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Quarterly Profits or Machine Production - Which Comes First?

David F. Piangerelli

Companies invest millions of dollars in revenue producing assets, specifically, machines of all types. These machines, ranging from trucks to wheel loaders, cooling towers to crushers, paper machines, injection molding machines, blowers, mixers, food processing equipment and so on, depend upon proper maintenance protocol with qualified personnel using quality products to insure the longest possible reliability and production.

While we are seeing a general upward trend in organizations that understand that a reliability centered maintenance (RCM) approach can impact the profitability of the company, they are unfortunately, few and far between. Too many organizations resist change and insist on doing things as they have always been done, relying on tribal knowledge of stakeholders within the organization who may not have the company’s best interests as a priority. These stakeholders, often entrenched within their own system of working with key vendor partners, willingly resist exposure to new concepts or products and services that can provide game changing strategy, and in fact impact the organization’s profitability with ramifications that are largely unknown or not even considered by management.

As a professional involved in the business of lubrication management, I am often times directed to the maintenance supervisor, mechanic or lube technician. While conversations with these individuals are generally enlightening and instructive as to the present methodology and philosophy practiced by the organization in maintaining their equipment, these same individuals, in many instances, are powerless in effecting any real change within the organization. To do so they must become salespersons who take on the task of convincing their supervisors that there may be better ways of doing things. Veteran maintenance persons, tired of fighting the fight, often don’t even try, as management simply tells them they are not interested, as from their perspective, it isn’t broke, so there is no need to fix it.

 

Management and Vendor are Aligned - Neither Cares!

figure 1

Injection Molding Machines - Sizeable investment typically using low price fluids

A successful plastics and metal manufacturing company several decades old, with six locations in four states, and a world class (appearing)  manufacturing facility, has millions of dollars invested in over 30 injection molding machines. The maintenance of these machines is lacking severely causing unnecessary expense and lost production. Worse yet, it is evident that management does not see any issues with their present situation as after having replaced a hydraulic pump on a machine, the fourth one in 12 years, management or (lack thereof) thought it was acceptable to do so without changing the highly contaminated oil that was determined to cause the failure of these pumps! It was also determined that this oil apparently has never been filtered or changed.  The pump cost was $5,000, the cost of 3 days lost production was not provided, but I am confident it was several thousands of dollars.

Equally sharing responsibility is the present lubricant vendor who is content to sell their customer the lowest priced hydraulic oil in their product offering, (most likely because someone in the organization demanded a better price) and do nothing proactive to assist their customer. Oftentimes vendors take the path of least resistance as well,  as it is always easy to sell goods at the lowest price, there will always be plenty of taker.

What should the lubricant vendor be doing? Well, at the very least,  they should be taking an active role as opposed to simply taking orders.  Here are a few ideas;

  1. Implementing an oil analysis program to monitor the condition of the fluid as well as machine health.
  2. Training personnel and sharing knowledge regarding contamination control and its importance and relationship to component life.
  3. Investigating the root cause of routine hydraulic pump failures which result in lost productivity as well as unnecessary labor and components costs.
  4. Investigating the excessive leakage exhibited by all of the machines and determining the root cause and recommending corrective action.
  5. Monitoring the improvements gained and moving the client towards a best practices approach that best suits their needs, i.e. putting the customer needs first.

 

Perfect Marriage - Customer gets Lowest Price, Vendor Sells More Stuff!

figure 2

School buses - although many maintainers are on extended drains - many still adhere to old school practices

Another example of wasted resources and unnecessary expense is provided by the low bidder policy of many organizations. A quasi-governmental organization operates 400 school buses. The buses represent a capital cost of several million dollars. Oil changes on these buses are performed at 4,000 mile intervals. Each year, the organization puts its lube oil contract out to bid, with the winning bidder always being the lowest priced product. Buses used to be turned over at a ten year interval; however, experience has demonstrated that the potential for engine failures rose exponentially during the 8th through 10th year of ownership. Consequently, buses are now turned over at about the 7th or 8th year. When the prospect was shown clear verifiable documentation suggesting that engine oil drains could safely be extended at least 5 times the present interval and that engine life would not only not be compromised but would be extended further, he dismissed it out of hand stating that the only thing that matters is the price per gallon. This individual cannot understand the difference between price and cost and is perfectly content to ignore industry trends, while simultaneously contributing to needless generation of waste oil. This scenario repeats itself thousands of times throughout the country.

In many ways this vendor/customer/low bid relationship is a perfect one. Customer wants goods at the lowest possible price; vendor wants to sell as much goods (in this case gallonage) at a price he can live with. There is no incentive for the vendor to reduce the volume of product sold to the customer.

Hence the relationship continues, as the game never changes, only the players. With organizations adopting a green initiative, this example represents a prime candidate to reduce the carbon footprint of the organization by effectively reducing the volume of oil purchased to one fifth that presently consumed. Unless and until someone in the organization either has an epiphany or somehow learns about the potential savings, reduced waste and increased efficiency potential, it continues, ad nauseam.

 

Don’t Sell Me What I Need, Sell Me What I Want

figure 3

Downtime costs in a Hot Strip Mill can exceed $250,000 per hour

A worldwide steel manufacturer requests a quotation for several automatic lubrication system stations at their hot strip mill facility. The incumbent lubrication systems vendor, one who formerly represented a quality manufacturer of lubrication system components, now handles a “knockoff” line manufactured offshore. This vendor enjoys much of the lubrication system business at this and other mills because of their ability to come in consistently as the low bidder. When my organization was asked to quote on a replacement of an existing system, we examined the application issues and determined that several production losses were directly due to the fact that the lubrication system design was deficient. We added certain key components to the design which would address this deficiency, provide a more robust and reliable system, and more importantly, eliminate the root cause of the loss of production. When our solution oriented concept was presented to the prospect, the price was the primary concern. We were requested to re-quote including the same component mix provided by the competitor so the buyers could compare “apples to apples”. Interestingly enough, this solution had already been implemented by our partner distributor at a sister plant that had experienced the same issues as this plant, but no one was interested in verifying the results (which was as simple as a phone call). We have decided to not invest any more time with this prospect that is not interested in our solution oriented approach or aligned with our philosophy and have declined the request to re-quote.

These three examples represent a microcosm of experience in our world. I am confident that many other vendors have experienced similar situations regardless of the product line. Why these situations occur and how we may collectively work to improve upon the status quo, is, in my opinion, all about communication and priorities.

Continuous Improvement Starts with Communication

The predominant use of voicemail, coupled with an increasing trend of organizations that prohibit name sharing of key players serves to isolate decision makers from ideas, products and services that can help them operate more efficiently. Some organizations now actually refuse to receive business cards or product collateral. Vendors must share the blame as they often waste prime time and don’t know how to get in, do their business, and get out. Worse yet, they do not bring any value, further supporting managements’ decision to isolate themselves. Organizations contracted out to provide MRO materials to the customer, add more layers of insularity. So the question becomes how to screen out those who bring no value and qualify those (or at least communicate with them) who may bring value to an organization. Those who are on the “customer/prospect” side of this discussion may have more to gain than lose in the time dedicated to engaging potential vendors in a conversation or meeting. Unfortunately they cannot easily qualify those that can bring value. The inability of the value added vendor to talk to management who has the power to make the decisions impacting their business is the largest obstacle to moving forward.    So the question becomes, How do we screen out those vendors who bring no value and qualify those (or at least communicate with them) who may bring value to an organization?

If your organization has a sales team, you wouldn’t want them to be roundly dismissed as you would hope that they are able to engage your prospects in a meaningful way. If you are an organization that gets called on by sales people in the field, you may wish to extend to them the same courtesy you’d like to have your sales team experience. By encouraging cross department communication; i.e. sales with production, maintenance with management etc. all will be enlightened to each others’ challenges.

In the final analysis, we all “profile’ each other in some way shape or form. I seek out progressive individuals who are open minded, do not prematurely judge, are interested in learning, vested in continuous improvement, and understand the difference between price and cost. I hope that prospects would seek out and welcome vendors who willingly share knowledge, provide timely well researched responses to their questions or inquiries, have demonstrated self improvement in educating themselves in their respective chosen fields, aspire to become the expert in their field(s) and are willing to do what it takes to show a higher level of professionalism than lesser salespersons’ who would reduce our value, tarnish our chosen profession and waste their precious time. By selecting vendors who have your interests as their number one priority, you effectively choose to grow and be better. And that is a worthy goal for all of us.

David Piangerelli, CLS, MLT II, is the President of Lubrication Technologies, Inc., a New England-based company serving industries of all types for 35 years. www.lubetechnologies.com.

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