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The True Cost of Poor Lubrication

The results from this survey question weren't all that surprising considering who we were asking. And if I asked the question to anyone reading this article, I'm sure the responses I would get back would be similar to the results we received from the original respondents. Over 99 percent of respondents answered that precision lubrication was either "critically important" or "important but not critical" to the overall reliability of their equipment. (Figure 1)

We then asked a follow-up question: "At your plant, have you achieved a level of lubrication that you would consider close to best practice?" Remember, almost all respondents said they believe lubrication is either critically important or important but not critical, but in this case, only 32 percent of them said they have a program that resembles best practice. And I'm sure if we did a little digging, we could still find room for improvement in those 32 percent. So the take away here is that most industry professionals believe lubrication is important to reliability, but very few have done anything about it. (Figure 2)

Roadblocks to Improvements

When we start to investigate why some plants just don't make the grade in precision lubrication, or any maintenance improvement program, you can really boil it down to three common roadblocks. (Figure 3)

  1. Lack of Understanding
  2. "Firefighting"
  3. No Management Buy-in

Lack of knowledge or expertise to do anything is very common. This is referred to in psychological terms as unconscious incompetence and is the first of four stages involved in the progression from incompetence to competence in a skill. Think of the first stage the same way you may have thought about your first experience driving a manual transmission vehicle. Learning how to effectively operate a manual transmission requires a lot of practice to be able to apply the correct inputs to clutch, break, accelerator, stick shift and steering wheel. At one point, you were completely unaware of what a manual transmission was and how to operate one. Over time, with a little awareness, you were consciously, albeit consciously incompetent, in the use of manual transmissions. You still were challenged when operating one and understood there was a gap between the way you currently operate and the way the manual transmission should be operated. With more time and effort, you know how to operate the manual transmission, although it takes a significant amount of concentration in the stage referred to as consciously competent. Over time, the operation of the manual transmission becomes second nature. In this, the final stage of learning, you become unconsciously competent at doing the task. It becomes business as usual.

Simply put, people don't know what they don't know. Within the maintenance community, there are several catalysts that will highlight a lack of understanding in lubrication and the subsequent need for change, one of them being catastrophic equipment failure. This type of issue always brings lack of understanding to the forefront. The solution is always some kind of education, formal or informal, and partnering with some kind of outside support, be it a products company and consultant, your oil analysis lab or your lubricant supplier.

We have all faced the challenge of being too busy "firefighting" to make any headway on a lubrication program. We're often paralyzed by the mounting issues in our current program to spend any time addressing the root causes and working to eliminate them. Short of increased headcount in our maintenance department, outside support is often the best solution. Again, that support can come from numerous sources.

Perhaps the most challenging barrier is lack of management buy-in. Lack of management buy-in can be overcome with a financial business case analysis. Once we can see our way through these challenges, we need to sort it all out. We need to decide where to start. We obviously want to capitalize on the low hanging fruit and those items that are going to give us the quickest return on any investment we make. But how do we do it?

What is Poor Lubrication?

The pathway to success in lubrication is not much different than any other improvement program within the plant. You need to quantify your current program. Whether your lubrication program is formal or informal, sophisticated or simple, identifying where you are in contrast to where you want to be is the first and most important step. This helps to identify the gaps. The biggest gaps, the gaps that are going to give you the greatest return on investment, are the ones you need to focus on.

Identifying the gaps allows you to design a program around the gaps you want to focus on first. After designing the program, it's time to execute it and put it into practice. You'll need to make sure everyone is educated to the point where they can do their job effectively. Then, measuring successes and reevaluating gaps will help to continuously improve.

When we look to identify gaps in our lubrication program, we focus on 10 key areas:

  1. Lubricant purchasing, selection and quality assurance
  2. Lubricant storage, handling and dispensing
  3. Lubricant application practices
  4. Equipment maintainability and contamination control
  5. Oil sampling practices
  6. Oil analysis and basic inspections
  7. Lubrication PM optimization
  8. Training and education
  9. Lubrication scheduling, tracking and reporting metrics
  10. Leakage control, safe lubricant handling practices and environmental compliance

Some of these categories may be more important than others depending on the type of production facility and equipment within it. However, each area plays a role in our holistic approach to improving our lubrication program. To know how to identify gaps, it's important to know what poor lubrication actually is.

Many people hear "poor lubrication" and they immediate think this term refers to the quality of the lubricant itself, and it can. However, poor lubrication is really any aspect of a lubrication program not done with precision and includes:

  1. Incorrect amount of lubricant; too much or too little lubricant.
  2. Wrong lubricant type; incorrect viscosity, base oil type, thickener (if applicable) or additives.
  3. Poor storage and handling; outside, not under cover, not climate controlled.
  4. Ineffective dispensing or application; using methods and tools not considered best practice.
  5. Inefficient contamination control; inconsistent or non-existent approach.
  6. Unskilled personnel; not trained or educated to what precision lubrication is or why it's important.

Where Improvement Programs Fail

A typical lubrication assessment process follows the same path as most assessment exercises. A benchmark is completed in an attempt to capture the current culture surrounding lubrication. Then, a gap analysis may be done to identify the difference between the current practice and what would commonly be considered best practice in a specific area of lubrication. Unfortunately for many assessments, this is where it ends. The client is left with a document that speaks to their issues, but offers little in the way of a path forward or a way to communicate the need for change to management. Most lubrication improvement initiatives fail because the recommendations provided are too generic and do not look at lubrication holistically. Without specific action items, a business case analysis, timelines and follow-through, improvements rarely get executed fully.

As an example, consider how many home improvement programs have failed in the past because specific action items didn't exist. I consider myself a fairly handy person and decided that I could save some money by building a deck in my backyard myself without contracting it out. I consulted with a big box lumber retailer, designed my deck with their design software and they provided me with a bill of material for all the necessary hardware. A few days later, the material arrived on my driveway with no sign of an instruction guide or task list. Luckily I, like many others, was able to build my deck to the satisfaction of my "upper management," but not without some challenging moments. However, I could have failed just as easily.

The Language of Management

Perhaps the most challenging roadblock to launching a successful lubrication program, and perhaps the most important component, is illustrating the financial benefits and gaining management buy-in. However, as the story goes, maintenance people like us have had a difficult time quantifying the benefits of precision lubrication and acquiring the funding we need to build our programs.

Engineers and maintenance professionals tend to talk in highly technical terms. We tend to use terms like ISO particle count, turbulent sampling zone, NLGI grade and filtration beta ratio. We often try to illustrate the benefits of lubrication program improvements with what we know to be technically true with little regard for the terms that are usually important to executive management. Executive management speaks the language of dollars and cents, not ISO VG68, or NLGI 2. Our job as maintenance professionals is to convert what we know about reliability and lubrication into language executive managers can understand.

Many studies have concluded, as has the following one, that, "While the cost of purchasing lubricants typically amounts to less than one percent of a plant's maintenance budget, the downstream effect of poor lubrication can amount to as much as 30 percent of a plant's total maintenance costs." I hear the beginning of this statement a lot and it's probably true for many. Management often feels there's little or no opportunity to improve their lubrication program because they spend relatively little on lubricants. As this example states, that's really not the case. The total cost of your lubrication program is the sum of not just the lubricant or the upfront costs, but the ongoing and downstream costs as well. The sum of all these costs can be significant.

What we really need to do is convert what we know into a cost benefit analysis where we take a critical and conservative look at the upfront and ongoing costs and attempt to quantify the potential financial impact.

In the time that I have been consulting on lubrication programs, I've found that most companies are losing between five percent and 15 percent of their annual maintenance budget to poor lubrication. I use a very comprehensive tool, along with specific case studies, to evaluate the current practice and tie it into an analysis like the one shown in Table 1. In this example, I was able to conclude that this company is losing more than $2.5 million every year due to poor lubrication from an annual maintenance budget of $15 million. Of that $2.5 million about 20 percent of that can be immediately addressed. We'll call this the low hanging fruit or the biggest bang for your buck. This cost benefit analysis (CBA) is based on discounted cash flow analysis to value the project using the concepts of the time value of money. Because we know that the value of a dollar is worth more today than at any point in the future and there is a cost of using this capital on this improvement program, your accounting team and executive management will require that all future cash flows are estimated and discounted to give their present values. What we end up with is the value of the potential return in today's dollars. (Table 1)

It's easy to see the return on investment is quite significant. After a $95 thousand initial investment to tackle the immediately-addressable lubrication losses, and after ongoing costs of about $37 thousand per year, the five-year net present value (NPV) is close to $1.3 million. This is a great investment and, in this case, we really are just scratching the surface.

There is so much more to lubrication programs than what is on the surface. If we can navigate our way around typical roadblocks with education and awareness, technical and project management support from subject matter experts, and the support of our management team, we stand a much better chance of making impactful and lasting changes that benefit the entire organization.

Jason Kopschinsky, CMRP, C.E.T., MCPM, joined Des-Case as the Technical Services Manager in April of 2011. Prior to joining Des-Case, Jason has spent over a decade coaching clients in asset reliability and lubrication management. Jason has published a variety of technical articles on condition monitoring, contamination control, lubrication management and program management, and has been invited to speak at numerous international symposia.

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