Maintenance management

Is it a profit center?

Historically a company's maintenance organization has been viewed as being a necessary evil and as a financial drag on the company. This was true, however, with current applications within a CMMS, like planning and scheduling, inventory management, purchasing management, and craft capacity planning, there is no reason today that the maintenance organization cannot become a profit center.

The three well-known major returns for a well-designed and managed maintenance organization have always been increased asset utilization, increased craft utilization, and reduction in spare parts inventory investment.

There are additional returns on investment (ROI) that the maintenance organization can contribute to the profitability of a company. In order for these additional return on investment contributors, the maintenance organization should consider the following maintenance management applications.

Organizational requirements
The maintenance management organizational requirements are:

The maintenance work order planning and scheduling system should be co-mingled with the operations work order planning and scheduling system. Maintenance work orders should be identified as either static--non operational asset, or dynamic--operational asset--in order for item one above to occur. Maintenance work orders likewise should be separated into four work order applications:

• changing spare parts,
• lubrication,
• cleaning, and
• safety and health analysis.

The purchasing management system should undertake the development and implementation of vendor stocking programs. The maintenance work order planning and scheduling system should use both sequential and overlap sequential scheduling techniques. The maintenance storeroom program should be
integrated with the maintenance work order planning and scheduling system. Additional consideration should be given to the implementation of both predictive and total productive maintenance applications.

There are 12 cost reduction steps that provide your maintenance management organization the financial return on investment for the ten maintenance management functions we reviewed above. These items can be expressed in dollars and cents to prove that maintenance management can and should be a
profit center.

Improving return on investment
Increased asset utilization means more productivity that means more sales dollars, which means more return on investment. Eliminating direct and indirect overtime expenses by both maintenance and production workers translates into greater return on investment. A predictive maintenance program should reduce, or eliminate major machine failures. This should reduce overall maintenance costs. Moving from a reactive to a planned and scheduled environment in maintenance reduces maintenance costs, that increases the return on investment.

When manufacturing or process equipment is operating properly, the company is producing sellable, quality products. When planning and scheduling maintenance work order techniques are used, the maintenance labor force becomes more efficient, and labor utilization increases. This translates into doing more work with the same labor force, that again increases the return on investment.

With proper planning and scheduling and when the inventory management system tracks both planned and unplanned requirements this translates into less spare parts inventory. This reduces the carrying cost of the spare parts inventory. Improved asset utilization eliminates downtime and provides the manufacturing work force with an improved working environment, that adds to higher productivity, and improved efficiency, that adds to the return on investment.

The purchasing management system should undertake the development and implementation of vendor stocking programs.

With the addition of predictive maintenance and total productive maintenance applications, the manufacturing labor force develops what we call pride-of-ownership of assets. This change in the mental attitude of labor tends to increase productivity. With proper maintenance work order planning and scheduling,supported by predictive maintenance and total productive maintenance, and using the proper CMMS, the maintenance department becomes a profit center, as is described above.

Additional benefits may be:

• reduction or elimination of air freight collect transportation costs from vendors for spare parts,
• ability to obtain ISO 9000 certification with the least costs,
• improved vendor relationships due to vendor stocking programs,
• improved relationship between maintenance and operations, and
• becoming a world-class maintenance organization.

In our international competitive environment, maintenance management personnel should have a thorough understanding of the ten maintenance functional requirements. The factors of return on investment analysis can be supported by your financial officer. The financial officer in your company, like yourselves, is interested in profitability and ROI. You should have the capability to move from a liability to a profit center and add to your companies net profit.