Changes in the maintenance approach

Most maintenance improvement initiatives today are functional in nature (Peterson, 2002). Firms that follow Functional Excellence Models believe that:

• operation owns production and maintenance owns equipment;

• maintenance excellence means efficient service to production;

• repair efficiency is the best measure of maintenance performance;

• production runs at any cost;

• goals are set by functional managers, resulting often in contradictory and self-defeating reward/recognition practices; further on, most measures are lagging indicators, demonstrating past results, while few leading indicators (or none) are considered to make a prospect on the future operation;

• purchasing excellence means having the lowest cost of items available;

• pressure is on individuals to do better; no gauges or tools of “better” exist.

So there is no attention to the system/to the whole organization and to match the goals of the other functions. Hence, we can assert these initiatives are somewhat limited in scope.

In an increasingly open global competitive environment caused by the higher pressure on costs, by the pressures to increase profit margins, or, in worse case scenarios, by the pressures to retain profit margins under lowering retail prices, a new mentality is being developed (Mather, 2003).

Maturity assessment for Physical Asset Management: Evidence from Manufacturing Plants and Infrastructures

As a result, at a high level, we can state that a number of changes in the way of thinking can be found – when passing from maintenance management to physical asset management –. Herein, such relevant changes are briefly enlisted (Peterson, 2002):

1. The plant exists only for one reason — to produce as much product as possible, to specify and delivery schedules, at the lowest sustainable price 2. To improve will require fundamental changes in discipline and culture,

beginning with the management team. Relationships and personal prejudices will be realigned

3. Everyone in the plant is on the same team and must work toward the same goals

• shared vision of how the plant will work in the future

• a multi-year plan for mastering new skills in asset management

• a business case that continuously creates bottom-line value

As one of the largest elements of both operational and capital spending, physical asset management is often an obvious target for cost reductions. For example, the maintenance costs are often very high and they are following an increasing trend.

One of the major factors behind this trend is that we are more dependent on machinery than past. Where previously people work, today machineries work. In fact, thanks to the development of automation and technology people are substituted by machineries in a lot of industrial sector (Dunn, 1987).

Due to the introduction of Reliability-Centred Maintenance (RCM), Total Productive Maintenance (TPM), Business-Centred Maintenance (BCM) and other methodologies and concepts, maintenance has already evolved a lot during the last decades (Waeyenbergha and Pintelon, 2006), to justify its own costs. However, a company in the process industry that solely applies these maintenance models cannot be really efficient as an estimated 65 percent of a company’s life cycle cost (LCC) are set during the design phase (Barringer, 1997).

LCC considers the specification and design for reliability and maintainability of physical assets such as a plant, machinery, equipment, buildings and structures. The application of LCC also takes into account the processes of installation, commissioning, operation, maintenance, modification and replacement. Last but not

Maturity assessment for Physical Asset Management: Evidence from Manufacturing Plants and Infrastructures

least, decisions are influenced by feedback of information on design, performance and cost, throughout the life cycle of a project (Waeyenbergha and Pintelon, 2006).

LCC helps then changing provincial perspectives for business issues, with emphasis on enhancing economic competitiveness by working for the lowest long term Cost of Ownership, which is not an easy answer to obtain. Let’s consider, for example, these typical problems and conflicts observed in most companies (Barringer, 2003):

1. Project Engineering wants to minimize capital costs as the only criterion, 2. Maintenance Engineering wants to minimize repair hours as the only criterion, 3. Production wants to maximize uptime hours as the only criterion

4. Reliability Engineering wants to avoid failures as the only criterion,

5. Accounting wants to maximize project net present value as the only criterion, and

6. Shareholders want to increase stockholder wealth as the only criterion.

Management is responsible for harmonizing these potential conflicts and, according to the PAM concept, this may be done under the banner of operating for the lowest long term Cost of Ownership. LCC can then be used as a management decision tool for harmonizing the never ending conflicts by focusing on facts, money, and time.

LCC is only one of the instrument of the huge field of Life Cycle Management. In the Life Cycle Management approach emerges the awareness that maintenance activities have close relationships with activities in other phases of product life cycle, such as the design, production and end of life phase. These relations create the necessity for integration in terms of technologies as well as information throughout the product’s life cycle so as to perform effective maintenance (Takata et al., 2004).

The effective maintenance, continue Takata et al.(2004), should involve the following activities:

1. improving design based on evaluating maintainability in the product development phase, and providing the design data for maintenance strategy planning and maintenance task control;

2. selecting a maintenance strategy appropriate to each part of the product;

3. planning and executing the maintenance tasks control based on the selected strategy;

Maturity assessment for Physical Asset Management: Evidence from Manufacturing Plants and Infrastructures

4. evaluation of maintenance result to determine whether the maintenance strategy planning and maintenance task control are appropriate;

5. improvement of maintenance (task control and strategy planning) and products based on the evaluation of maintenance results;

6. dismantling planning and execution at the end of the product life cycle.

Summarizing, for PAM the life cycle perspective is key and its importance, as we will see better in next Chapter 3, is illustrated in numerous definitions of PAM. More than that, the maintenance approach may be related to such a life cycle perspective of the physical asset, as well as its life cycle costs. This helps motivating understanding of the new role of maintenance within PAM.