The benefits of maintenance outsourcing

Dec. 16, 2004
Intelligent asset management combined with maintenance outsourcing can lead to significant savings on MRO costs and increase your return on your assets.

Outsourcing in recent months has become a contentious issue for the public. Even government officials are feeling the pressure as they try to cut bottom-line costs by outsourcing jobs overseas.

Plant managers have been feeling similar pressures. Caught at the mercy of a tight market for skilled field technicians and stuck in the crosshairs of management directives to boost the bottom line, many plant managers are turning to alternative approaches to manage their operations, maintenance, and asset management needs.

Among these new and alternative approaches is the use of sophisticated asset/equipment management systems. These tactics also include the formation of non-traditional vendor partnerships to outsource non-core processes and build cost-cutting applications. With the goal of lowering costs and improving efficiencies and downtimes, maintenance and production managers across the operational spectrum find themselves integrating these new approaches as a vital part of their plant management arsenal.

Maintenance Outsourcing
A big part of the outsourcing equation, particularly for managers facing hiring freezes, cuts in training budgets, aging maintenance workforces, and hard-to-find skilled labor pools, is maintenance outsourcing. Today, maintenance outsourcing provided by outside vendors is covering more and more maintenance tasks once handled by in-house staff.

Maintenance support for specialized valves and actuators has long been outsourced.  Routine maintenance for other control and automation processes is now being handled by outsourcing vendors as well.

“Facilities have pared down costs, increasingly relying on vendors for service,” says Craig Resnick, research director of the ARC Advisory Group, a leader in providing strategic planning and technology assessment services to manufacturing companies.

What are the advantages of outsourcing? Outsourcing enables budget flexibility. It lets organizations pay for only the services they need and when they need them. It also reduces the need to hire and train specialized staff, brings in engineering expertise from the outside, and reduces capital expense, yielding better control of operating costs. The outsourcing arrangement can change as your maintenance needs change.

Doug Schuler is the instrument reliability coordinator with BP Amoco Texas City and a Puffer-Sweiven contractor. He’s also a control valve specialist.

“There’s a clear trend to using more and more contractors all the time,” Schuler says. “Using a contractor to focus 100 percent on a particular area lets you better manage existing assets.

“Because I focus 100 percent on control valves, I not only better manage that area, but I provide a resource for other engineers.”

Advances in technology are making such expertise not just desirable, but increasingly essential. In Schuler’s experience, it’s the OEM who has the know-how to provide that expertise.

“Control valves are highly engineered products. You cannot expect a third party to appreciate or fully understand engineering designs perfected over a period of years. The OEM has intimate knowledge of how such things as changes in trim or operating conditions affect their products.”

Vendor-Customer Partnerships
Just because plants are getting help from the outside doesn’t mean that managers are removed from the process. To the contrary, close partnerships are developing between manufacturers and end users. The free exchange of information and resources helps them pursue common goals: cutting costs, increasing efficiency, and extending product life.

Larry Lizner, senior maintenance engineer with Celanese Chemical, got his group together with a vendor to redesign a control valve based on observed failure points.

“We actually spent time in one of Flowserve’s engineering offices, re-engineering an indexing seat design in a ball valve we use,” says Lizner.

“It was a very positive experience. We don’t have new mean time between failure data yet, because our new design has yet to fail. Reliability is our number one concern, so it was a win-win from our perspective.”

Flowserve’s Durham believes such partnerships play a key role in reducing maintenance costs.

“Flexibility is paramount,” Durham says. “Metrics may be needed for anything from a single loop to multiple plants.”

Durham uses software and consulting to help his customers reduce MRO costs.

“It has helped our customers identify critical valves and bad actors, optimize inventory, prioritize turnarounds and shutdowns, and increase mean time between repairs.”

Reducing MRO Costs & Improving ROA
At ARC, Resnick says that his organization’s clients are looking to predicting and preventing failures as the key to reducing their maintenance, repair and operation (MRO) costs, and to increasing their return on assets.

“It’s not just the equipment cost and number of valves and controls, but the financial impact of failure on production,” Resnick says. “That’s why improving your maintenance practices deserves so much attention.”

A trend toward outsourcing maintenance and adopting asset management applications is helping operators make the improvements that Resnick says are crucial to keeping plants up and running, and keeping costs down.

Asset Management
Today’s asset management applications are a far cry from the paper files and rudimentary databases of yesterday. Closely related to computer maintenance management software and enterprise resource planning applications, the next generation of systems provides the ability to synchronize operational and maintenance activities.

The best asset management programs give insight into the future—they give maintenance managers the tools and the knowledge to set priorities and tackle potential problems that would have the most effect on business. They provide a window on the overall status of equipment, warning of weak links, tracking and archiving equipment performance measurements, highlighting failure points, and helping to schedule predictive, planned maintenance.

The potential cost reduction and increased reliability are the most attractive benefits of asset management, says David Durham, aftermarket manager for Flowserve Flow Control.

“Our response has been to combine a software tool, Flowstar.net, with an active partnering process to help plant personnel formalize a cost-reduction program,” Durham says.

Many customers are still reacting to equipment problems, Durham says, and they have little in the way of a documented repair event history.

Asset management programs like Flowstar.net seek to change that. They take advantage of existing open-standard communications protocols—such as HART and FOUNDATION Fieldbus—to collect diagnostics from equipment and give operators a superior way to monitor their facilities. Open standards eliminate the need for multiple, proprietary maintenance terminals. Ultimately, advanced diagnostics, partnered with smart transmitters and open digital protocols, consolidate data into one asset management application, giving operators the information they need to predict—and prevent—failures.

That paves the way for better decision-making, and ultimately leads to reduced MRO costs.

The process begins with information a plant already has.

“We start by importing data from historical files and loop file folders,” Durham says. “We also perform an actual physical assessment and recording of valve and control condition and operation.”

Once that information has been absorbed, the system gives operators the tools to be proactive instead of reactive. The result is a substantial increase in reliability, as operators move from fighting fires to performing highly planned preventive and predictive maintenance. The benefits increase over time—as the software gathers more data, efficiency grows.

Asset management applications can also cut inventory costs for the supplier. As inventory control responsibility moves from the end user to the manufacturer, an asset management program can help the manufacturer make intelligent inventory decisions.

“You can predict what parts and equipment needs what stock levels, based on repair and failure history,” says Resnick.

Dean Teglia, industrial equipment managing partner at Accenture NA, sees a slow evolution in the industrial sector toward more sophisticated maintenance practices.

“We see clear benefits from both an end user and the OEM side,” says Teglia. “For the end user, it’s more cost-effective to fix faults before they occur, to manage an intelligent predictive and preventive maintenance program instead of a reactive program. For the OEM, smarter equipment and automated management provides data points that can decrease life cycle costs and help to refine a product based on real-world activity.”

MRO outsourcing is a practical and cost-effective solution for the maintenance and repair challenges today’s plant operators face. Using new asset management systems, plant managers and operators are gaining important predictive information on their operational performance, letting them spot faults before they can impair reliability and safety.

Open communications protocols provide the easiest way to diagnostically assess plant equipment. By obtaining performance information, and measuring and storing that data in an open-standards asset management program, both end-users and OEMs get critical insight on product behavior.

With more and more plants using asset management systems and outsourcing vendors to help with maintenance needs, efficiency increases and diminished downtime are being realized in a variety of industries. Operators and managers are getting a fresh view on the workings of their equipment and systems as better data and better access to that data becomes more available. This lets them analyze, prioritize, and schedule maintenance needs before their systems actually fail.

With the aid of OEM engineering expertise, they can turn that intelligence into cost savings.

“As our customers gain knowledge and baseline metrics, we see a slow migration to condition performance monitoring, for even higher degrees of maintenance accuracy,” says Durham.

ARC’s Resnick sums up the benefits of proactive maintenance simply: “You can have a valve or part on its way, with a service person if needed, before the part has failed.”

Bruce Olive is CEO of Koroberi, Inc, a full-service marketing firm serving the strategic, creative and tactical marketing needs of a diverse list of business-to-business and business-to-consumer clients.

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