IT in Manufacturing

A balanced approach

October 2008 IT in Manufacturing

Asset-intensive industries such as chemicals, mining and food processing are characterised by sizable capital investments in machinery and equipment. Companies in these industries usually have a large maintenance budget.

Cost considerations

Maintenance is often the largest fixed cost (other than raw materials) in such companies. In a medium-sized chemicals plant, the annual maintenance budget could be 10% of the original capital investment. This ratio of annual maintenance cost to capital investment can vary significantly by industry and depend on many factors, such as plant age, the level of complexity and the amount of moving machinery, but in almost all cases maintenance costs are substantial and need to be carefully managed.

Poor maintenance can lead to unplanned breakdowns, which can have a major impact on production and service levels. This adds to the business criticality of an effective maintenance function, which therefore has to be seen as highly strategic to these companies.

As with all businesses, manufacturing companies have to make sustainable profits. During periods when production demands are high, businesses might be tempted to reschedule planned maintenance into the future. Other factors that lead to maintenance being delayed could include cost pressures in the company, or in the case of very old plants a decision could be made to minimise maintenance as the plant has reached end of life.

Informed decision making

In practice, when management ask questions regarding planned or scheduled maintenance, they are often flying blind. Despite significant investment in IT systems, the computerised maintenance systems generally cannot provide relevant information to help the business make informed planned maintenance decisions. The information that is required is a combination of cost, replacement value, historic reliability, and process criticality (if equipment should fail, how would this impact production and what is the probability of failure?). Clearly, this is a complex calculation, requiring not only a large amount of data, but a high level of data integrity and statistical analysis. Most importantly though, maintenance data without information regarding the actual role of the equipment in the production process is next to useless – yet most maintenance systems are implemented independently of production teams.

The problem with CMMS

Many plants use their computerised maintenance management system (CMMS) as a tool for improving the efficiency of the maintenance processes. The emphasis is on reducing 'wrench time'. Doc Palmer describes 'wrench time' as the proportion of time during which craftsmen are being kept from productively working on a job site by delays such as waiting for assignment, permits, parts, tools, instructions, travel, coordination with other crafts or waiting for equipment information. A well implemented CMMS achieves all these benefits by (for example) ensuring spares are available in the store, making available standard procedures and instructions for defined tasks, and providing equipment information and accurate maintenance history. Furthermore, a CMMS can help plan maintenance work accurately and reliably, and generating job cards or work orders automatically. But is this enough?

The problem with most CMMS implementations is that the system is focused on optimising maintenance in isolation. Other factors, such as the opportunity cost of breakdowns and lost production, are not taken into account. So for example, a minor piece of equipment such as a steam valve might have the potential to bring down the entire plant should it fail. Shutting down and starting up a process plant can be an expensive exercise – failures of this type should clearly not be a frequent occurrence. Yet the standard CMMS information such as spares cost, part numbers, maintenance costs and historical failures may not reveal the true role of this particular steam valve in keeping the plant running.

Key performance indicators

The industry has developed concepts such as overall equipment effectiveness (OEE) to help place equipment performance in the context of the business impact. OEE is a measure of availability (downtime), performance efficiency (reduced capacity) and quality (rework, scrap). However, several analysts have pointed out fundamental flaws with OEE as a measure of maintenance effectiveness. For example, performance efficiency could be as much a result of good performance of the production department as of the maintenance department. Separating key performance indicators (KPIs) of these different, often conflicting objectives, requires careful design of the systems and a comprehensive understanding of the underlying process and business.

Contextualised reasoning

For operations management, the solution is to use a balanced approach that makes sure that maintenance information is seen in the full context of the production objectives. CMMS systems that are implemented as standalone islands are not effective. Nor are so-called integrated CMMS systems of much use if the integration is purely with financial and procurement systems, as these systems are also usually segregated from the realities of day-to-day production processes. Effective CMMS systems therefore need to relate production information with maintenance and equipment information. Modern IT technologies make this possible through combining process information (from control systems, for example) with maintenance data, and combining all of this with contextual information from production technicians and artisans. This combined information approach is necessary for producing data that enables effective decision making.

A recommended best practice when implementing a CMMS system is to start by going back to basics and regard it as a strategic project with major business implication. The project needs involvement from the finance, production, maintenance and safety departments. All too often we see the CMMS system as simply an advanced electronic filing system belonging to the plant engineer. If this is the case in your business, then you may need to consider a re-implementation.

For more information contact Gavin Halse, ApplyIT, +27 (0)31 275 8080,,

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