MRO Today - Outsource recourse

Outsource recourse
If your maintenance department isn't a center providing high productivity, service, leadership and profits, you risk replacement by outside providers

by Ralph W. "Pete" Peters

Successful contract maintenance providers clearly understand maintenance as a profitable business opportunity. Maintenance is forever, and there always will be new business opportunities for the true value-added contract maintenance provider.

These professionals understand the profit involved and the importance of overall craft effectiveness and quality service. Simply, their goal is to perform services equal to or greater than in-house maintenance, at a profit and potential savings to your company.

The future will see third-party maintenance providers continue to replace in-house maintenance operations who priced themselves out of the marketplace due to low craft labor productivity, poor service and a lack of internal leadership.

With that in mind, who will step forward with the courage and commitment necessary to bring the art and science of maintenance into a profit center within your operation? Who will convince your leadership that:

1) “We have the technical know-how and leadership capabilities to operate your maintenance operation and take it to a more reliable and profitable level.”

2) “We will divest it completely from you and slowly sell its services back to you at a profit to us and a net savings to you. We will validate immediate short-term benefits and continuously measure improvements and benefits to you over the long term.”

3) “We will provide both the technical and personal leadership to avert certain failure of your business if you continue along your current path of no investments in maintenance best practices and craft skills development for your people assets.”

Are you a takeover target?
The in-house maintenance operation that continues with rising craft labor costs, no productivity gains and marginal customer service is an easy takeover target.

View and operate the overall maintenance process as an internal business and consider it a profit center. Today, in-house maintenance operations can be competitive with the proper leadership, equipment, tools and application of today’s maintenance best practices.

One key part of the answer is to get maximum value from craft assets and achieve high “overall craft effectiveness” (OCE). We must clearly understand the OCE factor as it relates to our craft assets.

We all understand the world-class metric “overall equipment effectiveness” (OEE), which measures the combination of equipment asset availability, performance and quality output.

We also understand that asset management and asset care are excellent new global terms for the maintenance process. However, asset management is singularly focused on equipment and facility assets.

The profit-centered maintenance leader (in-house or contractor) must consider total asset management in terms of all assets and resources:
— Equipment/facility assets
— Craft skills/people assets
— Material assets
— Information assets
— Team processes as a people asset multiplier

The OCE factor focuses on measuring and improving the value-added contribution that people assets make to total asset management.

Let’s review the three key elements for measuring OCE and see how they align with the three elements for determining the OEE factor for equipment assets.

Measuring OCE
Maintenance operations that continue to operate in a reactive, run-to-failure, fire-fighting mode and disregard implementation of today’s best practices continue to waste their most valuable asset and very costly resource — craft time.

Typically, due to no fault of the craft workforce, surveys and baseline measurements consistently show that only 30 to 40 percent of an eight-hour day is devoted to actual, hands-on “wrench time.”

Best practices such as effective maintenance planning/scheduling, preventive/predictive maintenance, more effective storerooms and parts support all contribute to proactive, planned maintenance and more productive, hands-on wrench time.

Measuring and improving OCE must be one of many components in the maintenance improvement process and total asset management.

OCE includes three key elements related to the three elements of the OEE factor:

Overall craft effectiveness
— Craft utilization
— Craft performance
— Craft methods and quality

Overall equipment effectiveness
— Availability/utilization
— Performance
— Quality

Craft utilization
The first element of the OCE factor is craft utilization (CU). This measures our effectiveness in planning and scheduling craft resources so that these assets are doing value-added, productive work.

Effective planning/scheduling within a proactive maintenance process is key to increased wrench time and craft utilization. It’s having the right part, at the right place and time, to do scheduled work with minimal, non-productive time for the assigned craftsperson or crew.

CU is expressed simply as:
CU% = total productive time (wrench time) ÷ total craft hours available/paid x 100.

Maintenance operations that continually fight fires and react to emergency repairs never have enough time to cover all the necessary work. Over time, it seems more craftspeople or contracted services are the only answers.

Improving craft utilization provides additional craft capacity in terms of total productive craft hours available.

In relation to OEE, it is increased people asset availability and capacity. It’s also gained value and additional hours that can be used to reduce overtime, devote to PM/PdM, reduce the current backlog, and attack deferred maintenance.

Craft performance
Planning times provide a number of key benefits for the planning function. First, they provide a means to determine existing workloads for scheduling by craft areas and backlog of work in each area. Planning times allow the maintenance planner to balance repair priorities against available craft hours and realistically establish repair schedules that can be accomplished as promised. Second, planning times provide a target or goal for each job that allows for measurement of craft performance.

Due to the variability of maintenance-type work, the goal of the individual craft performance measurement is to evaluate the craft workforce as a whole and not by the individual craftsperson.

Craft methods and quality
The third element affecting overall craft effectiveness relates to the relative level of methods used (personal and shop tools, special shop equipment, shop work areas, repair methods, etc.) as compared to current state-of-the-art methods.

This element can include callbacks where the poor quality of the initial repair requires another trip to fix it right the second time. Typically, the craft methods and quality (CMQ) element is a more subjective value and is not determined based on actual data like craft utilization and performance. However, the craft methods and quality level does affect overall craft labor productivity.

The OCE factor is determined by multiplying each of these three elements:
OCE = CU% x CP% x CMQ%

Maintenance craft labor may be very efficient with 100 percent craft performance and still not be effective if craft utilization is low and craft methods and quality are poor. Due to the subjective nature of determining the value of craft methods and quality, this element is typically not used. This element is an important part of effective planning and scheduling.

One part of planning is determining the scope of the repair job and the tools or equipment that might be required. A continuing concern of the planning function should be on improving existing repair methods, through better tools, repair procedures or diagnostic equipment. Providing the best possible tools, special equipment, shop areas and repair procedures can be a contributor to improving OCE.

By recognizing that the value for craft methods and quality is subjective, the OCE factor is best determined by:
OCE = CU x CP

Improving CU and CP
Improved craft utilization through more effective resource planning increases available wrench time.

Improved performance results when work is planned and the right people, tools, equipment and parts are made available.

Improving craft performance is a continuous process with a program for craft skills training and methods improvement to do the job right the first time in a safe and efficient manner.

When we look at improving both CU and CP, we see a greater opportunity for a return on investment.

Think profit-centered
Profit-centered, in-house maintenance, combined with the wise use of high-quality contract maintenance services, will be the key to the final evolution that occurs in your maintenance organization.

There will be revolution within organizations that do not fully recognize maintenance as a core business requirement and establish core competencies for it. The bill will come due for those operations subscribing to “pay-me-later” thinking. Operations that gamble with maintenance lose.

Maintenance is a requirement for profitable survival and total operations success. If the internal core competency for maintenance is not present, it must be regained.

Neglect of the past must be overcome with a growing number of profit-centered maintenance providers that clearly understand OCE and providing value-added maintenance service at a profit.

Ralph W. “Pete” Peters is the general manager of maintenance practice for Tompkins Associates, an engineering-based consulting firm specializing in total operations.

This article appeared in the June/July 1999 issue of MRO Today magazine. Copyright, 1999.