In a recent survey of manufacturing executives, 54% of companies say that maintenance retirements will cost them more than $10MM over the next five years. And 31% estimated the cost at more than $50MM. According to Stephanie Neal’s article in Managing Automation magazine, OEMs can’t afford to make new capital investments, yet “businesses need to run at peak performance levels…Meanwhile, baby boomers are retiring, leaving a gap in the number of skilled professionals who understand MRO operations.”
These numbers are a major concern for OEMs because equipment downtime has a negative impact on business. And we’re hearing a similar message from other capital equipment operators like airlines, rail & transit, and oil & gas. Maintenance capability is critical to keeping equipment in-service, generating revenue and profits.
In the same issue of Managing Automation, David Brousell’s article identifies the top 3 business goals for 2009 as:
- Reduce Inventory
- Improve Customer Service
- Reduce Downtime.
While it may not be obvious at first, these three objectives and the retirement problem share a common characteristic: success relies on improving access to parts and service information. Current maintenance improvement strategies that focus on enterprise asset management or supply chain management (EAM/ALM/CMMS and SCM/SPP) fall short because they lack the detailed aftermarket information necessary to fully address these opportunities and problems. (See a previous blog post on this topic.) Traditional systems can track performance, schedule maintenance and balance inventory but they don’t address the problem of improving service—both scheduled and unscheduled maintenance activities.
With the number of experienced mechanics decreasing and the demands for productivity increasing, how will companies keep equipment running? Some are simply outsourcing maintenance to a 3rd party, essentially buying a “best-in-class” maintenance organization. The problem with this approach is that recurring costs are bound to increase as the company’s first-hand knowledge regarding equipment maintenance decreases.
Another approach is to enhance in-house maintenance by implementing a one-stop-shop for all parts and service information—including the collective experience of the maintenance department—for your equipment. This allows existing service departments to become more efficient and more consistent in delivering maintenance and support, and helps new technicians perform like old-timers. This approach also helps companies to contain escalating maintenance costs, ensuring they retain control over uptime and output.
Implementing a one-stop-shop approach does more for companies than just improve maintenance training, reduce equipment downtime and improve customer service. (Although that may well be enough.) It also helps reduce inventory by ensuring correct parts orders and by providing real-time demand information from the point-of-service to the supply chain management system, allowing more accurate parts forecasts.
Companies that operate capital equipment face a dilemma. They need to get more production out of existing equipment with limited resources—both human and financial. Solving this problem is a big decision. On the one hand companies can outsource maintenance, but once that decision is put in motion it becomes difficult to reverse. On the other hand they can use available technology to improve the in-house maintenance and thereby keep their options open. To my way of thinking, in an uncertain world flexibility is a commodity that is hard to replace and one that I am reluctant to lose.