The best strategies for leveraging scarce resources

Strategies for leveraging scarce resources.

By Paul Studebaker, CMRP, Editor in Chief

When we planned this article in August, 2008, we imagined it as a practical guide to dealing with a shortage of maintenance talent at your facility, right now, because of skilled worker retirements and the missing generation of replacements (we call it the Maintenance Crisis). Since then, the economy has continued to deteriorate, spilling thousands of experienced manufacturing professionals into unemployment at the same time that many older workers lucky enough to have the option are staying on the job.

Workers’ eagerness to work and willingness to continue has taken the edge off the Maintenance Crisis, but the economy has taken its place. Today, the need for industrial maintenance departments to work smarter and be more resourceful is driven by budget cuts, layoffs and hiring freezes. This won’t last forever.

“Many issues have changed since the downturn, but we continue to work on the shortage because it’s not going away,” says Jeff Owens, president and CEO, Advanced Technology Services (ATS, www.advancedtech.com). “Staffs are skinnier than before, and retirements are coming.”

The young people you’ll need might be laid off. Some of the older workers who are staying aren’t the most skilled, and as the economy comes back and 401(k) account balances recover, more will retire.

“It’s a difficult problem and it’s going to get worse,” says Don Rainey, director of field services, Azima DLI (www.azimadli.com). “A client told me that once a month he wakes up at 3 a.m., realizing that 22 of his 28 millwrights are 55 or older. Contractors have the same problems — a shortage of skilled folks. You can’t cram 20 years of experience into a 12-week course.”

If you’re forced to cut staff, think down the road and plan. “Keep a balanced mix of high-knowledge, middle knowledge and new people,” Owens says. “If you lose the young people — if we show them manufacturing is unstable — will we be able to attract them back?”

Whether driven by demographics or economics, the winning strategies are the same. Don’t just hunker down, try to get by and wait for the recession to be over. Here are ways to cope with manpower and material shortages, stay (or get) proactive, and be ready to take advantage of returning activity as the economy rebounds.

Know your priorities

Faced with too much to do, maintenance professionals usually are advised to review their work orders, set priorities, eliminate wasted activities and leverage the limited workforce. Stop unnecessary preventive maintenance (PM) activities, like overly-frequent lubrications and ineffective inspections. Stop sending two technicians when one can do the job. Cross-train them so they can do multiple jobs. “Take a long, hard look at what you’re doing and if it’s necessary,” says Rainey. “Have millwrights do the more mechanically-oriented electrical work.”

But most facilities can’t figure it out. Instead, they stop training, drop any proactive and predictive programs, and fall far behind on PM tasks. “In the economic crisis, maintenance is the first thing hit,” says Magnus Pousette, vice president, Reliability Services, North America, ABB (http://www.abb.com/service). “No training, no PMs — it moves backward into a more reactive mode.”

Proactive maintenance rarely gives an immediate payback, and at first it costs more than preventive and reactive programs. But once it’s established, it costs 20% to 30% less. The value and benefit come from the ability to quantitatively assess equipment and perform the maintenance on your schedule rather than the machine’s. “And nowadays, because of the skills shortage, the odds of doing damage are greater during an overhaul,” says Rainey. Predictive lets you work only on the machines that need it, when and where it’s needed.

When it’s necessary to defer maintenance, reactive companies don’t know where to make the cuts. Proactive organizations use risk-based analysis and can make more intelligent decisions.

“One of our clients is a gas company looking at the idea of dropping its predictive program. They said, ‘We can’t go back to 1960,’” says Rainey. “Back then, you had skilled craftspeople you could count on to align and bed a machine properly as part of doing their job. Now we have the tools, like laser alignment, to do it quicker and easier, but we have far fewer people who can take advantage of them.”

The current economy has put the squeeze on capital as well as expenses, and woe betides the company that neglects its valuable assets. “Because of a lack of capital dollars, people must be more efficient and more conscious of how they maintain equipment,” says Chuck Kooistra, CMRP, senior vice president, General Physics (www.gpworldwide.com). His company recently formed GPAllied, a joint venture with Allied Reliability (www.alliedreliability.com) to provide maintenance and operations consulting and services.

Companies that give ground on predictive maintenance are building up a maintenance debt. “It’s not on the balance sheets, but it’s there and growing,” says Pousette. “It’s going to be very, very difficult. There will be a lot of bad mornings when companies realize the capacity they had six months ago is now 30% or 40% less, and it’s going to cost a big bunch of cash to get it back.”

Find quick returns

Reducing maintenance costs while preparing for the future tends not to be cheap in the short run. Proactive plants may already be in a position take advantage of idle time to accelerating cost-saving projects and programs. The rest of us need immediate cash savings and plans that offer rapid returns to support the proactive initiatives that will bring us out on top.

If you haven’t rationalized maintenance spare parts and supply inventories, now is the time. But do it wisely. “A plant that wants to conserve cash might have an idle line and be tempted to steal the parts from it rather than buy new ones, but what happens when the business comes back?” asks Blake Moret, vice president and general manager, customer support and maintenance, Rockwell Automation (www.rockwellautomation.com). “They might get the same cash-conserving benefit by consolidating suppliers.”

You might have been viewing better inventory control as a refinement — something you’d do if you had time and resources. Instead, use it as a cost-cutting measure, and enlist your suppliers to get it done quickly, efficiently and well.

“It’s all about reducing operational expenses,” says Kevin Hartler, director, Grainger brand solutions development, Grainger (www.grainger.com). “Don’t buy it until you need it, and use that money elsewhere. Think in terms of yesterday, today, tomorrow, not a four-month supply, and keep your money until you need to spend it.”

In many plants, 50% of maintenance inventory is inactive — it hasn’t been used in the past 12 months. “So you’ve gone to the trouble to order, shelve, manage, account for and audit materials you’re not using,” says Hartler. “Our Inventory Solutions program lets you take that labor and put it to valuable use.”

In one customer’s plant, Hartler found that only 30% of technician’s time was devoted to maintenance and repair. A significant portion was spent on procurement. “On average, it takes 90 minutes of people’s time simply to replenish an item,” Hartler says. “Our consulting team goes in and helps companies understand their maintenance and procurement processes. We take the time to analyze what they are doing and remove non-value-add activities.”

Get good advice

A trusted supplier might also be able to hook you up with deep expertise that can help you identify root causes, engineer solutions and plan projects that cut costs or offer immediate returns. “We have programs to reduce energy and waste,” says Hartler. “We draw on our base of suppliers to do surveys and propose cost-cutting measures, such as energy-efficient lighting.”

Keep an open mind about where potential savings lie, and consider letting your suppliers weigh in. Plants often tend to take a silo view, hiring service providers for specific major repairs, remote support or training. “It’s better for them to let us look at the overall problem,” says Moret. “Do they need to increase uptime by managing parts and getting faster turnaround? Or do they need to look for the root problem? Maybe there is an undersized or stressed component, or they need operator training. We are able to look at the overall problem and break it into discrete chunks.”

An assessment can show the potential of a project or set of services. “If there’s no way to show savings, why hire us?” says Owens. “We guarantee ROI and payback.”

But be ready to listen. “We have never had so much activity with new customers,” says Pousette. “Many are asking us to help them cut their costs, and often we can. But others actually need to invest more, and they do not want to hear it.”

Fill in with services

Service providers that have geared up to help manufacturers deal with the maintenance crisis are seeing the recession as an opportunity to demonstrate their value and establish relationships that might carry on as the economy picks up. To address the specific problems brought on by larger budget cuts and shrinking cash flows, they’ve increased the ranges of their offerings.

Often, vendor services are less expensive than doing the work in-house. “A company with 100 people in maintenance will have three or five really good people, the technical backbone, who spend half their time reinventing wheels, for instance, defining the PMs on a gearbox,” says Pousette. “Instead, they could buy that PM for maybe $500. They could outsource their root-cause failure analysis and halve their workloads.

“You can increase productivity of existing scarce resources by drawing on outside sources, not just from ABB but from others,” Pousette adds. “You should not try to do everything on your own. Pay attention to the hourly cost, and look at the small things, not necessarily big contracts.”

The vendors are essentially saying that no job is too large or too small. “If you need to cut an in-house engineering resource because you can’t use it full-time, use a service to do it part-time, like one week a month,” says Moret.

You might divert some work to remote support to free up local talent. Remote support can range from someone on the phone to a live person or access to a knowledge database. “It’s an inexpensive way,” Moret adds. “Linking over the Web can let them dial into the process for a one-time analysis, all the way up to continuous surveillance.”

Service providers also have broadened their offerings. For example, along with maintenance services, ATS now supports planning/scheduling, training and safety. “You can take a bits-and-pieces approach,” Owens says. “For instance, we have all that’s needed for a comprehensive safety program, with systems for compliance, OSHA documentation, training, etc. It can pay for itself with insurance savings.”

One problem is knowing for sure when the economy has turned around and it’s time to hire. “Services can help you fill in the blanks,” says Owens. “If you see an uptick and you’re not sure, you can draw on services. We offer flexibility and ingenuity to ramp up and ramp down with our clients.”

Outsource for expertise

But outsourcing isn’t all about manpower, versatility, the value of an outside perspective or even the fact that you can get a lot for your money. Expertise that has become a scarce commodity in local labor pools is being concentrated in service organizations. “Companies can’t find people, so they fill spots with people who are half-good,” says Pousette. “As a maintenance company, we’re able to attract people who want maintenance as a career. They generate value rather than just limit the destruction of value.”

Workers’ eagerness to work and willingness to continue has taken the edge off the Maintenance Crisis, but the economy has taken its place.

– Paul Studebaker, CMRP, Editor in Chief

In some critical areas, services might be the only way to get the job done. For example, the days of every plant having one or two predictive technicians are gone — they don’t have the resources to dedicate to a program. “And where will you get them?” asks Rainey. “If you try to take your best millwright and turn them into a vibration technician, you need someone with a lot of machine background, who also can deal with frequency charts and spectra, and is highly computer-literate. They also have to be a very, very effective communicator so they can convince a steel mill superintendent to tear into a functioning million-dollar gearbox. And they have to be willing to go into a plant and crawl into tight spaces and get hot and greasy and dirty on a regular basis. It takes eight months to a year for the person to get productive. Meanwhile, you’ve given up your best millwright.”

So it can be difficult to keep an in-house program going. Contrast that with leveraging the experience of a relatively small number of vibration analyzers by remote monitoring, where data is collected locally by regular staff and uploaded to experts for analysis. “We use software to screen it and in-house experts to analyze it, and transmit back the results,” Rainey says. “We can monitor a start-up in real time and immediately notify you of any problems. You also can send data at any sign of trouble. It typically saves half the cost of an in-house program because you aren’t paying the overhead for in-house staff and we’re saving travel cost and time.”

Rainey points out that as many as half the programs that were running in the 1980s have fallen into disuse. He says, “You can reinvigorate those programs without training, and the results are immediate.”

Prepare for recovery

Again, hunkering down is not a viable option. If you’re not in one of the few plants that can use recession-idled resources to improve reliability, productivity and efficiency, bear in mind that when good times return, you’ll be competing with them for talent as well as customers.

Leverage the fact that some of your most experienced workers are still on the job. “Take advantage of economic stimulus funds and get started with knowledge management,” says Kooistra. “Get the information out of those little black books.”

Stimulus money is being made available on a state-by-state basis. “Tennessee is offering as much as $100,000 per company for training, and they’ve relaxed the criteria — the company match is 50% instead of 100%, and it can be in soft dollars like facilities and labor,” Kooistra says. “It’s now available for established as well as new industries, earmarked for advanced manufacturing technologies.”

Have a vision for the future and prepare for retirements. “Look at social networking approaches,” Kooistra says. “Ultimately, I believe this will be a mechanism for new people to stay in touch with older, more experienced people. Retirees will work part-time answering questions in knowledge bases. We’ll use retirees as coaches, mentors and experts to help implement a CMMS system or staff an ask-the-experts forum.”

Meanwhile, hang onto your star performers or they’ll be leaving for better opportunities at the first sign of an upturn. “Keep them in your line of sight, have daily communications with them,” Kooistra says. “Anything you can do to keep your key performers will set you up for the recovery. What we thought would be a V has dragged on to a U, but the principle holds — the recovery will come.”