Can maintenance be a profit center?

Collecting, presenting and analyzing the right information can make the case for viewing maintenance as a profit center.

By Kahn Ellis

Too often, maintenance operations are viewed as a cost that needs to be contained or minimized. Unfortunately, this viewpoint ignores the role that a well-run maintenance organization can have on improving the bottom line.

However, collecting, presenting and analyzing the "right" sort of information can make the case for viewing maintenance as a "profit" center.

Practical steps

A first step is to develop common identifiers for assets. The proliferation of independent software systems has caused maintenance, operations and calibrations departments to identify equipment differently. This lack of common identification makes it difficult to provide integrated reports. Simply put, common identifiers make it easier to determine an asset's true uptime and to accurately track an assets full life cycle.

Another step is to provide detailed reporting and analysis of savings maintenance generates. Because many maintenance organizations use independent enterprise asset management (EAM) software, costs are often allocated to operations at a cost center level, with little detail. In many cases, these allocations are based on key indicators as a percentage of the annual budget. This arbitrary cost allocation makes it difficult to justify maintenance process improvement because individual cost center managers don't see the benefits being generated. This dilemma is solved by allocating the cost of work orders to the responsible "owners" directly.

A third step involves proper coding of work. Good codes normally have several dimensions to provide an accurate picture. One dimension is the type of work, such as corrective, preventive, predictive, etc., performed. Another supports failure modes and effects analysis. These codes, such as part, failure, cause and action, are necessary to diagnose equipment conditions and performance accurately. Proper coding can be difficult to implement and may require a real culture change in some organizations. However, when it's combined with accurate time and material data, a more accurate picture of plant operations emerges.

Trustworthy data

Examine the way maintenance data is gathered and the reports generated from this data. Many maintenance organizations use software separate and independent from the rest of the company's enterprise software. In fact, it's common to find different plants within the same company using different EAM software or the same software but in different ways.

Furthermore, maintenance groups or plants may gather data in different ways with different methods of allocating cost, coding and key performance indicators. Even if plants or groups base performance on similar indicators, they may not compile or "roll up" this data in a common method or structure. Additionally, the acceptance of data can come into question if the maintenance software is not well integrated with purchasing, accounting, human resources and other functional areas. Poor integration creates differences in information, which causes upper management to question the validity of maintenance data.

Additional ground rules

To correct some of the foregoing issues, it's important that the EAM have good business rules and addresses integration with the rest of the business. It also should mirror the operations of the entire enterprise.

Too often, maintenance operations are viewed as a cost that needs to be contained or minimized.

– Kahn Ellis

The EAM package must be able either to capture data for the full life cycle of an asset or have tight integration with other systems that do. This information is useful for future decisions on procuring new assets, modifying existing assets, and effective retirement and replacement of assets.

Maintenance needs to focus on ways to show its value to the company. Reports that document higher production rates, higher product quality and reduced disruptions can change the view of maintenance as being only a cost center.

More plants are reaping the benefits of improved integration and data exchange among maintenance and other business areas. Your plant should be one of them.

Kahn Ellis is product manager, PLM Assets Life-Cycle Management at SAP America, Inc. He can reached at (973) 316-3619 or kahn.ellis@sap.com.

Related content

Enterprise Asset Managment/Computerized Maintenance Management System Resource Center
http://www.plantservices.com/resource_centers/management/EAM_CMMS.html

SAP Knowledge Center
http://www.plantservices.com/knowledge_centers/sap/index.html

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