Show Them The Money
Klaus M. Blache | May 1, 2023
Many still ask, “How do I convince leadership to engage in reliability and maintenance initiatives?”
As stated in the 1996 Tom Cruise comedy “Jerry Maguire,” “Show me the money.” Of course, there are many other benefits that come with reliability/maintenance (R&M) best practices, but it starts with expected return on investment (ROI).
Improvements will depend on your current implementation of reliability and maintenance best practices. For example, if you are highly reactive/bottom quartile (emergency maintenance work hours exceeding 55% of total hours) versus top quartile (emergency maintenance work hours less than 14% of total hours), your maintenance costs are likely six times higher than a top-quartile company. This doesn’t include the much higher losses in related throughput. You need to help your management understand the opportunities and the risks if they don’t support R&M efforts. Otherwise, as stated in the movie, “I had so much to say and no one to listen.”
With a few simple metrics, you can reveal large saving potential. Let’s use Maintenance Cost/Replacement Asset Value (MC/RAV); Maintenance, Repair, Operation Inventory Cost/Replacement Asset Value (MROIV/RAV); and Overall Equipment Effectiveness (OEE). For this example, assume MC = $5 million, RAV = $80 million, MROIC = $3 million, and 1% in OEE = $200,000. Use the value of 1% more production availability if you don’t calculate OEE.
MC = annual expenses for maintenance labor, operators, and contractors performing maintenance, shutdowns, and materials.
RAV = value needed to replace the production capability of your current assets (equipment, building, utilities) in the plant.
MROIV = value of maintenance, repair, and operating (MRO) inventory in stock. This includes all storage locations, consignment, and vendor-managed/held inventory.
OEE = availability (of production asset) x performance (actual versus best capable) x quality
What can and should you do? The first three steps should be to:
Acknowledge the need for change. Be brutally honest. What are the “must haves” to be successful? Most changes (processes, technologies, CMMS usage) will involve cultural change to enable or sustain best practices. Most underestimate the amount of change needed.
Recognize it’s a journey. Establish realistic interim goals. Assess and prepare your workforce for change. Take the time to enable long-term stability and support. After some initial success, leaders often want quicker improvements/savings. Other areas also need time for change. That’s why it’s a journey versus an event.
Assess your level of R&M maturity (fundamental elements of reliability and maintenance). That requires a gap analysis (actual versus best practices) to monetize the opportunity.
There are, of course, many more metrics that can be added to the gap/opportunity assessment. However, the above can demonstrate that large improvements/savings are possible. Ready your workforce for change, because once you know what to change, it’s all about how to change. The soft stuff will be the hardest stuff and without the soft stuff, sustainable best reliability and maintenance practices are not possible. If you don’t, consider Tom Cruise’s “Mission Impossible” movies. EP
Based in Knoxville, Klaus M. Blache is director of the Reliability & Maintainability Center at the Univ. of Tennessee, and a research professor in the College of Engineering. Contact him at firstname.lastname@example.org.