Plant Operations

When Maintenance Manages Your Bottom Line

Qualified managers can fatten bottom lines via less down time, longer equipment life

By Earl Winter

While nearly every large, machinery-intensive business has at least one management-level person focused on the maintenance department or function, many smaller businesses feel they cannot afford a maintenance manager. They may have a person with the title of manager, but in reality this person spends most of his or her time repairing equipment. It is likely that this person never comes closer to actual management than scheduling work for the maintenance department.

To determine whether your organization actually manages maintenance or simply supervises repairs, ask the maintenance manager/supervisor the following questions:

• What is the current value of our repair parts inventory?
• What is the rate of turnover for each repair part carried in stock?
• What is our percentage of downtime/uptime?
• What does an hour of downtime cost for each major piece of equipment?
• What are the downtime requirements next week for preventive maintenance?
• What is the preventive maintenance completion rate?
• What is our corrective maintenance backlog?
• What percentage of available time is each maintenance employee productive?
• What percentage of maintenance time is spent on reactive versus scheduled activities?
• Where are expenditures with respect to the budget, and what are your projections for next month/quarter?

If the answers to these questions are incomplete, are just guesses, or you don’t even bother to ask because you already know the information is unavailable, you can take comfort in the fact that your operation is pretty normal in this industry. But should it be? You certainly don’t want your profitability to be “normal” compared to industry standards.

If this information on the maintenance department is not available because no one manages maintenance, your operation probably does not know the cost of maintenance shortcomings to production either. For example:

• How much excess textile inventory is in circulation due to machinery downtime?
• How many fewer turns do you get out of textiles due to damage caused by machinery?
• How many customers do you lose to poor quality or service as a result of poor maintenance?
• How many energy dollars are wasted due to rewash, aborted processes, and other maintenance issues?

Maintenance measurement by cost control leads to failures

It is unimaginable that a business operator could not see the benefit of having the kind of information outlined above when trying to add dollars to the bottom line. Yet access to this information seems almost unobtainable for many. Why? There are numerous reasons, but two of the primary ones include:

1. The way you measure the maintenance department. What do you hold your maintenance department accountable for? If you are like most business operators, you measure the department on:

• M&E (maintenance/engineering) repair expense
• M&E labor
• Maintenance/engineering overtime
• A perception of downtime (no actual measurement is available); and
• Typical HR measures such as lost time, absenteeism, etc.

1. The belief that maintenance is a cost that must be minimized instead of an investment to be optimized. Symptoms and consequences of this belief include:

• The measures shown above are line items that are squeezed when bottom-line pressure is applied
• The maintenance department must do more with less, and there is no choice for the maintenance leader except to become a full-time mechanic; and
• This is normally followed by plant deterioration and eventual personnel replacement for failing to meet expectations.

At this point in the discussion, it’s not uncommon for the business operator to ask if I believe that his or her company should not measure these operating statement line items and whether the maintenance manager position should be purely a desk job.

Of course, we should measure such things as maintenance labor, overtime and repair expense. I would not have a maintenance manager in my plant, if that person seemed afraid to get dirty. Indeed, they may be called upon to do so often. My point is this: The maintenance manager needs to be technically qualified, capable and willing to troubleshoot and repair machinery. However, the primary focus of this position should be managing the maintenance department. The measure of the department should not be how much you can cut maintenance costs year after year. This only guarantees that the department will eventually fail.

Savings on capital expenditures ‘phenomenal’

So how do you justify the cost of hiring a maintenance manager? It begins in the recruiting effort.

First, you must look for an individual who understands the need to document the maintenance department’s value to the organization. In other words, you need someone who will provide the kind of information noted at the beginning of this article. The savings achieved in the areas noted below can justify this management position:

• Production department labor and overtime;
• Decreased merchandise in circulation;
• Improved product quality and life; and
• Decreased energy usage per pound produced.

And yes, there will be maintenance department savings as well. The value of the repair parts inventory may go up or down, based upon what’s needed to provide maximum uptime and minimum freight charges. Working relations between maintenance and production will also improve because there will be valuable information to share. Maintenance can coordinate machinery downtime with production as needed, and production will be better able to schedule production needs. Labor is reduced accordingly and operations will cut expenses incurred by warming up machinery before it is needed.

Emergency repair costs will drop because a well-managed department has time and is trained to completely repair equipment the first time instead of just getting the machine back into production for the time being.

There are a number of savings categories not mentioned here for the sake of brevity, but one that is impossible to measure before the fact needs mentioning. When equipment reliability is improved by good management and prevention, equipment life is dramatically lengthened. It is impossible to provide a verifiable number for your plant(s), but reductions in capital expenditures in other companies due to improved maintenance management have been measured and the results are phenomenal.

Smart managers manage first

And how does an operation find such a manager? First, you must understand that good managers command higher salaries than good repairmen who schedule maintenance. A commitment to this investment must be made before spending money on a recruitment ad.

Second, except in the bleakest of economic times, a real maintenance manager won’t accept an offer of employment if management won’t provide empowerment to meet expectations. That includes computer hardware and software to help manage the department. There are too many positions open and too few good maintenance managers to fill them to waste career time in a no-win position.

How will you know when you’ve found the right person? During the interview process, a real manager will be able to discuss the value he or she should bring to the table. That value is improving reliability (equipment uptime) as efficiently as possible, and this can only be done through a comprehensive, well-managed preventive maintenance (PM) program.

A real manager is very familiar with the 80/20 rule. That is:

• 20% of the equipment creates 80% of the problems. This equipment then becomes the primary focus of attention.
• Without a comprehensive PM program, 80% of the maintenance department’s time is spent firefighting (reactive maintenance). With effective PM, 80% of the maintenance department’s time is spent on prevention and about 20% is spent on scheduled (proactive) activities. It is rare for breakdowns to drive activities in a plant with a competent maintenance manager.

Yes, maintenance department labor costs may actually go up some because you have invested in a manager. However, depending on how chaotic the department was, it is possible that this position’s cost is entirely offset by lower overtime and overall reduced need for personnel. But if maintenance department costs are increased, the improvement in the bottom line will still pay for this position many times over.

An important point in hiring a manager: When interviewing, I always create a scenario in which—due to crisis and lack of time—the manager will have to prioritize some things so low that he does not get to them. I give them a choice between preventive maintenance, corrective maintenance, safety, meetings, hands-on activities, training and administration. Candidates who would choose to let administration slide don’t get hired. Without administrative oversight, you lose the ability to manage at a time when you need it most.

Many times you have heard that you can’t manage what you don’t measure. This applies to maintenance as much as to any other department. Without a real manager, measurement probably won’t happen, but if it does, its only value is to tell you how bad things have gotten.

Earl Winter is president of Earl Winter Engineering Associates Inc. He was the engineering vice president for a large textile rental company and has more than 40 years’ experience in maintenance engineering management, much of this in the laundry industry. Contact him at 770/402-7820 or e-mail earl@earlwinter.com.

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