COGZ Return On Investment

How would you like to add 17 extra maintenance persons for free?

Planning achieves this effect. Productivity of 35% is typical of a traditional maintenance organization using “Wrench Time” as a measure.

On the average, a typical mechanic on a 10-hour shift is only productive for 3 ½ hours. The other 6 ½ hours are spent on non-productive activities such as necessary break time or undesirable job delays such as getting parts, instructions, or tools.

Simply implementing a simple planning system and scheduling system should help improve productivity to about 45%.

Then as information becomes developed to allow avoiding past problems, productivity should increase to 50%.

       

The last improvement to over 55% is attributed to special aids, such as improved inventory or tool room organization.

This last improvement is possible after the basic processes leading to the first improvements are well underway.

How does one measure the leverage of work order planning?

The specific improvement from planning maintenance can be quantified. Consider three persons working without the benefit of planning but placing them at the highest productivity of 35%.

Their combined productivity 105% can be thought of as one person always working productively who never has a delay and even has some time left at the end of the day.

Now take one of those persons away from the work force and make that person into a planner. The planner helps boost the productivity of the remaining two persons up to 55% each. The planner’s productivity is considered to be 0%. The combined productivity is now 110% a little better than all of them working without planning. It has also been shown that a single planner can plan for 20 to 30 persons.

Consequently, there never should be any question that a person should be taken out of the work force to become a planner. This concept is a big problem for many companies. They also fail to provide enough planners for one of two reasons. One, they might select one planner for a group of 50 mechanics, a serious under investment. Two, they select two planners, but then dump extra duties on them preventing them from the work of real planning.

A 30 person maintenance force is leveraged as 30 persons times (see the box below) 1.57 to yield a 47 person effective work force. Instead of 30 persons working at 35% productivity each, the work force has the equivalence of 47 persons working at 35% each.

This means that one is obtaining the effect of having 17 extra persons on the team without having to hire anyone new; 17 persons for the cost of one planner!

       

Additionally, seventeen persons at $25 per hour including benefits are worth $884,000 a year.

What do these extra persons or really “new found production hours” do? In the company with much reactive work, one uses them to put out all the fires. In the company with reactive work under control that is focusing on planned work, one leverages them to do more proactive work avoiding fires.

Finally in companies with preventive maintenance well in hand, one leverages them to invest in training to increase their skills and in projects to improve equipment or other work processes. Each of these companies has the ability to grow or allow natural attrition without hiring.

The above cases are dramatically improved if you are starting at 25% wrench time and moving to 55%, which is 55 divided by 25, which is equal to a 2.2 factor of improvement. The 30-person work force is increased to 66 persons.

The effect the 36 additional persons are worth $1,872,000 annually. While the measure and value of the extra productivity can be calculated rather easily in terms of work force, how one uses this extra labor is what matters. Getting more work done and done right leads to other significant savings that are easy to calculate.

        

Moreover, the aspects of planning must be understood in the context of a system in order to avoid the frustrations of many companies that have tried planning without success.

• Have a System – Manual or CMMS
• Work at Reducing Delays
• Have Parts, Tools and Manuals Ready
• Keep Track of Time Wasting Delays and look for improvement

To better understand the aspects of how the planning system works and the principles and techniques that make dramatic leverage possible in any maintenance program I would suggest obtaining a copy of the “Maintenance Planning and Scheduling Handbook” by Richard Palmer from where much of the previous data was obtained. In addition, I would like to briefly broach the subject of justification for a CMMS (computerized maintenance management software) .

How does a CMMS improve performance?

It organizes the maintenance department. If the operation is organized there is less confusion and waste. A CMMS never forgets when maintenance is scheduled and it makes the operation more manageable. There are many aspects to a maintenance operation.

• Scheduling Employees and Work Orders
• Purchasing
• Preventative Maintenance
• Corrective Maintenance
• Breakdown Maintenance
• Inventory Control
• Project Work

Organizing all of these is a major undertaking. A CMMS is the system to use because it reduces the work load. By managing the daily operations of the maintenance department the administrative work load is reduced, management has more time to spend with the maintenance staff.

What size plant should install a system?

Small and large facilities must consider installing a CMMS system.

• In a large facility the shared access of data, reduction in clerical work and management of a large maintenance effort is ideally suited to a CMMS.
• The small shop must also consider a CMMS. The maintenance team is most likely performing the filing, sorting and scheduling. These duties take away time that could be spent maintaining equipment.

Why install a CMMS ?

A CMMS will reduce plant maintenance and operating costs as properly maintained machines minimize downtime. Long term maintenance

operating costs will be reduced because of less breakdowns and emergency repairs, less emergency expenditures, lower cost for parts purchased, and lower inventory holding costs. There could be reduced outside contractor costs since the maintenance department has more time for preventative maintenance procedures.

Additional Cost Reductions
Cost reductions come in many ways as secondary benefits of a CMMS system.

• Worker efficiency increases since they go to a job with the correct parts and instructions.
• Machines require less parts and repairs when correctly maintained.
• Prices paid per part are less due to knowing the prices previously paid. Vendors are unable to indiscriminately raise prices. It is not uncommon for a medium size plant to have 5 to 10 thousand different purchased parts, how do you keep track of this type of information without a good inventory system?
• The purchaser of parts is more efficient due to information available to him.
• The purchaser can spend more time researching lower prices to save on part prices.

Actual surveys * have shown a 10%-20% reduction in maintenance labor costs and a 10%-15% reduction in parts cost. *(Thomas Marketing Information Center). Justification for purchasing a system is adequate on these reductions alone. The largest cost savings comes from improved efficiency of the plant, quality improvement of the product and all the other benefits previously discussed.