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Stephen C. Welch

Quality Insider

Lean Tips to Maximize Uptime

Should you outsource your production maintenance?

Published: Monday, October 8, 2007 - 21:00

Many companies view production maintenance as a necessary evil, and through the years, manufacturers have simply accepted maintenance as-is and made little little or no effort to improve it. But some forward-thinking manufacturers, committed to lean processes, and their outsourced maintenance partners are proving that a well-executed maintenance strategy delivers a competitive advantage.

A look at the manufacturing marketplace shows why outsourcing manufacturing maintenance has become a viable option. During the last 20 years, manufacturers invested billions of dollars to become more competitive in the global marketplace. The focus of this investment was on reducing costs in the manufacturing processes, i.e., getting lean, with the ultimate goal to become the “low-cost producer” in their respective industries. From the executive offices to the front lines, corporations supported these lean initiatives, and significant improvements were achieved in manufacturing processes.

Even as companies made significant investments to improve their manufacturing processes, maintenance often was excluded from these improvement plans. For example, on average, most maintenance departments are only 33-percent productive, according to Terry Wireman’s book, Computerized Maintenance Management Services (Industrial Press Inc., 1994).

Hence, the opportunity for maximum gains in manufacturing productivity has been reduced, often resulting in little or no measurable productivity gain. In fact, many manufacturers continue to perform their maintenance work today in much the same manner as it has been performed for the last two decades. This causes many companies to experience problems with quality control, production levels, and schedule adherence, as they’re often working with poorly maintained equipment.

An effective maintenance program is integral to the success of any manufacturer. Manufacturers no longer have a full reserve of redundant machines or a large stock of inventory to cover for missed production. The manufacturer must count on predictive and preventive maintenance activities to accommodate sophisticated delivery requirements.

What are your core competencies?
Perhaps the most fundamental factor in deciding whether to improve your current operation or outsource your production maintenance is determining whether maintenance is one of your core competencies.

Remember that evaluating your core competencies doesn’t mean assessing what you do well and what you do poorly. A discussion on core competencies should pinpoint activities “you must do well yourself” if you’re going to gain a competitive edge in your market. This analysis can be tricky, because companies can have core competencies that they perform poorly and, conversely, they can perform noncore competencies exceptionally well.

If you determine that production maintenance is truly a core competency, you should turn your efforts to improving your current maintenance organization. However, if you determine that maintenance isn’t a core competency, then the option to outsource all or part of your maintenance becomes viable.

Challenges affecting your decision
Outsourcing options are causing many companies to take a fresh look at the key elements of their maintenance programs. A review of a process pinpoints those components that are going well and those that are key challenges. The development and implementation of an effective maintenance plan has significant challenges, including:

People—How am I going to find, train, and retain technically competent maintenance personnel?

Management—Where do I find the leadership in my organization to move from traditional maintenance to total productive maintenance?

Performance measurement—Do I have the people and processes in place to perform root-cause analysis, elevate the use of our computerized maintenance-management system (CMMS), and track and adapt from performance measurements?

Spare parts and maintenance supplies—Where do I find time to address repairs, procurement, management, ownership, warranty administration, and total-cost-to-own issues?

Costs—How do I maximize the value of every dollar spent on maintenance and reduce the costs associated with poor maintenance?

Partnering with a professional maintenance organization addresses these issues with experts who face and meet these challenges daily. An additional benefit of outsourcing to a maintenance partner is that you gain greater control over maintenance. This may sound strange, but it’s been proven true. Essentially, although you may lose some control over the maintenance activities (and you should want that to happen), you gain much greater control over the maintenance results.

One final benefit of an outsourcing partnership is that you are able to redeploy some of your key people to areas that are core competencies for your company. In today’s job market, hiring new people is difficult at best. To be able to outsource your noncore activities and assign your best people to your core business allows all areas of the plant to work more effectively.

Traditional relationships versus maintenance partnerships
Many companies choose to outsource for traditional reasons, including reduced labor costs, increased craft flexibility, support of business-cycle fluctuations, and the implementation of specialized activities.

In the traditional scenario, the relationship established between the manufacturer and the contractor is based primarily on providing “bodies and tools” to work within the framework of the existing maintenance operation. In essence, nothing in the maintenance process is changed.

A partnership scenario is based on change and continuous improvement in the way maintenance is performed. A maintenance partnership includes some key elements.

Performance measurements are clearly communicated.

Planned maintenance is the focus of the operation.

Maintenance becomes a competitive advantage.

Manufacturer and maintenance contractor desire a mutually beneficial relationship.

Maintenance best practices are established and tracked.

In the maintenance-partnership scenario, performance guarantees and continuous-improvement goals provide greater control over maintenance results and ensure that production goals are achieved.

Outsourcing options
As described earlier, one of the options to consider when outsourcing is to contract maintenance only in specific situations, primarily to enhance craft flexibility and support business-cycle fluctuations. This “situational” outsourcing helps improve machine uptime and reliability. The nature of the relationship calls for definite start and stop dates, so any progress made during the term of the contract can revert to the previous state once the contract has expired.

Another option is outsourcing the maintenance activities. This gives your maintenance partner complete ownership of production and facilities maintenance, including the people, management, parts procurement, repairs, vendor management, processes, CMMs, technical support, data collection, performance measurements, and maintenance results.

Obviously, this option is attractive to manufacturers who want to assign responsibility for a noncore part of their operation to maintenance professionals.

Tips for effective outsourcing
Once you make the decision to review outsourcing as an option, you can take several steps to ensure the review process is productive. First, prepare a description of the outsourced partner’s level of service. This statement should clarify the responsibilities, service levels, reporting needs, and conformance parameters. Look for companies that assume total responsibility for the maintenance elements.

Also, look for an outsourced partner that uses your own maintenance talent—they assume responsibility for your maintenance operation.

Next, make sure you investigate the culture of your potential maintenance partners to ensure it will blend with your existing company culture. This review is critical to finding a partner you trust and feel comfortable working with on a long-term basis.

Ask for a written proposal. Make sure the proposal covers how the maintenance will be performed and how the contractor plans to transition from an internal maintenance mode to contract maintenance mode. Determine if the contractor has the flexibility and depth to call on additional resources.

Also, verify that the contractor has a comprehensive performance-measurement strategy. Ask for a maintenance plan and make sure the scope of work is clearly defined. The less left to interpretation, the better.

Ask for references, and don’t stop there. It’s important to visit plants where the potential partner is currently performing maintenance. Talk to the plant personnel currently working with them, especially the plant manager. Inquire what the partner’s staff members are like to work with. Are they responsive? Can they do what they say they will do? Are they flexible? Are they knowledgeable, professional people?

Carefully develop and analyze the price agreement. Although many contracts in the past were prepared on a “cost-plus” basis, lately the trend is shifting to fixed-price agreements. Fixed-price agreements provide clear statements of responsibilities and, therefore, accountabilities. Fixed-price agreements also take the variability out of your maintenance budget.

Delve into other contract specifics, keeping in mind that most maintenance contracts generally cover services and costs on a yearly basis.

Most important, begin an open dialogue with plenty of feedback opportunities. Like personal relationships, the best partnerships occur when the two parties have a high level of respect and trust for one another.

A new view
An effective maintenance program is integral to the success of any manufacturer and its lean strategies. Because most manufacturers hope to raise maintenance to a level that supports their production goals, many organizations investigate outsourcing as an alternative.

In the past, to outsource was to admit an error or incompetence. Outsourcing is now viewed as an intelligent choice that can shift the maintenance focus from necessary evil to increased equipment reliability and uptime.

Ready or not?
If you’re on the fence about inviting a maintenance partner into your plant, consider the following questions. Your answers may help you determine whether you are ready to outsource.

  • Is maintenance one of your core competencies?
  • Do you have the resources to dedicate to an internal-improvement initiative?
  • Do you have a maintenance-improvement plan?
  • Do you have metrics in place to tell you how your maintenance organization is performing?
  • Are your maintenance expenses wildly variable?
  • Will your maintenance organization support your ISO/QS certification goals?
  • Does your maintenance organization lack leadership?
  • Are you having difficulty hiring and retaining good maintenance people?
  • Are you having difficulty with machine uptime?
  • Are you constantly operating in an overtime mode to keep up with production demand?

Discuss

About The Author

Stephen C. Welch’s default image

Stephen C. Welch

Steven C. Welch is a sales account manager for ATS. His customer relationships include Eaton electrical, hydraulic, aerospace and fluid power sites. Steve has been with ATS for nearly two decades and applies lean and Six Sigma methodologies at client sites across the United States.