Cutting Maintenance Costs Can Lower Overall Equipment Effectiveness (OEE)

Saving cost on Maintenance by, for example, resizing the team or deciding to stop doing certain tasks results in a lower reliability of the assets. Yes, in the short term Maintenance spend decreases. Moreover, combined with a subpar equipment reliability starting point, the medium-term effect will be also be a further reduction of asset reliability. This will lead to more corrective maintenance tasks as more equipment breaks down. In the end, the cost will be at the same level or higher because Corrective Maintenance takes more time and effort to fix, can have collateral damage and parts that need to be replaced can be costly. In this scenario, downtime increases so production output and maybe even product quality are negatively influenced.

If you want to realize sustainable results you first need to ensure your equipment reliability is at a sustainable level. Remember that performance can only be at the desired level if the supporting processes are in place to keep it there. This might require an investment in for example process improvements as well as in equipment or digital transformation and Industry 4.0 solutions. Organizations that are able to make this scenario work often do this by either keeping the same budget or increasing it to optimize asset reliability (through Reliability-Centered Maintenance). We have written a lot about this already but we will say it again: invest in Preventive Maintenance (PM) to decrease Corrective Maintenance (CM). If you do, you might not immediately see an enormous change in your PM:CM ratio. However, the cost shift will be substantial and will soon lower spend because corrective work is more expensive as mentioned above. With more planned maintenance you will also work more efficiently (which is usually the case with planned work). This can lead to a decrease in staff cost as a smaller workforce (own and contractors) can do more.

So, when you have convinced management of the sustainable course of action (scenario 2) then what’s the best way to start? Here are some tips:

Rome wasn’t built in a day. If someone has invested a lot of money in Italian city real estate though, they would want to be kept in the loop of progress and see results. Corporate or site management prefers to see results in the budget year that the cost reduction was agreed on whereas these types of asset performance improvement programs take typically two to three years depending on the situation at starting improvements and the size of the asset base. To give an example: if Mean Time Between Failure (MTBF) for a specific asset is three months, it will need time to implement PM plans, monitor and prove improvements. When prioritizing the bad actor list, consider first working on quick wins or keeping the first stage limited in scope. Either of these strategies will ensure you have proof of success sooner after which you can work on more difficult bad actors or scale up the initiative. In any case, make sure you measure your KPIs and give management regular updates.