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Times and thinking in the Industrial World have changed dramatically in the past three decades. Traditions that have literally been sacred cows in those post WWII years have been forgotten; witness that the “Greatest Generation” is almost a “Vanished Generation”. Technically speaking, some of this has been good and necessary – some maybe not.

In the Maintenance World, technical change and innovation brought to us the introduction of Predictive Maintenance (PdM) technology, which has been, and continues to be, one of the foremost positive changes in the way we do business. It has provided to us the opportunity to measure and trend equipment health, and thus avoid intrusive actions until absolutely necessary – thus minimizing the well documented risk of human errors that would require another service call to fix what we did wrong. In fact, PdM mirrors for us the same related technical advances in the medical profession that preclude intrusions (think surgery) before it is really necessary.

A second innovation of note is the widespread use of IT that has given us the CMMS capability to record, store and retrieve volumes of useful data and information at the touch of a keyboard button. We unfortunately have not yet learned how to use all of this CMMS capability to our advantage (notably developing useful equipment history files), but it has come a long way to automating routine maintenance paperwork (e.g. Work Orders) that previously used many man-hours and file cabinets to achieve,

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A third, and perhaps for me, the most important innovation has been the widespread introduction of the Reliability-Centered Maintenance (RCM) methodology that was introduced by United Airlines in the mid-60s to solve the maintenance issues on the 747-100 airplane. The RCM process shifted our attention from a “Preserve Equipment” to a “Preserve Function” mindset that allowed us to logically concentrate our resources on what really counted (Functions) – not to just keep everything running irrespective of what it did or how important that may or may not be.

One of the things that has NOT changed very much is the age-old management perception that maintenance is just a necessary evil and unfortunate cost center. Maintenance today is basically tolerated, but not really appreciated or effectively used. I sense that this may finally be changing for the better because, simply put, your maintenance organization, when properly used, is a BIG money generator! Let me further explore this wild blue notion where many of my best professional friends have kittens when I first suggest it.

Whenever we initially meet with a new client, the first (and ultimately most important) point that we introduce is that there is only one reason for our meeting and discussion – MONEY. And when your initial focus is on MONEY, your perception of maintenance improvement will change from reducing Preventive Maintenance(PM) costs to increasing the Return On Investment(ROI) from your overall maintenance program expenditures. The ROI factor becomes a significant, if not dominant, element in formulating your maintenance strategy. The basic reason behind this is the realization that PM costs are actually quite small in comparison to the price that could ultimately be paid if the resulting Corrective Maintenance (CM) costs and loss of revenue (Downtime-DT) are not properly addressed and controlled. This strategy concept is illustrated in Figure 1 that depicts a model which should drive a maintenance optimization strategy.

Figure 1

Notice that this model recognizes the costs that must be taken for the PM and CM portions of the maintenance effort. Unfortunately, most organizations look only at these two elements, and conclude that maintenance is strictly a cost center – and this must be minimized in any way possible as the driving force behind maintenance improvement. The net result is frequently a reduction in PM activity. And if this is measured, the net effect rather quickly becomes an increase in CM cost as well as an increase in lost revenue. It is these latter two results, and especially the increase in lost revenue, that are the key factors in realizing the role that the maintenance organization can play. Specifically, when the focus is to spend the necessary funds to activate a meaningful PM effort, our measurements over 25 years of experience indicate that the multipliers shown on Figure 1 are achieved. While an effective PM Program can actually increase the PM costs, each PM dollar spent and effectively focused on the bad actor systems can actually preclude the necessity to spend $10 dollars on Corrective Maintenance. But the multiplier of particular interest is the reduction in output Downtime where a multiplier $100 to $10,000 can be achieved. This reduction directly translates to PROFIT!

We feel that this suggests a very strong argument to support our belief that maintenance is actually a PROFIT center for your company. This may be a very new notion to some of you, but the acceptance of maintenance as a PROFIT center (not a cost center) is a real important factor in producing dramatic bottom-line impact, and moving your organization toward what constitutes World Class Maintenance.

Mac Smith

Anthony “Mac” Smith, is an internationally recognized expert in the application of classical RCM. His engineering career spans over 60 years, including 24 years with GE. For the past 40 years, Mac has concentrated on providing RCM consulting and education services to more than 75 clients in the Fortune 500. He is the author or co-author of two of the industry’s best referenced books on RCM.

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