Strother Martin said it best in the movie, Cool Hand Luke (1967): “You’ve got to get your mind right!” That’s the key to outsourcing maintenance. If you do it because the accountants told you to cut your budget, or because you want to foil the union, or the plant down the street is doing it, you don’t have your mind right.
With that kind of attitude, you’ll wind up like the Grace L. Ferguson Airline and Storm Door Company. In a classic comedy bit by Bob Newhart, the pilot tells the passengers that the reason the air fares are so low is because, “We have attempted to eliminate what we in the airline business call 'frills' and 'extras,’ like maintenance and radar and a whole bunch of technical instruments up in the cockpit.”
Instead of treating maintenance as a frill and extra, it’s far better to take a positive attitude toward maintenance outsourcing and learn how a proper program can improve reliability, increase the bottom line and keep people working.
Get your mind right
A study by A.T. Kearney (www.atkearney.com) says that many plants outsource services for the wrong reasons. More than 80% of the companies in their study said they outsourced to reduce operating costs, reduce capital investment and concentrate on their core business. Fewer than half said it was to increase speed to market, improve quality and gain faster customer response time. The majority of companies with revenue-related goals reported they failed to meet those goals.
The Mittal (formerly International Steel Group) plant in Cleveland has the right idea about maintenance outsourcing. In 2004, management decided it was important to more clearly identify the root causes of failures, and thereby improve equipment reliability. Their goals were to identify failures, standardize repair reporting, expand repair tracking to all repairable assets, track equipment and use condition monitoring to find equipment that may require repair soon. The plant is still in the process of making all this work, but it illustrates a company with specific goals for its outsourcing. Note that achieving lower costs is not one of the goals.
“If the plan to outsource maintenance is viewed as the plant throwing maintenance ‘over the wall,’ making it someone else’s problem, the plan will be doomed to failure from the beginning,” says Stephen Welch, marketing sales manager at Advanced Technology Services (ATS, www.advancedtech.com). “A common mistake is made when considerations to outsource maintenance focus solely on the ability to reduce cost. Another common mistake is focusing outsourcing efforts on the labor component only. Generally, 85% of problems are related to poor processes, and 15% are related to people.”
Many outsourcing activities are started with no real planning. “I often hear managers tell me they decided to outsource a service based on an article, a vendor pitch or even a company initiative to find activities to outsource,” says Andy Drexler, global marketing leader for services at Honeywell (www.honeywell.com). “No one took the time up front to discover what their desired results were, and what tradeoffs would have to be incurred to reach them.”
Plant managers often have wrong ideas about outsourced maintenance. Welch says some of the common myths and misunderstandings include:
- Outsourcing maintenance is an admission of internal failure: “Traditionally, companies outsourced a function when it was being performed poorly or the processes were out of control,” says Welch. That may have been true once. “In today’s marketplace, outsourcing is viewed as a proactive measure that allows best practices to be accomplished.”
- Control of maintenance will be lost if it is outsourced: Not true. In many cases, you don’t have control anyway. Much of today’s maintenance activity is devoted to putting out fires. With competent outsourcing, the provider produces performance metrics and maintenance data that can lead to a significant gain in overall control.
- If outsourcing is unsuccessful, internal expertise will be lost: Again, not true. Many service providers will hire much of your current workforce, especially those with detailed knowledge about your process equipment. The contractor will actually enhance the abilities of those employees through advanced training, better tools and exposure to maintenance management software. If the outsourcing contract doesn’t work out, the workers are available to return to the plant with more skills than they had when they left.
- Outsourcing will increase costs: Although outsourcing may increase maintenance spending in the short term, as contractors make necessary changes, a good maintenance program will reduce the plant’s cost to manufacture products. Also, the long-term results of a good maintenance program are lower overall maintenance costs.
Martin Michael, vice president of marketing and sales at Advanced Automation Associates (www.aaainc.com), says that outsourcing “helps companies and plants prevent downtime, improves production efficiency and uptime, allows the plants to deal with emergencies immediately, and improves the quality of manufacturing operations. Because of these benefits, outsourcing has an immediate ROI, saving thousands in maintenance and an improved profitability.”
Outsourcing companies follow best practices, so they will help you implement programs such as maintenance leadership, planned and scheduled maintenance, preventive and predictive maintenance, reliability improvements, maintenance materials management and good contractor relationships, says Welch. In other words, they’ll help you implement the programs you’ve always wanted to do.