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How improving maintenance operations can lead to ROI and profitability

Nov. 11, 2020
Industry best practices, managed by an effective CMMS/EAM system, will drive efficient operations.

If you asked me early in my software career (circa 1996), “what do maintenance people do?” My initial and quick response was “to fix broken assets,” a typical response matched by most people of that era.

About the Author: Paul Lachance

The reality is that maintenance technicians and their teams’ primary goal is to increase a manufacturer’s production capacity and efficiency. Maintenance is just as responsible for profitability as any other department for a manufacturer. This is achieved by cost-controlling measures such as avoiding downtime, optimizing labor, avoiding stock-outs (missing a critical spare part when needed), and assisting in ensuring compliance and safety. These all promote profitability.

Fortunately, the dated perspective of the grimy maintenance person only resurfacing to angry production staff when assets are down is going away. Today these professionals are known for proactively keeping assets and facilities running smoothly, and they often tie in with many departments (including production, finance, engineering or safety). In many ways, they are the unsung heroes of an organization and have serious positive impact in profitability.

Manufacturers who implement software and best practices and use consulting services have consistently shown even greater profitability potential.

Before we can talk about the path to greater profitability, let’s look at some of the profit killers that plague manufacturers, especially as it pertains to maintenance operations. Some at the top of the list include: labor (overtime, improper balance of work, wrong people for job, ineffectiveness); parts (stock-outs, poor ordering, poor management, loss/missing/theft); assets (downtime, poor quality scrap/rework, energy usage, premature retirement); compliance (fees/fines, insurance hikes, bad will).

These dreaded profit killers can be avoided by optimizing maintenance operations through a combination of well-implemented software and industry best practices to control maintenance operations costs, which will ultimately drive profitability. A steady dose of continuous improvement, driving “lean” and efficient maintenance operations, is key. All of this will make your organization more profitable.

Let’s take an organization that implemented software. By year three, it had reduced overall maintenance spend by $2 million. This does not happen overnight, but dedication to improving maintenance operations can lead to serious ROI and profitability in the long term.

1. Start with software

In today’s manufacturing maintenance environment, software is not only beneficial – it is essential. And in many compliance cases, it is mandatory. For example, ISO requires (among many other things) automated preventive maintenance. It is critical you have CMMS (computerized maintenance management system) or EAM (enterprise asset management) software that can help optimize your maintenance operations around asset management, work orders, parts and procurement, safety and compliance, reporting and analysis, and more. Many look to implement a CMMS to simply help automate manual tasks without realizing the cost savings and profitability benefits. 

The benefits of using a CMMS include asset preservation/longevity, minimizing unnecessary downtime, producing better products/environment, using less energy, and optimizing maintenance planning.

Still not convinced? According to a guide by the Federal Energy Management Program on “Operations and Maintenance Best Practices” (https://plnt.sv/FEMPguide), organizations that use a CMMS have experienced operational efficiency, such as a 28.3% increase in maintenance productivity; 20.1% reduction in equipment downtime; 19.4% savings in material costs; and 17.8% reduction in maintenance, repairs, ad operations (MRO) inventory.

2. Rely on industry methodologies

“Lean manufacturing” (including maintenance operations) helps organizations optimize efficiency and control costs, all while creating quality products. There are numerous best practices, methodologies, and other toolsets that have shown great progress in the drive to be lean and efficient. 5S, Six Sigma, and Total Productive Maintenance (TPM) are just a few. Each of these ultimately help a manufacturer be efficient/lean through continuous improvement processes.

Finding the right methodology for your organization is critical on the path to profitability. Here’s how some of the popular methodologies can help:

5S is a simple but excellent example. Each of the 5S’s (Sort, Set in Order, Shine, Sustain, and Standardize) are foundational to many of the other methodologies. In fact, 5S sits “under” the pillars of TPM (see below). 5S makes factories better organized, in optimal configuration, and clean – all allowing much more efficient maintenance management. 

Many of us have performed 5S-type tasks in our own houses during the COVID-19 pandemic. I know my attic, closets, and garage are much more organized and cleaner with my surplus of free time at home! This translates to all aspects of maintenance from the tool-crib, spare-parts room to making assets cleaner and easier to identify chronic problems. Like many of these methodologies, 5S should become a “way of life,” so all members of the team automatically use these principles. Having grown up sailing (which I continue today), my father used to say, “a clean boat is a happy boat.” The same rings true for a factory and its assets when supported by 5S.

Six Sigma is a larger and more comprehensive methodology that pushes for extremely minimal process and quality variability by removing causes of defects. Six Sigma is often driven by management with a focus on quantifiable financial improvements and relies heavily on statistical data to drive analysis. The goal is to reduce defects to under 99.99966%. This is a continuous improvement process that defines overall goals, measures the current situation/stats, analyzes using data to verify root cause issues, works to make improvements, and then continues to catch and correct future issues. Six Sigma initiatives can be large and challenging, but manufacturers have reported major overall cost savings and improved profitability as a result.

Total Productive Maintenance has a root philosophy that everyone in the organization – from front-line workers all the way to the CEO – are responsible for maintenance. The “autonomous maintenance” pillar empowers the operators of assets to perform basic tasks such as cleaning, lubrication, and tightening in a preventive manner to ensure the asset runs smoothly. TPM (autonomous maintenance) helps eliminate chronic abnormalities early, which promotes better uptime and other benefits.

A CMMS can help with each of these methodologies. Providing root-cause-analysis from work orders, identifying sources of downtime, showing where the “bad actor” assets live and other analytics are helpful. You can also use standard CMMS capabilities such as basic PMs for operators (i.e., instructions or videos). The results of these efforts will make your organization more profitable.

3. Turn on services

Software is important, but a real return on your CMMS investment – which will provide the best in terms of profit killers – requires a quality implementation and training for your team. In the 25+ years I’ve been around manufacturers and CMMS, the most common root cause of an unhappy customer is related to poor implementation, poor quality data, and or lack of training. Yes, quality software with appropriate features is important, but that won’t help you if your organization isn’t set up properly.

Controlling costs to avoid the dreaded profit killers requires your CMMS or EAM be properly configured with solid workflows to match your operational needs. This all follows a deep dive into your goals, objectives, and pains. The data – often migrated from a legacy system – needs to match this process. It’s essential that the entire team is properly trained on their respective use of the solution. You may require an integration to another system (think sending a requisition of low spare parts to your purchasing system). You’ll also need a readily available help desk to assist when you need it.

The time-to-value ratio of organizations that use services properly can speed up implementation by 50%. The services should be tailored to match your initial needs and budget, and you can always expand. Proper services are well worth the cost and effort as they bring in a positive ROI and resulting profitability quicker.

Combining your CMMS or EAM software with implementation services and industry best practices will help you battle profit killers and get your organization on the path to greater profitability. Don’t be intimidated – rely on your CMMS vendor to walk you through how this can help. Start with small goals, and continuous improvement and resulting profitability will eventually have you make big leaps and drive away those dreaded profit killers.

Lean manufacturing and maintenance is always in fashion. As we continue feeling the impact of the COVID-19 pandemic in every facet of our lives, one thing is for certain: “doing more with less” is critical in all times. When the pandemic passes, those who took advantage of the amazing CMMS efficiencies, amplified solid best practices and methodologies, and leveraged services to get implemented will be well ahead of the competition.

Your Space

This article is part of our monthly Your Space column. Read more from our Your Space series.

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