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The number one law of economics you need to know is based on a principle discovered over 200 years ago. You've probably heard of it - it's called the Law of Diminishing Returns.

As any good MBA student can tell you, this law states that as one production factor increases while the others remain constant, overall production decreases after a certain point.

In plain English, it means as you increase preventive maintenance, production output eventually decreases. The following chart illustrates:

The Law of Diminishing Returns

You see, there's a fine line between doing too much, too little and just the right amount of preventive maintenance. Clearly, there's a point at which increasing PM hurts the bottom line.

The reason? Simple. Most PM procedures require that the equipment is shut down. That means uptime goes down, so production output eventually goes down too. Meanwhile, maintenance costs go up.

So how much preventive maintenance is too much?

According to a private study, best practice programs generate 15% of their maintenance work from PM inspections. Another 15% is corrective work identified by those inspections.

So preventive maintenance should account for about 30% of your total maintenance workflow.

Tip provided by Allied Reliability
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