Originally published at the Manufacturer
Maintenance and asset optimization programs are about more than just shop floor operation reports Matt Bolch. When done properly, they can be shown to drastically improve the bottom line
J.M. Smucker Co. takes good care of its assets. That may be one of the reasons the Orrville, OH-based food manufacturer best known for its jams and jellies has been around for more than a century.
Still, company officials didn’t use the term “reliability” until a few years ago to describe how the company cared for and maintained its assets, says Chuck Armbruster, corporate reliability engineering manager. “As the company grew, we knew we couldn’t have each plant autonomous,” says Armbruster, who has been at the main Smucker plant for 15 years. “In order to leverage our strengths and purchasing, you have to look at the macro level.”
Two years ago, Smucker took over Crisco and Jif plants from Procter & Gamble, picking up more than product lines and factories. The company also adopted P&G’s operating philosophy that focuses on good maintenance practices. “We try to put good practices in place that by default save you money in the long run,” Armbruster says. That would include using preferred vendors who have demonstrated a commitment to quality and following good equipment installation practices to minimize vibration during commissioning projects.
Once equipment is up and running, operators take control of their areas of responsibility instead of merely running equipment. The Smucker Quality Management System (SQMS), based on P&G tenets, is being rolled out two plants at a time through the Smucker Co., which has 16 US plants. Armbruster says SQMS enjoys strong commitment from the company’s co-CEOs as well as from managers and frontline employees throughout the company.
When followed religiously, maintenance and asset optimization programs can be shown to reap significant rewards. Companies have found that maintenance represents from 15 percent to 40 percent of a product’s total cost and dollars saved in maintenance are a cost avoidance, says Terrence O’Hanlon, a certified maintenance and reliability professional at Reliabilityweb.com, an Internet resource for asset management.
“People are starting to take notice” of the importance of maintenance, says Terry Wireman, a senior industry analyst at GenesisSolutions, a professional services company focused on industrial asset optimization based in Ridgefield, Conn. “Many companies view maintenance as a cost center, failing to consider the impact maintenance has on their assets, which can mean fewer redundant assets and better returns.”
Because asset management isn’t taught at most business schools, Wireman says a company’s commitment to it can run hot or cold, depending on who’s in charge. But it does appear the tide is turning toward protecting one’s physical assets. GenesisSolutions looks at maintenance costs as a percentage of a facility’s estimated replacement value. A benchmark is to spend two percent of the asset’s value each year on maintenance. “We’ve seen some companies as high as five percent, but we see a lot of waste in it,” Wireman says.
Unlike many factory employees, a minimum number of maintenance employees should be employed despite product demand, a downturn in orders or other factors that could affect plant staffing, Wireman says. And once you find good maintenance workers work hard to keep them, the analyst adds.
Retirements have thinned the ranks of maintenance workers, and apprentice programs are lagging as younger workers find glitzier career paths to take. This occurs as equipment becomes more sophisticated, which requires better trained maintenance workers. As a result, maintenance costs are rising, Wireman says.
From a competitive standpoint, asset management also makes sense because a company that takes care of its equipment is more efficient, which can drive per-unit costs down while building profit margins, says O’Hanlon from Reliabilityweb.com.
For many companies, physical asset management represents the final frontier to wring efficiencies from the manufacturing process. The process ranges far beyond maintaining an asset, starting with its design, procurement, construction and installation, continuing with its maintenance until the asset is disposed of when its useful life is complete. “In the past, these functions were not always connected or viewed as a single process, but today, with competitive pressures increasing, companies are finding huge amounts of untapped productivity and profit can be had by actively managing physical assets,” O’Hanlon says.
Up to 65 percent of the operations and maintenance cost of a physical asset are designed from the start, O’Hanlon says, so getting input from maintenance and reliability experts prior to designing or procuring an asset is critical to keep overall maintenance costs low in relation to plant net asset value.
The Society for Maintenance & Reliability Professionals, based in Knoxville, Tenn., has been bringing maintenance people together for 12 years. Joe Petersen, the group’s business manager, says membership numbers have been stable. Members include such manufacturers as General Motors, Harley-Davidson and Alcoa, along with suppliers and consultants.
In fact, SMRP conferences in 2002 and 2003 set attendance records despite the down economy. Petersen says interest in the organization increases when manufacturing capacity gets squeezed, which is occurring now in many industries. “The savings [from asset management] come from increasing your capacity,” Petersen says. “If breakdowns cost five percent to seven percent of capacity utilization and you can improve that, you’ll get a sizeable gain.”
Since SMRP started its Certification for Maintenance and Reliability Professionals course, 900 people have taken the exam and 600 have passed. As reliability issues continue to move toward the forefront of a plant manager or CEO’s thinking, Petersen says the certification will take on increased importance.
Another issue that’s taking on increased importance is the nascent development of an International Standardization Organization standard on maintenance. While Petersen says that the United States and Australia lead the world in asset reliability, manufacturers must get involved in helping the ISO group set a standard they can live with. “Once again, if North American industry doesn’t get behind it, we may have standards dictated to us that may not be in our best interest,” Petersen says.