Non-traditional ROIs to improve your maintenance ROI

Consider the value of these ROIs and go beyond the bottom line with your maintenance investment.

By Ralph W. “Pete” Peters

The top leadership of many organizations, both large and small, must gain a greater awareness and personal understanding of the importance of maintenance. I have mentioned this many, many times in my book from McGraw-Hill — Maintenance Benchmarking and Best Practices. Top leaders must be aware of their total maintenance requirements. They must be aware of best practice needs and take advantage of the investment opportunities within maintenance.

Top leaders that have experienced the results of a Scoreboard for Maintenance Excellence assessment, along with projected benefits and gained value, will take notice. In addition, when they see that you have implemented The Reliable Maintenance Excellence Index that will validate those projected results, all top leaders will take an even closer look. Unfortunately, many organizations simply continue to gamble with maintenance costs and do nothing. Total maintenance requirements continue to grow with the status quo.

The core requirements for maintenance will never, never go away because maintenance is forever. Top leaders might exclaim that “our core competency is assembling cars or educating college students and it is not maintenance.” The truth is that maintenance remains forever as a core requirement for auto assembly success, as well as a core requirement for large and small college facilities. So when I read or hear about a top leader saying that “we are outsourcing maintenance because maintenance is not a core competency” I cringe and think to myself, here is one more top leader that just does not get it. Maintenance is a core requirement for success.

A near-sighted company vision focused on short-term results is fatal and will fail.

– Ralph W. “Pete” Peters

Maintenance is a core requirement in everything; body, soul, mind, car, house, factory and the roads to the factories. The core competency for doing maintenance and managing the business of maintenance is strictly another issue. The core competencies to perform in house maintenance can slip away gradually or very abruptly by key crafts retiring or changing companies.

Sound investments that affect the bottom line are still available in almost all existing maintenance operations. You can bet heavily on the fact that profit-centered contract maintenance providers are continuously looking to improve their profit picture and customer service as providers of maintenance. I personally know many from this growing business sector, and some are relentless in their pursuit of profit optimization and quality customer service. Takeover targets emerge as plant maintenance or facilities management operations continue to maintain the status quo too long. Then it becomes too late to turn around the in house operation and a takeover occurs. Many times this results from a new top leader that comes in wanting to make an immediate impact. It may be a new top leader that is impatient and a reader of all the literature on outsourcing and says, “Just do it."

Traditional ROI

We have focused on creating a greater awareness of the traditional return on investment (ROI). I think you will agree that much more is possible by applying today’s best maintenance practices, principles and leadership philosophies. Technology of the future will open up even greater maintenance improvement options. Real maintenance ROI is available to the organization that successfully converts the thinking of top leader into a complete awareness maintenance improvement is a profitable action they must take.

Maintenance operations that have committed to continuous reliability improvement and are applying today’s best maintenance practices, principles and leadership philosophies have achieved significant improvements. Investments in maintenance that successfully implement the practices from this book and other on the market can achieve results that are comparable to the following:

  • 15 to 25% increase in equipment uptime
  • 20 to 30% increase in maintenance productivity
  • 25 to 30% increase in planned maintenance work
  • 10 to 25% reduction in emergency repairs
  • 20 to 30% reduction in excess and obsolete inventory
  • 10 to 20% reduction in maintenance repair costs
  • Improved product quality
  • Improved utilization of equipment operators; greater production productivity
  • Improved equipment effectiveness and capacity
  • Improved equipment life
  • Improved productivity of the total operation

Beyond the bottom line and non-traditional ROIs

Investments in maintenance improvement will provide significant tangible results based on the traditional concept of ROI. Successful improvements in maintenance will impact the bottom line directly while providing both tangible and intangible benefits throughout the organization. Today’s leaders must also adopt some non-traditional interpretations of ROI that will provide significant additional benefits.

Non-traditional ROIs for improving maintenance return on investment 

There are nine non-traditional ROIs that I have listed on the previous graphic. Some include multiple ROIs As Part I in this series, we will review three non traditional ROIs. In the complete series we will review them all in Part II and Part III. The following three non-traditional ROIs will be important contributors to your success in gaining commitment to action by top leaders, action by maintenance leaders and to action from your craft leaders. In addition, if your organization has not really, really begun that critical first step on the journey toward maintenance excellence, these non-traditional ROIs will help with that important first step.

Return on inspiration (ROI)

Inspiration begins with a vision and a positive expectation for the future. The maintenance leader must completely understand the company vision. The leader must be a part of and become aligned with the company vision, mission and requirements of success. Maintenance must be established as a top priority within the entire organization and clearly be seen as a requirement for success.

The maintenance leader must translate the company vision into a vision for maintenance excellence and develop a shared commitment from the entire maintenance operation. Each maintenance employee must understand that a shared commitment to improving the maintenance operation is a positive factor. They must have positive expectations about change and overcome the negatives normally associated with change.

The maintenance leader is a critical and valuable maintenance resource. Leaders are not born, they are continuously developed. They must develop a clear understanding of the requirements of success in maintenance. The investment in maintenance leadership development and technical skills development will provide return. The maintenance leaders that has a cleary communicated vision of maintenance excellence will provide inspiration to all. The return on inspiration and good maintenance leadership will improve employee morale, attitudes, cooperation, communication, performance and bottom-line results.

Return on insight, intent and initiative (ROIII)

Maintenance leaders with insight understand that the requirements of success in maintenance begin with hard work from a good team committed to a common goal. This type of leader has the insight and understanding that there are no easy answers and quick fixes. They communicate their insights and intent for improving maintenance openly and confidently throughout the organization. They are intent on making a difference and can make positive things happen with the proper investments of time and money. Their vision and goals are not just good intentions. They put goals into action through initiative and determination.

Maintenance leaders with what I call 20/20 insight, know where they are because they have taken the initiative to totally evaluate their current maintenance operation. They also have many lessons learned from 20/20 hindsight. The true maintenance leaders know exactly where the next investment of time and money should be. They think like an owner of a maintenance business. They have accepted the challenge to re-engineer their maintenance operation for the future and have established priorities for action. Specific short-term goals have been established that subordinates can focus on with intent and immediacy.

Maintenance leaders who have 20/20 insight know their operation as well as the good points of other maintenance organizations. They seek out new ideas, products and services from all sources. They benchmark against their own high standards of excellence while pursuing a strategy of continuous reliability improvement. They also benchmark against other like organizations, yet don’t get trapped into management fads. Maintenance leader continued insight reinforces their faith in the American maintenance workforce, as the world’s finest and guarantees that quality for the future by providing supreme leadership.

Return on integrity (ROI)

There must be a maintenance champion. The real maintenance leader readily accepts the role as champion for maintenance excellence. Likewise, integrity of purpose and the integrity of the maintenance champions must set an example for others in the organization to follow. Emerson said it very well when he remarked, “What you are thunders so loudly, I cannot hear a word you say to the contrary.” Leadership by example and “walking your talk” is essential for the maintenance champion and all company leaders.

A company with true integrity of purpose does not chase fads. It understands the business it is in and has a consistent vision of success with maintenance as a top priority. Such a company wants to know the true costs of maintenance — “if we did it right” or “if we achieve regulatory compliance that the law requires.” The maintenance champion with integrity is honest, no matter what the situation or cost, and will determine what is really needed to do the job right.

The maintenance champion understands the true cost of deferred maintenance as well as inadequate preventive/predictive maintenance. The champion is prepared to provide proactive leadership and support to the company’s compliance to regulatory issues. The real maintenance champion is prepared to take bad news to company leaders with courage.

The return on integrity may be difficult to see and measure when it’s present. 

When integrity is not present within the company or the maintenance champion, it is obvious. For example, one can see where not buying new tires or changing oil in your car prior to trading it is okay, while turning back the speedometer is against the law. Neglecting plant or facility maintenance due to lack of knowledge can be reversed through education, time, money and quality people. Neglect through lack of integrity may never be counteracted without a change in leadership.

Return on integrity is easy to see when it permeates the entire culture and is part of the organization’s personality. It takes the form of an organization built on trust, mutual support and mutual respect at all levels. This return on integrity utilizes maintenance, operations and operators working together to detect, solve and prevent maintenance problems. It encourages pride in ownership with operators and maintenance as they do their part to fix and prevent maintenance problems through a cooperative team effort of operation-based maintenance. 

The return on integrity inspires individual integrity and is obvious when all employees do their jobs as if they owned the company. Individual integrity includes pride in one’s work no matter what the task.

Return on integrity goes beyond the bottom line to ensure long-term operation of a company and its maintenance function. It is measured by the evidence of success for each company. If allowed by current accounting practices, return on integrity should show up on the left side of the balance sheet under intangibles. When integrity is not present, it represents a current or long-term liability that will eventually show up on the balance sheet and the bottom line.

We have looked at several new interpretations of ROI, as well as the traditional concept of return on investment. Part II and Part III will cover the remainder. The Maintenance Excellence Institute believes that maintenance operations have a tremendous opportunity to contribute directly to the bottom line with a strategy of continuous reliability improvement across all six maintenance resource areas. Top leaders of today’s companies who want to be a part of the future must look beyond the bottom line with respect to maintenance. Maintenance must be a top priority for success. A near-sighted company vision focused on short-term results is fatal and will fail. Organizations of all types need long-term commitments from top leaders and from true maintenance leaders at all levels in maintenance.

Ralph W. “Pete” Peters is the founder/president of the Maintenance Excellence Institute. Contact him at Pete@PRIDE-in-Maintenance.com, (919) 280-1253 or www.PRIDE-in-Maintenance.com.