The Uptime Blog
An article by Ben Casselman in the Wall Street Journal (November 26, 2011) describes a recent survey by consulting firm Deloitte that found “83% of manufacturers reported a moderate or severe shortage of skilled production workers to hire.” And that “74% of manufacturers said a shortage of skilled production workers had a ‘significant negative impact’ on either their productivity or expansion plans.”
The article uncovers other evidence of growing demand for skilled jobs as well, “While hourly wages in the broad category of maintenance and repair workers rose 6.4% from 2007 to 2010, increases were 10% in the subcategory of heavy-vehicle mechanics and 15% for specialists in electrical repairs on commercial and industrial equipment. The implication is that employers were competing for a limited pool of qualified workers.”
Clearly the Wall Street Journal is challenging the notion that good jobs are hard to find. There is demand for skilled workers in the manufacturing sector.
For instance, according to the article “AAR Corp., a Chicago-based aviation-parts manufacturer, has 600 job openings, mostly for skilled trade jobs like welders and maintenance mechanics. Chief Executive David Storch said the shortage of workers has forced the company to pass up business and delay some manufacturing work. He said the company would like to start a third shift at its Indianapolis aircraft maintenance facility but has been unable to do so because of worker shortages.”
And while the shortage of skilled workers can be seen across multiple industries, retirement is making matters worse. Casselman’s story indicates that almost 10% of Union Pacific’s employees will retire in 2011 (4,000 out of 45,000).
Finally, in this slow economy it seems that companies are becoming more selective about who they hire. “Jeffrey Joerres, CEO of staffing firm Manpower Inc., said that with demand for their products weak, companies only want candidates who have all of the skills they are looking for, and if the companies can't find someone who fits the bill really well, they'll just leave the job unfilled.”
Think about it; companies are leaving skilled jobs unfilled. That indicates two things about today’s manufacturing sector:
- Quality is more important than quantity (i.e., companies would rather do the job right than do it fast).
- The return on investment (ROI) for training skilled workers is too low (i.e., the cost of training exceeds the revenue generated by an inexperienced worker).
Given that over the past 20 years lean and six-sigma initiatives (LSS) have been implemented at almost every manufacturing company, the focus on quality isn’t surprising. However, the issue of training ROI is surprising. It’s amazing that companies have not yet applied their LSS expertise to address the bottlenecks in training skilled workers.
Skill is developed in two steps: knowledge and experience. For unskilled workers, knowledge is the technical information about how to perform a task; experience, on the other hand, is gained as they perform that task and apply that knowledge. There is no way to develop experience except through…experience. However, there are many ways to share knowledge. The closer you can bring the knowledge to the experience, the faster you develop a skilled workforce. In other words, when you get workers out of the classroom and into the field—and still provide them with the required knowledge—you revolutionize their training. This can simultaneously improve training ROI and work quality.
Enigma provides the technology to deliver knowledge, especially for organizations that maintain and repair complex equipment: planes, trains, trucks, cars, power sports, construction equipment, medical devices, semiconductor equipment, etc. Our solutions provide a one-stop shop of product information wherever it may be needed—consisting of parts and service information, best practices from the field, procurement, sales, remote collaboration, etc.—allowing workers to quickly apply knowledge and gain experience. With Enigma’s technology companies are empowering their service technicians to quickly become experts on the job, which improves equipment uptime, first-time-fix-rates (FTFR) and mean-time-to-repair (MTTR).
According to the Wall Street Journal, companies are looking for skilled workers. Enigma makes it cost-effective and easy for companies to train and develop skilled employees.
According to Henry Canaday, writing in AviationWeek (MROs Race to Speed TAT), "The most important factors in an airline's selection of an airframe maintenance firm typically are quality, turnaround time (TAT) and price, in that order. Airlines usually rank TAT ahead of price because it can cost $10,000 a day to lease a narrowbody for each day of planned TAT, and several times that for a widebody, according to maintenance consultants at Oliver Wyman. Unplanned TAT delays cost even more in revenue losses."
This supports what Enigma has been saying for years, regardless of your industry when it comes to maximizing uptime and minimizing costs, maintenance quality and speed is critical. It's almost embarrassing to write something so obvious; however, what isn't so obvious is one of the key factors for improving quality and speed of service.
Maintenance consistency is a major driver for both quality and speed. In fact, lean six-sigma (LSS) shows that increasing maintenance consistency has a bigger impact on service cost than reducing mean-time-to-repair (MTTR). (You can look here and here for why that is.) In other words, when looking at the big picture, MTTR shouldn't be your primary concern.
Since quality and speed are not mutually exclusive, achieving both should be the goal—and service consistency drives both. Because Enigma's technology focuses on efficiency and consistency, we have been helping companies provide better, faster maintenance for years serving: airlines, MROs, automotive and industrial manufacturers and their dealers, rail and transit, and others.
Canaday writes, "KLM Engineering & Maintenance now leads the EU market in TAT for the 747-400, according to VP Base Maintenance Karel Bockstael. ‘We have to, to compete with Asia on labor cost.' D-check TAT on 747-400s [a complex maintenance event] can be as brief as four weeks, or 3.5 weeks without exterior painting. This represents a 30% reduction in five years through Lean and Six Sigma, identification of critical paths and other improvements, with no increase in manpower."
Interestingly, KLM went live with Enigma about five years ago. While we can't take credit for all of the savings—that would be unfair to KLM Engineering & Maintenance—Enigma's technology has contributed to their success.
At the dawn of this new decade, perhaps it's time for a fresh look at how your company supports and services equipment. When it comes to succeeding in the aftermarket, Enigma has the technology and the experience to help you fix it right and fix it fast.
As I mentioned in my previous post, I recently attended the MRO Middle East conference. I particularly like aviation conferences because, unlike in some other industries, the common aim of safety leads companies that would otherwise be mortal enemies to freely exchange ideas and enter into lively debate.
At this conference I particularly enjoyed the sessions on Lean and Six Sigma. There was some good debate on Lean (as a stand-alone initiative) and Lean plus Six Sigma. Some panel members suggested that Lean will reduce waste (in this context, waste = time) but the result will simply be that more maintenance problems are discovered in less time. On the other hand, these panel members argued that the combination of Lean and Six Sigma will not only reduce waste but also improve performance (meaning consistent service and reliability). The panel agreed to disagree and I personally think there are merits in both approaches but I believe it’s a blend of Lean and Six Sigma that will best support the aviation industry going forward.
Another subject, PMA parts, seems to be on the agenda at every MRO conference these days. If I understand correctly, there are over 100,000 PMA parts in use so it’s no wonder there’s a great deal of interest. There seemed to be some skepticism regarding the ability of PMA parts to deliver savings to an airline. A voice from the audience said they did not think the savings were as great as the presenters believed. And the biggest concern expressed by one of the airlines was whether or not an aircraft would be accepted at fair value when it came off lease. The worry that lease companies will not accept PMA parts seems to be valid. I conclude that although there is an increase in PMA part usage, the industry has yet to really make up its mind about the wide and complete acceptance of PMA parts. Certainly the OEMs seem to be stoking the fires against PMA parts and so the debate continues.
Back in March I wrote a post about the importance of Lean Six Sigma (LSS) for aftermarket service and support. I took the somewhat controversial position that, in the maintenance world, consistency should be a higher priority than efficiency and while companies usually focus on helping mechanics fix stuff faster, they would see more benefit by getting mechanics to fix stuff in the same amount of time. In other words, reducing the variability of maintenance execution provides more value than streamlining maintenance procedures. This doesn’t mean that reducing mean-time-to-repair (MTTR) is irrelevant, nor does it mean that improving work flows should be ignored; but it does mean that companies should control the maintenance process before they try to streamline it.
To understand why this is true we need to unpack the LSS acronym within the context of aftermarket service and support. Lean focuses on accelerating the overall repair process by modifying (or eliminating) non-value added maintenance tasks – to increase efficiency. Six Sigma focuses on reducing the variation in the time required to complete each task – to increase consistency. The big “aha” moment comes when companies realize that servicing equipment consists of multiple maintenance tasks and that no matter how streamlined the process, any variation between the fastest and slowest workers to complete each task has a compounding effect that can wreck the repair schedule and increase downtime. Any delays in maintenance execution trickle-down to the next task, destroying the ability to predict when equipment can be returned to service. This is why companies place a high premium on experienced mechanics. If a company can staff up with experts, they will have less variability in service execution and a more predictable and more flexible support organization.
At this point it makes sense to offer a word of warning about MTTR. Companies often overuse MTTR because it’s easy to understand and easy to measure. This makes it a very convenient number to track and report. However, MTTR is deceptive because it replaces the total range of repair times (as performed by each mechanic) with a single number (that represents the group). MTTR thereby masks the real source of blown schedules which is not the maintenance process but the variability of the workforce. Measuring the variability in repair times (for each task) is the critical first step for truly optimizing equipment maintenance.
In fact, reducing maintenance variability usually results in multiple options for the service organization to increase revenue and profits. One major OEM demonstrated that by reducing the variability of field service calls they could: 1) maintain the existing customer base with 12% fewer mechanics; 2) provide higher-margin service options (like a gold-level service plan); 3) increase the customer base up to 13% (by expanding the service territory). When comparing the impact of variability to cycle time (MTTR) this OEM realized that reducing variability provided much greater benefit.
So what’s more important for a maintenance organization: efficiency or consistency? As I said in the first blog post, the best answer is probably both. (Sometimes they go hand-in-hand.) But in terms of priority, companies should tackle consistency before efficiency. Once maintenance variation is under control, tasks that add no value become obvious. Enigma solutions help companies improve both aspects of Lean Six Sigma – efficiency and consistency.
For more information on Lean Six Sigma visit these sites:
Do you have ideas about optimizing aftermarket service and support? We welcome your input! Feel free to submit questions or comments to continue the dialog.
What’s the more important trait for a maintenance organization: efficiency or consistency? I pose this as a classic either/or question, when the best answer is probably both. Given the choice however, most people would probably pick efficiency without any hesitation. But they’d be wrong.
The logic behind choosing efficiency is understandable – reducing mean-time-to-repair (MTTR) improves equipment uptime, which increases revenue and profits. Therefore, if MTTR is the key to profits then efficiency must be the most important. (Who cares how the repair gets done as long as it gets done fast.) While focusing on “faster, faster, faster” raises the risk of poor quality, that’s not the reason efficiency is the wrong answer. Rather, I want to challenge the underlying assumption that MTTR is the best key performance indicator (KPI) for tracking aftermarket performance. I hope to demonstrate to you that variability in the maintenance function (still using time as the measurement) is a better KPI for optimizing the service organization.
For more than 10 years, two concepts have dominated the discussions of manufacturing engineers: 1) Lean and 2) Six Sigma (LSS). These practices have proven incredibly valuable to the companies that implemented them but LSS is not just for manufacturing anymore. Lean Six Sigma holds huge opportunity for aftermarket services as well.
I have been talking about LSS with analysts for several years, hoping to see a real dialog begin about the implications for the aftermarket. Unfortunately, none has been willing to take the lead on this topic (probably because analysts don’t offer a solution to the problem). Therefore, Enigma will start the Lean Six Sigma dialog by sharing the lessons we’ve learned from customers, partners and consultants.
In future blog posts I’ll describe the impact that Lean and Six Sigma can have on the aftermarket and explain why consistency is more important than efficiency. I hope this discussion will shine a light on the importance of LSS initiatives for aftermarket services and in the process help readers take away some knowledge that they can apply within their own company. Consistency and efficiency are critical to improving aftermarket revenues and profits. Lean Six Sigma can teach us how to balance these traits and thereby optimize the service organization.