how maintenance activities are handled currently. It should be easy to relate the maintenance performed to a specific area.

Later, a report can be produced that can be sorted by area. As an example, a list of all breakdowns in the pre-assembly area within a specific date range may be useful to pinpoint problem equipment areas. The more areas that are defined, the better the level of detail for future reporting. Keep the list of areas in a spreadsheet or other document. More than likely, the information can be imported into the maintenance software.

Name equipment. Naming equipment is one of the most important steps to success. The naming scheme should support future growth as well as the way the current workforce recognizes the equipment. Conventional schemes such as "P" for pump and a three-digit number (P-101, P-10A, or P-10B) should be considered. Some companies embed an area designation into the name as well. If P-101 is located in the pre-assembly area, the pump name might be PA-P-101.

It is important to provide a name or tag number for any piece of equipment in the facility that could ever be maintained. This should include office air handling equipment, company vehicles, water heaters, compressors, etc. Again, place the list of equipment in a spreadsheet or document.

Identify nomenclature requirements. Equipment nomenclature can be defined as the information required for purchasing the equipment or part without the need for the owner’s manual or without contacting the supplier.

Establishing equipment nomenclature can make the life of the maintenance technician significantly easier. Consider creating nomenclature templates for different equipment or part types. As an example, each time a motor coupling is purchased, the supplier needs specific information to ensure the correct coupling is provided. General nomenclature templates to consider are pumps, bearings, belts, motors, control valves, gear reducers, instrumentation devices (level, flow, temperature, etc.), and compressors.

There will be equipment or parts that are unique to a specific industry. Nomenclature is particularly important for unique items because the equipment or part may have to be manufactured. This information also can be imported into the software; however, consider placing the nomenclature into a document file.

Corrective maintenance. Corrective maintenance vs preventive maintenance is an often-discussed topic. Generally, industry guidelines recommend 80 percent of the work done in a facility be preventive maintenance and 20 percent corrective or reactive maintenance.

However, when you are implementing maintenance software, forget this advice. Wait until the basic infrastructure of maintenance is in place and working well before venturing into preventive maintenance percentages. Instead, concentrate on establishing a corporate culture that readily accepts the mandatory use of maintenance software.

A rule established early in the transition from a manual system to software might be: Effective (date), all work performed by maintenance department employees will be recorded on Form (form name here). The information to be recorded, at a minimum, shall include:

• Area of the repair
• Equipment number repaired
• Start time of the repair
• End time of the repair
• Parts/consumables used for the work
• Employees involved with the repair

Software is not needed to establish this requirement. The use of the information is twofold. First, it creates the beginning of an equipment history for the facility equipment. Second, it provides the foundation for the culture of recording maintenance activities within the department. One of the biggest factors in the failure of maintenance software is the lack of willingness on the part of maintenance personnel to provide critical information to establish maintenance histories. The paper work orders can be easily entered into the software with the "open and close a work order" feature in most maintenance software products.

Preventive maintenance. What about preventive maintenance? Start with ranking the facility equipment on its degree of importance. Start slowly. Identify equipment items that are required for the facility to generate revenue. Review the manufacturers’ recommended maintenance for the equipment. Then blend common sense from your maintenance experience with the maintenance the manufacturer is recommending.

Next, create a maintenance task that includes:

• Who is performing the work: maintenance or subcontractor
• Permit required to perform maintenance (lockout/tagout, confined space permit, etc.)
• Special tools required to perform maintenance (include personal protective equipment)
• Spare parts required to perform maintenance
• Special lubricant(s) required to perform maintenance
• Estimate of man-hours for task
• Description of task (fully explain the sequence of steps to perform work)
• Description of appropriate test or check to confirm equipment maintenance is complete

Place this information in a document file so it can be imported into the maintenance software. Once maintenance tasks have been created, review the man-hours required to complete the work. Look at the available manpower capacity in the maintenance department before scheduling the first preventive maintenance work order.

It is a mistake to schedule more preventive work orders than the current manpower level can handle. This creates a lack of confidence in the system and, more importantly, demoralizes the workforce. The sense of accomplishment is lost and it creates the impression that the department is not performing the work.

Maintenance tasks have to be scheduled at intervals that are physically achievable by the manpower available. As an example, do not schedule 20,000 hours of overhaul work if only 15,000 hours of manpower are available.

Work orders are typically printed for one week of maintenance. Every effort should be made to adjust the schedules so that if the department gets behind, work orders already out on the floor are completed first.

Keep on working
Maintenance software implementation is a work in progress. It can be as simple as entering a small amount of information each day. Over time, the software gets populated. Some companies enter the information when confronted with the need to perform maintenance on a specific piece of equipment. Others elect to populate the software all at once. Any of these methods work. The important issue is to develop a culture where maintenance personnel want the system to succeed. This can be one of the biggest avenues to success.

Maintenance tasks, new equipment, new staff, new technologies, etc., all play a role in how the maintenance software can be best used to alleviate downtime and maintain efficiency. Maintenance software has been around for decades. The price of computer hardware is at an all-time low. Low-end maintenance software packages can be purchased for about the same price as a well-equipped PC. The excuses not to implement maintenance software are fewer and fewer each day. Take the plunge. You’ll be glad you did. MT

Roger D. Evans is president of Compliance Technologies, Inc., 135 Mirramont Lake Dr., Suite #135, Woodstock, GA 30189; (800) 845-6094

These workers collect a wealth of knowledge during their many years on the job, but this information is almost never formally documented or transferred to others.

Their expertise includes asset prioritization, asset condition and performance targets, inspection knowledge, and general know-how pertaining to the maintenance of critical assets. If companies do not systematically collect this important information while employees perform their jobs, all of this knowledge will be lost upon retirement.

Most maintenance organizations have become accustomed to manually collecting and storing asset condition data, usually where it's most accessible to the employees—in their personal "little black books." These books hold enormous amounts of maintenance expertise, and, unfortunately, they either disappear or become meaningless when the employees retire.

According to a Hudson Institute study on the state of the workforce in North America, more than 30-40 percent of maintenance trades people will be retiring over the next five years. This problem is particularly acute in the utilities industry where imminent retirement estimates are as high as 50 percent.

While retiring rates are increasing, fewer people are entering the maintenance profession. Apprenticeship programs are at their lowest levels in decades. There are various reasons for this trend, but they all lead to a single conclusion—organizations must accomplish more with fewer resources.

Companies that understand this issue are turning to reliability software to capture the expertise and knowledge of their retiring workers.

Several years ago a prominent North American manufacturer realized that the average age of its employees was about 52. It recognized the urgent need to capture the knowledge of these skilled individuals; often an employee would turn in his little black books as he was leaving. In these books he had collected years of experience related to his job, from condition monitoring routes to the tolerance levels of certain condition indicators that he had recorded.

Fortunately today, at this company, there is no crisis when an experienced maintenance professional retires. I recently attended a retirement celebration for one of its employees who had 45 years in maintenance. The company had arranged a big party, but for this retirement, there were no little black books to be turned in. Over the past few years, the company had transferred this employees knowledge into a reliability software system.

Reliability software enables companies to capture, analyze, and use asset health data as the employees perform their jobs. Information such as condition monitoring inspection routes, tolerance levels of condition indicators, and the maintenance work plans required to conduct repairs is now available to all maintenance employees. It acts as a repository for condition data and all maintenance program information.

The reliability software manages online data, predictive data, and visual inspection data that users collect on operator rounds or during routine maintenance inspections. It then analyzes data and presents the results in a visual format, using flashing alarms and graphic capabilities to enable users to focus on problem areas.

In addition, the software has the ability to compare multiple data points to create a complete picture of the operating health of critical equipment. Employees no longer need to remember or spend time repeating calculations because the software performs them automatically.

Reliability software reduces the overall effort to perform and document the maintenance function and it systematically drives decision making—capturing asset condition knowledge that typically exists only in paper form, to effectively monitor equipment health and to identify the right work at the right time.

Robert C. Baldwin, CMRP, Editor

Mostly, the analogy focuses on the similarity of checking your heart rhythm, blood pressure, and body temperature to checking a machine's vibration level, operating pressure, and operating temperature.

The analogy expands nicely to cover procedures such as electrocardiogram, magnetic resonance imaging, and blood workups in the human and vibration analysis, infrared thermography, and oil analysis for the machine.

Exploratory surgery is not to be prescribed casually, neither are machine overhauls (because of the risk of maintenance-induced failure).

The analogy also works for the overall approach to health-wellness center vs. emergency room, doctor-prescribed medication vs. grandma's home remedy, and proactive maintenance vs. reactive maintenance.

One of Begley's columns noted "a nascent revolution in which 'systems biology' is overthrowing the reductionist, molecular-biology paradigm that has reigned for half a century (since the double-helix discovery)." Molecular biology was quite successful, she writes, reaching its pinnacle with the sequencing of the human genome. Once the parts list has been assembled, one must next look to the function of each and how they work together systems biology. Root cause analysis and reliability centered maintenance (RCM) come to mind.

In another column, she brings up penetrance, the likelihood that a gene will lead to a trait or disease, noting that "you can say that Gene X causes diabetes in an extended family, but what you are really saying is that Gene X causes diabetes when it interacts with precisely the genes those people share." This reminds me of the importance of a machine's operating context to its maintenance requirements.

And what about holistic medicine, defined by the Canadian Holistic Medical Association as "a system of health care which fosters a cooperative relationship among all those involved, leading towards optimal attainment of the physical, mental, emotional, social, and spiritual aspects of health"? That sounds a lot like TPM and physical asset management to me.

Who's on your equipment health team: physicians, pharmacists, and physical trainers, or quacks, medicine showmen, and fry cooks? Regardless of who they are, we believe they all can profit from some of the remedies we serve up in our Professional Development Quarterly. MT

Although the details of physical asset management, financial asset management, and human asset (resources) management are quite different, they share common elements directed toward supporting the value chain of the enterprise.

As noted in "Part I: The Asset Management Model," these support functions entail setting procedures to be followed with respect to the assets used by managers of the value chain, ensuring that the procedures are followed, and keeping score. They include the acquisition and deployment of additional assets when required. Given the similarities of these tasks in each function, one would think that the physical asset management organization would be similar to the others: small, focused and tightly organized, and influential.

In reality, this is seldom the case. The physical asset management function is usually much larger than the other two, much more diffuse, much less focused, and not nearly as influential. All of which means that it is also much less effective.

In the opinion of the author, the single most important reason for the differences in organization, influence, and effectiveness between the physical asset management function and the other two is that more often than not it is responsible for executing maintenance tasks in addition to deciding what tasks should be done. This adds an enormous—in fact, a crippling—additional day-to-day management burden compared to the other two support functions.

It really does matter
At this point, it is worth pausing to ask whether it matters to any organization if the physical asset support function becomes weak, unfocused, and demoralized to the extent that its effectiveness is impaired. To answer this question, let us compare the consequences of inadequate support from each of the three main support functions.

If the finance department does not do its job properly, the worst that could happen is that the organization goes bankrupt. In extreme cases, senior executives could face lawsuits from irate shareholders.

If the human resources department does not do its job properly, the ability and/or willingness of the workforce at all levels to do their jobs begins to deteriorate. This leads to an overall decline in business performance and may cause an increase in human errors with safety consequences. (However, in the case of the latter, the cause and effect relationship is usually difficult to prove in a legal sense.) In extreme cases, poor human resource management results in actions such as strikes or sabotage that could threaten the survival of the business. In short, the consequences of poor human resource management are nearly all economic, but there are some safety overtones.

In the world of physical asset management, inappropriate design and/or maintenance leads to increases in failure rates and downtime that also erode business effectiveness. In modern, highly automated businesses, the performance of physical assets has an impact on business performance that is at least as great asand often greater thanthe performance of people. Not only that, but many equipment failures have direct, lethal consequences in a world that is starting to hold individual managers personally accountable for such failures, to an extent that can result in heavy fines and extensive jail sentences.

So it could be argued that physical assets are not only at least as important as the other types of assets in business terms, but from the viewpoint of the accountability of individual executives in the case of certain types of failures, they are actually far more important. They need to be managed accordingly.

If the physical asset management function is to become as influential and effective as it could and should be, a number of key changes need to be made. The most important of these are outlined in the following paragraphs.

Separate the referees from the players
Both the financial and the human resource functions separate the policy formulation process (writing the rules of the game) from the execution of the associated tasks (playing the game). At the strategic level, this is perhaps the single most important step that the physical asset management function should take to solve the organizational problems outlined in the first part of this article.

In essence, this means that the execution of all maintenance tasks—whether preventive, predictive, corrective, or detective—should be made the responsibility of the business units that operate or use the assets. The physical asset management function should be responsible for selecting the tasks (content and frequency), without being responsible for their execution.

Combine engineering and maintenance
In cases where they are separated, the engineering and maintenance functions should be combined into one physical asset management function.

Make sure the physical asset management rules are right
Part 1 of this article mentioned that many operations people are still highly skeptical about the value of preventive maintenance activities because of problems associated with excessive reliance on inappropriate fixed-interval maintenance in the past. It also mentioned that some maintenance departments are trying to compensate by swinging too heavily toward predictive or condition-based maintenance. In fact, the real answer is to recognize that all types of asset management policies have a place, and to select the policy that is most appropriate for dealing with each type of failure.

Not only must these policies ensure that each asset continues to make a safe and cost-effective contribution to the value-adding process, but they also must be legally defensible.

To address this issue, many formal physical asset management strategy formulation processes have been developed over the past 20 years. The best of these—most notably those that comply with "Evaluation Criteria for Reliability-Centered Maintenance" (SAE Standard JA1011)—not only lead to rapid and substantial improvements in equipment reliability, safety, and environmental integrity, but also provide a solid basis for defending the maintenance programs in a court of law if this should become necessary.

It is essential that anyone who takes the lead in applying these processes should receive formal, competency-based training before attempting to do so. (It is not sufficient to try to lead the application of these processes after simply reading a book or attending a short course.)

Applying these processes correctly is likely to do more than any other single action to restore the long-term technical credibility of the maintenance function.

Avoid shortcuts
The application of rigorous asset management strategy formulation processes takes time and costs money, but the financial returns are such that they usually pay for themselves in a matter of months, if not weeks. This is a very rapid payback indeed.

Despite this rapid payback, some individuals and organizations have tended to focus on the effort rather than the returns, which has led them to spend a great deal of energy trying to reduce the time and resources needed to apply these processes. The results of these attempts are generally known as streamlined techniques. Some of them even generate fairly significant short-term gains.

However, in the experience of the author, the omissions embodied in these streamlined techniques result in maintenance programs which contain so many flaws that in the long term, the performance of equipment to which they are applied will not match that of equipment subjected to correctly developed programs. This means that the credibility (and hence the stature) of the maintenance people who employ these streamlined techniques will not improve, but is likely to suffer further. Clearly, the only way to avoid this fate is to avoid shortcuts.

Ensure that the players understand the rules
The managers of business units that take responsibility for executing maintenance tasks must have a basic understanding of the principles underlying the task selection process, and need to understand fully the risks that they, their colleagues, and the business as a whole face if the tasks are not done correctly. They also should clearly understand and be able to make effective use of whatever planning, scheduling, and reporting procedures are in place to help ensure that the tasks are done at the right time and by the right people.

In the case of modern, highly automated value-adding processes, the impact of technology is reaching the point that a substantial technical qualification—ideally a degree in engineering—is becoming a necessity for the managers of the relevant business units. This should be supplemented by intensive formal training in modern asset management processes. This is a critical success factor because many organizations already have tried unsuccessfully to make maintenance task execution the responsibility of business unit managers. Mounting anecdotal evidence is suggesting that one of the main reasons why these attempts fail is lack of appropriate training for the managers in the field.

The people who actually do the work (operators and maintainers) also need a basic understanding of the task selection process, and they need to be trained to do the tasks properly. Their inclination to "do the right job right" every time will be greatly enhanced if they play a part in the task selection process.

Ensure that the rules are obeyed
Procedures should be in place to ensure that all maintenance tasks are done at the right time and by the right people. This needs suitable planning and scheduling systems, and much more needs to be done about the question of compliance.

In most industries right now, poor maintenance schedule compliance attracts little more than periodic exhortations to try to do better. In fact, given what is at stake, the penalties for noncompliance with the rules of physical asset management should be at least as severe as those that apply if anyone breaches the rules governing the management of financial assets or human resources. (Think about what usually happens to managers who chronically exceed the controllable portions of their expense budgets, or what happens to a manager who loses his temper and hits a subordinate.)

Of course, organizations will only accept a similar degree of discipline in the world of physical assets if they have commensurate faith in the value and the validity of the tasks. This places even greater onus on physical asset managers to ensure that the correct tasks are specified, and leaves even less room for shortcuts.

Spend what needs to be spent
The worldwide pressure to reduce maintenance costs leads many maintenance managers to complain that they are not given the resources needed to apply rigorous maintenance policy formulation processes. One also frequently hears complaints that insufficient resources are provided to deal with existing maintenance workloads, let alone to analyze what the organizations concerned should really be doing.

Rigorous analysis reveals that there is a certain safe minimum of maintenance that needs to be done on every plant asset. (Sometimes it transpires that this safe minimum is zero, but that finding should be substantiated by rigorous analysis.) Doing less than the safe minimum increases the risk of injuries or fatalities, usually to an extent that is indefensible in a court of law. Bear in mind that in the present legislative climate, the people who establish maintenance policies and the people who manage the execution of the work are increasingly likely to be held every bit as accountable for such accidents as the people who perform the work.

All this means that the time has come for maintenance people to insist that sufficient resources are made available to determine what the safe minimum of maintenance work actually is, and that the resources required to perform the safe minimum are made available. However, they can do this credibly only if the people providing the funds have complete confidence in the technical validity of the process used to establish the safe minimum—yet another reason why there is no room for shortcuts.

Maintenance information systems
Just about every maintenance organization that is likely to need a computerized maintenance management system (CMMS) or enterprise asset management (EAM) system already has one, so the need for and capabilities of such systems are already well established. The only question that sometimes remains is whether the systems should be under the control of a centralized physical asset management department or whether they should be under the control of field maintenance people in the business units.

The other two asset management functions tend to control the specification, installation, and operation of the computer systems used to manage their assets, so it makes sense that the physical asset management function should do likewise. The field people should simply have access to the systems to help them plan their work on a day-to-day basis and to feed back data as required.

Outsourcing
Two distinct aspects of maintenance are frequently outsourced. One is the execution of tasks, and the other is the formulation of maintenance strategy (specifically the application of processes such as reliability-centered maintenance).

Task execution is sometimes split into two further categories: major projects such as shutdowns and turnarounds which are very often outsourced, and day-to-day maintenance which is frequently done by in-house personnel. If any or all task execution is to be outsourced, it is essential that the scope of the work to be done by the contractors is defined as precisely as possible before any contracts are let. In other words, such contracts should be let only after the maintenance policies that apply to the assets concerned have been identified in detail.

Maintenance strategy formulation, on the other hand, should not be outsourced. In the opinion of the author, asking contractors to develop maintenance programs is like asking a raw material supplier or some other outsider to set a company's expenditure budgets, or asking a trade union leader to negotiate a union agreement on behalf of the employer. Far from being outsourced, the physical asset management strategy formulation process should be seen as a function—arguably the most important function—of the in-house physical asset management department.

21st century physical asset management organization
To summarize: physical asset management in the 21st century should be separated into two distinct functions (see the accompanying chart "21st Century Enterprise Organization"):

• The first function should be a centralized physical asset management department, with the duties and responsibilities similar to those outlined in the table in the first part of this article (available on the Internet at). The overall head of this department should report to the chief executive of the enterprise that makes use of the assets.
• The second function should be fulfilled by field supervisors responsible for organizing maintenance tasks on a day-to-day basis (with the assistance of field planners as necessary), and for ensuring that the work is done as planned to the required standard. The maintainers who wield the wrenches and the operators who push the buttons and pull the levers should report to these field supervisors, not to the head of the physical asset management department.

The present organization of physical asset management in most undertakings is such that years—if not decades—are likely to elapse before these proposals can be fully implemented, for two reasons. First, the magnitude of the changes will often provoke massive resistance from all sorts of people who are comfortable with the status quo. Second, at this point in time and in most organizations, the maintenance function has an immense amount to do to re-establish its technical credibility.

However, given the scale of the contribution that safe, stable, and reliable physical assets make to the value-adding process, the companies that get there soonest will enjoy an overwhelming competitive advantage, especially in highly automated industries. The time to start the journey is now. MT

John Moubray is president of Aladon, LLC, a reliability-centered maintenance consultancy.

21st Century Enterprise Organization

Physical asset management can be divided into two functions: strategy and management at the
vice president level and task execution in the business unit.

back to article

Results-oriented organizations focus first on the quality and volume of production throughput, followed closely by the cost to produce the required quality and volume. This approach will improve reliability performance, which will drive manufacturing costs down.

Most organizations focus more on cutting maintenance costs, and, as a consequence, maintenance costs go down temporarily, only to increase much more than the initial savings. In addition, reliability goes down, paving the way for losses that can be substantial. This behavior and results have been proven many times, especially in economic downturns. The root cause of this phenomenon is often shortsightedness and what the late quality leader Dr. W. Edwards Deming described as one of the most serious diseases in American industry: "the mobility of top management."

The three case studies that follow demonstrate what happened in two organizations that focused on cost reductions and in a third organization that focused on Results Oriented Maintenance.

Case 1: Cost and head count reduction

The accompanying graph shows a 3-year case study in a food processing organization with an aggressive cost reduction program. A key measure used in maintenance benchmarking exercises was the number of maintenance crafts people and first line managers such as planners and supervisors.

The head count reduction was done through attrition and layoffs. The major mistakes by this organization were:

• To cut costs by reducing only the number of employees and not considering reducing the need for maintenance or improving work processes.
• To focus on number of employees, instead of hours of maintenance work, including overtime and contractor hours.

Case 2: Aggressive cost reduction

The graph for this case shows results at a chemical plant, a high-cost producer in its market, where management decided to do whatever it took to cut costs, mainly in maintenance. When the cost-saving initiative started, market prices for the plant's products were low and profitability in a short-term perspective was low compared to other plants in the corporation. The fast-paced cost reduction actions included:

• Operations took over maintenance and only did maintenance work that was judged absolutely necessary.
• Planners were laid off and planning of work was discontinued.
• Scheduling was discontinued.
• Maintenance prevention activities such as shaft alignment were abandoned and lubrication was handed over to operators without training and implementation of a documented program.
• The preventive maintenance program was handed over to the operators, without training in what to do or how to inspect. The preventive maintenance inspectors were laid off.
• Shutdown crews were merged with another plant about 1 hr drive from the subject plant.
• Painting programs were abandoned.
• Training of crafts people was discontinued.

After realizing the catastrophic consequences of what had happened, the mill took initiatives to bring maintenance to world-class status. Results are very encouraging and the mill is today one of the top performers. Reliability is approaching 94 percent. Maintenance costs have gone up, so has quality production throughput, and manufacturing and maintenance costs per ton are lower.

The actions taken to bring maintenance to world-class status included:

• Reinstating preventive maintenance inspectors and revising the preventive maintenance program.
• Bringing maintenance back to a central maintenance function.
• Developing a partnership between maintenance and operations instead of a customer-supplier relationship.
• Focusing on planning and scheduling and front line implementation of these practices.
• Developing employees' capabilities toward joint goals.
• Making capital investments in new equipment and restoration of worn out equipment.
• Implementing front line management action indicators.

Case 3: Reliability improvements first, costs second

This plant manufactures the same product as the plant described in the previous case, but it decided to focus on reliability improvements instead of only cost reduction. This included:

• A clearly outspoken and established partnership between operations, engineering, and maintenance was forged.
• A change was made from a reactive to a planned and scheduled maintenance organization. Less than 10 percent of all maintenance work was planned when the initiative was launched. Ten years later more than 85 percent of all work is planned and scheduled.
• A strong vibration analysis program was implemented. When it started, the average vibration level was 0.23 in./sec. Today it is down to 0.11 in./sec.
• Lubricators were professionally trained. This resulted in better filtration and water removal, better seals, oil testing, and fewer types of lubricants. Cost for lubrication was reduced by 60 percent.
• All rotating equipment above 1000 rpm is balanced dynamically before it is put into service.
• Many equipment bases were improved and equipped with jack-bolts to improve alignment precision.
• Electric motors and rolls in storage are marked and rotated twice a month.
• Alignment training, standards, and execution were implemented.
• Stores inventory and services were analyzed and improved. Service level now stands at 96 percent and stores value has been reduced by more than 30 percent.
• Adherence to preventive maintenance schedules was increased to over 90 percent.

Reliability pays

Reliability improvements increase production throughput and drive down maintenance costs. Maintenance cost reduction is a consequence of reliability performance; it is never the other way around. MT

Information supplied by Christer Idhammar, president, IDCON, Inc., Raleigh, NC; (800) 849-2041. Idhammar is the recipient of the 2002 Euromaintenance Incentive Award in recognition of extraordinary accomplishments in the field of maintenance.

Case 1: Moving maintenance resources to operations and cutting craft personnel

The number of crafts people was reduced by 14.3 percent the first year. After 1 year, 6 percent were hired back. In the same period, contractor spending went up 88 percent. Total maintenance hours including overtime, contractor hours, and in-house hours went up 10.5 percent. Total maintenance costs went up 29.2 percent. On top of that, reliability and production throughput decreased 6 percent. This plant is now investing in hiring and training more maintenance people, implementing lost maintenance practices, and moving all maintenance resources back to professional maintenance management after initially decentralizing maintenance to operations.

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Case 2: Lingering effect of 2 years of cost cutting

In the first 2 to 3 years maintenance costs dropped from $35 million/yr to $27 million/yr and results were hailed as good. However, reliability started to decline. When beginning this initiative, overall production reliability (OPR)—the product of quality performance, time performance, and speed performance—was 93 percent; it bottomed at 78 percent 6 years after the start of the initiative. At this time the market price for the plant's products had doubled. The drop of 15 percent in OPR and quality production output corresponded to a loss of over 300,000 tons during some very good years when product could be sold at top prices. Financial losses because of low OPR resulting from shortsighted maintenance cost savings are conservatively estimated to exceed $1.2 billion over a 3-yr period.

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Case 3: Focus on reliability

During the first 3 years, maintenance costs increased 8 percent (2.5 to 3 percent/yr). During the same period, reliability as measured by OPR, and consequently also production throughput, increased steadily from a low of 83 percent to 90 percent. Reliability continued to increase to 92 percent. In financial terms, a short-term increase in maintenance costs of about $3.3 million resulted in savings of $17 million annually. The value of increased and sold production represented $18 million annually. Total maintenance costs were reduced by 40 percent. Today this plant survives another economic downturn because of the reliability initiative it initiated and implemented.

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